Bankruptcy is a legal action in which a person who cannot pay his or her bills can get a fresh financial start. There are two types of bankruptcy that are most used by individuals: Chapter 7 and Chapter 13.
The filing fee for a Chapter 7 bankruptcy is $299, and the fee is $274 for a Chapter 13 bankruptcy, whether for one person or a married couple. The attorney fee varies depending on the facts and circumstances of each case. You have the right to discuss fees with your attorney and to reach a clear understanding of how much legal representation will cost.
Before filing, you must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filled. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in person, by telephone, or over the internet. The counseling agency will issue a certificate that you have received counseling, and this certificate is filed with the bankruptcy forms in your case.
Chapter 7: Straight Bankruptcy
In bankruptcy under Chapter 7, a debtor files a petition asking the court to discharge his or her debts. The basic idea in a Chapter 7 is to wipe out (discharge) your debts in exchange for you giving up your non-exempt property which is liquidated to raise money. This money is used to pay certain creditors. In most cases, you’ll lose little, if any, of your property. That’s because most of your property is either exempt or secured, so nothing is available to pay your creditors. The process takes approximately four months and includes one meeting with your trustee and creditors.
If you want to keep property, like a home or a car, and are behind on the payments on a mortgage or car loan, a Chapter 7 case is probably not the right choice for you. That is because Chapter 7 does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Chapter 13: Consumer Reorganization In a Chapter 13 case, (commonly called a Wage Earner’s Plan) you, the debtor, file a PLAN showing how you will pay off some of your past-due and current debt over an extended period, normally three (3) to five (5) years. You must attend a meeting with your trustee, and you may have to attend to plan confirmation hearing before the bankruptcy judge.
The most important thing about a Chapter 13 case is that it will allow you to keep valuable property — especially your home — which might otherwise be lost.
You should consider filing a Chapter 13 plan if you:
What property is protected?
Generally, you can keep all property in Chapter 13, as long as your creditors receive as much money under your plan as they would if your property was liquidated. In a Chapter 7, you can keep all property which the law says is EXEMPT from the claims of creditors. Florida exemptions include (but are not limited to):
The amount of some exemptions are doubled when a married couple files together.
Your right to receive certain benefits such as social security, unemployment compensation, workmen’s compensation benefits, and public assistance — regardless of the amount — is also exempt.
In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at the equity (value minus money owed on it) in your property when applying exemptions.
While your exemptions allow you to keep property even in a Chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a Chapter 13 case, you can keep all of your property if your plan meets the requirements of the Bankruptcy Code.
The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free information about our qualifications and experience. We are a debt relief agency providing legal assistance to consumers seeking relief under the Bankruptcy Code.