Bankruptcy Filing in Florida: Understanding the Basics
Bankruptcy is a legal process that offers individuals and businesses the chance to eliminate or restructure their debts. If you’re struggling to make ends meet, this may be a viable option for you. However, filing for bankruptcy in Florida can be complicated and intimidating, especially if you’re unfamiliar with the process.
Below, we’ll take a closer look at the basics of the process in Florida, including the different bankruptcy chapters available, how to file, and what you can expect from the process. It is crucial to point out that this article is not intended as legal advice, and is for information purposes only and is in no way to be construed as legal advice. You should ALWAYS consult with an attorney regarding your legal matters.
Types of Bankruptcy in Florida
There are two primary types of personal bankruptcy available to most individuals in Florida: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is also known as “liquidation”. This type of bankruptcy is designed for individuals who qualify and meet the income requirements and can’t afford to repay their debts. In a Chapter 7, a trustee is appointed to sell off any non-exempt assets in order to repay your creditors. Once your debts have been discharged, you’ll be free from most unsecured debts, such as credit card debt, medical bills, and personal loans.
Chapter 13 is also known as “reorganization” bankruptcy. To qualify for this type of filing, individuals would have regular income and can afford to repay some of their debts. In a Chapter 13, you’ll work with a trustee to create a repayment plan that typically lasts between three and five years. Once you’ve completed the repayment plan, any remaining unsecured debts will be discharged in most cases.
How to File for Bankruptcy in Florida
Filing for bankruptcy in Florida is a complex process that requires careful planning and attention to detail. Here are the basic steps you’ll need to follow:
Gather Your Financial Information: Before you can file, you’ll need to gather all of your financial information, including your income, debts, and assets. This will help you determine which type of bankruptcy is right for you and ensure that you meet the eligibility requirements.
- Income information, including pay stubs, tax returns, and any other sources of income.
- Debt information, including credit card statements, medical bills, personal loans, and any other outstanding debts.
- Asset information, including bank statements, investment accounts, real estate holdings, and any other assets you may own.
- Information about your monthly expenses, including rent or mortgage payments, utility bills, food costs, and other necessary expenses.
- Any legal judgments or liens against you, including tax liens, court judgments, and other outstanding legal obligations.
- Business financial information, including business tax returns, financial statements, and other relevant financial data if you are filing for business bankruptcy.
It’s important to gather as much financial information as possible before filing for bankruptcy to ensure that you have a clear understanding of your financial situation and can make informed decisions about the type that is right for you. An experienced bankruptcy attorney can also help you understand which types of information are most important and ensure that you have everything you need to move forward with the process.
Complete Credit Counseling:
Before you can file, you’ll need to complete a credit counseling course from an approved provider. This course will help you understand your options and determine whether bankruptcy is the best solution for your financial situation. A good attorney will help you with all of this.
File Your Bankruptcy Petition:
Once you’ve completed your credit counseling, you or an attorney you’ve retained will file your petition with the Florida bankruptcy court. You’ll need to provide detailed information about your finances, including your income, debts, and assets.
Attend the Meeting of Creditors:
After you’ve filed your petition, you’ll be required to attend a meeting of creditors. This meeting is an opportunity for your creditors to ask you questions about your finances and your petition.
Complete Your Proceedings:
Once you’ve completed all of the requirements of your proceedings, your debts will be discharged, and you’ll be free from most unsecured debts.
Process in Florida
In Florida, filers can choose to use either the federal exemptions or the state exemptions, but they cannot mix and match between the two. This means that you must choose one set of exemptions or the other. Essentially, exemptions are legal protections that allow you to protect certain property from being sold to pay your debts.
If you choose to use the federal bankruptcy exemptions, you can exempt up to $25,150 of equity in your home, up to $4,000 of equity in a motor vehicle, up to $13,400 in household goods and furnishings, up to $1,700 in jewelry, and up to $2,525 in tools of the trade, among other exemptions.
If you choose to use the state bankruptcy exemptions, you can exempt your entire homestead property, regardless of its value, as long as it meets certain criteria. You can also exempt up to $1,000 of equity in a motor vehicle, up to $1,000 in personal property, up to $750 in tools of the trade, and up to $4,000 in a qualified retirement plan, among other exemptions.
It’s important to note that the exemption amounts can change over time, so it’s always a good idea to consult with an experienced attorney to ensure that you understand the most up-to-date information on exemptions in Florida.
When you file, the bankruptcy trustee will review your assets and determine which ones are exempt and which ones are non-exempt. The non-exempt assets are then sold to pay your creditors.
For example, if you own a home with a mortgage and you have $50,000 in equity in the home, you may be able to exempt up to $25,150 of that equity using the federal exemptions. If you choose to use the state exemptions, you may be able to exempt the entire value of your Florida homestead property, regardless of its value.
Florida also provides exemptions for personal property, including household goods, clothing, and certain types of personal property. Additionally, Florida law provides exemptions for retirement accounts, such as IRAs and 401(k)s, up to a certain amount.
One of the unique features of bankruptcy law in Florida is the homestead exemption. Under Florida law, your primary residence is exempt from the process, meaning that it cannot be sold to repay your creditors. This exemption is not unlimited, however, and there are certain restrictions based on the value of your home and how long you have lived in it.
It’s important to work closely with an experienced bankruptcy attorney to ensure that you understand which exemptions are available to you and how they will impact your proceedings. Your attorney can help you protect your assets to the fullest extent possible while still satisfying your creditors’ claims.
Moving Forward
Bankruptcy can be a challenging and emotional process, but it can also be a powerful tool for individuals struggling with debt. If you’re considering filing for bankruptcy in Florida, it’s important to understand the different types of bankruptcy available, the eligibility requirements, and the steps involved in the process.
Working with an experienced attorney can be a valuable asset as you navigate the complex world of bankruptcy law. An attorney can help you determine which type is right for you, guide you through the filing process, and ensure that your rights and interests are protected throughout the proceedings.
Remember that bankruptcy is not a decision to be taken lightly, and it’s important to weigh all of your options before filing. However, if you’re struggling with overwhelming debt and don’t see a way out, bankruptcy may be a viable option for you to start fresh and rebuild your financial future.
It’s important to note that filing for bankruptcy will have an impact on your credit score, and it will remain on your credit report for up to 10 years. However, in many cases, the impact on your credit score can be less severe than the impact of overwhelming debt and missed payments.
Additionally, filing does not necessarily mean that you will lose all of your assets. In Florida, you may be able to exempt certain assets from the bankruptcy process, such as your primary residence, personal property, and retirement accounts.
If you’re considering filing, it’s important to understand the laws and the specific requirements for each type of bankruptcy. Working with an experienced attorney can help ensure that your rights and interests are protected throughout the process.
