Consumer debt is rising quarter after quarter each year and the levels today are some of the highest they have ever been. If you have high levels of debt and can no longer make payments on it, you may have thought about filing bankruptcy. The process of filing bankruptcy involves much more than just filing the papers with the court and getting your debt discharged. The eligibility requirements and the steps you need to take are very complex, and you must follow proper procedures. To make sure no mistakes are made that could hurt your case, it is important that you speak to a Lauderdale Lakes bankruptcy attorney.
Understanding Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common type of bankruptcy filed in Lauderdale Lakes. Since 2005, borrowers who want to file Chapter 7 bankruptcy must pass a means test. This test essentially shows that you do not earn enough income to manage your current debt level. If you pass the means test and can file Chapter 7, you can have most if not all of your debt discharged and you are no longer responsible for paying it.
During a Chapter 7 bankruptcy, there is also a meeting of the creditors. The bankruptcy trustee and any creditors you owe will attend and you are also required to attend. For many, this is the only meeting a person must attend. Many people are nervous at the thought of attending the meeting with the creditors. With a Lauderdale Lakes bankruptcy lawyer by your side, there is no reason to be nervous.
It is possible to lose some property during a Chapter 7 bankruptcy. Sometimes, assets are sold and the proceeds of the sale are distributed among a borrower’s creditors to cover a portion of the debt owed. However, not all borrowers lose property during the process and many actually do not lose anything at all. The law in Florida outlines many generous exemptions that allow borrowers to keep all of their assets.
Understanding Chapter 13 Bankruptcy
Borrowers who do not qualify for Chapter 7 bankruptcy because they do not pass the means test can file Chapter 13 bankruptcy. A Chapter 13 bankruptcy is vastly different from a Chapter 7 bankruptcy. Chapter 13 can discharge some of your debt, but the majority of it is reorganized into a repayment plan. The repayment plan lasts between three and five years. Although you are still responsible for paying the debt, the payments should be much more manageable than they were before you filed.
Due to the fact that debt is not discharged during Chapter 13, borrowers do not lose any property. However, if the debt is not repaid, the creditors and debt collectors can pursue legal action against the borrower.
Florida Bankruptcy Exemptions
Although borrowers may lose some property during the bankruptcy process, that is not always the case. Florida law outlines many exemptions that protect certain assets. The exemptions are applicable in both Chapter 7 and Chapter 13 bankruptcy cases, but the two processes do treat non-exempt property differently. Non-exempt property refers to any assets that can be sold by the bankruptcy trustee.
During a Chapter 7 bankruptcy, the trustee will identify the non-exempt property and sell it so the proceeds can be distributed among the creditors. The proceeds are intended to help cover at least a portion of the debt still owing. While no assets are sold during the Chapter 13 bankruptcy process, borrowers are still required to pay the value of non-exempt property equity. The payments made by the borrower become part of the new repayment plan or are taken from the disposable income of the borrower, whichever is greater.
Like other aspects of the bankruptcy process, there are residency requirements placed on exemptions. The residency requirement to file bankruptcy states that borrowers must live in the state for at least 180 days before they file their bankruptcy petition. The residency requirement for exemptions though is 730 days. Borrowers who file for bankruptcy in Florida and have not lived in the state for at least 730 days cannot take advantage of the bankruptcy exemptions. If an individual does not meet the residency requirement for exemptions, the exemptions from the state in which they previously lived will apply.
The exemptions that apply in any case will depend on the borrower’s situation. One of the most common exemptions used in Florida is the homestead exemption, which allows borrowers to protect 100 percent of the equity in their home. Some of the other most commonly used exemptions in Lauderdale Lakes are as follows:
- If the homestead exemption is used, up to $1,000 in personal property such as furniture, art, and electronics
- If the homestead exemption is not used, up to $4,000 in personal property
- Education savings, health savings, and hurricane savings
- Prepaid medical savings accounts and health savings accounts
- Prescription medical aids
- Tax credits and refunds
- A maximum of $1,000 in motor vehicle equity, or more if a married couple files jointly
- A maximum of $750 in weekly wages for the head of the family, or 75 percent of the federal minimum wage, whichever is more
Subsequent Bankruptcies
While the law does allow borrowers to discharge their debt through bankruptcy, the courts do not want people filing bankruptcy time and time again. Due to this, if you file Chapter 7 bankruptcy and your debt is successfully discharged, you must wait eight years until you can file again. The clock on the eight years begins when you filed for bankruptcy the first time, not when your debt was discharged.
If your debt is reorganized into a repayment plan in Chapter 13, you must wait two years before you can file again. Due to the fact that repayment plans generally last between three and five years, most people can file Chapter 13 bankruptcy after their first case is finalized.
Our Bankruptcy Lawyers in Lauderdale Lakes Can Help with Your Case
The bankruptcy process is a complicated one, and one small mistake could have a very negative impact on your case. At Loan Lawyers, our Lauderdale Lakes bankruptcy lawyers will ensure no mistakes are made in your case so you have the best chance of getting your debt discharged. Call us today at (954) 523-4357 or contact us online for a free case evaluation.
