If you are struggling with a high amount of debt and you cannot repay it, bankruptcy may be the right option for you. Filing bankruptcy is more complicated than many people think. It is not just a simple matter of filling out some forms and submitting them to the court. Any type of bankruptcy you file will have a specific process that must be followed, and you may even have to qualify if you want to file certain types of bankruptcy. Below, our Boca Raton bankruptcy lawyer explains the processes for the most common types of bankruptcy.
The Process of Filing Chapter 7 Bankruptcy
Through a Chapter 7 bankruptcy, you can discharge all or a portion of your unsecured debt. Chapter 7 bankruptcy is one of the most common types of bankruptcy filed in Boca Raton, but the process can become complicated. The steps of Chapter 7 bankruptcy are as follows:
- Determining if you qualify: Unfortunately, not everyone qualifies for Chapter 7 bankruptcy. One of the main requirements is that you must pass the means test. The means test was introduced into the bankruptcy system in 2005. To pass, you must show that you do not have enough income to repay your current debts. A Boca Raton bankruptcy lawyer can advise you of the eligibility requirements and help you determine if you qualify.
- Determine which exemptions are applicable: During the Chapter 7 bankruptcy process, a bankruptcy trustee may sell some of your assets and use the proceeds to repay your creditors. Florida law, though, provides for many exemptions that can protect your assets from being sold. For example, under Florida law, there is no limit on the amount of equity you can protect in your home.
- Submit your petition to the bankruptcy court: The bankruptcy petition you file essentially asks the court to grant you bankruptcy and discharge your debt. Your bankruptcy case does not formally start until you file your petition. A Boca Raton bankruptcy lawyer can help you file the petition and make sure it is accurate and complete.
- The issuing of the automatic stay: Immediately after you file your bankruptcy petition with the court, a judge will issue an automatic stay. An automatic stay prohibits creditors and lenders from contacting you to try and collect on any debt you owe. The automatic stay also prevents creditors and lenders from taking legal action against you, such as filing a lawsuit to try and recover the debt.
- Appointing the bankruptcy trustee: Soon after you file the bankruptcy petition, the court will assign a bankruptcy trustee to your case. Bankruptcy trustees have a number of duties. They will attend the meeting of the creditors, also known as the 341 meeting, and they will also handle objections to certain exemptions you have claimed. The trustee is also responsible for handling the sale of any assets and will update the court about any changes in your case.
- Adversarial claims: During your bankruptcy case, the holders of any debt you owe have the opportunity to file an adversary claim. Creditors can make an adversarial claim if they think the borrower has misused the bankruptcy process or if they believe the debt is not eligible to be discharged.
- Getting the debt discharged: The last phase of the Chapter 7 bankruptcy process is getting your debt discharged by the court. The bankruptcy trustee will also sell any non-exempt property and distribute the proceeds among the creditors you owe.
The Process of Filing Chapter 13 Bankruptcy
For those who do not want to file Chapter 7 bankruptcy, either because they do not want to potentially lose property or for another reason, Chapter 13 bankruptcy may be a better option. Chapter 13 bankruptcy is also a great option for individuals who do not qualify for Chapter 7, such as those who do not pass the means test. Contrary to Chapter 7, your debt is not discharged during a Chapter 13 bankruptcy. Instead, the majority of it is restructured into a payment plan, which typically extends between three and five years. The Chapter 13 bankruptcy process involves the following:
- The automatic stay: Immediately after you file a Chapter 13 bankruptcy, the court will also issue an automatic stay. Like in a Chapter 7 bankruptcy, the automatic stay will ensure that you are not contacted by creditors or lenders, and that you are not the subject of a lawsuit or any other type of legal action.
- Modifying your mortgage: Many people choose to file Chapter 13 bankruptcy when they are facing foreclosure because it can help borrowers keep their home. When the mortgage debt is restructured into a payment plan, your monthly payments can be reduced and it can essentially force your mortgage lender to make changes to your loan that are more affordable.
- Determining if you are eligible: Like Chapter 7, there are certain requirements associated with Chapter 13 bankruptcy. You do not have to pass a means test, but you must have a regular source of income. If you are filing bankruptcy with your spouse, only one of you must have a regular source of income.
- Limitations on debt: You are only allowed to have a certain amount of debt when you file Chapter 13. If you have a greater amount than what is typically handled during Chapter 13 bankruptcy, you may have to file a Chapter 11 bankruptcy instead.
- Drafting the repayment plan: When creating your repayment plan, you probably want to be responsible for the smallest payment amounts possible, while your creditors will try to get the highest payments possible. A Boca Raton bankruptcy lawyer can negotiate on your behalf so your repayment plan is reasonable for you and accepted by the court. Once you have created the repayment plan, you are required to submit it to the court within 14 days of filing your case.
Call Our Bankruptcy Lawyers in Boca Raton, Florida Now
If you have too much debt you cannot repay, our Boca Raton bankruptcy lawyers can advise on your case. At Loan Lawyers, our skilled attorneys have helped thousands of people successfully discharge their debt and we will put our expertise to work for you. Call us now at (954) 523-4357 or contact us online to schedule a free review of your case.
