Chapter 7 Bankruptcy in Florida: 6 things to know
Are you unable to repay your debts? Do you have creditors calling you at all hours and sending you threatening collection letters? Should I declare bankruptcy? Have you considered filing for bankruptcy in Florida to clear the debt? Not sure if you can afford the fees of a bankruptcy attorney in Florida?
The purpose of this article is to explain bankruptcy and bankruptcy resources to consumers throughout Florida. Our goal is to help you get out of debt and secure a better financial future for you and your family.
Florida Bankruptcy Guide
- Chapter 7 Bankruptcy in Florida
- Chapter 13 Florida Bankruptcy
- The Florida Means Test for Bankruptcy
- Florida Bankruptcy Exemptions
- Additional Florida Specific Bankruptcy Information
- Additional Bankruptcy Considerations
Chapter 7 Bankruptcy in Florida
A Florida Chapter 7 Bankruptcy is often referred to as a “simple” bankruptcy case. It is also called a “liquidation” bankruptcy case. You are not required to repay non-dischargeable debts. For example, medical bills, credit card debt and personal loans. However, most tax debts and student loans do not qualify for bankruptcy discharge.
In a Florida Chapter 7 bankruptcy, all of your assets are part of the bankruptcy estate. A Chapter 7 trustee reviews these assets to determine if he can sell the assets on behalf of your unsecured creditors. Most Chapter 7 cases filed in Florida are non-asset cases, meaning the debtor (the person who filed the case) keeps all of their assets. Typically, non-asset Chapter 7 cases filed in Florida are completed within four to six months of filing.
Chapter 13 Florida Bankruptcy
A Chapter 13 Bankruptcy Florida is considered a “worker” bankruptcy because the debtor pays off some of their debts through a Chapter 13 repayment plan. The bankruptcy repayment plan reorganizes the person’s debts into a manageable and affordable plan. Most Florida Chapter 13 plans are three to five year plans.
A Chapter 13 case has some advantages that Chapter 7 does not, such as:
- Save your home from foreclosure by spreading overdue mortgage payments;
- Allowing you to reduce your car payments and possibly reduce the amount you owe on a car title loan;
- give you more time to repay your taxes;
- Spread alimony and child support; and,
- Protect assets that have non-exempt equity from being sold at a bankruptcy auction.
You might want to watch Chapter 13 tips and tricks if you are considering this option as there are definitely pros and cons.
The Florida Means Test for Bankruptcy
Not everyone can qualify for Chapter 7 bankruptcy in Florida. So you can check the Chapter 7 Bankruptcy Qualifications in Florida to estimate if you may qualify.
Chapter 7 bankruptcy in Florida is designed to help people who cannot afford to pay off their debts. For this reason, there are income limits for receiving a Chapter 7 bankruptcy discharge. A bankruptcy discharge is a court order that waives your legal responsibility to repay a debt. If you do not meet Florida’s income requirements for Chapter 7, you cannot receive a Chapter 7 discharge.
The means test is the bankruptcy form used to determine if you meet the income requirements for a Florida Chapter 7 bankruptcy. Ascend has an in-depth blog on the Florida Bankruptcy Resources Test for Chapter 7. However, the numbers used to calculate the resources test change. Check the UST website for current numbers. The means test data from May 15, 2022 can be viewed on the US Trustee’s website.
Florida Means Test Calculator
The bankruptcy means test calculates your average monthly income based on the income you received in the six months before you filed for bankruptcy. This figure is multiplied by 12 to arrive at your median annual income.
If your annual median income exceeds the median income of a household of your size in Florida, you “fail” the means test.
However, there is a second part of the test. The second part allows you to deduct involuntary deductions (i.e. income taxes) and allowable living expenses from your gross income. As a result, it increases your disposable income, which can be used to pay off debts. To clarify, if your disposable income is less than a specific amount, you may still qualify for a Florida Chapter 7 bankruptcy filing. If not, you may need to consider filing for Chapter 13 bankruptcy. If you know for a fact that you do not qualify for a Chapter 7 bankruptcy, you can use the Chapter 7 calculator. 13 to estimate your monthly payment. You can do this to see if a Chapter 13 is affordable or if another debt relief option would be better for you.
Florida Bankruptcy Exemptions
Florida Bankruptcy Exemptions play a very important role in a bankruptcy case. Bankruptcy exemptions protect the equity you hold in certain assets. Therefore, it is important to carefully analyze the available Florida government bankruptcy exemptions before filing for bankruptcy in Florida.
Florida does not allow debtors to use federal bankruptcy exemptions. If you resided in Florida for two years before filing for bankruptcy, you must use state bankruptcy exemptions. If you haven’t lived in Florida for at least two years, there is a formula that determines whether you can use federal bankruptcy exemptions or must use state exemptions based on your previous residency.
Florida residents enjoy one of the most generous homestead bankruptcy exemptions. A debtor eligible for Florida bankruptcy exemptions can claim an unlimited exemption on a home, provided the person owned the property for at least 1,215 days before filing for bankruptcy in Florida.
Additional Information on Florida Bankruptcy Exemptions
Florida bankruptcy exemptions for personal property are not as generous as the homestead exemption. However, there is a wild card exemption that can help in some cases. Also, most retirement accounts and government benefits are fully exempt in bankruptcy in Florida.
Bankruptcy exemption planning is crucial if you have non-exempt equity in an asset. If you file under Chapter 7, the Chapter 7 trustee can liquidate the assets and use the funds to pay your unsecured debts. You may be able to save the property in Chapter 7 by paying the trustee an amount at or near the net equity. This may or may not be possible or even advisable, depending on your overall financial situation.
However, if you file under Chapter 13, you can keep the property by paying the Chapter 13 trustee a little more each month. You are required to pay an amount equal to the amount your unsecured creditors would have received had you filed. a Florida Chapter 7 bankruptcy.
For individuals with significant assets, we recommend seeking the advice of an experienced bankruptcy attorney before filing for bankruptcy.
Additional Florida Specific Bankruptcy Information
You may want to know additional information about filing for bankruptcy in Florida, such as who the trustees are and how Florida bankruptcy districts are broken down.
The curator is part of the US Trustee Program which serves as a “watchdog on the bankruptcy process” as defined by the US Justice website. The goal of the program is to promote the efficiency and integrity of bankruptcy for the benefit of all different stakeholders, including the public, debtors and creditors.
Florida Bankruptcy Districts
Florida has three bankruptcy districts: the Northern District, the Intermediate District, and the Southern District. Many districts have multiple courts, so you may want to consider visiting your district’s court website.
Not sure exactly where you would end up because you might be on the two district line. See this helpful map of the Bankruptcy District below, courtesy of Florida Bankruptcy Government.
Additional Bankruptcy Considerations
Before filing for receivership in Florida, you may want to consider all of the options for getting out of debt. Debt settlement, debt management, and debt consolidation are just three bankruptcy-free options to explore. Some things to consider before declaring bankruptcy include:
- Can I negotiate with my creditors to resolve my debts without bankruptcy?
- Will I lose property if I file a Chapter 7 complaint?
- What will my Chapter 13 plan payout be if I file?
- How much does bankruptcy cost in Florida?
- Am I facing repossession, garnishment or wage garnishment?
- Has a creditor taken legal action to recover a debt, such as bringing a debt collection action?
- Do I have debts that cannot be discharged in the event of bankruptcy, such as student loans or tax debts?
- What are debt relief companies? For example, should you consider Accredited Debt Relief Reviews Where Credit Associates Reviews?
- Am I facing a contempt action in family court for unpaid alimony or child support?
Should You File for Chapter 7 Bankruptcy in Florida?
Filing for Chapter 7 bankruptcy in Florida is a big decision. That said, understanding the costs and qualification along with the pros and cons can help inform your decision. You can also observe alternatives to Chapter 7 bankruptcy and some key considerations.