Filing for Bankruptcy in Florida

In the United States bankruptcy is provided to allow individuals and business to remove debt or extend the payments of some or all debts to give the debtor time to pay.  Bankruptcy is mostly controlled by federal law with state laws only coming into play by specifying the bankruptcy exemptions allowed.  Florida has elected to use the states exemption list instead of the federal list.  Florida is stricter than most states.  

There are two basic categories of bankruptcy. One is a liquidation, which sells all assets over a certain amount, and the other is a reorganization, which provides structured payments over a period of several years.  

A Chapter 7 bankruptcy is a liquidation type bankruptcy.  Chapter 7 allows for the sale of all nonexempt property, which is not protected by the Federal Bankruptcy Code or state exemptions.  There is a maximum dollar value a person can keep.  Petitioners are allowed to keep all secured debts as long as payments can be made on the loans.  The collateral can be returned to the financial institution if you do not want to keep the debt.  For example, if you owe $2,000 on a vehicle but it is only worth $500 due to damage, you can surrender the vehicle to the financial institution and they cannot come back to you for the difference in the value of the vehicle and what you owe.  This can only be done during the bankruptcy.  If you surrender the vehicle after the bankruptcy is completed then the financial institution can and will go after you for the difference.  A Chapter 7 allows for petitioners to eliminate all of their unsecured debt such as credit cards and medical bills.   

A Chapter 13 bankruptcy is reorganization.  This allows debtors to catch up on past due payments by making monthly payments to the bankruptcy court.  Debtors with a regular steady income are required to make monthly installments over three to five years.  Many people who are about to lose their home to foreclosure file for Chapter 13 bankruptcy.  Once a bankruptcy is filed, the mortgage company and bank is not allowed to contact you or take your home.  All contact must go through your attorney and the bankruptcy court.  Once you are caught up and the bankruptcy ends, you will go back to paying the mortgage as normal.  Individuals and small business can file for Chapter 13 as long as the total unsecured debt is less than $360,475.00 and secured debts is less than $1,081,400.

In Florida, you must use the Florida state exemption list to learn which exemptions are applicable.  This includes your homestead exemption of $21,625, property up to $1,000 or property up to $4,000 for those with no homestead, motor vehicle up to $1,000, prescription health aids, tax credits and refunds, prepaid college, prepaid medical savings account deposits, funeral contracts, pensions, public benefits, alimony, child support, insurance, compensation for injuries,   If you are married filing jointly then you can double these exemptions.  

For example:  since the state exemption for a vehicle is $1,000 if you have a vehicle worth $5,000 the trustee will sell your vehicle and use the proceeds to pay off the loan and apply the remainder to paying other obligations.  If your vehicle is only worth $900 then you will be allowed to keep the vehicle.

To file for bankruptcy in Florida you must first compile a list of all your debts with company name, contact name, address, phone number, account number and amount owed.  All of this information will be used to file a petition for bankruptcy.  There are three districts where the petition for bankruptcy is filed in Florida:  Northern, Middle and Southern District. The petition is long and complicated so it is best to have an attorney complete the paperwork.  When filing bankruptcy, all candidates must complete mandatory credit counseling and debtor education course. Once the petition is filed you will attend a 341 or creditors hearing.  If everything is in order and no one is contesting the bankruptcy the trustee will approve it and you will attend the final bankruptcy hearing.  

There are some debts that are not dismissible in a bankruptcy.  Debts such as student loans, spousal and child support, most taxes, fines or penalties for violating the law, debts for personal injury or death caused by intoxicated driving and anything not listed in the bankruptcy papers.  

Bankruptcy is a complicated process. It is always best to consult a qualified bankruptcy attorney for advice.