I previously wrote about Chapter 7 bankruptcies as an option for Floridians. In that post, I mention that for individuals there is another bankruptcy option. That option is a Chapter 13 bankruptcy. The following offers general information regarding Chapter 13 bankruptcy and when it is a good option for Floridians.
Make Too Much Money
You may not be able to qualify for a Chapter 7 if you make too much money. For a Chapter 7, you must pass the means test. If your income is too high or you have assets with equity that may be subject to sale by a chapter 7 trustee, you may need to file a Chapter 13 instead. This allows your creditors to recoup part or all of their losses over time. The benefit of a Chapter 13 is that you will get a reasonable and realistic timeline to repay your debts.
Smaller Attorney Fees in the Beginning
You usually have to pay attorney fees upfront with a Chapter 7 filing since they count as dischargeable debt. In other words, in a Chapter 7, you cannot add more unsecured debt to be paid in the future. If you file under 13, you could arrange to pay only a portion of your bankruptcy attorneys’ fees. Then, include the rest of it in your payment plan.
Payment Plans
Debtors essentially get more time to pay their debts under Chapter 13. For those needing more time to pay back a car loan or to catch up on late mortgage payments, Chapter 13’s debt reorganization nature is very helpful. Through a debt repayment plan, you can pay your arrears in installments. You send your monthly payments to your bankruptcy trustee, who then distributes them to your creditors.
Discharge Certain Debt Unavailable Under Chapter 7
Chapter 13 has a long list of dischargeable debts, many of them considered non-dischargeable under Chapter 7. There are different types of debt on this list. For instance, government fines and penalties, or if you owe the government certain taxes, may be dischargeable under Chapter 13.
Repossession, Foreclosure, or Wage garnishment
An automatic stay takes effect when you file bankruptcy. This means that during bankruptcy proceedings, your creditors must stop all debt collection efforts. This included any attempt to repossess your vehicle, foreclose on your home, or garnish your wages. Since the Chapter 13 bankruptcy process could last up to five years, you can put your affairs in order during this time.
Keep your Property
Chapter 13 filings are often done with the intention of holding on to a property that may otherwise be given up if bankruptcy is filed under Chapter 7. In Florida, allows for certain property exemptions. Depending on your situation, Chapter 13 may protect ownership of your property. We would have to discuss your particular situation in this case.
This blog is general information to show that Chapter 13 is another option for Floridians. It is my job to discuss all the options available to you and which would be your best path forward. Give me a call and let’s figure out how to help you.
