Bankruptcy Attorney in Spring Hill, FL
As a bankruptcy attorney in Spring Hill, FL, our attorney has seen how stressful, scary, and overwhelming the bankruptcy process can be for most individuals. Often, the first questions that run through someone’s mind are, “Can I keep my car or house? Or what type of bankruptcy is best for me? Do I need an attorney?” The fact is, the bankruptcy process can be complicated and confusing, which is why choosing the right attorney to represent you and explain how the process works is such a critical part of making sure your bankruptcy goes through the legal system without an issue.
How Common Are Bankruptcies?
Many people often feel ashamed or embarrassed that they are filing bankruptcy or considering filing for bankruptcy. These laws were enacted for the purpose of allowing individuals who have experienced financial hardship to seek a fresh start, so you should not be bashful about exercising those rights. In fact, in 2010, at the peak of the bankruptcy filings from the 2008 financial crisis, about 1.6 million American’s filed for bankruptcy according to the Administrative Office for U.S. Courts, and though this number has gone down considerably, the Administrative Office for U.S. Courts still reported a total of 772,646 annual bankruptcy filings for the fiscal year ending in March of 2019. So, it's important for you to understand throughout the process that you are not alone, and the bankruptcy attorney at the Peck Law Firm is here to help you get through this difficult time. As such, there are a few things that every person considering bankruptcy should keep in mind the most important of which is what type of bankruptcy you want to file.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is by far the most common type of bankruptcy, and it is the most appealing type of bankruptcy, because if successful, it allows a debtor, i.e. the person filing for bankruptcy, to liquidate their estate, disburse and distribute the proceeds from their estate among their creditors, and discharge their debts after completing the process, essentially allowing a debtor to start with a new slate from a financial perspective. The process for starting a Chapter 7 bankruptcy is fairly straightforward, but it is what happens throughout the process that can be complicated. For starters, your bankruptcy attorney will start the process by filing the following documents:
- A petition for filing for bankruptcy
- A statement of financial affairs; and
- A schedule of assets (property you own) and liabilities (debts you owe)
The filing of the petition will normally result in a stay or a halt to any other judicial actions that your creditors may have initiated against you. Moreover, a trustee will usually be appointed to manage the liquidation of your estate. The liquidation process consists of selling your property and assets and using those funds to pay creditors, but there are certain types of property that are exempt from the process, which means that you can keep the exempt property. However, even if you can keep exempt property, you may still be required to continue paying any liens or loans you have on the exempt property. For example, a homestead exemption allows you to keep your home, but the home will still be subject to your existing mortgage.
What is an exemption in a Bankruptcy case in Florida?
An exemption is a type of protection given to a debtor, by either state or federal law, that shields certain property the debtor owns from creditors. The homestead exemption is by far the most common exemption claimed by individuals filing for bankruptcy, but it can also be the most confusing due to the interplay between federal bankruptcy law and Florida’s bankruptcy laws. The federal bankruptcy code gives states the ability to “opt out” of the federal exemptions contained in the Bankruptcy Code and enact their own exemptions that apply to residents filing for bankruptcy in their state.
Florida is one state that has opted out of the federal exemptions and enacted their own exemptions under title 15, chapter 222 of the Florida Statutes, which, in many ways, provides you with much more protection than what you would otherwise be entitled to under federal law. For example, if a person does not qualify for one of the state exemptions in Florida, they can still utilize a federal exemption pursuant to 11 U.S.C. § 522(d). Instead, most debtors will want to use Florida’s homestead exemption, because it provides most homeowners who have owned their home for 1,215 days before their petition for bankruptcy was filed with very broad protection. If you qualify for the exemption, it allows you to keep your home entirely, because unlike the homestead exemption under federal law, there is no cap on the value that you can retain.
Understand that there are several cases issued by the Florida Supreme Court that articulate how courts should determine whether a person’s home qualifies under the homestead exemption, but this normally becomes relevant when you are an individual who owns multiple homes or homes in more than one state. For the average homeowner with one home, the homestead exemption is usually available.
What is the Chapter 7 Bankruptcy Means Test?
The “means test,” as codified in 11 U.S.C. § 707(b)(2), is a method of determining whether certain individuals filing for bankruptcy are eligible to file under chapter 7. The test itself is fairly complex, but it only applies to certain filers. Whether or not you have to pass the means test depends on a couple of things, the nature of your debts and your median income. Individuals with a median income below the average median income for the same type of individual in your state are not required to satisfy the means test pursuant to 11 U.S.C. § 707(b)(7)(A). Moreover, the means test is imposed on debtors with primarily “consumer” debts, which is defined by 11 U.S.C. § 101(8) as a debt “incurred by an individual primarily for a personal, family, or household purpose.” Thus, individuals with primarily business related debts may not be subject to the means test, but the complexity of the test demonstrates why hiring a bankruptcy attorney to represent and guide you through the bankruptcy process is so important.
Chapter 7 Bankruptcy vs. 13 Bankruptcy
One of the most common questions that most people have regarding bankruptcy proceedings is “what is the difference between the various types of bankruptcies?” The answer really boils down to what your obligations will be after finishing the bankruptcy process. Under a Chapter 7 bankruptcy, you will be required to turn over or relinquish all of your nonexempt assets to a court-appointed trustee. These assets will then be sold and the funds will be disbursed to your creditors, but you will not be obligated to pay the majority of your creditors any money once the bankruptcy reaches a conclusion.
A Chapter 13 bankruptcy is different from a Chapter 7 bankruptcy in that a Chapter 13 bankruptcy is concluded by the creation of a repayment plan that must be approved by the court and that will require you to repay your creditors with that portion of the debt that your disposable allows. A Chapter 13 bankruptcy is only available to individual debtors, not businesses, and it is an alternative to individuals who fail the means test. However, the downside to a Chapter 13 bankruptcy as compared to a Chapter 7 bankruptcy becomes readily apparent when an individual’s bankruptcy is considered a “no asset” case.
What is a No Asset Bankruptcy?
For many American’s, an individual’s home is their primary financial asset, and Florida law provides for a number of different exemptions regarding things like life insurance, retirement accounts, etc. So, what can happen is you may have to declare bankruptcy, but all of your assets are exempt. This results in a “no asset” case. If an individual successfully files a Chapter 7 bankruptcy in this scenario, there will be no assets to transfer in order to pay your creditors, and your debts will be eliminated by the bankruptcy. If you file a Chapter 13 bankruptcy, however, you will be required to repay your creditors pursuant to a court-approved repayment plan. Thus, the type of bankruptcy you file can have a substantial impact on what you will be required to pay in the future.
Bankruptcy Attorney in Spring Hill
At the end of the day, bankruptcy attorneys act as financial advisors that assist their clients with evaluating their legal options, exploring possible alternatives other than bankruptcy, and determining the most appropriate course of action for your unique situation, but this process always begins with you calling our office and scheduling a free, confidential consultation. There is no doubt that filing for bankruptcy is a complicated process that requires legal expertise, but the good news is that you don’t have to go through this process by yourself. At the Peck Law Firm, P.A. our bankruptcy attorney has been helping individuals like you obtain a fresh financial start for over a decade, and he stands ready to start working on your case today. So, if you are considering filing for bankruptcy, give our office a call today to schedule a consultation.
