Bankruptcy laws in some form or fashion have been in place in the United States for over 200 years. Our Constitution even addresses the subject of bankruptcy, and Congress has passed the Bankruptcy Code. Florida and every other state has at least one judicial district established for bankruptcy. While the law details six basic types of bankruptcy, two types are more common for individuals in the midst of financial difficulties. These are Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Sometimes Florida residents experience catastrophic events that prevent them from being able to meet their financial obligations. That is usually when they file for either Chapter 7 or Chapter 13 bankruptcy. However, what happens if a tragedy strikes while an individual is already in a debt repayment plan?
Getting behind on bills can cause emotional and financial distress for any Florida resident. The situation can be made worse if your lender is threatening to take your home from you through a foreclosure action. If you qualify, Chapter 13 bankruptcy could help you keep your home.
Many Florida residents believe that their chances of getting a mortgage are close to zero when their financial situations require them to seek protection from a bankruptcy court. Fortunately, bankruptcy does not have the same stigma that it did in decades past. It might give them hope to know that it is possible to obtain a mortgage during or after a Chapter 13 bankruptcy, depending on the circumstances.
The media and debt relief advertisements make getting out of debt sound simple -- stop spending, work longer hours and sell stuff you do not need in order to pay down debt. Like numerous other Florida residents who are in financial distress, you might be at the point where this type of advice is too little too late. You might now be at the point where you are facing repossession of your car or another secured asset because you are behind on the payments. Filing for Chapter 13 bankruptcy could help stop repossession efforts and give you the time to get current on your payments.
When many Florida residents divorce, they have both senior and junior liens on the marital home for which both parties are legally responsible. If one ex-spouse files for Chapter 13 bankruptcy, he or she might wish to strip the junior lien as part of a debt repayment plan -- essentially treating it as an unsecured debt that will be given the same priority as any other unsecured debt. A bankruptcy court on the East Coast recently determined that making this proposal is allowed even when the other ex-spouse, who is not part of the bankruptcy, is still liable for the debt.
The simple answer to that question is that it depends on your circumstances. The primary reason that many Florida residents file for Chapter 13 bankruptcy (reorganization) over a Chapter 7 (liquidation) is that they want to retain as much of their property as possible that would not necessarily be considered exempt under a Chapter 7. It also might be possible to discharge debts that would not otherwise be eligible under the other chapter.
A Chapter 13 bankruptcy can last between three and five years. During that time, a Florida filer's financial circumstances can change dramatically. Therefore, procedures exist to modify a debt repayment plan after confirmation if the changes are significant.
Florida couples who are experiencing financial struggles often search for the debt relief option that will work best for them. For many, filing for bankruptcy will be the best option. Once that decision is made, the next hurdle is to determine whether Chapter 7 or Chapter 13 bankruptcy will provide the best outcome.
Florida residents with regular incomes and struggling with their finances have options. Filing for Chapter 13 bankruptcy could alleviate their financial woes while allowing them to retain their property. As part of the proceedings, the filer is required to propose a debt repayment plan for approval by the court.