You may have reached a point where paying your bills seems insurmountable and you’ve decided to file for bankruptcy. There are certain assets, such as your home, that you’d like to retain, but you’re not sure if that’s possible.
Florida’s bankruptcy laws do allow exemptions; an exemption simply means that you can keep the asset in question. Before we get too far into the scope of allowances, however, we should take a look at the two types of bankruptcy you’re likely to consider.
How To File for Bankruptcy in Florida
Your first decision in preparing to file for bankruptcy is to determine whether Chapter 7 or Chapter 13 is the most sensible choice for your unique circumstances. There are some major differences between the two.
Chapter 7 Bankruptcy
In a Chapter 7, you liquidate your unsecured debts. You are no longer responsible for paying debts such as credit cards and medical bills – they’re wiped out. The state of Florida considers you eligible for a Chapter 7 if you have little or no income or assets. Your house may also be included in a Chapter 7; however, if you have negative or no equity built up, it could be exempt. In other words, you may not have to sell your house in a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
Conversely, Chapter 13 is a reorganization of your debts. That means that you don’t qualify for a Chapter 7 because you make too much money. You have the earning potential to repay at least a portion of your debts. The trustee will establish a repayment plan that allows you to get caught up on the debts you owe, such as a mortgage, auto loans, and credit cards.
It’s recommended that you discuss your options with a qualified bankruptcy attorney before you make a decision about filing. The experts at Florida Law Advisers, P.A. are available for a free initial consultation. Contact us at (844) 265-2165 to schedule an appointment.
Florida Bankruptcy Means Test
Congress enacted the Means Test in 2005 in order to determine a person’s eligibility for Chapter 7. It’s a two-part test that considers your expenses, income, and family size to establish how much disposable income you have available to repay your debts.
Determine whether your income for the most recent six months is lower than your state’s median income based on the household size matching your own. You automatically pass the test if your income is lower than the median.
If your income’s higher than your state’s median, you will need to continue to part 2 of the test to see if you may still qualify for Chapter 7 bankruptcy.
In the second step of the Means Test, you’re required to calculate your monthly disposable income. Disposable income is established by calculating your gross monthly income and then deducting allowable expenses. You then project your disposable income over the next five years. At this point, you must determine in which of the three income levels you qualify:
- If it is less than $8,175, you pass the Means Test.
- You may be eligible for Chapter 7 if your disposable income is between $8,175 and $13,650, and your “disposable income is less than 25% of your outstanding unsecured debt.”
- If your projected disposable income is greater than $13,650 over the next five years, you do not qualify for Chapter 7.
Consult a knowledgeable Tampa bankruptcy attorney to assist you with determining the best course of action for your unique situation.
Florida Homestead Exemption Statute
Florida does not allow the use of federal bankruptcy exemptions; the state uses its own exemption codes. The Florida Homestead Exemption Statute is one such vehicle for determining eligibility for retaining certain assets, such as your home.
According to Florida’s homestead exemption rules, there is not a restriction on how much of your home’s equity you can exempt. There are two property size distinctions, however. In order to qualify for the homestead exemption, your property must be no larger than ½ an acre if within city limits or 160 acres outside of a municipality
Contact an experienced bankruptcy attorney at Florida Law Advisers, P.A. for a more comprehensive analysis of your financial situation and Florida’s bankruptcy laws. We are available for a free initial consultation.
Bankruptcy and Foreclosure
If you are behind in your mortgage payments and the lender’s threatening you with foreclosure, it may be time to consider bankruptcy. By filing either a Chapter 7 or Chapter 13, you are automatically provided a stay from all creditor collection actions or garnishments until the case is resolved.
A qualified attorney can help you determine the best course of action. The experienced lawyers at Florida Law Advisers, P.A. in Tampa have successfully assisted many homeowners to lower their mortgage payments and prevent foreclosure through bankruptcy.
Each situation is unique, and while filing bankruptcy is one option, it may not be the best choice for you. Your attorney will evaluate your case and determine the best route to return you to financial health. Our attorneys may be able to challenge your lender’s right to foreclose on your home.
Choosing a Florida Bankruptcy Attorney
If you are researching Florida bankruptcy and exemptions, your financial situation may be at the point of needing immediate legal intervention. A delay in getting the assistance you need could cost you further unnecessary expenses and stress. The experts at Florida Law Advisers, P.A. are dedicated to helping each of our clients find a way to move forward and regain financial control.
We have years of experience in stopping wage garnishments, creditor collections and harassment, and foreclosures. Contact us 24/7 by calling (844) 771-4322 or send us an online message. A professional member of our team will advise you on what you should bring with you to your free initial consultation with one of our experienced bankruptcy attorneys. Contact us today to discover the options available to you.