Filing for personal or business bankruptcy can be more beneficial than it might seem at first glance. It can provide you with an opportunity to get your finances in order and start fresh. After all, paying your debts while covering your expenses can be challenging if they far exceed your monthly income. Determining how to afford everything without falling farther behind on payments can be overwhelming.
The experienced Orlando bankruptcy attorneys at Florida Law Advisers, P.A., can help you make the best financial decisions so you can move forward with your life. We can review your situation and advise you on rebuilding your financial standing. Call us for a free consultation with an experienced Orlando bankruptcy attorney to learn more.
How Do I Declare Bankruptcy?
You must complete multiple steps to declare bankruptcy in Florida.
Before initiating the bankruptcy process, gathering relevant documentation and information is essential. You should be prepared with the following information:
- A list of your creditors, the nature of the debt, the amount owed to each, and their mailing addresses
- Income information, including your salary or pay rate, which can be found on your tax returns or paycheck stubs
- A list of all the property you own, including real estate and valuable personal items
- A detailed list of your reasonable and necessary monthly living expenses, such as your mortgage, utility costs, groceries, car payments, medications, and so on
You might find that referring to the following documents while completing the bankruptcy forms is helpful:
- Creditor statements and bills
- Bank statements from the last six to 12 months
- Collection agency and third-party debt collector letters
- Your credit report
Complete a Credit Counseling Course
You must take a credit counseling course before filing for bankruptcy in Florida. The following requirements apply to a credit counseling course:
- You must pay a fee unless you can get it waived by submitting a specific request
- You must complete the course within 180 days before filing for bankruptcy
- The course must be with an approved credit counseling provider
- The certificate of completion must be filed with the necessary bankruptcy forms
Pass the Means Test
You must take the Chapter 7 means test to determine whether you are eligible for Chapter 7 bankruptcy. Generally, your average monthly household income must be less than the median income for similar households as determined by the U.S. Census to qualify for Chapter 7 bankruptcy. However, there may be exceptions, so it’s essential to speak to an Orlando bankruptcy lawyer who can ensure that you calculate your income correctly. Your eligibility for Chapter 7 is less likely the higher your disposable income is. If you don’t qualify for Chapter 7, consider filing for Chapter 13 instead.
Complete and File the Bankruptcy Forms
If you pass the means test, you can fill out the necessary forms and file them with the court. The court will assign a Chapter 7 trustee to your case. The trustee will verify your provided information and manage the rest of the bankruptcy process. You will likely need to provide your trustee with various financial documents, such as your tax returns and bank statements.
Take Another Course
You must take a debtor education course after filing for Chapter 7 bankruptcy. There, you will learn skills to manage your finances, such as budgeting. You must complete the course and submit your certificate of completion to the court before your debt is discharged.
Pros and Cons of Filing for Bankruptcy
You should carefully consider whether filing for bankruptcy is right for you. Although there are multiple benefits, some drawbacks might deter you from proceeding.
The potential advantages of filing for bankruptcy include the following:
- You might keep some assets if you file for Chapter 13.
- Creditors can’t contact you or pursue collections actions.
- Your credit score may increase after discharging your debt.
- A trustee handles your case for you.
- You could pay less than what you owe.
- Bankruptcy alleviates your responsibility over most unsecured consumer debt.
The possible disadvantages of filing for bankruptcy include the following:
- Discharging all debt is not possible, such as taxes, court orders, and alimony.
- Your trustee might have to sell your assets to repay the creditors.
- People you know might discover your case because the information is public.
- Bankruptcy can remain on your credit report for as long as 10 years.
- You can face legal action if you provide false or inconsistent information when you file.
- Your credit score could plummet depending on what it is before filing.
- Bankruptcy requires upfront payment of service fees and other expenses.
What is Chapter 7 Bankruptcy and What Does It Cover
When you file for Chapter 7 bankruptcy, your assets are liquidated to pay your creditors, and the court issues a bankruptcy discharge to sever any contract between you and a creditor. You are no longer obligated to pay discharged debts, and the creditor can’t pursue action against you.
Chapter 7 bankruptcy will discharge most debt, including:
- Business debts
- Medical bills
- Most attorneys’ fees
- Personal loans
- Most civil court judgments
- Credit card balances, including overdue and late fees
- Overpayments to government programs, such as Social Security and welfare
- Past-due rent
- Collection agency accounts
- Unpaid taxes and penalties
- Past-due utility bills
- Most auto accident claims
Will Bankruptcy Proceedings Stop Foreclosure?
When you file for bankruptcy in Florida, the court will order an automatic stay that prevents creditors from continuing collection efforts, which includes the mortgage holder. However, the automatic stay does not apply in some situations, so speaking with an experienced Orlando bankruptcy attorney is crucial to ensure that bankruptcy proceedings will stop foreclosure in your case.
How Many Times Can You File for Bankruptcy?
You can file for bankruptcy as many times as you want. However, you typically must go through a waiting period before filing a new case. The waiting period depends on the type of bankruptcy you previously filed and the type you want to file afterward.
- You must wait eight years to file a new Chapter 7 bankruptcy case if you previously filed for Chapter 7
- You must wait two years to refile for Chapter 13 bankruptcy if you previously filed for Chapter 13
- You must wait six years to file for Chapter 7 after having previously filed for Chapter 13
- You must wait four years to file for Chapter 13 after previously filing for Chapter 7
How Long Does Bankruptcy Take in Florida?
The duration of your bankruptcy case will depend on the type you file. The process of filing and going through Chapter 7 bankruptcy can take up to a year. When you file for Chapter 13, the process typically takes three to five years, depending on your repayment plan.
How Long Does Bankruptcy Stay on My Credit Report?
You can expect Chapter 13 bankruptcy to stay on your credit report for seven years. Chapter 7 bankruptcy should come off your credit report after 10 years.
Can You Rent After Bankruptcy?
Because bankruptcy remains on a person’s credit report for seven to 10 years, renting an apartment or house can be challenging because a potential landlord can see the bankruptcy during a background check. However, bankruptcy does not automatically bar a person from renting a home or apartment. An Orlando bankruptcy lawyer can give you some strategies for improving your chances of renting after bankruptcy.
Can Student Loans Be Included in Bankruptcy?
Federal student loans can be discharged in bankruptcy only if you file a separate action (called an adversary proceeding) and demonstrate to the bankruptcy court that repaying your loans would cause undue hardship.
How Our Orlando Lawyers Help with Bankruptcy
An Orlando bankruptcy lawyer from Florida Law Advisers, P.A., can assist you with multiple parts of your case, including:
- Determining your eligibility for bankruptcy
- Advising you of your options and whether you should consider filing Chapter 7 or Chapter 13
- Explaining the difference between discharged debt and debt you still owe
- Protecting your legal rights
- Communicating with your creditors
- Helping you find a way to keep the assets you don’t want to liquidate
What is Chapter 13 Bankruptcy and What Does It Cover?
Chapter 13 bankruptcy is often more desirable to debtors because it doesn’t require them to liquidate their assets to repay their debts. Instead, they can pay their debts in installments over three to five years. It often allows debtors to save their homes from foreclosure.
Chapter 13 typically discharges unsecured debts, such as:
- Credit card balances
- Medical bills
- Unsecured personal loans
- Some obligations under leases and contracts
Chapter 13 does not discharge the following secured debts:
- Alimony and child support payments
- Federal student loans