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Chapters 7 & 13 Consumer Bankruptcy Law



Filing bankruptcy is an important legal right. A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial "fresh start" from burdensome debts. Although there are six basic types of bankruptcy cases provided for under the Bankruptcy Code, only two are commonly used by individuals. Those two types are Chapter 7 debt liquidation and Chapter 13 debt reorganization.
Commercial Law & Transactions Attorney
Chapters 7 & 13
Consumer Bankruptcy Law

The stress, anxiety and worry put upon you and your family by harassing creditors, past due notices, foreclosure actions and other situations brought upon by heavy debt can be handled. As soon as you go through the steps to file bankruptcy, your creditors will be legally required to immediately halt any collection activities. If you were threatened with foreclosure or have a pending foreclosure auction sale date, a bankruptcy filing will bring those foreclosure activities to a halt.

Chapter 7

If you have no conceivable way to pay off your debts within the next few years, you may be eligible to file a Chapter 7 bankruptcy. This type of bankruptcy is the most common type of bankruptcy filed by individuals. Chapter 7 bankruptcy may afford you the opportunity to discharge debts, bills and financial obligations, while allowing you to keep your exempt personal property. A Chapter 7 bankruptcy is designed to give families or individuals a fresh financial start without being burdened by old credit cards, bills and judgments.

A Chapter 7 liquidation proceeding is available to individuals, partnerships, and corporations. The debtor is allowed to keep exempt assets. For individuals filing bankruptcy in Florida, the exemptions are primarily determined by Florida law. They include the debtor's homestead, debtor's interest not to exceed $1,000.00 in a single motor vehicle, a debtor's interest in any professionally prescribed health aids, monies paid into the Prepaid Post-Secondary Education Expense Trust Fund, and $1,000.00 per individual for miscellaneous personal property. Certain other assets such as the cash surrender value of life insurance policies, annuity contracts, IRA's and pension plans may be exempt also. All non-exempt assets must be turned over to the Chapter 7 trustee for liquidation and distribution to creditors.

Some debts, including recent tax obligations, trust fund obligations, child support and alimony generally cannot be discharged. In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed.


Chapter 13


A Chapter 13 bankruptcy or "wage earner reorganization" is available only to individuals with regular income. It requires that the debtor file a plan providing for payment to creditors over a period of up to five years. The benefits of a Chapter 13 include the ability to reinstate a home mortgage that is in default, stop IRS collection efforts while payments are made, the ability to retain non-exempt real estate and personal assets.

WHAT TO EXPECT

The Gathering of Information

    In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules required, the debtor must collect and assemble the following information:

    1. A list of all creditors and the amounts and nature of their claims;
    2. The source, amount, and frequency of the debtor's income;
    3. A list of all of the debtor's property; and
    4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

    Certificate of Counseling

    Before you can file a bankruptcy case, you must participate in a credit counseling session from an approved agency and receive a Certificate of Counseling. This can be done in person, over the phone, or via the internet and should not take more than an hour to complete. This is a mandatory requirement, and your case will not be filed unless you receive your certificate. We will provide you with a list of approved agencies during your initial consultation. You must also complete a Financial Management Course prior to your discharge.


    Filing for Bankruptcy

    After one of our attorneys has reviewed your completed questionnaire, your case will be prepared for filing. The attorney will walk you through your entire petition and accompanying schedules in order to ensure accuracy and completeness. It is extremely important for this information to be accurate. Any false statements could result in the dismissal of your bankruptcy filing by the trustee and could possibly subject the debtor to criminal charges. Once you have approved the documents, your signature will be required in order to file the petition.


    The 341 Meeting with Creditors

    After your bankruptcy petition is filed, the trustee assigned to your case will schedule a 341 meeting of the creditors. This meeting is typically scheduled approximately 20-40 days after your bankruptcy petition is filed. Attendance is mandatory. Failure to attend could result in dismissal of your case. The trustee will notify you of your meeting time. This meeting is referred to as the 341 meeting (named after the bankruptcy code section that created it). Any objections to your bankruptcy must be raised and discussed at this meeting.


    Discharge

    If you have filed a Chapter 7 bankruptcy, your discharge will follow approximately 2 months after the 341 meeting assuming no creditors raise objections. Upon discharge, you will no longer owe the debts listed in your bankruptcy petition. If you are filing under Chapter 13, a judge must first authorize or approve your proposed Chapter 13 debt re-organization plan. Assuming the judge accepts your plan and you adhere to its schedule and requirements, any debt remaining after the term of the re-organization plan will be discharged.


    Why file for Chapter 13 Protection?

  • Save-a-Home You are behind on mortgage or auto payments and you want to want to keep those assets. A Chapter 13 will allow you to get current provided you complete the plan successfully.

  • Taxes If you have tax debts, sometimes they may be very difficult to discharge in a Chapter 7 case. A Chapter 13, however, will allow you to pay the taxes back over the life of the plan while protecting you from wage and bank account garnishments.

  • Time Barred If you have filed a Chapter 7 within the prior 8 years you cannot file another case until the 8 year period has expired. A Chapter 13 filing can protect you and your assets from the collection efforts of your creditors.

  • Student Loans While you can't discharge student loans or certain types of taxes in a Chapter 7 case, you can consolidate those debts in a Chapter 13 and put them into a manageable repayment plan.

  • Protect Co-Signors You may have co-signers on debts that you want to protect so your creditors do not attempt to recover from them. If you had a friend, spouse, ex-spouse, or relative co-sign for you on a debt your creditor would be paid through the Chapter 13 plan and the co-signer will be completely protected.

  • Disposable Income You may have too much income to qualify for a Chapter 7. A Chapter 13 can provide you with Bankruptcy protection if you cannot qualify for a Chapter 7 or, if you simply wish to repay the debt or at least a portion of the debt.

  • Please contact our offices for a free consultation regarding whether you may qualify for Bankruptcy Protection and whether you can benefit from Bankruptcy protection.