Are you unable to repay your debts? Do you have creditors calling you at all hours and sending threatening collection letters? Should you file bankruptcy? Have you thought about filing a Florida bankruptcy case to erase debt? Are you unsure whether you can afford Florida bankruptcy attorney fees?
The purpose of this article is to explain bankruptcy and bankruptcy resources to consumers throughout Florida. Our goal is to help you find a way out of debt and secure a better financial future for yourself and your family.
Florida bankruptcy Guide
- Chapter 7 Bankruptcy in Florida
- Chapter 13 Bankruptcy in Florida
- The Florida Means Test for Bankruptcy
- Florida Bankruptcy Exemptions
- Additional Florida Specific Bankruptcy Information
- Additional Bankruptcy Considerations
Chapter 7 Bankruptcy in Florida
A Chapter 7 bankruptcy Florida is often referred to as a “straight” bankruptcy case. It is also referred to as a “liquidation” bankruptcy case. You are not required to repay non-dischargeable debts. For example, medical bills, credit card debt, and personal loans. However, most tax debts and student loans are not eligible for a bankruptcy discharge.
In a Florida Chapter 7 bankruptcy, all your assets become a part of the bankruptcy estate. A Chapter 7 trustee reviews those assets to determine if he can sell the assets on behalf of your unsecured creditors. Most Chapter 7 cases filed in Florida are no-asset cases, meaning that the debtor (the person who filed the case) keeps all of his or her property. Generally, no-asset Chapter 7 cases filed in Florida are completed within four to six months after filing.
Chapter 13 Bankruptcy in Florida
A Chapter 13 bankruptcy Florida is considered a “wage earner” bankruptcy because the debtor repays some of his or her debts through a Chapter 13 repayment plan. The bankruptcy repayment plan reorganizes the person’s debts into a manageable, affordable plan. Most Florida Chapter 13 plans are three to five-year plans.
A Chapter 13 case has some benefits that Chapter 7 does not offer, such as:
- Saving your home from foreclosure by spreading out past due mortgage payments;
- Allowing you to lower your car payments and possibly lower the amount you owe on a car title loan;
- Giving you more time to pay back taxes;
- Spreading out back alimony and child support payments; and,
- Protecting property that has non-exempt equity from being sold at a bankruptcy auction.
You may want to look at Chapter 13 tips and tricks if you are considering this option as there are definitely pros and cons.
The Florida Means Test for Bankruptcy
Not everyone can qualify for Chapter 7 bankruptcy in Florida. As such, you can check the Chapter 7 bankruptcy Florida qualifications to estimate whether you can qualify.
Chapter 7 bankruptcy in Florida is designed to help individuals who cannot afford to repay their debts. For that reason, there are income limitations for receiving a bankruptcy discharge under Chapter 7. A bankruptcy discharge is a court order that waives your legal liability to repay a debt. If you do not meet the Florida income requirements for Chapter 7, you cannot receive a discharge under Chapter 7.
The Means Test is the bankruptcy form used to determine if you meet the income requirements for a Florida Chapter 7 bankruptcy. Ascend has a detailed blog about the Florida bankruptcy means test for Chapter 7. However, the figures used to calculate the Means Test change. Check the UST website for current figures. The means test data from May 15, 2022 onward can be found on the US Trustee’s website.
Florida Means Test Calculator
The bankruptcy means test calculates your average monthly income based on the income you received during the six months before filing a bankruptcy petition. That figure is multiplied by 12 to arrive at your annual median income.
If your annual median income exceeds the median income for a household of your size in Florida, you “fail” the Means Test.
However, there is a second part of the test. The second part allows you to deduct involuntary withholdings (i.e. income taxes) and allowable living expenses from your gross income. As a result, this increases your disposable income, which can be used to repay debts. To clarify, if your disposable income is below a specific amount, you may still qualify for a Florida Chapter 7 bankruptcy case. If not, you may need to consider filing for bankruptcy under Chapter 13. If you know for a fact that you do not qualify for a Chapter 7 bankruptcy, you may want to use the Chapter 13 calculator to estimate your monthly plan payment. You can do this to see whether a Chapter 13 is affordable or whether another debt relief option would be better for you.
Florida Bankruptcy Exemptions
Florida bankruptcy exemptions play a very important role in a bankruptcy case. Bankruptcy exemptions protect the equity you own in certain assets. Therefore, it is important to carefully analyze the available Florida government bankruptcy exemptions before filing bankruptcy in Florida.
Florida does not allow debtors to use federal bankruptcy exemptions. If you have been a resident in Florida for two years before filing a bankruptcy petition, you must use the state’s bankruptcy exemptions. If you have not lived in Florida for at least two years, there is a formula that determines whether you may use federal bankruptcy exemptions or if you must use state exemptions based on your previous residence.
Florida residents enjoy one of the most generous bankruptcy exemptions for a homestead. A debtor that is eligible for Florida bankruptcy exemptions may claim an unlimited exemption on a home, provided the person owned the property for a minimum of 1,215 days before filing for bankruptcy in Florida.
Additional Information on Florida Bankruptcy Exemptions
Bankruptcy exemptions in Florida for personal property are not as generous as the homestead exemption. However, there is a wild card exemption that can help in some cases. Also, most retirement accounts and government benefits are fully exempt in bankruptcy cases in Florida.
Bankruptcy exemption planning is crucial if you have non-exempt equity in an asset. If you file under Chapter 7, the Chapter 7 trustee may liquidate the asset and use the funds to pay your unsecured debts. You may be able to save the property in Chapter 7 by paying the trustee an amount equal to or close to the net equity. That may or may not be possible or even advisable, depending on your overall financial situation.
However, if you file under Chapter 13, you may keep the property by paying a little more each month to the Chapter 13 trustee. You are required to pay an amount equal to the amount your unsecured creditors would have received if you filed a Florida Chapter 7 bankruptcy.
For individuals who have significant assets, we recommend seeking the advice of an experienced bankruptcy attorney before filing for bankruptcy.
Additional Florida Specific Bankruptcy Information
You may wish to know additional information about filing for bankruptcy in Florida, such as who the trustees are and how the Florida bankruptcy districts are broken out.
Florida Trustees
The trustee is part of the US Trustee Program who serves as the “watchdog over the bankruptcy process” as defined by US Justice’s website. The program’s goal is to promote the efficiency and integrity of the bankruptcy for the benefit of all the different stakeholders including the public, debtors and creditors.
There are numerous Florida Chapter 7 Bankruptcy Trustees and Florida Chapter 13 bankruptcy trustees that will help guide you through the process.
Florida Bankruptcy Districts
Florida has three bankruptcy districts: Northern District, Middle District and Southern District. Many districts have multiple courts, so you may consider visiting the court website for your district.
- Northern Bankruptcy District Website
- Middle Bankruptcy District Website
- Southern Bankruptcy District Website
Are you not sure where exactly you would end up because you may be on the line of two districts. See this helpful bankruptcy district map below courtesy of Florida Bankruptcy Government.
Additional Bankruptcy Considerations
Before filing for bankruptcy relief in Florida, you may wish to consider all options for getting out of debt. Debt settlement, debt management and debt consolidation are just three non-bankruptcy options to explore. Some things to consider before filing for bankruptcy include:
- Can I negotiate with my creditors to resolve my debts without bankruptcy?
- Will I lose any property if I file a Chapter 7 case?
- How much will my Chapter 13 plan payment be if I file?
- How much does it cost to file bankruptcy in Florida?
- Am I facing repossession, foreclosure, or wage garnishment?
- Has a creditor started legal action to collect a debt, such as filing a debt collection lawsuit?
- Do I have debts that are non-dischargeable in bankruptcy, such as student loans or tax debts?
- What are debt relief companies? For example, should you consider Accredited debt relief reviews or Credit Associates reviews?
- Am I facing a family court contempt action for unpaid alimony or child support?
Should You File Chapter 7 Bankruptcy in Florida?
Filing Chapter 7 bankruptcy in Florida is a big decision. That said, understanding the costs and qualification and pros and cons can help inform you about your decision. You can also observe alternatives to Chapter 7 bankruptcy and some key considerations.
