An overview of Chapter 13 bankruptcy cases in Florida

Filing for Chapter 13 bankruptcy may allow people to repay all or a portion of their debts, and receive a discharge for certain remaining liabilities.

Despite having regular income, some people in Florida and elsewhere may still face serious financial challenges. These may result from changes in their jobs or incomes, their spending habits, unfairly structured loans or any other number of factors. In an effort to regain control of their finances, many consider debt relief options, such as filing for Chapter 13 bankruptcy. Understanding what the process entails may help those dealing with overwhelming debt to determine if it is the right option for their situations and needs.

Eligibility requirements

While the eligibility requirements may not be as stringent as those of other bankruptcy filing options, not everyone who is dealing with overwhelming debt may file for Chapter 13 protection. In order to qualify, individuals or married couples cannot have secured debts in excess of $1,184,200 or unsecured debts totaling more than $394,725. Further, they must have completed a credit counseling course through an approved agency within the six months prior to their filings. Having had a prior case dismissed within the last 180 days for failing to appear or comply with court orders, or voluntarily dismissing a previous case after creditors sought to recover property on which they held liens may render people ineligible to petition for Chapter 13 bankruptcy.

The repayment plan

Unlike Chapter 7 filings, which require people to liquidate their assets to pay off their debts, the crux of Chapter 13 petitions is the repayment plan. With their filings or within 14 days, those seeking bankruptcy protection must submit a proposed repayment plan. Either biweekly or monthly, the plans should specify installments to be made toward repaying the filer's debts. Over a three-year or five-year period, Chapter 13 filers must apply all their disposable income toward paying back their priority claims in their entirety, as well as all or a portion of their secured debts.

The meeting of the creditors

After people file bankruptcy petitions, a notice is sent to all their listed creditors. The bankruptcy trustee will hold a meeting of the creditors, during which the filer may be questioned by the trustee and any creditors who are in attendance. The parties will attempt to resolve any issues with the proposed repayment plan at that time. After the meeting of the creditors, the plan is forwarded to the court for approval.

Discharging debts

Once they have completed all the installments as specified in their repayment plans, people who file for Chapter 13 bankruptcy may be relieved of their liability for certain remaining debts. These may include nonpriority unsecured debts such as credit card balances, medical bills, personal loans, certain court judgments and some tax obligations. The Chapter 13 discharge may not, however, apply to other debts, including alimony or child support, educational loans, mortgages, or judgments resulting from criminal fines or penalties resulting from personal injury or wrongful death cases involving drunk or drugged driving.

Navigating the ins and outs of bankruptcy filings may be challenging for people in Florida and other localities. Missing deadlines, incorrectly completing forms and not having the correct documentation, among other factors, may result in their cases being dismissed. Therefore, it may be helpful for those considering filing for bankruptcy protection to obtain legal representation. An attorney may guide them through the process and help ensure they meet all the necessary filing and compliance requirements.

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