People naturally do not like the feeling of being trapped, whether physically or financially. Hence, it is important for Florida consumers to be wary of taking on too much debt. However, despite good intentions, many people find themselves in difficult financial straits and in desperate need of debt relief.
One option to obtain relief from debt is through a Chapter 7 bankruptcy. However, many people are hesitant to take this route because they are afraid of losing some of their most cherished possessions. What many do not realize is that there are many ways consumers can avoid having many possessions being liquidated during a Chapter 7 proceeding. Understand the applicable laws can help in achieving the best outcome.
Bankruptcy laws have built-in protections for consumers, which allow them to take defined exemptions to protect certain assets from being liquidated. The homestead exemption provision in Florida allows petitioners to list equity in their homes as an exemption on their bankruptcy filings, as long as certain requirements are met. Other exemptions for assets are also specified. Filers may benefit by gaining an understanding of the applicable laws in order to fully understand the allowed exemptions.
Not everybody qualifies for a Chapter 7 bankruptcy. Some may earn too much money to qualify for this type of bankruptcy and, as a consequence, not be able to pass the means test required by the Bankruptcy Court. Luckily, the law also provides various other options for debt relief. It may be possible to file a Chapter 13 bankruptcy, which is designed to allow for restructuring debt through a court-approved plan in order to provide more manageable monthly payments.
Source: Investopedia, “File Chapter 7 Bankruptcy“, Daniel Kurt, Oct. 1, 2014