Florida residents often find themselves having financial difficulties to the point that they are unable to meet their obligations. It is then that the prospect of filing for bankruptcy might be a viable debt relief option. There are two main types of bankruptcy that consumers file — Chapter 7 and Chapter 13.
A Chapter 7 bankruptcy is called a liquidation bankruptcy because any assets that do not fall within an exemption allowed by either the state of Florida or the U.S. Bankruptcy Code will be liquidated. In most cases, the majority of an individual’s assets will fall under an exception. However, for those who have a second home, a second car or other assets that do not fall within an exemption, the trustee could take those assets and sell them in order to pay creditors. Of course, before a person can file under this chapter, he or she will have to meet certain financial requirements.
A Chapter 13 bankruptcy is categorized as a reorganization since a payment plan is drawn up and approved by the court to pay off debts within three to five years. Before a plan is approved, creditors and the trustee have the opportunity to object to it. There are certain income and debt requirements that potential filers must meet in order to file under this chapter as well.
Regardless of whether a Florida resident files Chapter 7 or Chapter 13, there will be numerous deadlines to meet and documents to file. This debt relief process can be complex, which is why people are advised not to file on their own. When the process is properly completed, the filer will be able to walk away with a fresh financial start.
Source: twocents.lifehacker.com, “What Really Happens When You File for Bankruptcy“, Kristin Wong, June 14, 2016