In Florida as elsewhere, federal bankruptcy law ultimately governs the matter through the Bankruptcy Code contained under Title 11 of the United States Code. Federal law provides for the various remedies. For consumers, the choice is basically between filing a Chapter 7 bankruptcy or a Chapter 13. One area where Florida law applies is in the providing of specified exemptions that allow the bankruptcy filer to keep assets under the stated maximum allowance.
A twist of Florida exemption law is that it provides a homestead exemption whose value is unlimited, making it reasonable to expect that homeowners filing a bankruptcy in Florida will have a reasonable chance of keeping their home. However, the Florida exemptions are somewhat complicated and contain qualifications and exceptions. It is highly recommended that one consult with an experienced consumer bankruptcy attorney prior to making any presumptions about options or strategy. One important preliminary issue to discuss with the bankruptcy attorney is whether to file a Chapter 13 or a Chapter 7.
Chapter 7 has the advantage of providing a nearly absolute assurance that one’s unsecured debt, including credit cards and medical bills, will be forever erased and that a final discharge order will usually be granted within about three to four months after filing. Chapter 13, on the other hand, is an extended payment plan in which some debts will be partly or totally paid to the Chapter 13 trustee on a monthly basis. The court-approved plan usually goes from a minimum of 36 months to a maximum of 60 months.
Chapter 13 offers more room for flexible treatment of some debts. It also provides consumers with a way of keeping their house even though it may have fallen into default. Even with the generous Florida homestead exemption, a Chapter 13 may be necessary to obtain a payment plan to pay off the mortgage arrears and compel the lender to reinstate the loan in good standing after successful completion of the bankruptcy. Consumer bankruptcy attorneys usually offer a free initial consultation to learn one’s qualifications, whether a Chapter 13 or Chapter 7 bankruptcy is preferable, and options for obtaining the powerful governmental relief established in the federal bankruptcy laws.
Source: wallstreetmojo.com, “Chapter 7 vs Chapter 13 Bankruptcy“, Roshan Waingankar, May 21, 2018