When people file consumer bankruptcy, many opt to eliminate their debts through a Chapter 7 case. You may have considered this option for the immediate financial relief it could provide. Yet, your income might prevent you from qualifying for it. Or, you might want to keep certain assets – like your home or vehicle – that you could lose through Chapter 7. You will likely feel wary of filing Chapter 13 bankruptcy, since many cases fail. But depending on your circumstances, it may make sense for you.
Consider your income
Filing Chapter 13 bankruptcy may make sense if your income is higher than Florida’s median. To qualify for Chapter 7 bankruptcy in the state, your income must fall below this figure. If it does not, you may still be able to file Chapter 7 if your monthly income passes a means test after subtracting expenses. But if you have the resources to repay your debts, trying to qualify for Chapter 7 may be a presumption of abuse. In this case, pursuing a Chapter 13 case will likely be your only option.
Consider your assets
Florida’s bankruptcy exemptions may allow you to keep your house, vehicle and other assets when filing Chapter 7 bankruptcy. Yet, you can only do so if your equity in them is low or if they fall beneath a certain value. Chapter 13 bankruptcy, though, allows you to keep your assets regardless. Even if your house is facing foreclosure or your car is facing repossession, they will receive protection through an automatic stay – which stops creditors’ collection efforts – for 30 days after you file bankruptcy. Afterward, you will keep them so long as you follow your repayment plan. The only way you would lose them, then, is if you do not adhere to this plan.
If you’re struggling with debt, filing Chapter 13 bankruptcy may be a sound option if your income is significant or if you have assets you want to protect. An attorney can help you understand if it makes sense in your situation.