If money troubles have you thinking about bankruptcy, you’re not alone. Recent statistics show that bankruptcy filings are on the rise. More and more people are turning to bankruptcy to get out of debt. While bankruptcy can be helpful, Floridians looking to file should know what lies ahead.

This article answers some common questions about Florida bankruptcy. But bankruptcy law can be complicated. After reading this article, you should speak to a Florida bankruptcy lawyer.

An Overview of Debt and Bankruptcy

There are two types of debt: secured and unsecured. A loan that requires collateral is a secured debt because if you stop paying, the lender can take back the collateral. Car loans and mortgages are examples of secured debt. Unsecured debts don’t require collateral. If you stop paying on unsecured debts like medical bills, student loans, or credit cards, the lender has nothing to take back.

The most common types of bankruptcies for individuals are Chapter 7 and Chapter 13. With Chapter 7, your property can be sold to pay off debts. Unfortunately, valuable items such as your house or car can be lost.

In a Chapter 13 bankruptcy, you’ll enter a reorganization plan where you’ll make monthly payments on your debts. Usually, you’ll be able to keep secured property like houses and cars. Your unsecured debts could also be significantly reduced in the process.

Does Bankruptcy Have Any Income Limits?

Yes. The law restricts Chapter 7 to people with lower incomes. To file a Chapter 7 bankruptcy, you must pass a “means test.” This test estimates your annual income and compares it to the median income for a Florida family of the same size. If your family’s income is lower, you’ll satisfy the means test. You can also pass the means test by proving that your income is far lower than your debts and necessary expenses.

Chapter 13 has no income requirements or limits, but it does have debt limits. As of 2023, a Chapter 13 filer’s secured and unsecured debts cannot exceed $2.75 million.

Do I Have To Do Anything Before I File?

Yes. You must take an approved credit counseling course at some point in the 180 days before you file. You can find one using this searchable list of approved credit counseling courses.

How Much Does a Florida Bankruptcy Cost?

The law sets different fees for different bankruptcies. At the time of this writing, the Chapter 7 fee is $338, and the cost for Chapter 13 is $313.

If the filing fee is an issue, the court can help. In either type of bankruptcy, you can ask the court to let you split the fee into four payments. Chapter 7 filers whose incomes fall under listed federal income limits can also ask the court for a fee waiver.

Where Do I File for Bankruptcy in Florida?

Every legal case must be filed in the proper court. Both Chapter 7 and Chapter 13 are part of the federal bankruptcy code. This means you’ll need to file bankruptcy in a federal court.

Florida’s federal courts are divided into three districts, each with several bankruptcy courts. You’ll need to find the court that takes cases from the area where you live. You can use the U.S. Courts’ Federal Court Finder tool to find the closest court. A bankruptcy lawyer can help you find the right court and ensure you meet residency requirements.

How Do I File for Bankruptcy?

Your bankruptcy proceeding begins with the “Voluntary Petition for Individuals Filing for Bankruptcy.” This form asks for your name, address, and Social Security number. It will also ask you which type of bankruptcy you are filing, whether you completed credit counseling, and other information.

You’ll have to file other forms about your income, assets, and other relevant parts of your financial situation along with the petition. The U.S. Courts’ website has a list of free bankruptcy forms. A bankruptcy attorney can tell you which forms should be filed in your case.

What Happens After I File Bankruptcy?

Here’s what happens in a typical Florida bankruptcy case.

• The bankruptcy judge will enter an automatic stay on the day you file your bankruptcy petition. The stay stops debt collection actions such as foreclosure, lawsuits, and repossession.
• The court will assign a bankruptcy trustee to your case when you file. The trustee will make essential recommendations and decisions about your case.
• 40 days after you file, the trustee holds a meeting of creditors. Your creditors can ask you questions about your finances at this meeting. With Chapter 13 filing, the focus will be on your proposed repayment plan. With Chapter 7, the trustee will let you know if any of your assets will be sold.

Of course, timelines and requirements can change based on the type of bankruptcy, the complexity of your case, and other factors.

Does Florida Have Bankruptcy Exemptions?

Yes. Although federal law governs bankruptcy, it allows states to create certain bankruptcy rules called exemptions. Florida exemptions let you protect important items such as your home, car, and personal property.

If you file Chapter 7, the trustee can sell your property. However, the trustee can only sell non-exempt assets. You can keep any property that qualifies for an exemption. Also, with Chapter 13, your exempt property won’t be considered when determining how much your monthly payments should be under your payment plan.

Exemptions are a crucial part of bankruptcy law. Ask your bankruptcy lawyer about the exemptions that apply in your case.

Can I File for Bankruptcy Without a Lawyer?

No law requires hiring an attorney for bankruptcy, but you should. The bankruptcy process can be a maze of complicated rules regarding forms, exemptions, deadlines, residency requirements, and more.

A small mistake could cost you. Discussing your case with a qualified attorney is the best course of action. LawInfo is here to help you find a bankruptcy attorney near you.