Debt can add up quickly and have a devastating effect on your financial situation. The protections of the bankruptcy code can provide relief from this overwhelming pressure, and a knowledgeable attorney can guide you through every step of the process.
Before filing bankruptcy, it’s important to consider your options. You need to be certain about your decision to file, and you need to understand what type of bankruptcy is best for your situation. Consulting with an Orange Park bankruptcy lawyer is a smart way to help you make the most beneficial choice for your financial future.
Chapter 7 vs. Chapter 13 Bankruptcy in Orange Park
For an individual considering bankruptcy, there are two common options, Chapter 7 or Chapter 13 bankruptcy. Work with a local attorney to determine which type of bankruptcy is best for you.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy filed by individuals. Informally, this process is known as liquidation bankruptcy, and can take less time than a Chapter 13 petition. In many cases, a Chapter 7 case will wrap up in about 4 months.
This option is for debtors with mostly exempt assets. Throughout the bankruptcy case, the court will appoint a trustee to collect the fair value of your non-exempt assets and use the proceeds to pay off your debt. The vast majority of Chapter 7 cases are “no-asset cases,” meaning that there are no non-exempt assets from which the trustee could expect to get money to pay creditors. As long as the trustee does not find evidence of fraud or error, the court typically discharges, or erases, the debt once the distributions to creditors are made.
Not every filer qualifies for Chapter 7. If your household income is below Florida’s median income, you will automatically qualify to file.
What is Florida’s median income? Median income amounts are published by the Office of the United States Trustee bi-annually ~ November and May. As of November 1, 2020, Florida’s median income is as follows:
|Florida’s Median Income|
|as of 11/1/2020|
|Household Size||Gross Annual Income||Gross Monthly Income|
If your household income is above these figures, federal law requires you to pass a “means test” to qualify. Consumers with income over and above what is allowed through the means test won’t be eligible for Chapter 7 bankruptcy and instead, must file under Chapter 13.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy reorganizes your debts and allows you to catch up on your secured loans before they are discharged. The process can be substantially longer than filing for protection under Chapter 7, and in many cases, it can take up to five years to complete.
In Chapter 13, you’ll be required to create a Plan of Reorganization which establishes how you will treat your various creditors, including whether you will keep or surrender cars or real property. The bankruptcy plan has a single monthly payment which is sent to the Chapter 13 trustee who disburses amounts to creditors in accordance with the plan. When the plan is complete, the court will issue a discharge.
What is a Discharge?
The ultimate goal of filing a bankruptcy is to receive a discharge, which releases you from your obligations for specific debts. You won’t pay back any debt that has been discharged.
Not all debt is dischargeable in bankruptcy. While credit card bills and medical debt are routinely discharged, tax obligations, child support, and spousal maintenance will not be erased. You’ll need to consult an attorney in Orange Park to advise you on debts that are eligible to be discharged.
Speak with an Orange Park Bankruptcy Attorney Today
There are many decisions to make when considering filing for bankruptcy. No matter the worth of your assets, you shouldn’t make these decisions alone. An Orange Park bankruptcy lawyer will review your circumstances and advise you on the best way to proceed. To learn more about how an attorney can help with your Chapter 13 or 7 case, call right away and schedule a confidential consultation.