Catastrophes happen that can deplete your savings and leave you unable to pay your bills. You may be trying to renegotiate your debt after losing your job or running up your credit cards on unforeseen medical bills. These situations can be overwhelming, and you may feel like you do not have any options to regain stability.
Fortunately, filing for bankruptcy could offer the protection you seek and allow you to gain control over your debts. If you cannot pay your bills and creditors are hounding you, a St. Augustine bankruptcy lawyer can assess your situation and explain your options.
Chapter 7 Bankruptcy
Most people file Chapter 7 after a sudden loss of income leaves them unable to pay their bills. To qualify, you must pass a means test unless your income less than or equal to Florida’s median income for a family of the same size. The current median incomes are:
- Single filers with no dependents – $4,296.58 per month or $51,559.00 annually
- Households with two people – $5,228.00 monthly or $62,736.00 annually
- Households with four people – $6,880.00 monthly or $82,560.00 annually
- Households with six people – $8,380.00 monthly or $100,560.00 annually
If you make more than the Florida median income, the Means Test allows you to deduct from your gross income all secured debt payments and certain allowable expenses. If you fail the Means Test, Chapter 13 may be an option.
Exempted Assets
One of the most generous exemptions available to Florida filers is the homestead exemption, found in Title XV Chapter 222 of the Florida Statutes, in which you can keep unlimited equity in an owned home. You can also protect limited equity in a motor vehicle, and pre-petition earned income, up to $750 per week in income for a head of household, or the greater of 75 percent or thirty times the federal minimum wage of $7.25 under Fla. Stat. Ann. § 222.11.
A St. Augustine bankruptcy attorney can determine what assets you can keep during a Chapter 7 bankruptcy.
Chapter 11 Bankruptcy
Although some individual filers can use Chapter 11, such as sole proprietors who want to discharge business and personal debts, this chapter is most often used to restructure business debt. It can allow a company to pay down its debt under more favorable terms with future earnings. This process is usually voluntary, but creditors can occasionally force debtors into an involuntary Chapter 7 or 11 bankruptcy under United States Code Chapter 11 § 303.
Chapter 13 Bankruptcy
If your income is too high for a Chapter 7 filing, you could instead consider filing for Chapter 13 protection. As in Chapter 11, you would restructure your debt and make reduced payments to your creditors while maintaining possession of your assets.
There is a maximum limit to the debt a Chapter 13 filer can hold, however. Additionally, you must demonstrate that your income tax filings are current and you have enough income to make the new, reduced payments. If your debt is too high, a complicated combination of Chapters 7 and 13, sometimes called Chapter 20, may be available.
Credit Counseling
Individual filers, with a few exceptions, must undergo mandatory credit counseling before filing personal bankruptcy in St. Augustine. A certificate of completion should accompany your petition to the court. Counseling for Chapter 7 will help the court determine if you have enough income to be rerouted into Chapter 13. During counseling for Chapter 13, you will learn whether your disposable income can cover the proposed repayment plan.
A St. Augustine Bankruptcy Attorney is Your Advocate
Federal and state bankruptcy laws are meant to give you and your businesses relief from crushing debt. Bankruptcy can be your second chance at a secure financial future, and a St. Augustine bankruptcy lawyer can help you determine which chapter will best benefit your situation. Call today for your initial consultation.
