If you live are under tremendous financial pressure and unable to pay off your outstanding debts, then filing bankruptcy may be the only viable option that you have.
As an individual you have a choice of filing for bankruptcy under two chapters. An explanation of both the chapters – and how to choose the chapter more suitable for you – is given below.
You can file for bankruptcy under Chapter 7 only if you pass the “Means Test”.
This test involves calculating your gross income and assets and deducting your liabilities and your expenses during the past 6 months prior to you having filed for bankruptcy. These numbers are then compared with the average median income of a similar sized family in Texas.
If your net income is lower, then you qualify for filing under Chapter 7; otherwise, you may have to file under Chapter 13. Once you file under Chapter 7, the court will appoint a trustee, who will sell off your unprotected or non-exempt assets to pay off your creditors.
Your case can be discharged within 6 months if you file for bankruptcy under this Chapter. Since normally your home and cars will be exempt, you will be able to retain these assets.
If your home and car are at risk as a result of not being able to meet your obligations, then you can see why retaining a qualified bankruptcy attorney like Allmand and Lee to file Chapter 7 on your behalf is a wise choice.
Chapter 13 Explained
Unlike Chapter 7, filing under Chapter 13 will give you the chance to repay your outstanding debts over a longer period of time, usually between 3 to 5 years. You also have the chance to keep all your property.
As with Chapter 7, once your attorney files for bankruptcy under Chapter 13 on your behalf, your creditors will no longer be able to foreclose on your home or take your possessions. By law, they must also stop harassing you immediately.
Once you file under Chapter 13, you will need to submit a repayment plan to the court, detailing your plan to pay off your debts. Your bankruptcy attorney can even try to get a part of your loan discharged, so that you can pay off the rest.
If your plan is approved, the court will appoint a trustee, who will monitor your repayment schedule to ensure that you stick to it.
Chapter 13 or 7?
Usually (depending on the situation), individuals try to file for bankruptcy under Chapter 7 in order to get most of their outstanding debts discharged. The time taken to do this is also quite less as compared to filing under Chapter 13.
The problem is that with the new, stricter laws put into place after October 2005, you might find it difficult to file under Chapter 7 and might have to file under Chapter 13. Most of your assets may also be disposed of by the court trustee in order to satisfy your creditors.
This might not happen under Chapter 13.
Therefore, Chapter 13 allows you to stay in control as you chart out a repayment plan stretching between 3 to 5 years. If you are wary of losing many of your assets and do not mind a longer repayment plan, then you could ask your bankruptcy attorney if you can file under Chapter 13.
However, if you want your case to get discharged within a short time and are unable to come up with a long-term plan to raise money to pay off your creditors, then filing under Chapter 7 would be a better option.
So, compare both chapters with your bankruptcy attorney before deciding on which chapter is the better option.
Find More Chapter 13 Articles
For those of you who call Florida their home, the recent economic catastrophes should be enough to prompt you to know more about the Florida Chapter 11 bankruptcy. People call this the reorganization plan because it allows the debtor to reorganize his payment schemes and keep his assets all the same. He can sell off certain assets to repay debts or perhaps just refinance them. Individuals and businesses can take advantage of this plan.
It really does happen to the best of people, this whole business of debts getting out of hand. When this happens, working with the creditors and the courts may be your best choice. It may not always be the first choice or even the most popular choice but 11 usually is the only choice. Filing for insolvency will buy you some time to plan and act plus, it also allows you to keep your assets such as your house.
When you want to file for insolvency, you must know of the many different chapters available. The Eleventh one will help you keep your business and allow it to stay open while you fix your finances. You may also know about chapter seven wherein your business gets liquidated to help pay for the debts.
The next step requires you to hire a lawyer. You may argue that this is expensive but you simply cannot do without a lawyer. Filing for insolvency gets messy and complicated; a lawyer will help you keep things in track. You need a lawyer to keep things in order while your case is in court for several years as is commonly the case. There are even lawyers that focus on insolvency cases exclusively.
Once you have your lawyer, you need to file for insolvency once only in a 6 month period. All courts will not approve your filing for insolvency if you fail to meet some conditions as well. Make sure you keep up with the repayment schedules and also show up for any hearings.
You also have to spend some time in getting the needed paperwork in order. You must file for your assets and all your liabilities. You will also need to present income and expenditures records to the court.
When you opt for the Florida Chapter 11 bankruptcy, you must be prepared to work hard. Find the best lawyer you can and get all the necessary paper work done. You must listen to what your lawyer tells you and pay off your debts as soon as you can.
Recovering from a debt is indeed hard but not impossible. With the help of right knowledge of lawful procedures along with right patience and fortitude, repaying debt becomes considerably easy. If you are one of the debtor, you must know about all your rights and processes in cases where you are not in state to repay the debt. Most of the people are generally not aware of their rights and end up in losing much more than their debt and their career as well.
All about Chapter 13…
There are certain laws designed by the government to relieve the debtors on the occasions where they are not able to repay their debts. Chapter 13 Florida covers the guidelines to prevent liquidation of the assets and is more of “reorganization” in which the debtor proposes a repayment plan of 3-5 years to the creditor.
By filing bankruptcy under Chapter 13, the debtor is believed to repay all the debts from his future income and can prevent his assets such as foreclosure of the property, car and other mortgage payments. Interests on tax debts can also be impeded. If the debtor meets all the terms of repayment till the end of the proposed plan that is generally 3-5 years, he is then exempted of all the remaining dischargeable debt.
The amount to be repaid by debtor primarily depends on his throwaway income and several other factors. The entire amount to be paid to the creditors should at least match the amount they would have received if case was filed under Chapter 7 of bankruptcy.
One of the eligibilities of being able to file under chapter 13 is that the debtor should have some source of regular income and some funds to be able to apply for Chapter 13 repayment plan. Filing under this law is beneficial if the debtor wishes to repossess their assets. The debtors can then effectively make up to their missed payments and can sort off reinitiate the actual agreement.
For this reason Chapter 13 is also termed as reorganization and chapter 7 as liquidation. However for other cases where the individual just wish to confiscate the liability of debt, Chapter 7 can be a good choice.
How exactly chapter 7 and 13 differ…
The major difference between the two is basically their time periods. A chapter 7 case lasts for a duration of 3-4 months, whereas Chapter 13 Florida on an average takes around 3-5 years. Even though most of cases filed in florida are under chapter 7 yet here are some of the obvious benefits that why you should prefer chapter 13 over 7.
Aside from preventing the assets, this law can considerably reduce your secured debts to a newer value as per the security. Moreover you can also get relieved from the dischargeable debt such as liability of repaying because of divorce or separation agreement.
A person who is bankrupt but has enough equity in the house they own such as their house should never have a problem about obtaining finance. Even a bad credit history is not a good enough cause to stop someone having a home loan at an advantageous interest rate. Meeting the requirements of certain conditions is just one of the basics that can contribute to the fact that this procedure can never be that simple but then being a bankrupt won’t be one of those concerns. Specially created to meet the needs and terms by which a bankrupt has to arrange his fiscal affairs, these home loans for individuals who are bankrupt are restricted to that group of people only.
Having a standard home loan is better compared to meeting the standards for the credit score normally reserved for home equity loans even though it is much lower, the interest rates are good and the steps necessary to achieve it is not that hard. If the outstanding mortgage of the home were totally paid off, the equity release will be available as a percentage of the remaining equity and a secured loan will also be taken off if it becomes a part of the equation.
To simplify this if you take a individual who owns a 100,000 dollar home and take off his 50,000 dollar mortgage you are left with an even fifty thousand dollars of which eighty five percent will be available for the home equity loan. The fact that this home loan is secured on a house simply implies that a large sum of money is accessible thus giving the intended bankrupt individuals the chance to be in touch with the good conditions this loan has to offer. With this form of loan, all the advantages seem to be with the person borrowing the money as they are give better interest rates than bankrupts can usually expect in addition to better repayment terms which means they should never have a problem making the repayments.
Credit checks on secured home equity loans are never very thorough as the lender is aware of the collateral in the place so is more at ease with lending it to someone who is bankrupt. As the requirements for this type of loan have been lowered, the person applying for a loan can expect a swift resolution which is not something that would normally happen for a secured loan. Once the credit verification has been completed, only a couple of steps remain, the first of which is the careful analysis of the place’s deeds.
Not only will the individual borrowing the money need to establish that they are in employment and have the means but also that the repayment is not going to overburden the borrower. What is there that shouldn’t be a problem for the lenders anymore is the thought that the borrower has the ability to pay so the assurance that the monthly instalments is not exceeding 40 percent of the individual’s income should coincide with its call for for current copies of pay checks. For borrowers that cannot show this, their loan total may be reduced until it does fall within the rules and does not create fiscal strain on the borrower when repayments are due.
It is not uncommon to see people getting into debt. Debt, though agonizing, is not unmanageable. By taking some prudent steps they can be cleared, and those indebted can put their financial standing back in order, provided there is a foreseeable income coming in. In some scenarios this is not possible however. The reasons may be, the debts are too large for the affected to handle or simply the person may be unable to stand harassment any longer. Pondering over the problem and delaying action only adds to woes. For people like these, the best solution is to seek legal redress by filing a bankruptcy proceeding before a competent court.
Filing a bankruptcy proceeding in a competent court – a Federal Court in Florida for example, ensures immediate protection from creditors taking charge over the filer’s properties. The other reliefs they get include, protection from creditors trying to take repossession, stopping utility companies from discontinuing services, foreclosure of loan by lenders, elimination of liens in some cases or modifications to repayment schedules and even exemption from paying unpaid accident claims awarded by courts. If you are one of those affected by unmanageable debts and live in Florida, then, you should hire one of the bankruptcy lawyers in Florida immediately.
When you file for bankruptcy proceeding, the first relief you get is an automatic stay, and it binds everyone who have a stake in it. Typically, due process takes about 3 month to be completed before the filer is finally discharged from all obligations. There are two chapters under which bankruptcy proceeding is filed – Chapter 7 and Chapter 13.
When you apply for bankruptcy under Chapter 7, also known as ‘straight’ or ‘liquidation,’ all creditors, including credit card companies, lawsuit plaintiffs and doctors, and others are barred from recouping their money from you directly. It is total and you can start afresh from scratch. But, before the court finally discharges you, it will apply the means test to check if you are acting in good faith. An income lower than the state median for 6 months preceding application, presumes you are acting in good faith; otherwise the court will examine your application at greater depths before deciding.
Chapter 13 is radically different as compared with Chapter 7. It is more about reorganizing the applicant’s finances. Typically, the courts will allow anywhere between 3 and 5 years for the filer to repay debts based on present income levels and what can be apportioned to meet debts. Usually the court draws an action plan to which every stake holder will be obliged to abide. Though the provisions of Chapter 7 and Chapter 13 of the law of bankruptcy appear to be transparent, there are subtle nuances to getting relief under them. Bankruptcy lawyers in Florida can advice you on what is best for you.
Majority of applicants in Florida file for bankruptcy under Chapter 7, though it is the prerogative of the courts to entertain or to issue a directive to be taken up under Chapter 13. The biggest advantage of Chapter 13 is you can retain the titles to your assets, but you must prove you ability to service the debts as directed by it.