Collection and Bankruptcy Law resources compiled as a resource throughout the litigation process.
U.S. Bankruptcy Court, Northern District of Florida
Northern District of Florida bankruptcy filing requirements:
Facts About Chapter 7 Bankruptcy
Chapter 7 is commonly known as “liquidation” bankruptcy. It allows you to clear debts quickly and work toward a fresh start.
Filers may keep assets that are exempt under Florida law. All non-exempt assets are turned over to a Chapter 7 trustee for liquidation and distribution to creditors, or arrangement of a payment plan to buy back assets from the trustee.
Individuals, partnerships and corporations may file Chapter 7 bankruptcy in order to retain assets. Individuals must pass a “means test” to determine if Chapter 7 or Chapter 13 bankruptcy is appropriate for their disposable income levels.
Individuals who file Chapter 7 bankruptcy must obtain credit counseling from an approved provider within 6 months before filing. Debtors also must complete an instructional course in personal financial management from an approved provider after filing bankruptcy.
Florida law governs the types of assets that are exempt under Chapter 7. Examples include a homesteaded property, a motor vehicle, the wages of a head of family, life insurance proceeds, disability income, pensions and health aids.
Some assets have limited protection under Chapter 7, such as interests in limited and general partnerships and LLCs
Some debts such as recent tax obligations, trust fund obligations, child support and alimony generally cannot be discharged.
Facts About Chapter 11 Bankruptcy
Chapter 11 often is called “reorganization” bankruptcy. It gives individuals and businesses protection from creditors and law suits while they reorganize financially and make arrangements to pay all or a portion of their bills and debts. Chapter 11 also can be a means to postpone IRS collection procedures.
Small businesses can use Chapter 11 bankruptcy to liquidate their assets. Individuals can file for Chapter 11 bankruptcy protection with no debt ceiling as there is in Chapter 13, and an individual Chapter 11 filing also provides greater flexibility than a Chapter 13.
Real estate investors can file Chapter 11 to allow them time to sell properties and reorganize debts. Condo associations also can file for Chapter 11 bankruptcy protection when units are in foreclosure and owners are no longer making monthly maintenance payments, but banks have not yet taken title to the units.
Facts About Chapter 13 Bankruptcy
Chapter 13 is called “wage earner reorganization” or “adjustment of debts” for an individual or married couple and is available to individuals with regular income. Chapter 13 requires the filer to pay off some outstanding debts under a structure plan to pay creditors over a period of time, up to five years. Chapter 13 bankruptcies can stop foreclosure actions, reinstate a home mortgage that is in default, postpone IRS collection efforts and retain non-exempt real estate and personal assets.
There are debt limits in Chapter 13 for both secured and unsecured debts. If you exceed the limits, you may have to file a Chapter 11 bankruptcy.
Debts that you owe to the government usually are not dischargeable, but including them in your Chapter 13 filing can freeze interest and penalties on taxes.
Chapter 13 may be a good choice for individuals with home mortgage problems because it allows time to reinstate a mortgage that is in default, and may retain investment properties and other assets that might be lost in a Chapter 7. Individuals also may be able to discharge second and third mortgages in Chapter 13, if the home appraises for an amount less than its first mortgage balance, because second mortgages are considered as unsecured debt.