(Straight Bankruptcy Liquidation)

(Payment Plan for People with Regular Income)

Basic operation

Credit counseling required within 180 days before filing bankruptcy. File your bankruptcy petition with court. Trustee administers your bankruptcy. All non-exempt assets are surrendered to trustee for distribution. You keep your exempt assets. The money from sale of your assets is divided among creditors.

Credit counseling is required within 180 days before bankruptcy. File your petition and suggested payment plan with court. The plan provides for payments over 3-5 years. Your payments will be made from disposable income (after necessities taken care of). Debtor keeps assets.

Limitations

The “means test” will determine your eligibility for Chapter 7. Your income must be below Florida`s state median income. Chapter 7 is not available if you have declared Chapter 7 bankruptcy within 8 years.

Any debtor owing less that $307,675 in unsecured debt and $922,975 in secured debt is eligible.

Frequency

Debtor must wait 8 years before filing Chapter 7 again. 

Chapter 13 discharge cannot be granted if debtor filed either Chapter 7, 11, or 12 within the previous four years or a had a Chapter 13 discharge two years earlier.

Effect on debts

With exceptions of student loans, child support and taxes, etc., most debts are discharged after the bankruptcy. Once a discharge order is entered, your liability to creditors ends. 

A portion of debts are paid off over time under the terms of your repayment plan. With exceptions of student loans, child support and taxes, etc., debts will be discharged. Once a discharge order is entered, your liability to creditors ends. 

Effect on home

If you want to keep you home, you must make mortgage payments. Your home equity may be preserved under homestead exemption. The maximum homestead exemption is $125,000 if your home was acquired 40 months before filing. In Florida, if you own for more than 40 months, you may exempt unlimited home equity.

Your home will normally be preserved if your plan is completed. Your home may also be preserved under the homestead exemptions or marital ownership laws. The maximum homestead exemption is $125,000 if your home was acquired 40 months before filing. In Florida, if you own for more than 40 months, you may exempt unlimited home equity.

Effect on car or truck

Your vehicle will probably be taken by creditors, unless arrangements are made to pay off loan by redemption or reaffirmation. If you own your car outright, you may keep it if is exempt. (Its value would normally have to be less than $5,000, depending on a number of factors).

You can keep your vehicle if your plan is successfully completed payments are made. If not, it may be taken by creditors.

Effect on nonexempt assets

All  assets that are not exempt under the Florida or Federal bankruptcy exemptions must be surrendered to the trustee for distribution to creditors.

You can keep all of your belongings if your plan is successfully completed. If not, non- exempt assets are sold to pay creditors, as in Chapter 7 bankruptcy.

Time to repay

Not applicable, because filing Chapter 7 bankruptcy discharges all of your debts, therefore there is no debt to repay!

Your plan will take three to five years to pay off. 

Payments

Most of your debt will be discharged; however, other debts, such as taxes, student loans, and child support, will have to be paid, unless an adversarial proceeding is initiated and you are found eligible for discharge.

Anything considered “disposable income” is available for payments to creditors; in other words, whatever is left after you take care of necessities (food, shelter, etc.). Disposable income is determined by by IRS regulations to a large extent. 

What will be repaid

This will depend on the value of your non-exempt assets, which will be surrendered to the trustee to pay off debts.

Chapter 13 plan may allow for payment of less than the full amount of debts, depending on your disposable income. 

End result 

Bankruptcy court will enter a discharge order, ending enforceability of all debts you incurred prior to filing for bankruptcy.

Debtor is not liable for most debts if the payment plan is successfully completed.

When finished

Court enters a "discharge order" after about 3 months of filing. 

When debtor makes all required payments in accordance with the court-approved plan. A discharge order is then entered by the court. 

Effect on credit

Some creditors will report a Chapter 13 bankruptcy for seven (7)years.