Florida bankruptcy

Florida Bankruptcy Legal Guide

Bankruptcy is a legal process through which individuals or businesses unable to pay their debts can seek relief from some or all of their obligations. In this process, a bankruptcy court assesses the petitioner’s assets and liabilities and then decides whether to discharge the debts, freeing the debtor from these financial burdens. The process aims to provide a fresh financial start for the debtor, while also ensuring fair treatment of creditors.

There are different types of bankruptcy, each with its own rules and outcomes, including liquidation (Chapter 7) and reorganization (Chapter 11 for businesses and Chapter 13 for individuals).

What Is the Bankruptcy Law?

The law that allows for bankruptcy in the United States is the Bankruptcy Code, found in Title 11 of the United States Code. This federal law outlines the various types of bankruptcy proceedings and processes, providing a legal framework for individuals, couples, and businesses seeking relief from unsustainable debt. The Bankruptcy Code was enacted in 1978, replacing previous bankruptcy laws, and it has been amended several times to address changing economic conditions and policy perspectives.

What Are the Types of Bankruptcy?

There are several types of bankruptcy in the United States, each designed for specific situations and identified by their respective chapters in the Bankruptcy Code:

  1. Chapter 7 – Liquidation: This is the most common form of bankruptcy for individuals. It involves the liquidation of assets to pay off debts. Certain personal assets may be exempt, but a trustee sells off the rest to pay creditors. Remaining unsecured debts (like credit card debts) are often discharged, meaning the debtor is no longer legally required to pay them.
  2. Chapter 11 – Reorganization (Mostly for Businesses): This type is primarily used by businesses and allows them to keep operating while reorganizing their debts. The debtor proposes a reorganization plan to keep the business alive and pay creditors over time. Individuals with substantial debts and assets can also file for Chapter 11.
  3. Chapter 13 – Reorganization (Individuals): Similar to Chapter 11, but designed for individuals with a regular income. Debtors keep their property and make payments to creditors based on a court-approved repayment plan, usually over three to five years. Those with valuable non-exempt property often choose Chapter 13.
  4. Chapter 12 – Family Farmers and Fishermen: This is a specialized form of bankruptcy for family farmers and fishermen. It’s similar to Chapter 13 but provides additional benefits to those in the farming and fishing industries, recognizing their unique financial challenges.
  5. Chapter 15 – International Bankruptcy: This chapter deals with cross-border bankruptcy cases, where the debtor has assets and debts in more than one country. It is used to provide a legal framework for international insolvencies.

Each type of bankruptcy serves a different need and comes with its own set of rules, eligibility requirements, and processes. The choice of which type to file depends on the debtor’s specific financial situation, their debt types, and their long-term financial goals.

Looking up bankruptcy law in Florida

Why Should You Consider Filing Bankruptcy?

Filing for bankruptcy can be a significant decision for individuals or businesses facing overwhelming debt. Here are some reasons why someone might consider filing for bankruptcy:

  1. Debt Relief: Bankruptcy can provide relief from unmanageable debt. It can discharge unsecured debts like credit card bills and medical expenses, freeing individuals from these financial burdens.
  2. Automatic Stay: Upon filing, an automatic stay is put in place, which immediately stops most creditors from pursuing collection actions, lawsuits, wage garnishments, or foreclosures.
  3. Asset Protection: Bankruptcy can offer protection for certain assets. For example, in a Chapter 7 bankruptcy, many personal assets (like your home, car, and retirement savings) may be protected from liquidation.
  4. Structured Repayment Plan: In cases of Chapter 13 or Chapter 11 bankruptcy, individuals or businesses can reorganize their debts and create a manageable repayment plan, typically over 3-5 years.
  5. Prevent Foreclosure or Repossession: Filing for bankruptcy can temporarily halt foreclosure on a house or repossession of other assets, providing time to reorganize finances.
  6. Financial Fresh Start: Bankruptcy can offer a fresh start, allowing debtors to reset their financial situation and work towards a more stable financial future without insurmountable debts.
  7. Credit Score Impact Mitigation: While bankruptcy negatively impacts your credit score initially, it can sometimes be a quicker path to rebuilding credit than continuing to struggle with escalating debts.

Find out if you qualify for bankruptcy.

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Are Debtors Required to Have an Attorney To File Bankruptcy?

Bankruptcy law does not require hiring a bankruptcy attorney to prepare a bankruptcy petition or represent you in Florida’s middle bankruptcy district. Debtors who can and are willing to do new things on their own, or debtors who cannot afford a bankruptcy attorney, can buy forms on the internet to file their bankruptcy petition and schedules.

However, bankruptcy is a complicated area of the law, and bankruptcy law gives no special treatment or excuse to debtors who file their own petitions with mistakes or omissions.

How to File Chapter 7 Bankruptcy in Florida

Here are the general steps to filing for Chapter 7 bankruptcy in Florida:

  1. Credit Counseling: Under federal law, anyone filing for bankruptcy must first go through credit counseling within 180 days before filing their case.
  2. Bankruptcy Petition: The next step is to prepare the bankruptcy petition and accompanying schedules, which detail your financial situation, including debts, assets, income, and expenses.
  3. Filing the Petition: Once the petition and schedules are complete, they are filed with the bankruptcy court. In Orlando, this would be the United States Bankruptcy Court for the Middle District of Florida.
  4. Automatic Stay: As soon as you file for bankruptcy, an “automatic stay” goes into effect, which prevents most creditors from taking collection actions against you.
  5. Bankruptcy Trustee and Meeting of Creditors: A bankruptcy trustee is appointed to administer the case. The trustee will review your bankruptcy papers and supporting documents. The trustee will also preside over a meeting of creditors (a 341 meeting) where creditors may ask you questions about your financial situation and bankruptcy papers.
  6. Financial Management Course: After filing, you must complete a debtor education course from an approved provider.
  7. Discharge of Debts: If everything goes smoothly, the bankruptcy court will issue a discharge order, which wipes out qualifying debts.

The specifics of these steps can vary, and there can be exceptions and additional requirements depending on the details of your situation.

Jon Alper

About the Author

I’m a nationally recognized attorney specializing in asset protection planning. I graduated with honors from the University of Florida Law School and have practiced law for almost 50 years.

I have been recognized as a legal expert by media outlets such as the New York Times and the Wall Street Journal. I have helped thousands of clients protect their assets from creditors.