State Laws

Florida Bankruptcy Laws


Florida Bankruptcy
Many people are facing difficult financial times in this rough economy. The residents of the state of Florida are no different. When real estate was booming and loans were easy to come by, the people who live here bought as much as they could.

Now, many are stuck in a situation where they are unable to pay their bills due to loss of a job or are not able to see their homes because the value has decreased so significantly. When hard times come, many people have to turn to bankruptcy in order to survive financially. The good news for Florida residents is that it is one of the most liberal states when it comes to bankruptcy laws.

Types of Bankruptcy

There different types of personal bankruptcy, Chapter 7 and Chapter 13. There is also Chapter 11 and that is specifically for business owners. Chapter 7 bankruptcy allows for all debt to be forgiven, as long as it is unsecured debt such as credit cards and other personal debt.

Chapter 13 allows the debtor to repay some of your unsecured debt and also pay on your secured debt. This is what is commonly used when a person wants to keep their home but has fallen behind on their payments. Chapter 13 will let you keep your home and avoid foreclosure while you attempt to make up payments.

Debts Released

With Chapter 7, all of your unsecured debt is released. This includes credit cards, medical bills and other personal debts. Chapter 7 is the most common form of bankruptcy that is filed. All of the assets of the debtor are taken by the court, except their home.

In Florida, homes are exempt from being taken in a bankruptcy. You may also keep all your retirement income assets, cars and some other assets. You may also be able to keep one or two credit cards. You just have to go into an understanding with your credit card company that you realize you have to continue making payments.

With Chapter 13 allows you to save your home from being foreclosed on and allows most of your unsecured debt to be forgiven. Your secured debt will not be forgiven.

Process Length

The process for filing bankruptcy can be lengthy and take between four to six months from start to finish. Paperwork must be filed with the courts and a hearing takes place before anything can be approved.

Effect on Credit

The bankruptcy will stay on your credit report for ten years, but you may be able to establish credit in two years from the time of your bankruptcy. Unfortunately, you credit will be damaged for a few years directly proceeding your bankruptcy.

While you may be able to keep a credit card, it will be very difficult to open a new one or get a new loan for a car or home. You will have to remain diligent and make payments on time during your bankruptcy to ensure your credit improves over time.

What Can Prevent You from Filing

You may not be able to file for Chapter 13 bankruptcy if the courts do not find your plan to be workable. If you do not make enough money for the plan to work, they may deny your request and make you file for Chapter 7. Filing bankruptcy is a right under the Constitution so there is nothing truly preventing you from filing.

See also:
Florida Gun Laws
Florida Divorce
Florida DUI Laws
Florida Misdemeanors External link (opens in new window)
Florida Felony External link (opens in new window)
Florida Divorce External link (opens in new window)