Bankruptcy Exemption Rules In Florida - Michael A. Ziegler, P.L.

Bankruptcy Exemption Rules In Florida

In chapter 7 there is no monthly fee (like there is in Chapter 13), and you get rid of your debts almost immediately, but in exchange for these benefits, the filer is limited on the stuff they can keep. We call the stuff you can keep your “exempt property.” Anything outside of the list of exempt property is sold off (either to the bankruptcy filer themselves or to a 3rd party if the filer isn’t interested). That is the trade-off for the Chapter 7 benefits.

Exempt property also plays a role in Chapter 13. In Chapter 13, you can keep all of your stuff, whether it is exempt or not; however, your non-exempt property plays a role in how much your payments are. The more non-exempt stuff you have, the more your monthly payments may be.

The actual “list” of exempt property depends on your residency under quirky calculation set out under the bankruptcy code. In short, if you have lived in Florida for two years or more, you’ll probably be using Florida’s state law exemptions.

In Florida, the most common exemptions include your primary residence (also known as a homestead exemption), a certain amount of personal property, $1,000 in equity in a vehicle, and you can hold on to most retirement accounts. The normal rule of thumb is that if it’s tax-exempt, like an IRA or 401(k), it qualifies for the exemption. You can also hold on to property that qualifies as a tenancy by the entirety, which means that you owned it jointly with your spouse after you got married. There are some other less common exemptions, but those are the main ones.

Is Filing A Chapter 7 Bankruptcy Easier Than A Chapter 13 Or Vice Versa?

Comparing chapter 7 bankruptcy to chapter 13 bankruptcy is like comparing apples to oranges; they have different tools and different purposes. However, I think it is fair to say that a chapter 13 case is typically more involved thank Chapter 7.

A chapter 7 bankruptcy case is more of an abbreviated process. The bankruptcy filer has to meet the requirements of the means test, meaning that they typically have to be below a certain income level. In addition, they have to be conscientious of the belongings that they may have to sacrifice if they want the chapter 7 benefits.

In a chapter 13 case, you can get some additional tools to adjust your debts, which can be an added benefit in the case. Also, you can keep the stuff that you’d otherwise have to give up in a chapter 7 case. However, in a chapter 13 case, you are committed to monthly payments that can last for three to five years. So, both sides have their pluses and minuses.

Which Chapter Of Bankruptcy Is Better For Your Credit?

In the long-term, chapter 7 is probably better for the numeric FICO score. This is because the case typically closes sooner, which means credit can begin rebuilding at an earlier point in time. However, on a subjective basis, many creditors find bankruptcy filers who have filed for chapter 13 to be appealing because it shows that the filer made an effort to pay a portion of their debts.

How Long Does The Bankruptcy Process Typically Take To Get Completed?

Normally, a bankruptcy filer in a chapter 7 case receives discharge around three to six months after the case has been filed. The case can take longer to close. A chapter 13 case typically takes three to five years.

What Is The Emotional Impact Of Filing Bankruptcy On People?

For the most part, the people that are looking to file for bankruptcy are coming to me at a point of great distress. Usually they are coming to me after some sort of job loss or interference. They may have had a personal health issue, a marital separation, or other challenges in their life that have precipitated falling into debt. They feel a sense of personal frustration because the bills just keep mounting. In addition, there may be lawsuits and collection calls that they have to deal with. Someone who is considering filing for bankruptcy normally has a tremendous amount of anxiety.

Bankruptcy helps to quell those anxious feelings, because we take a situation that has previously been unmanageable and we’re able to resolve many of the problems that come with those debt challenges. Most people find that their anxiety increases as the bankruptcy moves towards the conclusion.

For more information on Bankruptcy Exemption Rules In Florida, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (727) 538-4188 today.

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