How to File for Bankruptcy


March 8, 2016

Filing for bankruptcy is never an easy decision to make. It is often a last resort for people that find themselves in dire financial situations. People think of bankruptcy as having all debt wiped and starting over with a clean slate. Before you decide, don’t be afraid to seek legal counsel. The Law Office of Michael A. Ziegler, P.L. serving Tampa Bay and Clearwater Florida can help you with filing for bankruptcy.

First Steps

Before you file, first you must get credit counseling within 6 months before filing. Afterwards you must complete a financial management instructional course. This must be done before your debts can be discharged.

Then, review the type of debt you plan to get rid of. If most of it is non-dischargeable, you may not want to file Chapter 7. Non-dischargeable debts include child support payments, student loans, and many tax or governmental obligations.

Bankruptcy can get rid of your personal obligation on “Secured debt” like mortgages and car loans. But, it cannot keep the lender from repossessing the property. Understanding these distinctions can help determine what Chapter of bankruptcy may be right for you.

Types of Bankruptcy

There are two common types of bankruptcy used for consumers, Chapter 7 and Chapter 13.

Chapter 7 Vs. Chapter 13

Chapter 7 bankruptcy is often referred to as the “liquidation chapter.” It is more streamlined and there is no payment plan. In exchange for wiping out your debts, you’re limited on what property you can keep. The law considers property you keep “exempt,” and the property you cannot keep “nonexempt.” Your appointed trustee collects all your nonexempt property, and sells it off to repay your creditors.

To qualify for Chapter 7, you must pass a means test. This is an income test to determine if you have the resources to repay the debt. If you are determined to have the means to repay your debt, your bankruptcy is either dismissed or converted into a Chapter 13.

Chapter 13, is known as the “reorganization Chapter.” The court will approve a repayment plan and allow you to keep property that you might otherwise have to give up in Chapter 7. Chapter 13 also offers some abilities to adjust your debts which may not be available in Chapter 7.

In some circumstances, you can lower the amount you might owe on a car or rental property. You can even “strip off” a second mortgage or a home equity line.

Deciding to file for bankruptcy should always be discussed with a bankruptcy attorney. They will be able to review all your assets, property and the nature of your debt. The Law Office of Michael A. Ziegler, P.L. serving Tampa Bay and Clearwater Florida can assist you in filing for bankruptcy. We can help you better understand your debt, and what options you have available. Call today for a free consultation at (727) 538-4188 or fill out our contact form online.

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