Choosing the proper chapter to file for under the bankruptcy code is extremely important and usually requires the advice of a bankruptcy lawyer. In consideration of filing a Chapter 13, individuals who want to keep their home from being foreclosed upon or those who have valuable assets who don't want to surrender those assets in a Chapter 7 proceeding may choose to file Chapter 13. Foreclosure or repossession actions by creditors are stopped under a Chapter 13 and delinquent payments can be made up over time. 11 U.S.C. 1322. Chapter 13 also may be the only option for those who have filed a previous bankruptcy sometime during the last eight years or those who earn more than the medium state income level. The current median level for the means test in Florida is approximately $41,000 for an individual or around $68,000 for a family of four. [These numbers are approximates and is greatly impacted by actual expenses and other considerations. The means test is complicated even for experienced attorneys so please contact us for more information to see if you may still qualify for a Chapter 7.]
Principal that is owed in excess of the true value of assets, other than the first mortgage on a house can be reduced or in some instances wiped out. Additionally, those who are delinquent on debt on which a friend, family, or others have "co-signed" as a co-debtor can protect the co-debtors with a Chapter 13. In other words, you can avoid hurting the credit of those who helped you get the loan even though you are declaring bankruptcy.
To keep secured property, a debtor must make up any past due payments and become "current" by the end of the payment plan's term. All payments to the bankruptcy Trustee must be made timely otherwise the petition will be dismissed, payments made will be forfeited to the creditors and the collection proceeding by creditors would be allowed to resume.
In the end, a Chapter 7 bankruptcy can result in less money being paid to creditors. While a Chapter 7 results in a discharge of unsecured debt and unless reconfirmed, secured assets may be lost to creditors. The time in which a debtor wishes to file a petition can also affect the decision of whether to file Chapter 13 or Chapter 7. Increases or decreases in income, loss of a job, health problems, marriage or divorce are all things which commonly impact our clients' decision of which bankruptcy chapter to file under Chapter 7 or Chapter 13.
In Northeast Florida, Jacksonville is the location where bankruptcy petitions are filed. Please contact us to discuss your particular situation and which Chapter of the Bankruptcy code may best for you.
Please click below to learn more about:
