Florida Bankruptcy Explained: Common Questions & Answers

Florida Bankruptcy Explained: Common Questions & Answers

Are you feeling overwhelmed or confused with the Florida bankruptcy process? Today, we’re going to help you get the answers and the clarity you’ve been searching for. 

We know Florida bankruptcy laws can be challenging to understand without the right information on your side. Even if you’ve filed for bankruptcy in the past, you still might not understand exactly how it works. 

That’s why we’re sharing our Florida bankruptcy FAQ as well as some Florida bankruptcy statistics to keep you educated and empowered with this knowledge. 

Florida Bankruptcy Statistics 

  • Thousands of people file for bankruptcy in Florida every month. In 2019, 46,777 filed for bankruptcy. Of this number, 31,160 filed for Chapter 7 bankruptcy, 629 filed for Chapter 11 bankruptcy, and 14,944 filed for Chapter 13 bankruptcy. 
  • The United States Bankruptcy Court for the Middle District of Florida is the third busiest bankruptcy court out of 90 federal districts in the nation. 
  • While the total filings relative to population in Florida are relatively low, the bankruptcy filings per 1,000 population are higher in Florida than the national average.

Florida Bankruptcy FAQ

Now that you know a little more about Florida bankruptcy statistics, we’re going to answer the questions we get the most about bankruptcy law, the bankruptcy, and dealing with your own bankruptcy case.  

What is bankruptcy?

The United States Bankruptcy Court defines bankruptcy as:

“a legal process which allows a person (a “Debtor”), who owes more money than he or she can currently repay, to either (1) repay a portion of the money over time under Chapter 11, 12, or 13, or (2) have the entire debt forgiven (“discharged”) under chapter 7. Under chapter 7, a Debtor may be required to surrender assets to a trustee. Bankruptcy is also available to businesses, corporations, and partnerships. Even municipal governments can file bankruptcy (under Chapter 9).

After a Debtor has filed a case (i.e., “petition”), creditors must stop all collection efforts against the Debtor for a period of time, unless they get permission from the bankruptcy court to continue. This protection from collection efforts is referred to as the “automatic stay.”

The Bankruptcy Code and Federal Rules of Bankruptcy Procedure determine which chapter one is eligible to file, which debts can be eliminated, how long repayment must continue, which possessions can be kept, etc. A Debtor must abide by these federal laws and rules.”

What type of Florida bankruptcy case should I file? 

Chapter 7 and Chapter 13 are the two most commonly filed types of bankruptcy. There are certain legal requirements that will determine whether filing a Chapter 7 case of a 13 case is right for you.  

Chapter 7 bankruptcy is a viable option for individuals with limited income. It’s a form of liquidation bankruptcy. Many of your possessions will be sold to repay your existing debts. If you want to try and hold onto property such as a home or cars, you may want to consider a Chapter 13 case. 

Chapter 13 bankruptcy is known as a reorganization bankruptcy: You are given a court-approved repayment plan that lasts for either three or five years. If you complete the repayment plan and are current with all your debt payments, you will be able to hold onto your property.

The Means Test could be an obstacle to you filing a Chapter 7 Bankruptcy. The Means Test determines whether a Chapter 7 Bankruptcy filing amounts to an abuse of the Bankruptcy process. Thus, pushing you into a Chapter 13 Bankruptcy instead.

We’ve covered more about the Chapter 7 means test in this post

Will I have to go to bankruptcy court?

The answer is almost always yes. But keep in mind, your obligation to appear in court will be minimal. About a month after filing a bankruptcy petition, you’re required to attend a hearing called a First Meeting of Creditors.

What is a Meeting of Creditors?

This is a hearing at which the Trustee and your creditors get an opportunity to ask you questions about your assets and liabilities. This hearing is not before the Judge, and it typically lasts less than 15 minutes. Creditors often do not attend the Meeting of Creditors. As a result, the Trustee often is the only party that asks you questions.

Will I lose my job if I file for bankruptcy?

 No Florida bankruptcy FAQ is complete without including information about how filing for bankruptcy affects your current job or future opportunities.

No — employers can’t fire you because you file bankruptcy. In fact, Federal Law prohibits such action. Employers also cannot discriminate against you because of a Florida bankruptcy. Lastly, the government cannot discriminate against you because you filed bankruptcy when it’s hiring.

Who will find out if I file for bankruptcy?

A bankruptcy case is a public record but keep in mind, local papers rarely list bankruptcy cases anymore. Your family and friends would have to access a particular website to find out if you file for bankruptcy. So they likely will not know about the case unless you or a creditor tell them. 

What are the automatic stay and the bankruptcy discharge?

The Automatic Stay temporarily stops the debt collection efforts of most creditors. It stops creditor collection calls, collection letters, and lawsuits. It also stops wage garnishments. There is an Automatic Stay in both Chapter 7 and Chapter 13 cases. The Automatic Stay goes into effect when the Bankruptcy Petition is filed.

The Bankruptcy Discharge eliminates your personal liability for a debt. So you’re no longer responsible for paying the debt. At the same time, the creditor can’t try to collect the debt from you. But secured creditors may still have a right to the property which serves as collateral for the debt. 

Can I buy a house after bankruptcy?

If you’ve filed for a Chapter 7 or Chapter 13 bankruptcy case, you’ll be subjected to certain wait times for filing a conventional loan. Understandably, this often gets in the way of buying a house. 

Conventional loans are often sold to either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). They each have borrower guidelines in place for the mortgages they’ll buy. Furthermore, they differ between Chapter 7 and Chapter 13 bankruptcy. 

Want to learn more about buying a house after bankruptcy, including loan wait times and types? Have a look at this post.

Can I buy a car after filing for bankruptcy? 

In many cases, the answer is yes. It’s usually easier to buy a car after bankruptcy than it would be to buy a house. But no matter what kind of big purchase you’re making, it must be thoughtfully considered to make sure you’re moving forward with your best interests in mind.

Often, you’ve freed up enough income due to discharged debts that you’re able to pay for a car in cash. 

If you do this shortly after filing bankruptcy, but you had that money (or were entitled to it) on or before you filed, you could be required to list that cash as an asset on your bankruptcy petition. In that case, make sure to consult with a bankruptcy attorney immediately.

Florida Bankruptcy Help

Have you considered filing for bankruptcy? We hope this Florida bankruptcy FAQ gave you some of the information you need to help with your decision. But we know this can be a confusing and difficult time.  

Help is available—Brent M. Myer practices in the areas of consumer bankruptcy and debt collection defense. With more than 15 years of consumer bankruptcy experience, he has represented debtors and creditors. He is committed to representing those who need bankruptcy relief in the Stuart, Florida area. 

At the Law Office of Brent M. Myer, we believe bankruptcy is not the end. Rather, it’s an opportunity to start again. 

Call us today for a free consultation.

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