Chapter 7 And Chapter 13 Bankruptcy Lawyer Serving Largo, Clearwater & St. Petersburg FL

Bankruptcy impacts your financial future. It’s a good choice in the right situation but it is a complex process that requires thought and planning before acting.

If you are considering bankruptcy, especially at a time of economic hardship like the COVID-19 pandemic, you are certainly not alone. In fact, tens of thousands of people file for bankruptcy each year in Florida. In just 2019, within the Middle District of Florida (which includes Pinellas County), 18,797 residents filed for Chapter 7 bankruptcy and 6,972 filed for Chapter 13 bankruptcy.

You want to be strategic when thinking about filing for bankruptcy. Talk to trusted attorney Ted Schofner to learn about your best financial options and to understand the outcomes of those choices.

The Schofner Law Firm provides a free initial consultation for bankruptcy so call (800) 891-9996 today.

Defining Chapter 7 And Chapter 13: What’s The Difference?

Chapter 7 and Chapter 13 are the two main types of personal bankruptcy in Florida. They are very different from each other, so it’s important to weigh which type would be best for your economic situation.

Chapter 7 bankruptcy is also called “liquidation” or “straight” bankruptcy because it essentially converts most of your current assets into money. Typically, these assets will be sold by a court-appointed trustee, and the proceeds will be used to pay back your creditors fully or partially. If you file for this bankruptcy type and the process goes smoothly, your debts may be discharged (cancelled) in as little as 90 days.

Not all of your property may be converted in Chapter 7. There are some you may be able to protect via bankruptcy exemption, such as your retirement account and inexpensive property like clothing and tools. Majority of Chapter 7 cases are actually “no asset” cases, where there are no non-exempt items to liquidate – in other words, the filer does not have to sell anything to get a discharge.

Chapter 7 is for those who will admit to the court that they are “insolvent” or unable to pay their debts. It is also preferable for those who have low income and very few assets, as there will be little to ‘give up.’

Chapter 13 bankruptcy, on the other hand, is known as “debt adjustment” or “reorganization” because it creates a debt repayment plan that you are more likely to afford. Your assets will not be liquidated, but you must pay back your debts – or some of it – through your repayment plan. The amount to repay depends on the type of debt, your income, and your expenses. A typical repayment plan can stretch over three to five years before discharge.

Chapter 13 is usually filed by individuals whose incomes are too high to qualify for Chapter 7. It can be ideal if all you need is some debt relief – for example, if you have fallen behind on your mortgage payments, credit card payments, or child support arrears. Moreover, you may choose Chapter 13 bankruptcy if you don’t want to risk the liquidation of any of your assets.

Important Questions To Ask When Considering Bankruptcy

To help you choose the bankruptcy type to file for, and to understand how it may impact your finances, you should discuss these questions with a reliable bankruptcy lawyer:

• How would a bankruptcy impact my credit rating? Though many believe that filing for bankruptcy will damage your credit score, it may actually be beneficial in the long run. Initially, your credit will drop, but after debt discharge, you can quickly rebuild it. We have known plenty of filers who were able to buy a home in two years or less after discharge.
• Are taxes forgiven in bankruptcy? There are specific rules for each type of tax debt under each type of bankruptcy filing. In general, a tax debt may be discharged if it was due at least three years before bankruptcy claim or if the tax return was filed at least two years before the claim.
• Will bankruptcy affect my tax returns? The short answer is no. Generally, you would still be eligible for tax refunds, but note that your tax refunds could be counted as an asset.
• What is the Means Test? This test, which is required under the Bankruptcy Abuse Prevention and Consumer Protection Act, compares your income against the Florida median income, and your expenses against the national standards for your location and family size. For example, you want to file for Chapter 7 but have a large income. If the Means Test finds that you have huge expenses because of your large family, there is still a chance to qualify for Chapter 7.

Why A Lawyer Is Crucial When Filing For Bankruptcy

Filing does not require an attorney but remember, your financial life is on the line. Many filers choose to hire an attorney because proceedings tend to go smoothly with a lawyer guiding them. Individuals proceeding on their own often encounter major setbacks from failing to submit documentation, missing required appearances, or getting suspected of fraud. Your lawyer can help you avoid these mistakes, ensuring that your bankruptcy claim is complete and thorough.

More than that, an attorney can provide sound advice on the complex legal and financial implications of your decision. Each option you choose could have a unique impact on your situation now and in the future. Consult a lawyer who has had years of experience helping clients with their bankruptcy decisions.

Contact The Schofner Law Firm

If you are thinking about a bankruptcy filing in Florida, talk to attorney Ted Schofner. He has been trusted in the Largo and Clearwater area since 1990, and provides a free initial consultation. Call The Schofner Law Firm today at our toll-free number 1-800-891-9996 or through our online contact form.