What to Know About Bankruptcy Laws in Florida

 

Filing for bankruptcy can be a daunting and overwhelming experience, but it can also provide a fresh financial start. If you're considering bankruptcy, it's crucial to understand how the laws in Florida differ from those in other states and what options are available to you. Bankruptcy laws are designed to help individuals and businesses get out of debt and either reorganize or discharge certain financial obligations. 

In Florida, residents have access to specific bankruptcy protections that could make the process smoother. Here’s what you should know about Florida’s bankruptcy laws: 

Types of Bankruptcy in Florida 

There are two main types of bankruptcy that Florida residents can file for: Chapter 7 and Chapter 13. Understanding the difference between these two can help you determine which path is right for your financial situation. 

• Chapter 7 Bankruptcy: Chapter 7 is often referred to as "liquidation" bankruptcy. It involves the discharge of most unsecured debts, such as credit card balances, medical bills, and personal loans. In exchange, the debtor may be required to liquidate certain non-exempt assets to repay creditors. However, Florida law offers substantial exemptions that can help you protect your property, including your home and car, under specific circumstances. 

Florida's generous homestead exemption allows debtors to protect their primary residence, regardless of its value, as long as the home is located in the state and was owned for a specific period. This is a significant advantage for Floridians compared to residents of other states where homestead exemptions may be more limited. 

• Chapter 13 Bankruptcy: Chapter 13 is often called "reorganization" bankruptcy. In this type of bankruptcy, individuals with a regular income are given a chance to reorganize their debts into an affordable repayment plan that typically lasts three to five years. At the end of the repayment period, any remaining eligible debt is discharged. Unlike Chapter 7, Chapter 13 allows you to keep your property, including your home, as long as you can continue making payments under the court-approved repayment plan. 

This option is ideal for individuals who are behind on mortgage payments or who want to keep valuable assets but cannot qualify for Chapter 7 due to income limits. 

Florida-Specific Bankruptcy Exemptions 

Florida is one of the few states that offers a very favorable exemption system to its residents. Bankruptcy exemptions protect certain assets from being sold or liquidated during the bankruptcy process. The most notable exemptions include: 

• Homestead Exemption: As mentioned, Florida law offers one of the most generous homestead exemptions in the nation. This protects your primary residence from being sold to pay off creditors, regardless of its value (with certain qualifications, such as having owned the home for a minimum period). 
• Personal Property Exemptions: Florida residents can protect personal property such as clothing, furniture, and household items up to a specified value. 
• Wages: Florida also protects 100% of wages earned by debtors, which means your paycheck will not be garnished by creditors during bankruptcy proceedings. 
• Retirement Accounts: Certain retirement accounts, such as 401(k)s and IRAs, are fully exempt from bankruptcy, which allows you to preserve your savings for the future. 

Understanding Florida’s exemption laws can provide peace of mind and allow you to keep your home and other important assets while still discharging or reorganizing your debt. 

Means Test for Chapter 7 Bankruptcy 

To qualify for Chapter 7 bankruptcy in Florida, you must pass the "means test." The means test determines whether your income is low enough to file for Chapter 7. The test compares your current income to the median income for a similar household size in Florida. If your income is above the median, you may be required to file for Chapter 13 instead. 

For individuals whose income is below the state median, filing for Chapter 7 may be a straightforward way to discharge debts without having to repay them. The means test is complex, so it’s crucial to consult with a bankruptcy attorney to understand if you qualify and to ensure that all calculations are done correctly. 

The Automatic Stay and Creditor Protection 

One of the most immediate benefits of filing for bankruptcy in Florida is the "automatic stay." Once you file your bankruptcy petition, an automatic stay goes into effect, halting most collection actions, including wage garnishments, foreclosure proceedings, repossessions, and creditor harassment. This protection provides immediate relief, allowing you to focus on resolving your financial issues without the stress of constant creditor pressure. 

How to File for Bankruptcy in Florida 

Filing for bankruptcy in Florida follows a specific legal process that begins with the preparation and filing of a petition with the bankruptcy court. This petition includes detailed information about your debts, income, assets, and financial transactions. 

In Florida, you must also attend a "341 meeting" (also called a creditors' meeting) where the bankruptcy trustee and your creditors will have the opportunity to ask you questions about your finances. While creditors rarely attend these meetings, it’s essential to be honest and transparent when answering questions. 

Why You Should Consult a Bankruptcy Attorney 

Bankruptcy law is complex, and every situation is unique. While Florida offers generous exemptions and protections for residents, navigating the bankruptcy process requires expert guidance. An experienced bankruptcy attorney can help you: 

• Determine the best type of bankruptcy for your situation. 
• Ensure that you meet the eligibility requirements for Chapter 7 or Chapter 13. 
• Maximize the benefits of Florida’s exemptions to protect your assets. 
• Navigate the court system and avoid costly mistakes. 

If you're considering bankruptcy in Florida, it’s important to work with an attorney who understands Florida's bankruptcy laws and can help you make the right decisions for your financial future. 

Conclusion 

Filing for bankruptcy in Florida can be an effective tool for those struggling with overwhelming debt. With favorable exemptions and a clear legal process, Florida provides debtors with an opportunity to regain control of their financial situation. Whether you are considering Chapter 7 or Chapter 13 bankruptcy, it’s essential to fully understand the laws and seek the assistance of a skilled bankruptcy attorney who can guide you through the process. 

If you’re facing financial hardship and need assistance with bankruptcy proceedings, contact the team at Lewis & Jurnovoy to schedule a consultation. We are here to help you navigate Florida’s bankruptcy laws and find the best solution for your situation. 

Lewis and Jurnovoy is a local law office serving the Florida Panhandle. We specialize in bankruptcy law, including Chapter 7 and Chapter 13 bankruptcy. We will work to achieve the best financial remedy for your outstanding debts. 

Lewis & Jurnovoy PCB 
2714 West 15th St 
Panama City, FL 32401 
(850) 913-9110 
https://www.LewisandJurnovoy.com