South Florida Attorney Eric N. Klein

Florida Bankruptcy Laws

Below is information on Florida bankruptcy laws and issues in general. If you have any specific questions that are not answered here, please do not hesitate to call us at 561-353-2600 or email us today.

There are generally four types of bankruptcy: chapters 7, 11, 12 and 13 of the Bankruptcy code. Chapter 12 involves issues with farmers. Chapter 11 deals with large corporations or individuals with large sums of money. Chapters 7 and 13 deal with individuals and small business which will be the topic of this discussion.

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CHAPTER 7

Federal bankruptcy laws state that chapter 7 is essentially a proceeding where you are discharged or freed from the obligations of your debts. Furthermore, when you file chapter 7, it automatically stops lawsuits, wage garnishments, and any other collection actions against you. This is referred to as an "automatic stay". However, in specific instances, a creditor may seek permission from the bankruptcy court for relief from the automatic stay so they can begin or continue such collection or foreclosure actions against you.

WHAT IS A DISCHARGE?

The filing of a chapter 7 petition is designed to result in a discharge of most of the debts you listed on your bankruptcy schedules. A discharge is a court order that says you do not have to repay your debts, but there are a number of exceptions. Debts which may not be discharged in your chapter 7 case include, for example, most taxes, child support, alimony, and student loans; court ordered fines and restitution; debts obtained through fraud or deception; and personal injury debts caused by driving while intoxicated or taking drugs. Your discharge may be denied entirely if you, for example, destroy or conceal property; destroy, conceal or falsify records; or make a false oath. Creditors cannot ask you to pay any debts which have been discharged. Once you receive a chapter 7 discharge, you may not file another chapter 7 case for a period of eight (8) years.

WHAT ARE THE POTENTIAL EFFECTS OF A DISCHARGE?

The fact that you filed bankruptcy may appear on your credit report for up to 10 years. Thus, filing a bankruptcy petition may affect your ability to obtain credit in the future. However, if you follow our credit restoration program, you will quickly begin receiving offers of credit and even a mortgage! It is not uncommon for our clients to obtain a mortgage within six months to two years of receiving a discharge.

WHAT IS AN EXEMPTION

Florida bankruptcy laws explain exemption as the bankruptcy code that allows you to "exempt" (or keep) from your creditors a large amount of value in your personal and real property. For example, a debtor is allowed to keep his or her car if the equity in the car does not exceed $1,000.00.

Before you decide to file chapter 7, you must fully analyze your financial situation to determine whether a chapter 13 filing would be beneficial. Chapter 13 is for an individual debtor with stable income, who can file a Repayment Plan to pay a percentage of their general unsecured debts over the course of the Plan term, usually 36 to 60 months. An additional benefit could be retention of all assets and the opportunity to cure arrears due secured creditors, such as home mortgage(s), car loans, etc.

HOW CHAPTER 7 WORKS

A chapter 7 case begins with the filing of a petition with the bankruptcy court. In addition to the petition, you are also required to file with the court several schedules of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of executory contracts and co-debtors. According to Florida bankruptcy laws, a husband and wife may file a joint petition or individual petitions.

In order to complete the official bankruptcy forms, which make up the petition and schedules, you will need to compile the following information:

• Most recent bills/statements from ALL creditors including student loans, unpaid medical bills, unpaid utility bills, etc. (including name, address, zip code and account number).
• Prior Bankruptcy documents, if any.
• Credit Reports, if any.
• Income tax, excise tax, real estate tax or other tax bills for taxes you owe.
• Documents on alimony or child support owed to a former spouse.
• Documents for any and all real estate you own (including timeshares), including the deed, HUD Statement and a statement from the mortgage company showing the balance due on the mortgage. Also, an appraisal of the real estate or a written real estate broker’s opinion of value.
• Proof of insurance for any real estate you own (coverage selections page of insurance policy).
• Copy of any motor vehicle title or registration you own.
• Proof of insurance for any motor vehicle you own (coverage selections page of insurance policy).
• Documents regarding the rental of your apartment.
• For each secured debt, such as a car loan, a copy of the latest statement showing the name and address of the creditor, the balance due on the debt, the balance of monthly payments left and the date the debt was incurred.
• 6 months of your (and if married and living together, your spouse’s) most recent pay stubs.
• 6 months of documentation relating to other sources of income you may have from rental property, businesses, interest and dividends, alimony, child support, pensions, SSI, SSDI, or food stamps.
• Documents relating to any retirement accounts you have including IRA’s, 401(k)’s, etc showing the name and address of the administrator of the plan and the value of the account, including any loans against the account.
• The estimated replacement value of your home furnishings, including televisions, stereos, kitchen ware, tables, chairs, beds, sofas, etc, Replacement value means the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined.
• The estimated replacement value of your clothing, again, keeping in mind that replacement value means the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined.
• An estimated value of your jewelry, again, keeping in mind that replacement value means the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined.
• A copy of your federal and state tax returns for the last four years.
• Documents regarding any lawsuits you are involved in, wage garnishments, and seizure or foreclosure of property.

When a husband and wife file a joint petition, they should be sure to gather the above detailed data for both spouses.

The filing of a petition under chapter 7 "automatically stays" most actions against the debtor or the debtor's property. This stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue any lawsuits, wage garnishments, or even telephone calls demanding payments. Creditors normally receive notice of the filing of the petition from the court clerk.

One of the schedules of assets and liabilities which will be filed by the individual debtor is a schedule of "exempt" property. Florida bankruptcy law provides that an individual debtor can protect some property from the claims of creditors either because it is exempt under the laws of the state of Florida.

According to Florida bankruptcy laws, a "meeting of creditors" or a "341 meeting" is usually held 20 to 40 days after the petition is filed. The debtor must attend this meeting, at which creditors may appear and ask questions regarding the debtor’s financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting. The trustee also will attend this meeting and question the debtor on the same matters. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending.

ROLE OF THE CASE TRUSTEE

Upon filing of the chapter 7 petition, an impartial case trustee is appointed by the United States Trustee to administer the case and liquidate the debtor's nonexempt assets. If, as is often the case, all of the debtor’s assets are exempt or subject to valid liens, there will be no distribution to creditors. Typically, most chapter 7 cases involving individual debtors are "no asset" cases.

DISCHARGE

The Florida bankruptcy law regarding the scope of a chapter 7 discharge is complex, and debtors should consult competent legal counsel in this regard prior to filing. As a general rule, however, excluding cases which are dismissed or converted, individual debtors are discharged in more than 99 percent of chapter 7 cases. In most cases, the discharge will be granted to a chapter 7 debtor relatively early in the case, that is, 60 to 90 days after the date first set for the meeting of creditors.

The grounds for denying an individual debtor a discharge in a chapter 7 case are very narrow and are construed against a creditor or trustee seeking to deny the debtor a chapter 7 discharge. Among the grounds for denying a discharge to a chapter 7 debtor are that the debtor failed to explain satisfactorily any loss of assets; the debtor committed a bankruptcy crime such as perjury; the debtor failed to obey a lawful order of the bankruptcy court; or the debtor fraudulently transferred, concealed, or destroyed property that would have become property of the estate.

While the information about Federal bankruptcy laws presented in this fact sheet is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, and any local rules or practices adopted and disseminated by each bankruptcy court. Finally, this fact sheet should supplement, not be a substitute for, advice of competent legal counsel.

If you have any questions regarding Florida Bankruptcy Laws or other bankruptcy issues, please call us at 561-353-2600 or email us today.

Portions reprinted from the office of the US Department of Justice.

*Federal law has defined us as a debt relief agency. We help people file for bankruptcy relief under Title 11 of the Bankruptcy Code.