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Fort Lauderdale Bankruptcy Blog

How Chapter 13 can assist businessowners

A previous post on this blog talked about how bankruptcy may be an important and even necessary step for Florida businessowners to take should they run into financial hardships.

This post specifically talked about how Chapter 7 bankruptcy, in which a businessowner will surrender non-exempt property in exchange for a discharge of debts, may be the right move after a business fails.

Options for business owners in financial distress

As this blog has discussed, families and individuals in Florida may suddenly find themselves overwhelmed by debt for a number of different reasons. For instance, a job loss or a medical emergency can mean that a family who was staying afloat suddenly needs financial help.

However, the Chapter 7 process is not just for those who have consumer debt. South Florida is also the home to many businesspeople who choose to go into business for themselves as a sole proprietorship. In other cases, they may elect to a corporation or an LLC. However, their creditors will still likely expect them to sign personal guarantees on their loans, making them personally responsible for corporate debt.

Medical debt is a common reason to consider bankruptcy

For many years, bankruptcy was one of those subjects that most people simply did not want to think about, much less talk about openly. Fortunately, that is changing, and this change couldn't come a moment too soon. As public opinion about bankruptcy changes, more people recognize that living in the modern world is always a dangerous proposition, and bankruptcy is one of the great gifts that the law gives us when unexpected setbacks occur.

These days, one of the most common reasons to consider bankruptcy is overwhelming medical debt. It is no longer a controversial opinion that the cost of medical care in America is astronomical. Many of us live in fear that that, no matter how well things are going at any moment, an unexpected illness or serious accident can bury us in debt in an instant. Many people even avoid treatment that they desperately need because they don't know how they'll ever pay for it.

What is an exemption and how does it work?

Those in South Florida who are running into financial trouble may hesitate to file for bankruptcy for a number of reasons.

Aside from a sense of embarrassment or emotional distress, many may worry that, by filing bankruptcy, they will have give up a lot of their hard-earned assets, including property that they really need to survive. In other words, and to use an old saying, they may be worried about losing their shirts.

Number of Florida bankruptcies is on the rise

Although unemployment remains low and wages continue to rise, the number of people in Florida who are filing for bankruptcy is on the uptick. According to numbers reported by a major Florida media outlet, bankruptcy filings have increased by 11 percent across the state. In the vicinity of Tampa and Central Florida, the increase is closer to 12 percent.

The good news is that numbers remain far below those that the state experienced during the Great Recession at the end of the last decade and, for that matter, throughout the 2000s.

Chapter 13 and foreclosure defense

This blog has discussed the difference between Chapter 13 and Chapter 7, which are the two types of bankruptcy most private residents of South Florida would file should they get into financial distress.

Each type of bankruptcy has its advantages and disadvantages. In many cases, for instance, a Chapter 13 may be the only viable option because a family earns too much income to qualify for a Chapter 7.

Chapter 7 and Chapter 13: differences between the two

South Florida residents would be aware that the two most common methods of filing for bankruptcy are under Chapter 7 and Chapter 13 of the United States Bankruptcy Code. While both of these methods are established debt relief methods, there are several differences that all bankruptcy filers should know.

The first difference between the two is that Chapter 7 necessitates the liquidation of assets while Chapter 13 does not. Instead, in Chapter 13 proceedings, the debts are consolidated and the debtor is expected to make monthly payments to repay debts.

Choose the right bankruptcy option for you: Chapter 7 or 13

If you're considering divorce, you need to think about what kind of divorce you want to go through. There are two primary forms of divorce that people tend to choose, either Chapter 7 bankruptcy or Chapter 13. Chapter 7 is also known as liquidation bankruptcy, while Chapter 13 is a repayment plan.

Both types of bankruptcy have their benefits. For example, Chapter 7 bankruptcy can eliminate unsecured debts completely without having to make payments. You may lose some of your unexempt assets, but you'll still keep exempt assets.

Basics of the Chapter 13 bankruptcy repayment plan

For people who are in financial duress but still hold a steady source of income, Chapter 13 bankruptcy is often the best form of debt relief. In a Chapter 13 bankruptcy filing, all the debts are combined, and the debtor makes regular payments to the bankruptcy case trustee to clear all debts. This method is known as the repayment plan and covers repayment of priority, secured and unsecured debts.

As many people in South Florida may know, a repayment plan needs to be submitted either at the time of filing the Chapter 13 bankruptcy petition or within a maximum of 15 days after filing the petition. This plan contains details of the fortnightly or monthly payments that the debtor would make to the trustee who would, in turn, distribute the money among the creditors per the terms of the repayment plan.

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