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Fort Lauderdale Bankruptcy Blog

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.

Who is eligible to file for bankruptcy under Chapter 7?

Sometimes, debts accumulated by an individual are so high that the only way to repay the debt and make a fresh financial start is to file for bankruptcy. Those debtors who have no or negligible income can file for liquidation bankruptcy under Chapter 7 of the Bankruptcy Code. However, the eligibility to file for Chapter 7 bankruptcy is only confirmed when a debtor has met certain conditions. Residents of Fort Lauderdale and the nearby areas in South Florida who can relate to these challenges may wish to continue reading.

According to bankruptcy laws, an individual, a partnership, a business or a corporation can file for Chapter 7 bankruptcy. The most important condition that a debtor from one of these categories needs to meet to be eligible for a Chapter 7 bankruptcy filing pertains to income. As incomes can vary a great deal, both from state to state and person to person, the law requires that a "means test" be conducted in order to make sure that the Chapter 7 filing is not an abuse of the provision. It is only after the courts are sure that a filing is not abusive in nature do they allow the debtor to proceed with Chapter 7 bankruptcy.

You’re not broke, so why would you file bankruptcy?

Like most Americans, you likely have substantial debt. Whether you financed your college education, underwent serious medical treatments or have a job that does not cover all your monthly living expenses, you might feel like you are in over your head financially.

While bankruptcy may not be your first choice, it could be your best option for getting back on track. But how do you know when you should file?

Provisions of the FDCPA can help stop creditor harassment

Many people in South Florida have either faced creditor harassment in the past or are facing it currently. In addition to the notices sent by creditors and collection agencies, those people have to deal with incessant telephone calls and messages, not just to themselves but also to people who are close to them. In fact, some debt collectors are even known to have called people at their workplace. The harassment can, sometimes, also include threats of violence, profane language and misrepresentation of facts.

The Fair Debt Collection Practices Act was enacted to address this harassment and embarrassment. The main purpose of the FDCPA is to set guidelines about the debt collection methods and practices that are employed by debt collection agencies in order to recover debt. The debts covered by this act include personal debts such as auto loans, credit card debt, student loans, mortgage and medical loans. It is important to mention here that business debts do not come under the purview of the FDCPA.

Chapter 13 bankruptcy: Who all are eligible to file?

Individual bankruptcies are usually filed under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. As many readers in South Florida would know, a Chapter 7 bankruptcy filing requires the debtor to liquidate assets in order to repay the debts. This is a bankruptcy option for those individuals who do not have a steady source of income. The liquidation of assets allows them to repay debtors and make a fresh financial start.

A Chapter 13 bankruptcy filing, on the other hand, is suitable for those individuals who have a steady source of income and a relatively lesser debt to repay. It must be mentioned here that Chapter 13 does not involve the liquidation of any of the filer's assets. In this mode of bankruptcy, all the debts are consolidated and the filer needs to repay that amount through monthly payments over a period of three or five years, as may be determined suitable by the bankruptcy court based in the debtor's circumstances.

Planning bankruptcy filing? Try other debt relief methods first

Financial challenges arising out of accumulated debt are sometimes so overwhelming that many people find it difficult to cope with the pressures and force themselves into filing for bankruptcy. Bankruptcy is definitely a foolproof way of eliminating debt but a person should consider a bankruptcy filing only after exploring the other debt relief methods that are available. In fact, the Federal Trade Commission strongly recommends that people try various debt relief methods before they decide to file for bankruptcy.

As the FTC suggests, a good way to begin debt relief efforts is to talk to creditors and try to put in place a modified repayment plan. In order to achieve a favorable result in these negotiations, debtors can seek help from credit counsellors or debt relief attorneys who, in turn, would represent you while engaging in discussions with the creditors. The usual result of these discussions is a monthly debt repayment plan that the debtor needs to adhere to. Another way of obtaining debt relief is by taking out a second line of credit. However, one needs to remember that in most such cases, one's home is kept as collateral.

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