Florida Bankruptcy Law: What are the Laws regarding Bankruptcy in the State of Florida?
Bankruptcy in Florida
Bankruptcy is where a person or business cannot pay their debts. In such a situation, they can apply for bankruptcy whereby they can get some deal for their creditors and get a clean start by wiping off their debt.
There are two types of bankruptcy Chapter 7 and Chapter 13
Chapter 7 bankruptcy: This is a fresh start and debts like credit card balance, medical bills, and personal loans can get removed by liquidating some assets. Each state has laws that give some exemptions.
Chapter 13 bankruptcy: Here you need to have a source of income and a repayment plan is worked out to clear debts. Usually, the debts are paid throughout three to five years.
Florida Bankruptcy Laws
As per laws, credit counseling is mandatory for all those who want to apply for bankruptcy.
The next step is to file for bankruptcy before a court. The court would examine your income and expenses before deciding whether you qualify for Chapter 7 or Chapter 13 bankruptcy. The average income for six months is considered and compared with the Florida median income.
You need to work out your average household income and then compare it with the median income. For a one member household, the income for 12 months is $44,576, for four members it is $72,382. If your average household income is below this, you are eligible for Chapter 7 bankruptcy; else you need to apply the means test.
Florida Bankruptcy Exemptions
In some states, people filing for bankruptcy have the option to choose between Federal and state laws on exemptions. In Florida, you have to use the state exemptions only. However, this is applicable only for those who have lived in the state of Florida for a minimum of 730 days before filing for bankruptcy.
Florida has the most liberal law when it comes to the homestead exemption. There is no limit of the amount for exemption, the exception being the property must not be larger than half an acre in a municipal area or 160 acres in other places.
Personal property of up to $1,000, that includes furniture, artwork, electronic items can be exempted. If you don’t claim a homestead exemption, you can claim up to $4,000 of personal property.
Vehicle exemption can be for up to $1,000. It can go up if filing jointly with spouse.
Up to $750 wages per week can be exempt for the head of the household.
Pension and retirement plans like 401 K, IRA, IRA Roth, etc. can be exempt up to $1,171,650.
The Florida Bankruptcy Procedure
Once you are through with the exemptions, you can file a petition for bankruptcy in the District Bankruptcy Court in Florida. You can take the help of a bankruptcy attorney for this. To file for a Chapter 7 bankruptcy, you need to pay $335, which you can pay in installments. For Chapter 13 bankruptcy the fee to be pad is $310. For Chapter 13, a repayment plan also needs to be submitted for the review of the court.
The court examines your petition and appoints a trustee, who will review all your paperwork in details. The trustee will call for creditors meetings. The trustee will sell non-exempt property and pay to creditors (in the case of Chapter 7). On completion of all processes, the court will issue a notice of discharge of debts.
For Chapter 13 bankruptcy, a judge will examine and confirm the repayment plan, and you need to repay debts as per the agreed plan.