Bankruptcy Laws: What You Should Know Before Filing

Filing for bankruptcy is not an easy decision to reach. However, it is important to know that when you have decided that the time has come to consolidate your debts and get a fresh start, very often the best option is to file bankruptcy. There are several types of bankruptcy that you can file, so it is important to weigh your options, speak with a bankruptcy attorney, and file the right one for your financial situation. A reputable Bankruptcy Lawyer can take the stress out, it is critical that you understand unique features of bankruptcy laws that allow you to protect your property as you go through this reorganization. If you are in PA and having hardship because of an auto or motorcycle accident, before filing BK, you should consult a Philadelphia personal injury lawyer. Especially if the accident was not your fault, was caused by a driver who was texting, hit and run, or even a workplace accident, you may need a good personal injury attorney.

There are two, most common, types of bankruptcy that a person can file and qualify for. These are known as a Chapter 7 and a Chapter 13 bankruptcy.

Chapter 7: Under a Chapter 7 bankruptcy you will be allowed to eliminate most of your unsecured debt which can include things like credit cards. In exchange, you agree to give up all non-exempt property. This is very important for Florida residents, because Florida has very unique laws regarding what is exempt property.

Chapter 13: Chapter 13 bankruptcies take a little longer, often between 3 and 5 years, to resolve. Under a chapter 13 bankruptcy you do not give up your property, instead you are required to live on a strict budget which is monitored by the bankruptcy courts. A mandatory monthly payment is required, and should you fail to make your payment, the bankruptcy fails and your debts remain intact.

Bankruptcy Laws and Whether You Qualify Under Them

Qualifying for a bankruptcy involves measuring your income and your expenses in a preset formula. This will then tell you if you can file for Chapter 7 or are only able to file for a Chapter 13. The court will typically see if you are under the poverty line, on an income basis, and if so you may simply qualify for a Chapter 7. If you do not immediately qualify for a chapter 7, you will need to explain all of your monthly expenses.

Exempt Property

In Tampa Bay, Florida there are very clear laws in place that serve to protect your exempt property when filing a Chapter 7 bankruptcy. The State of Florida has set the bar so that people can use this tool to get out of debt and start fresh. Exempting some property allows you to retain the necessary means to accomplish this.

Residence Property: You can maintain your home, regardless of the type or how much it cost. There is no monitory limit on the value of the home, however, the home cannot be on more than ½ an acre in a municipality and cannot be more than 160 acres elsewhere.

Wages: The head of a household to maintain 100% of their income, up to $750 per week. In addition, Federal pension needed for support and received up to three months prior to the bankruptcy are also exempt.

Pensions: Your tax-exempt retirements plan, 401(K)’s, Simple IRA’s, Roth IRA’s, and other benefits are also exempt.

There are many other benefits that the State considers exempt, which is why it is important to talk to an attorney about what your options are. Bankruptcy is not an easy process to go through. Qualifying is hard, and there are very specific requirements that must be met. Having an attorney who understands the process, can guide you through the myriad of  bankruptcy laws, and can help you with all the paperwork is an excellent place to begin reorganizing your debts.

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