Have creditors been calling day and night? Do you feel like you cannot get out from under a mountain of debt? Are you worried your wages will be garnished? Many times, people end up in a tremendous amount of debt through no fault of their own. Although people will often try to avoid it due to embarrassment or fear, sometimes filing for bankruptcy is the best choice.  For more than 30 years, Brian and his associates at ZinnLaw have been helping people get a fresh start by declaring bankruptcy. Read on if you think this may be an option for you, and we will explain some important points about declaring bankruptcy in Southwest Florida.

Florida’s bankruptcy laws are pretty forgiving and allow for a number of exemptions when you are filing:

• If you have owned your home for a long time, the Florida Homestead Exemption law allows you to protect an unlimited amount of equity. So you do not need to be afraid of losing your home.

• For those people who rent instead of own a home, you will not be homeless if you file for bankruptcy. The Florida Wildcard Exemption allows protection of up to $5,000 in personal property.
• The Florida Motor Vehicle Exemption allows up to $1,000 to be protected in a single motor vehicle.
• If you are married and filing for bankruptcy together, you can double the exemption on any property you both own.

Of course, if you are filing for bankruptcy, you will have to meet certain requirements, no matter what type you file. The first thing you will have to do is complete a state -approved credit- counseling course from an approved credit counseling agency. Nowadays, this can be completed online or via phone. The course has two components, one that you will have to complete before you file your case, and the second one after it is filed.  Each part of the course takes about 60-90 minutes. There are also fees associated with filing a bankruptcy case. You will need to pay those fees first, although those who file for bankruptcy sometimes qualify for a waiver of those fees in certain situations.

Which Type of Bankruptcy is Right for You?

When you come in for your free consultation at ZinnLaw, we will begin the discussion with which type of bankruptcy is right for your case. The two most common types of bankruptcy available, are Chapter 7 and Chapter 13, and they are based on the types of debt you have, as well as your circumstances. Our lawyers will work with you to determine which chapter will work best for you. Here are the main factors that will determine which type you should file:

2. What assets you own
3. How much debt you have and what kinds of debt you have.
4. Whether you own a small business.
5. Whether you are behind on a mortgage or car loan.
6. How much income you have.

Filing for Chapter 7

A Chapter 7 bankruptcy is the simplest and quickest type of bankruptcy, in which you can discharge most or all of your debts. One of the first things our lawyers at ZinnLaw will do is see which type of bankruptcy is best for your case, because not everyone is eligible to declare Chapter 7.

The first step in filing for bankruptcy will be for us to fill out the information on the Means Test, which compares your income to the average income of households in Florida. This means you’ll have to gather up your last 6 months of pay stubs and your tax returns as proof of income. As a general rule, your average income must be below the median income in Florida in order to qualify for Chapter 7, but you can still earn a significant monthly income if you have high expenses such as a lot of medical expenses or back taxes. We will discover if you can still qualify for Chapter 7 relief when we fill out the second section of the Means Test about disposable income. That’s why we will also review your monthly living expenses. After subtracting allowed bankruptcy expenses from your monthly gross income, the amount that remains is your disposable income.  Our lawyers at ZinnLaw will be able to file your bankruptcy paperwork with the court on your behalf once we’ve created a list of all of your assets, a list of all of your debts, and completed the Means Test.

If you do qualify and file for Chapter 7 bankruptcy, your case is typically discharged in four months. That means you’ll have a fresh start in terms of your credit score, and most or all of your debts will be erased.  Many people are able to file for a “no-asset case,” and do not have to worry about paying money to the Court to keep their assets. That’s one of the biggest advantages to filing for bankruptcy.

At ZinnLaw, our experienced bankruptcy attorneys will analyze the paperwork you bring in and determine whether you qualify for Chapter 7 bankruptcy. Once we file your petition, a meeting of creditors will be held. This meeting takes place, usually via phone within 40 days of the filing date. This is likely going to be the only official meeting or court appearance held as part of the Chapter 7 process, so don’t let this meeting intimidate you. We’ll be right by your side, guiding you, and will prepare you for that meeting.

The Facts About Chapter 13 Bankruptcy

Chapter 13 bankruptcy also erases your debts, but when filing for this type of bankruptcy you are agreeing to make certain payments to the Court, which then gets distributed to your creditors. Once that amount is paid, then your debts are erased. The payment plan is set up to be cCourt supervised based on your monthly income and reasonable expenses. 

To be eligible to file for Chapter 13, you must be an individual, as businesses cannot file for this typre of bankruptcy. People who file for Chapter 13 are unfortunately usually at the point where they are facing wage garnishment, foreclosure, or a lawsuit for debts owed. The amount of the agreed upon payment plan is based on your monthly expenses, monthly income, and the amount and type of debts you owe. This type of case may also entail debts like paying back payments on child support or alimony, or catching up on mortgage or car loan payments.

If you have too much debt, you cannot file Chapter 13. In 2022, Congress increased the specific monetary eligibility debt limits to be eligible for filing Chapter 13 bankruptcy to $2,750,000. Those people with debt above those limits may not be eligible to file for Chapter 13 protection. Our staff will help you put together a list of your secured and unsecured debts, as well as the other information you’ll need for us to file. Secured debts are those that are guaranteed by property you own in some way, and these include your mortgages and vehicle loans. Other personal loans, credit cards and medical bills all fall under the area of unsecured debts. 

When it comes to your unsecured debt, you will have to pay creditors a total amount equal to the value of your nonexempt assets when declaring Chapter 13 bankruptcy. But Chapter 13 allows you to eliminate or modify some secured debts, and it is the type of bankruptcy most often used to stop mortgage foreclosures or car repossessions because it permits you to catch up on past due payments. This type of bankruptcy also permits you to discharge some unsecured debts that are not dischargeable if you file Chapter 7 instead. 

We will file your case with the Court once we’ve gotten all of your paperwork together. The steps for filing are basically the same in both kinds of cases. We’ll be filing a certificate of completion for your credit counseling class, and a petition for filing bankruptcy. A meeting of creditors will be held. We will create a plan for repaying your creditors over a period of three to five years and submit that to the Court. We will attend all hearings required to get your plan approved. Once approved by the Court, you will make these payments to a trustee who will allocated them to the creditors. Once the payment plan is completed, most or all of your debts will be erased.

Common Myth: Everyone will know you have filed for bankruptcy.

The fact is that bankruptcy is a matter of public record, but the large number of filings means there’s a very small likelihood that anyone will ever see it. It does not get published in the newspaper, and the Sheriff does not come to your door. These are just myths. Unless you are famous, only your creditors will be privy to this information.

Review of Types of Bankruptcy

Chapter 7 is also known to as a “liquidation” bankruptcy due the the fact that it calls for most of the debtor’s assets to be sold to repay the creditors. In nearly all cases Chapter 7 applicants get at least some of their debts discharged. Chapter 7 can be used by both individuals or business organizations.

A Chapter 13 filing is also referred to as a “wage earner’s” plan. It allows fo a debtor to keep more property at the expense of repaying debts over a longer time period, typically 3 to 5 years in most cases.

Chapter 11 is a type of bankruptcy that involves a reorganization of said debtor’s business affairs, debts, and overall assets, and for this reason is referred to as “reorganization” bankruptcy. Chapter 11 bankruptcy will allow an organization to stay in business and restructure its obligations during the process.