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Chapter 13 Bankruptcy Florida


Many people file Chapter 13 bankruptcy in Florida to prevent foreclosure on their home. A Chapter 13 debt repayment plan gives you up to 60 months (5 years) to catch up on your mortgage payments. It is no longer a last resort – bankruptcy is now considered an accepted method of resolving serious financial problems.

If you are facing serious financial challenges, Attorney John T. Snow can help you to determine whether filing under Chapter 13 is right for you.

Chapter 13 Eligibility

An individual may choose bankruptcy under Chapter 13 if he or she has a regular income from employment or from self-employment. Corporations and partnerships cannot file under Chapter 13, but self-employed individuals and those who own unincorporated businesses are eligible for Chapter 13. In addition, the debtor must have less than $307,675 in unsecured debt and $922,975 in secured debt.

If the debtor is an individual with extremely large or complex debts or is a corporation, Chapter 11, which also allows for rehabilitation or reorganization, will generally apply.


Chapter 13 vs. Chapter 7

Chapter 13 has certain advantages over Chapter 7 in consumer bankruptcies that may make it a preferable choice. The following are some examples of the advantages of filing a Chapter 13 case:

  • If your are behind on your mortgage or car loan payments, Chapter 13 can permit you to repay the arrears over 3 to 5 years, provided you can pay the ongoing monthly payments as they come due – but not in Chapter 7.
  • If you have a second or third lien, you can “strip off” such liens from your home (other than a first mortgage) in Chapter 13 if there is no equity to support the liens – but not in Chapter 7.
  • If you have valuable nonexempt assets, you can keep these in Chapter 13 – but not in Chapter 7.
  • If your vehicle loan is over 910 days old, you can force the lender to accept the current value of the vehicle (plus interest) instead of the balance due – but not in Chapter 7.
  • If you have co-debtors on some of your debts, the creditor cannot seek payment from the co-debtor while you are in Chapter 13 – but not in Chapter 7. You should keep in mind that Chapter 13 is not the most suitable choice in all cases. The decision of whether to file a Chapter 13 case or a Chapter 7 case should be made in consultation with an experienced bankruptcy attorney.


Chapter 13 Proceedings - Chapter 13 Bankruptcy Florida

The Petition and the Automatic Stay


A Chapter 13 case begins with the debtor's filing of the petition with the bankruptcy court, which triggers the automatic stay— bankruptcy terminology for the termination of all debt-collection activity. Filing a petition does not stay certain types of actions, and the stay may only be in place for a limited period of time.

As long as the automatic stay is in place, creditors may not initiate or continue lawsuits against the debtor, garnish wages or call the debtor demanding payments. There is also a special automatic stay provision in Chapter 13 that protects co-debtors. A creditor generally may not seek to collect "consumer debts" from any individual who is liable along with the debtor.


Certificate of Credit Counseling

At the time he files his Petition, the debtor must also file a certificate of credit counseling and a copy of any debt repayment plan.


Additional Documents - Chapter 13 Bankruptcy Florida

Within the next 15 days from the filing of the Petition and Certificate of Credit Counseling, the debtor must file all other required documents, including: a schedule of assets and liabilities; a schedule of current income and expenditures; a statement of financial affairs; and a schedule of executory contracts and unexpired leases.

In the usual case, all documents, including the Petition and the Certificate of Credit counseling, are filed at the same time.


The Chapter 13 Plan - Chapter 13 Bankruptcy Florida

Within 15 days after the debtor's filing of the petition, the debtor must file a Plan that sets forth the details of how – and how much – he intends to pay creditors. Most Plans are from 36 to 60 months in length. The plan must provide for fixed payments to the Trustee on a regular basis and it will be submitted to the court for approval. If approved, the Trustee will distribute funds to the creditors according to the plan's terms. Within 30 days of filing, the debtor must start making payments under the plan to the trustee, even if the court has not yet approved the plan.


Claims (Debts) Under the Chapter 13 Plan

There are three types of claims: (1) priority claims, which include income taxes and certain other special debts; (2) secured claims, which are those for which the creditor has a lien on assets of the debtor if the debtor does not pay; and (3) unsecured claims, for which the creditor generally has no special rights to collect against any property the debtor owns. The Plan must pay priority claims in full, unless a priority creditor agrees otherwise. Unsecured claims do not need to be paid in full, as long as the Plan provides that the debtor will pay all of his "disposable income" to the Trustee over the length of the Plan, and as long as unsecured creditors would receive at least as much under the Plan as they would if the debtor's assets were being liquidated under Chapter 7.


The Discharge - Chapter 13 Bankruptcy Florida

Once the debtor completes all payments under the Plan, the debtor is entitled to a discharge, which releases him or her from all debts provided for or disallowed under the Plan. To obtain the discharge, the debtor must also (1) certify that all domestic support obligations have been satisfied (if applicable); (2) complete an approved financial management course; and (3) have not received a discharge within two years in a prior Chapter 13 case or within four years in a prior case under Chapters 7, 11 or 12.



Because the Bankruptcy Code affords various forms of relief, including a payment plan under Chapter 13, you should seek the advice of a lawyer before making any decisions. Attorney John T. Snow can help you to decide whether Chapter 13 is right for you.

DISCLAIMER: The information provided is for informational purposes only and should not be construed as legal advice. Seek the advice of an attorney for advice on any legal matter.

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