Which Chapter of Bankruptcy Is Right for Me?

Life happens. A sudden job loss or medical emergency can easily lead to a huge burden of debt. When experiencing financial hardship, filing for bankruptcy may be among the possible options to achieve debt relief. A knowledgeable Florida bankruptcy attorney can evaluate your financial condition and help determine which chapter of bankruptcy is right for you.

The Law Offices of David K. Blazek, P.C. is dedicated to providing experienced legal guidance and strong advocacy to individuals in bankruptcy-related matters. Attorney David K. Blazek is available to discuss your unique financial situation, enlighten you about your debt-relief options, and guide you through the entire bankruptcy proceedings from start to finish. The firm is proud to serve clients across Tampa, Miami, Jacksonville, and Orlando, Florida, as well as Atlanta, Macon, and Columbus, Georgia.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also referred to as "liquidation" bankruptcy, is designed to help individuals and families who are overwhelmed with debt eliminate most of their general unsecured debt and achieve a financial "fresh start."

In a Chapter 7 case, the bankruptcy court will appoint a trustee to oversee and administer the entire bankruptcy process. The trustee will gather and sell all of your non-exempt assets. The proceeds from the sale will be used to settle some or all your creditors.

Non-exempt assets are assets and property that can be sold in a Chapter 7 case. These include second homes, vacation homes, second cars, stocks, family heirlooms, cash, bonds, bank accounts, and other investments. However, you will still be left with your exempt assets, such as your primary home, car, clothing, furniture pieces, and household appliances.

Who Qualifies for Chapter 7?

Qualifying for Chapter 7 bankruptcy in Florida requires passing the bankruptcy "means test." The bankruptcy “means test” will review your financial history, deduct payments and expenses, and determine your amount of disposable income.

If your income is less than the median income for your household size in Florida, you will automatically pass the bankruptcy means test. Below is the median income for each household size in Florida:

• One-person household — $53,182

• Two-member household — $66,748

• Three-member household — $71,689

• Four-member household — $85,203

*Add $9,000 for each person in a household in excess of four members.

The figures listed above are for cases filed on or after May 15, 2021, but they're updated regularly.

Additionally, eligible candidates must take a mandatory credit counseling course from an accredited U.S. Trustee agency in Florida before filing. Also, candidates will take another debtor education course upon filing for Chapter 7 to receive their bankruptcy discharges.

When Is Chapter 7 a Good Option?

Chapter 7 may be a good option if:

• You have a small number of assets.

• Your income is lower than the median income for your household size in your state.

• You have medical expenses, credit card balances, and personal loans that can be eliminated or discharged.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, or "wage earner's" bankruptcy, is available to individuals and couples who earn a reasonable income but are facing an overwhelming debt burden. In a Chapter 13 case, the debtor will propose a repayment plan to their creditors and the court while taking all debts into account.

The bankruptcy trustee and your creditors will review and object to your proposed payment plan or make necessary adjustments. Once every party is satisfied with the repayment plan, the bankruptcy court will set up a confirmation hearing to review and officially approve the plan.

The Chapter 13 repayment plan allows you to pay off some or all of your creditors over an extended period using your future income or earnings. The repayment plan will be structured over a period of three to five years. Above all, you will be allowed to retain your assets, including your home and cars.

Who Qualifies for Chapter 13?

Only individuals who have a "regular source of income" can qualify for Chapter 13 bankruptcy in Florida. Also, you can file for Chapter 13 if your income is more than the median income for your household size in the state of Florida.

When Is Chapter 13 a Good Option?

Chapter 13 may be an ideal option if:

• You earn a regular income that can help you keep up with the repayment plan.

• You own many properties, and you don't plan to lose any of your assets.

• Most of your debts are student loans, non-dischargeable tax, or domestic support obligations (spousal support and child support payments).

Chapter 11 Bankruptcy

Chapter 11 bankruptcy, or "reorganization" bankruptcy, is designed to help consumers and businesses going through financial distress restructure their business operations, affairs, assets, and debts. Filing for Chapter 11 bankruptcy can give you sufficient time to reorganize your finances and eventually pay back your debts.

In a Chapter 11 bankruptcy case, the debtor (business or corporation) will propose a reorganization plan to repay creditors while keeping the business afloat. Both the creditor and the court must approve the proposed reorganization plan. Unfortunately, it can be expensive and time-consuming to file for Chapter 11.

Who Qualifies for Chapter 11?

You can file for Chapter 11 bankruptcy if:

• You are a business owner who needs time to reorganize their finances and debts.

• Your secured debt or unsecured debt exceeds the limits of a Chapter 13 bankruptcy filing.

When Is Chapter 11 a Good Option?

Chapter 11 may be an ideal option if:

• You own a business or large corporation.

• You want to keep running your business while you restructure your assets, business affairs, and debts.

• You have more debt to reorganize than allowed under the Chapter 13 "debt limit."

A knowledgeable Florida bankruptcy attorney can help evaluate your unique financial situation and determine the ideal bankruptcy option to help you achieve debt relief.

Hiring an Experienced Bankruptcy Attorney

Filing for bankruptcy is quite common in Florida and should never be seen as a desperate move. According to statistics from the American Bankruptcy Institute, there were 37,452 total bankruptcy filings in Florida in 2020, including 27,688 Chapter 7 filings, 572 Chapter 11 filings, and 9,169 Chapter 13 filings. However, due to the complexities involved, it is never advisable to navigate the bankruptcy process all on your own. Therefore, hiring an experienced bankruptcy attorney is crucial to evaluate your available options and for proper guidance.

Attorney David K. Blazek has the experience and resources to assist and guide consumers through the complex bankruptcy filing procedures. As your legal counsel, he can review your financial situation and explore your available bankruptcy options. Whether you are considering filing for Chapter 7, Chapter 11, or Chapter 13 bankruptcy, Attorney David K. Blazek can enlighten you about the benefits and downsides of each chapter and determine your eligibility. Also, he will help with the required documentation, represent you in bankruptcy court, and guide you through every phase of the legal proceedings.

Contact The Law Offices of David K. Blazek, P.C. today to schedule a simple case assessment with an experienced bankruptcy lawyer. Attorney David K. Blazek can provide you with the detailed legal guidance, support, and brilliant advocacy you need to navigate key decisions in your bankruptcy case. The firm is proud to serve clients across Tampa, Miami, Jacksonville, and Orlando, Florida, as well as Atlanta, Macon, and Columbus, Georgia.