Choosing Between Chapter 7 and Chapter 13 Bankruptcy

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As the video above points out, a key concern in choosing between Chapter 7 and Chapter 13 bankruptcy is whether your goal is to preserve assets.

At Kramer Law in Orlando, we provide consumer bankruptcy representation and alternative debt relief solutions beyond bankruptcy. We apply bankruptcy exemptions under Federal and Florida State laws to help families protect certain properties and assets in bankruptcy.

Under Florida personal bankruptcy law, exempt assets are the property you own that cannot be sold by the court to repay your creditors.

In Chapter 7 bankruptcy, a person’s nonexempt assets are liquidated—meaning they are turned over to the bankruptcy trustee and sold, with the proceeds going to pay off creditors. Examples of nonexempt assets that are used as payment to creditors are: cash, bank accounts, stocks and other investments, a second vehicle, a second home or vacation home, family heirlooms, and valuable collector items.

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Next, the majority of unsecured debts such as credit card debt, many personal loans, and medical bills, are eliminated. Most or all debt is wiped away. A Chapter 7 bankruptcy is typically completed in less than six months

Chapter 13 bankruptcy is a repayment plan in which secured debts, like a home mortgage or a vehicle loan, are made current, and unsecured debts, such as credit cards or medical bills, are paid back at less than full value. Many if not all of assets are protected.

Chapter 13 bankruptcy is one of many means of preventing foreclosure, vehicle repossession, and other debt related issues. A Chapter 13 bankruptcy lasts over a period of 3 to 5 years.

Understanding Florida Personal Bankruptcy Choices

As Orlando bankruptcy attorneys, we understand that every individual faces his or her own particular challenges. Choosing between Chapter 7 and Chapter 13 bankruptcy includes taking stock of your financial situation and goals:

  • Do you qualify for Chapter 7 bankruptcy?
  • Would you be able to pay your debts within 3-5 years under a Chapter 13 bankruptcy?
  • Are you being sued by creditors?
  • Are you trying to save your home from foreclosure?
  • Are you trying to keep from losing your car?
  • Do you have other property or assets you want to protect?
  • Has credit card debt spiraled out of control to the point of financial collapse?
  • Are medical bills beyond your ability to pay?
  • Are you still working? Is a steady form of income available to you?
  • Do you owe child support, alimony, student loans?
  • Do you owe tax debt?

A Bankruptcy Attorney’s Help is Critical in Choosing Options

No matter how you came to be in financial distress, you do have very practical, very workable options. If you are overwhelmed by debt, cannot make your payments, or if the bank is threatening to take your home, it is time to find out if bankruptcy is an option for you. And a critical element of bankruptcy is understanding exempt property and how that affects you.

Florida’s statutes on bankruptcy exemptions are complex. A Kramer Law attorney can evaluate your financial situation from every angle, and work with you and your family to determine what course will be most beneficial. We may find that in your case, debt settlement or foreclosure defense is the better solution in your situation.

If mounting debt is pulling you under, in Orlando contact Kramer Law today.

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