Florida is a state that has been especially hard-hit by the economic crises of the last few years. They are eleventh in the nation in unemployment rates, and sixteenth in the number of bankruptcy filings. There is no doubt that many more are considering that option, as no real relief appears to be hitting the middle and lower classes as of yet. Is this the right choice for every struggling debtor? The more information they have, the more able they are to make that decision.
Finding a Bankruptcy Attorney
Along with information, one of the best sources of expert help is a bankruptcy attorney. Despite the outward simplicity, there are key elements that must be examined to determine the needs of each consumer. Bankruptcy lawyers can provide that legal and financial expertise. However, retaining a bankruptcy attorney is a vital decision, and debtors should consult with a number of potential attorneys, check their background and histories, and determine the best choice carefully.
Bankruptcy Options
The two most common options are Chapter 7 and Chapter 13. The differences, however, are significant.
- Chapter 13 is a restructuring of a debtor’s finances and debts to enable them to pay all their creditors within three to five years. Those with significant property they do not want to see liquidated generally choose this option.
- Chapter 7 includes a liquidation of unprotected property in order to pay off some creditors, while discharging the remaining eligible debt. Those with no assets or few assets often choose this option.
Florida Exemptions
Those who file Chapter 7 bankruptcy can, by law, claim exemptions for certain types and amounts of property. Both federal and state exemption statutes exist; however, Florida allows filers to use only state exemptions, which include:
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Homestead |
Unlimited - Equity in a Primary Residence is Completely Exempt. This allows debtors to transfer non-exempt assets toward equity to keep more property. |
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Personal Property |
Prepaid hurricane savings accounts, prepaid medical savings accounts; prepaid college education trust accounts; motor vehicles up to $1,000; prescribed health aids; federal income tax credits or refunds; funeral contract deposits; other personal property up to $1,000 total |
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Wages |
Head of households, 100% up to $500/wk of paid or unpaid wages; federal government employee’s pension payments |
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Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; state officers and employees; county officers and employees, firefighters, police; ERISA qualified benefits; teachers |
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Public Benefits |
Public assistance; unemployment; veteran’s benefits; Social Security |
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Insurance |
Death benefits payable to a specific beneficiary; annuity contract proceeds; life insurance cash surrender value; disability or illness benefits; fraternal benefits |
Filing the Petition
These exemptions must be listed on the bankruptcy petition. Before it can be filed, however, the debtor must complete credit counselling before the bankruptcy trustee takes charge of the proceedings to liquidate funds for Chapter 7 debtors or create a repayment plan for those filing Chapter 13. Shortly thereafter, the filer and their attorney must attend a 341 meeting with their creditors to answer any questions. Finally, if everything is in order, the bankruptcy proceeding is complete and those with their obligations discharged are free from debt. Those filing Chapter 13 have a reorganization plan to enable them to be debt free in the designated period.
