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2022 Guide To File Chapter 13 Bankruptcy In Florida 

How to File Bankruptcy Chapter 13

When you hear the word bankruptcy, it may fill you with dread, but sometimes it can be the best option when your debts are mounting up to an unmanageable level.

When you file for Chapter 7 bankruptcy, all of your debts are wiped out, but there can be a serious downside to this in terms of how they are repaid. With Chapter 13 bankruptcy, you have the possibility of entering a debt repayment plan without losing so much in the way of assets.

Robert Stiberman, a Chapter 13 bankruptcy attorney at the Stiberman Law Firm will explore when Chapter 13 bankruptcy could be the best option for you.

Table of Contents

    Advantages of Chapter 13

    Chapter 13 bankruptcy can work in your favor in several ways:

    • It will stop foreclosure proceedings against your home, although you must still keep up with monthly payments on your mortgage during the Chapter 13 bankruptcy.
    • You are often able to reschedule secured debts, which may mean less to pay each month.
    • You will have no direct contact with your creditors; everything will go through an agent, who will divide your monthly payments between the creditors on your behalf.

    Chapter 7 vs. Chapter 13 Bankruptcy

    Chapter 7 bankruptcy can be the best choice if you do not have any non-exempt assets and are able to wipe out all your debts completely.

    However, there are some serious disadvantages that come with this type of bankruptcy. For example, if you are unable to claim an exemption, you may lose property and other assets, such as your car. In addition, Chapter 7 can stay on your credit report for up to 10 years, which will make it difficult to get new lines of credit.

    If you have a regular income, Chapter 13 could be a better option as it will allow you to keep your assets and restructure debt so it is more manageable. It should be noted that Chapter 13 bankruptcy stays on your credit report for seven years, but this is still shorter than the 10-year mark for chapter 7 bankruptcy.

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    Chapter 7 vs Chapter 13 Bankruptcy

    Unsecured Debt vs Secured Debts

    One important element of Chapter 13 bankruptcy is the understanding of unsecured and secured debt. Unsecured debt is not attached to any assets, which means that if you don’t make the payments, the creditor may not be able to recoup their losses. Credit card debt is usually unsecured, as is medical debt.

    Secured debt is when an asset, such as your home or car, is used as collateral for the loan. If you don’t make the payments on a secured loan, the creditor can repossess the asset. A mortgage is a type of secured debt.

    The major advantage of Chapter 13 over Chapter 7 bankruptcy is that with Chapter 13 you can reschedule secured debts so they are more manageable. This means you are less likely to lose your home or car if you fall behind on payments.

    Unsecured Creditors

    If you have unsecured creditors, they will be paid a percentage of what you owe them based on your disposable income, which is what’s left after essential living expenses and secured debts have been paid.

    For example, if you have a $10,000 credit card debt and your disposable income is $200 per month, the creditor would only receive $200 over the life of the repayment plan, which is usually three to five years.

    Secured Creditors

    With secured creditors, you will still need to make monthly payments on the asset that has been used as collateral, such as your home or car. In some instances yo may be able to reduce the loan amount based on the value of the asset at the time of bankruptcy. This can be applied to vehicles where you obtained the financing more than 910 days prior to filing or to investment properties that are underwater.

    How Does Chapter 13 Work?

    When you file for Chapter 13 bankruptcy, you will present a reorganization plan to the local bankruptcy court that details how you propose to deal with your debts. The plan reorganization period is usually three to five years.

    Your monthly payments will be made to a bankruptcy trustee who will then distribute the funds to your creditors. In most cases, you will only have to repay a portion of your debt, and the rest may be discharged.

    It’s important to note that you must have a regular income in order to qualify for Chapter 13 bankruptcy; if you don’t, Chapter 7 bankruptcy may be a better option. Regular income does not necessarily mean income from employment- a Chapter 13 plan payment can often be funded from family support (even when the person fling is not empoyed)

    Chapter 13 Eligibility

    Anyone, whether they are working for a company or are self-employed, can file for chapter 13 bankruptcy as long as their unsecured debts are below $465,275 and their secured debts are below $1,395,875.

    There are some exceptions. There may be instances where you have previously filed for bankruptcy and may have to wait a certain amount of time to file a new case. There may also be situations where your previous case was dismissed by the court with a prejudice period in which case you will have to either wait out the prejudice period or seek court permission prior to filing a new case.

    As long as you have been previously compliant with any such proceedings or if you have not filed for bankruptcy before and your debts fall within the figures specified above, you should have nothing to worry about.

    Applicants must be individuals, not businesses

    To file for Chapter 13, you must be an individual. You cannot file on behalf of a business.

    No recent bankruptcy discharges

    There is a waiting period attached to the previous bankruptcy filing. If you discharged debt in a previous Chapter 13 bankruptcy in the past two years or in Chapter 7, 11, or 12 bankruptcy within the past four years, you must wait until this time period has expired.

    Previous bankruptcy case not dismissed with prejudice

    In some instances the bankruptcy judge may dismiss your case with a 180 prejudice period, where you must wait until 180 days have passed before you can file for a chapter 13 bankruptcy.

    Must fulfill credit counseling requirement

    If you file for bankruptcy, you must have received credit counseling within 180 days before filing. The credit counselor must also be from an approved agency.

    Total debt within limits

    The total amount of your unsecured debt, meaning those debts with no guarantee from an asset, must not exceed $465,275. These kinds of debts could be personal loans, credit card debts, or anything similar. The total amount of your secured debts, such as a mortgage or auto loan, must not exceed $1,395,875.

    If behind on your income taxes, must be able to get current during the chapter 13 bankruptcy period

    You must be up-to-date with all of your income tax filings in order to qualify for Chapter 13 bankruptcy, and you must keep on track with this during the repayment period once the bankruptcy plan begins.

    Be able to pay all required debts and some unsecured debts

    If you are entering a Chapter 13 bankruptcy, you must be able to pay any tax debts and child support payments you may owe as well as keep up with your mortgage payments and auto loan if you want to keep hold of your home and car. You do not necessarily have to be able to clear all of your unsecured debts as long as you can agree to a repayment plan where all of your disposable income will go toward settling these during the time period of the plan.

    Must have sufficient income

    Your average monthly income must be enough to be able to realistically enter a repayment plan. The bankruptcy court will need evidence of your monthly income in order to establish whether a plan will be possible.

    What Are the Steps to Filing a Chapter 13 Bankruptcy?

    Step 1: Collect your documents

    You will need to get hold of your credit report, which you can do for free once a year. Then you will need to find out who all of your creditors are and how much you owe. You will need to gather together any documents that will be relevant to your filings, such as bank statements, tax returns, mortgage statements, and basically anything that relates to your assets or income.

    Step 2: Analyze your debt

    Once you have all of your documents together, you will need to list all of your debts and work out which fall into the secured debts category, which are unsecured, and which ones are the highest priority for you to repay. Child support and tax debts are generally of the highest priority, along with mortgage and car loan debts. After this will come credit cards, personal loans, and anything else for which you may be able to lower the payments.

    Step 3: Take inventory of the property you have

    You need to list all of the property you own, because some of it may be protected by bankruptcy exemption laws. However, you will still have to make regular mortgage payments, and you need to be aware of every monthly payment you will need to cover relating to properties.

    Step 4: Create a budget and figure out the status of your income

    Whatever the source of your income, you will need to show the courts that you have enough to cover your monthly living expenses and keep up with a debt settlement program. You need a tangible plan where you can demonstrate your income. You can even file for Chapter 13 bankruptcy if you are unemployed as long as any benefits or other income you are receiving will be enough to keep up with repayments.

    Step 5: Take the first credit counseling course

    The first step with any Chapter 13 bankruptcy is to complete the credit counseling course, which can be done over the telephone or online, will take around an hour, and will cost between $10 and $50. For very low-income households the fee may be waived.

    Step 6: Fill out and complete your bankruptcy forms

    One of the biggest steps in figuring out if Chapter 13 bankruptcy is for you is knowing that you will have to complete around 23 different official bankruptcy forms, which add up to around 70 pages in total. These will give the courts all of the information required on what you earn, what you owe, what you own, and what remaining funds you have to cover your debts when your monthly payments have been taken.

    Step 7: File your Chapter 13 Bankruptcy petition and pay the filing fee

    When attending the court hearing, you will need to print out and bring along your credit counseling certificate along with all of the forms you completed, which must be signed in all of the relevant places.

    There is a filing fee of $313 for Chapter 13 bankruptcy, which is paid to the local bankruptcy court.

    nth after filing for bankruptcy, then you will have to attend a 341 meeting which your creditors can attend, but it is unlikely that they will.

    After this will be the confirmation hearing, at which the bankruptcy judge assigned to your case will be present. If neither your creditors nor your trustee has any objections to your filing for Chapter 13 bankruptcy, then your case will be approved and a repayment plan will soon begin.

    Step 10: Keep up with your Chapter 13 plan payments

    Bankruptcy basics—rule one: keep up with your repayments!

    Once your case is approved, this is basically all you need to do for the next 3 to 5 years until you can be discharged from bankruptcy. Sounds simple, but of course, your regular income needs to stay in place, and any other debts arising may complicate things. Ensure that you stick to the plan no matter what, and you will know when you can move on to the next phase of your life.

    Step 11: Take the second debtor education course and receive your discharge

    There is a second debtor education course to take before you can receive your discharge. There are certain debts you may not have had to repay in full. Some unsecured debts you may have been required to pay a percentage of, and then the rest would be waived upon discharge.

    This course helps to develop a debt management plan and understand how to stay on track with your repayments during Chapter 13 bankruptcy. It also teaches you about what happens if you do not keep up with your repayments, and the consequences that can follow. This is an important step to ensure that you understand the commitment you are making when filing for Chapter 13 bankruptcy.

    Step 12: Discharge and completion

    Your repayment plan will last for 3 to 5 years, and once this is completed you will be discharged from bankruptcy. This means that most of your remaining debts will be wiped clean and you can start to rebuild your life.

    There are a number of rules and regulations surrounding bankruptcy, which is why it’s important to seek professional help before making any decisions. An experienced attorney will guide you through the process and ensure that everything is being dealt with in the most efficient way possible.

    We will also be able to offer advice on alternatives to bankruptcy if they feel it’s not right for your particular situation.

    How Chapter 13 can affect your credit score?

    Chapter 13 bankruptcy can affect your credit score in a few ways.

    First, if you have delinquent accounts that are included in your Chapter 13 repayment plan, your creditors may report these accounts as “current” on your credit report. This can help improve your credit score.

    However, the fact that you have filed for bankruptcy will still show up on your credit report for seven to ten years, which could hurt your score.

    Second, making timely payments under your Chapter 13 repayment plan can help improve your payment history, which is a major factor in determining your credit score.

    Finally, as you complete your Chapter 13 repayment plan and your debts are discharged, this positive information will be reflected on your credit report, which could further improve your score.

    Schedule A Free Consultation For Chapter 13 Bankruptcies Or Other Debt Relief Options

    Filing bankruptcy doesn’t need to be complicated. If you are considering Chapter 13 bankruptcy or any other debt relief options, the Stiberman Law Firm can help. We offer free consultations so you can learn more about your options and find the best solution for your unique situation. Contact us today and get started on your road to financial freedom.

    Written By:

    Attorney Robert Stiberman

    Robert is an experienced bankruptcy attorney with more than 13 years of experience in consumer Chapter 7 and Chapter 13 cases. Robert regularly practices in the Miami, Fort Lauderdale, and West Palm Beach Divisions of th... Read More

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