Filing for personal bankruptcy may be the best solution for some individuals facing financial hardship, but many Florida residents do not understand the benefits of filing bankruptcy. There are consequences when one files for bankruptcy protection, but there are also options available to individuals so that they can create a bankruptcy plan that will best resolve their unique financial troubles.
There are many misconceptions regarding bankruptcy protection that may affect an individual’s decision to pursue filing for Chapter 7 or Chapter 13 in the state of Florida. In our next couple of posts, our bankruptcy law blog will discuss some common misconceptions about bankruptcy and how bankruptcy can help individuals regain control of their finances.
Many people believe that they will lose everything if they file bankruptcy. This is because many individuals do not realize that there are different types of bankruptcy filings. Chapter 7 and Chapter 13 are the most common options when filing for personal bankruptcy. When one files for Chapter 7 in Florida, any of the individual’s assets that are not considered exempt will be liquidated. The proceeds from selling the assets are then distributed to creditors to go toward paying off the individual’s debt.
When one files for Chapter 13 in Florida, the individual has the option to reorganize debt. This means that a debtor can choose to keep certain assets such as a car or house by reaching an agreement with creditors regarding a payment plan to pay off all or most of the debt on the house or vehicle. Although a creditor must accept a payment plan before the individual can keep his or her selected assets, many creditors will accept payment plans in order to receive a better recovery on the debt.
We will continue this discussion later this week focusing on some other misunderstandings Florida residents have about Chapter 7 and Chapter 13 bankruptcy.
San Francisco Chronicle: “5 Myths About Personal Bankruptcy,” Angie Mohr, 5 May 2011