Divorce Attorney in Brandon, FL
Bankruptcy

Brandon Bankruptcy Attorney

Debt Relief for Florida Individuals & Businesses

The legal team at the Law Office of Thomas P. Gill, Jr. has extensive experience representing individuals and businesses in bankruptcy. Below we have provided a discussion about Chapter 7 and Chapter 13 bankruptcy to help you understand the differences between the two.

Chapter 7 Bankruptcy

Chapter 7 is known as liquidation bankruptcy, where the trustee liquidates nonexempt assets in order to pay off your debt. By the end of Chapter 7, nearly all debt is discharged within several months of filing the chapter. Most debtors attempt to file a Chapter 7 to avoid the monthly payments to the trustee.

What to expect when filing Chapter 7:

  • Filing the petition: Upon the filing of the petition, an automatic stay goes into effect, which makes it illegal for anyone to attempt to collect any money from the debtor. Any pending suits, such as foreclosures, are stopped, and all collection calls from creditors stop. In fact, anyone who violates the stay could be held in contempt of the bankruptcy court.
  • Creditor meeting: Approximately 30 days after the debtor files the petition, the first meeting of creditors is held by the bankruptcy trustee. The trustee is a lawyer that the court appoints to do all the "legwork" for the court in the case. At this meeting the trustee asks the debtor a series of questions under oath about his or her finances and the petition. Creditors may ask questions as well, if they choose to appear.
  • Discharge: Once the first meeting is over, the debtor typically waits for the court to process the file. If all goes well, 90 days after the first meeting, the court will enter the discharge order. The discharge is the key order in the case, and it provides that the dischargeable debts are forgiven and the debtor is not responsible to pay them. In most cases unsecured debts (debts without collateral), such as credit card bills, medical bills, and deficiencies on foreclosed homes or repossessed cars, are discharged. This is the "fresh start" bankruptcy is designed to provide. Typically, the bankruptcy case is closed shortly after the discharge is entered.
  • Secured debt: For each secured debt (where the debtor has pledged collateral, such as a home mortgage or car loan), the debtor must decide to reaffirm the debt or surrender the collateral. To reaffirm, the debtor enters into a contract with the creditor which says that the debtor will pay the debt in exchange for keeping the collateral. Alternatively, the debtor may elect to surrender the collateral in exchange for having the debt discharged.

Exemptions Under Chapter 7

There is a common misconception that bankrupt debtors lose all their assets. This is not true, because the Bankruptcy Code provides exemptions which state that the debtor may keep certain types and amounts of assets.

For example, the debtor will keep the equity in his or home, all retirement accounts, and $1,000.00 of miscellaneous personal property. The goal in any bankruptcy is to exempt all assets, but in some cases assets over the exemptions can be claimed by the court to be sold to pay some of the creditors.

In the hands of a competent bankruptcy attorney, Chapter 7 can be an effective tool to give the debtor a fresh start while keeping his or home and other assets.

Chapter 13 Bankruptcy

In a case when a Chapter 7 filing is inappropriate, a debtor might be able to file under Chapter 13. Chapter 13 is essentially a repayment plan that allows the debtor to repay a portion of the debt over a period of time, allowing an individual to restructure his or her debt to keep more assets than could be retained in a Chapter 7. Chapter 13 is akin to a business which files Chapter 11 to restructure its debt, then continues doing business.

What to expect when you file for Chapter 13:

  • Filing: To begin a Chapter 13 case, the debtor files a petition that is very similar to a Chapter 7 petition. However, in addition to the petition, the debtor must file a Chapter 13 plan. The plan is the debtor's proposal to restructure his or her debt.
  • Creating a repayment plan: A typical Chapter 13 plan provides that the debtor will use his or her income to pay his living expenses, then make payments to secured creditors for debts the debtor has reaffirmed, such as a home mortgage. The plan also can provide for catching up an arrearage on those debts, so that mortgages and other secured debts can be brought current. The plan then provides that any "extra" income left over will be paid to the trustee, who will pay the unsecured creditors a portion of their debts. Typically, a plan must be in effect for sixty months, and each month the debtor makes a payment to the trustee.
  • Repaying debt then discharge: The Chapter 13 plan is submitted to the court for approval. If the court approves the plan, and the debtor makes all the monthly payments called for by the plan, the court enters a discharge for any unsecured debt that remains unpaid at the conclusion of the sixty months. If the debtor successfully completes the plan, he or she keeps all assets.

When Chapter 13 Is Preferred Over Chapter 7

Generally, there are three reasons to file a Chapter 13:

  • First, the debtor may have significant assets that cannot be exempted in a Chapter 7.
  • Second, the debtor might have too much income to qualify for a Chapter 7 under the Bankruptcy Code.
  • Third, if the debtor is "upside down" on his or her first mortgage, the debtor can ask the court to dissolve the lien related to a second mortgage.

Is Bankruptcy Right for You?

We know that you probably have a lot of questions about whether you qualify for a certain chapter and which chapter is right for you. You can explore your options with the Brandon bankruptcy lawyer at the Law Office of Thomas P. Gill Jr., P.L. to learn more.

Call (813) 305-0353.

What Makes Us Different?

  • 30 Years of Legal Experience

  • Every Case is Handled by Thomas P. Gill

  • Empathetic & Compassionate Counsel

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