Consider Your Options Before Filing For Bankruptcy In Florida

According to the United States Courts, the Middle District of Florida had the highest number of bankruptcy filings among all the districts in Florida in 2021. Middle District of Florida had 36,786 total filings (26,047 Chapter 7 filings, 10,080 Chapter 13 filings, 659 Chapter 11 filings), Southern District of Florida had 18,058 total filings (12,187 Chapter 7 filings, 5,825 Chapter 13 filings, 46 Chapter 11 filings, and Northern District of Florida: 7,365 total filings (5,170 Chapter 7 filings, 2,187 Chapter 13 filings, 8 Chapter 11 filings). Overall, there were a total of 62,209 bankruptcy filings in Florida in 2021.

As of June 30, 2021, Florida’s total outstanding debt was approximately $28.9 billion. Of that debt, approximately $21.4 billion was general obligation debt, which is backed by the full faith and credit of the state. The remaining $7.5 billion was non-general obligation debt, which is backed by specific revenue sources or other collateral. Florida’s debt per capita as of June 30, 2021, was $1,335. 

What Are The Bankruptcy Laws In Florida?

Bankruptcy laws in Florida are primarily governed by the U.S. Bankruptcy Code, which is a federal law. However, there are also some state-specific provisions that may apply to bankruptcy cases filed in Florida. Here are some key points to know about bankruptcy laws in Florida:

1. Types of Bankruptcy: Individuals in Florida may file for bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 is a liquidation bankruptcy, while Chapter 13 is a reorganization bankruptcy.
2. Exemptions: Florida has its own set of bankruptcy exemptions that determine what property a debtor may keep in a bankruptcy case. These exemptions include, but are not limited to, the homestead exemption, which allows debtors to protect their primary residence up to a certain dollar amount, and the personal property exemption, which allows debtors to keep certain personal property up to a certain dollar amount.
3. Means Test: Debtors in Florida must pass a means test to qualify for Chapter 7 bankruptcy. The means test determines whether a debtor’s income is below a certain threshold and whether the debtor has enough disposable income to pay back some or all of their debts in a Chapter 13 repayment plan.
4. Credit Counseling: Before filing for bankruptcy, debtors in Florida must complete a credit counseling course from an approved agency.
5. Automatic Stay: When a debtor files for bankruptcy, an automatic stay goes into effect that stops most creditors from taking any further collection actions against the debtor, such as lawsuits, wage garnishments, or foreclosure.
6. Bankruptcy Court: Bankruptcy cases in Florida are heard in the United States Bankruptcy Court for the Southern, Middle, or Northern District of Florida, depending on where the debtor lives.

What Types Of Bankruptcy Are There For Individuals?

There are two main types of bankruptcy that individuals can file for under the U.S. Bankruptcy Code: Chapter 7 and Chapter 13. Chapter 7 Bankruptcy is also known as “liquidation” bankruptcy, and it involves the sale of the debtor’s non-exempt assets to pay off their debts. In a Chapter 7 case, a trustee is appointed to liquidate the debtor’s assets and distribute the proceeds to creditors. Certain types of debt, such as tax debt, student loans, and some court-ordered judgments, may not be discharged in a Chapter 7 case. Chapter 13 Bankruptcy is also known as “reorganization” bankruptcy, and it allows debtors to keep their assets while paying off their debts over a three to five year period through a court-approved repayment plan. The repayment plan is based on the debtor’s disposable income, and it must be approved by the bankruptcy court. Once the debtor successfully completes the repayment plan, any remaining eligible debts are discharged. It’s important to note that there are specific eligibility requirements and other factors that may influence which type of bankruptcy is best for an individual’s particular situation.

What Types Of Bankruptcy Are There For Businesses?

There are several types of bankruptcy that businesses can file for under the U.S. Bankruptcy Code. The most common types of bankruptcy for businesses are:

1. Chapter 7 Bankruptcy: This is available to both individuals and businesses. In a Chapter 7 case, a trustee is appointed to liquidate the debtor’s assets and distribute the proceeds to creditors. For businesses, Chapter 7 is typically used when there are no viable options for reorganization and the business is no longer operating.
2. Chapter 11 Bankruptcy: This is also known as “reorganization” bankruptcy, and it is available to both individuals and businesses. In a Chapter 11 case, the debtor creates a plan to reorganize the business and pay off its debts over a period of time. The plan must be approved by the bankruptcy court and by the creditors. Chapter 11 is typically used by businesses that want to continue operating and need time to restructure their operations and finances.
3. Chapter 12 Bankruptcy: This is a specific type of bankruptcy for family farmers and fishermen. It is similar to Chapter 13 in that it allows the debtor to reorganize their finances and pay off their debts over a period of time.

Learn More about the 3 main types of bankruptcy

Considering Business Bankruptcy? Keep These Things In Mind

If you’re considering filing for business bankruptcy in Florida, there are several important things to keep in mind. Here are a few key considerations:

1. Type of Bankruptcy: As mentioned in the previous answer, there are different types of bankruptcy available for businesses. Consider which type of bankruptcy is best suited for your business, taking into account factors such as your debts, assets, income, and business structure.
2. Timing: Filing for bankruptcy at the right time can be critical for maximizing the benefits of bankruptcy and minimizing its drawbacks. Consider factors such as your business’s cash flow, upcoming obligations, and pending legal actions when deciding when to file for bankruptcy.
3. Bankruptcy Costs: Filing for bankruptcy can be expensive, with court fees, attorney fees, and other costs. Consider whether your business can afford these costs and whether the benefits of bankruptcy outweigh the costs.
4. Credit and Reputation: Filing for bankruptcy can have a negative impact on your business’s credit and reputation. Consider how bankruptcy will affect your ability to obtain credit in the future and whether it may harm your business’s relationships with customers, suppliers, and other stakeholders.
5. Alternatives to Bankruptcy: Bankruptcy may not always be the best option for a struggling business. Consider whether there are alternative options available, such as negotiating with creditors, restructuring your business, or seeking financing from investors.
6. Legal Requirements: Bankruptcy is a legal process that requires compliance with specific procedures and requirements. Make sure you understand the legal requirements for bankruptcy, including filing deadlines, documentation requirements, and creditor notifications.

What Debts Are Not Discharged In Bankruptcy?

Not all types of debts can be discharged, or eliminated, through bankruptcy. The types of debts that are not dischargeable depend on the type of bankruptcy that is filed. Here’s a general overview of the types of debts that are not dischargeable under the most common types of bankruptcy:

Chapter 7 Bankruptcy: Some debts that are not dischargeable under Chapter 7 bankruptcy include:

• Most tax debts
• Student loans
• Child support and alimony
• Debts incurred through fraud or intentional wrongdoing
• Fines or penalties imposed by government agencies
• Debts for personal injury or death caused by driving while intoxicated
• Debts for willful or malicious injury to another person or their property

Chapter 13 Bankruptcy: Some debts that are not dischargeable under Chapter 13 bankruptcy include:

• Most tax debts
• Student loans
• Child support and alimony
• Debts incurred through fraud or intentional wrongdoing
• Fines or penalties imposed by government agencies
• Debts for personal injury or death caused by driving while intoxicated
• Debts for willful or malicious injury to another person or their property

How Does Bankruptcy In Florida Affect Your Credit Score And Future Loans?

Filing for bankruptcy in Florida can have a significant impact on your credit score. When you file for bankruptcy, it will be reported to the credit bureaus and will remain on your credit report for several years, depending on the type of bankruptcy you file.

For Chapter 7 bankruptcy, it typically remains on your credit report for up to 10 years from the date of filing. For Chapter 13 bankruptcy, it typically remains on your credit report for up to 7 years from the date of filing. During this time, bankruptcy can negatively impact your credit score and make it more difficult to obtain credit or loans.

Does Bankruptcy In Florida Include Tax Debts?

Bankruptcy in Florida can have different effects on tax debts, depending on the type of tax debt and the type of bankruptcy that is filed.

Under Chapter 7 bankruptcy, tax debts may be eligible for discharge if they meet certain criteria. Generally, income tax debts can be discharged if all of the following conditions are met:

1. The tax debt is at least three years old.
2. The tax return for the debt was filed at least two years ago.
3. The tax assessment for the debt is at least 240 days old.
4. The tax debt was not incurred through fraudulent activity or willful tax evasion.

It’s important to note that some types of tax debts, such as payroll taxes and trust fund taxes, are not eligible for discharge under Chapter 7 bankruptcy.

Under Chapter 13 bankruptcy, tax debts are typically not discharged, but they may be included in the debtor’s repayment plan.

Statute Of Limitations For Collections In Florida

The statute of limitations for collections in Florida varies depending on the type of debt. The statute of limitations is the time period during which a creditor can sue a debtor to collect a debt. Once the statute of limitations has expired, the creditor is no longer legally allowed to sue the debtor to collect the debt.

Here are some of the statutes of limitations for collections in Florida:

1. Written contracts: 5 years
2. Oral contracts: 4 years
3. Promissory notes: 5 years
4. Open accounts (credit cards): 4 years
5. Judgments: 20 years (but may be renewed for additional 10-year periods)

It’s important to note that the statute of limitations may be extended if the debtor makes a partial payment on the debt or acknowledges the debt in writing. Additionally, some types of debts, such as tax debts and student loans, may have different statutes of limitations or no statute of limitations at all.

Cons Of Bankruptcy In Florida:

While bankruptcy can provide relief and a fresh start for those struggling with overwhelming debt, there are also some potential downsides or cons to consider. Here are a few cons of bankruptcy in Florida:

1. Impact on credit: Filing for bankruptcy can have a significant negative impact on your credit score, making it more difficult to obtain credit or loans in the future. A bankruptcy filing can remain on your credit report for up to 10 years for Chapter 7 bankruptcy and up to 7 years for Chapter 13 bankruptcy.
2. Cost: Filing for bankruptcy can be expensive, as there are fees associated with the process, as well as potential legal and credit counseling fees.
3. Loss of assets: Depending on the type of bankruptcy and the exemptions available, some assets may be sold or liquidated in order to pay off creditors. This can include personal property, real estate, and investments.
4. Public record: Bankruptcy is a matter of public record, which means that your financial information will be available to the public and potential employers, landlords, or lenders.
5. Future limitations: There may be limitations on certain types of financial activities or transactions following a bankruptcy filing, such as obtaining credit or opening new accounts.

Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy

Why People Regret Filing Bankruptcy

There are several reasons why people may regret filing for bankruptcy, despite the potential benefits. Here are some common reasons why people may regret filing for bankruptcy:

1. Emotional toll: Filing for bankruptcy can be a stressful and emotional process, and it can take a toll on your mental health and self-esteem.
2. Impact on credit: As mentioned earlier, filing for bankruptcy can have a significant negative impact on your credit score, making it more difficult to obtain credit or loans in the future.
3. Limited options: Bankruptcy may not solve all of your financial problems and can limit your options for managing debt in the future. For example, some types of debt may not be eligible for discharge in bankruptcy.
4. Loss of assets: Depending on the type of bankruptcy and the exemptions available, some assets may be sold or liquidated in order to pay off creditors. This can include personal property, real estate, and investments.
5. Public record: Bankruptcy is a matter of public record, which means that your financial information will be available to the public and potential employers, landlords, or lenders.

Will You Lose Assets In Bankruptcy In Florida?

Whether or not you will lose your assets in bankruptcy in Florida depends on several factors, including the type of bankruptcy you file and the exemptions available to you.

In a Chapter 7 bankruptcy, also known as liquidation bankruptcy, the bankruptcy trustee may sell some of your assets to pay off your creditors. However, Florida law provides generous exemptions for certain types of assets, such as your homestead, personal property, and retirement accounts. These exemptions can protect your assets from being sold in bankruptcy.

In a Chapter 13 bankruptcy, also known as reorganization bankruptcy, you typically do not need to sell any of your assets to pay off creditors. Instead, you work with the bankruptcy court to create a repayment plan that allows you to pay off your debts over a period of three to five years.

What Happens If You Do Not Qualify For Bankruptcy In Florida?

If you do not qualify for bankruptcy in Florida, it may be because you do not meet the eligibility requirements or have too much income or assets to file for Chapter 7 bankruptcy. In this case, you may need to consider alternative debt relief options. Such as Debt settlement. Debt settlement involves negotiating with your creditors to settle your debts for less than what you owe.

If you do not qualify for bankruptcy, you may need to explore other debt relief options, such as debt settlement.

Why Is Debt Settlement In Florida A Better Option?

There are some potential benefits to debt settlement over bankruptcy that may make it a more favorable option for some individuals.

1. No BK on your credit report: Filing for bankruptcy shows on your credit report for up to 10 years. On the other hand, debt settlement does not show as a bankruptcy.
2. Cost: Filing for bankruptcy can be expensive, with filing fees, attorney fees, and other costs adding up quickly.
3. Emotional Impact: People report horror stories of the negative emotional impact of BK.
4. With a bankruptcy for the rest of their life: Employers or lenders can ask if someone has filed BK for the rest of their life. It is much less likely to be asked if one ever used debt settlement to pay back an agreed to amount.
5. Control: With debt settlement, you may have more control over the process and negotiations with your creditors, whereas with bankruptcy, a court will make the final decision.
6. Less severe consequences: Filing for bankruptcy can have significant consequences, such as the liquidation of your assets, whereas debt settlement may allow you to negotiate a more manageable repayment plan while keeping your assets.

Bankruptcy vs. Debt Relief: What’s Right For You and How We May Be Able To Help

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