The first impression of bankruptcy is typically one with a negative connotation as it occurs when an individual or business, called a debtor, owes more debt than they can afford to pay. Such debt can arise out of large expenses that may include but are not limited to unemployment, hefty medical bills, overextended credit, or simply difficulty paying notes on a home or car. Under 11 U.S.C. § 101 (2019), federal law outlines basic details for bankruptcy claims, including a clause that allows states to decide on whether to follow federal or state bankruptcy statutes. Florida is noted to have chosen the latter, thus rendering all bankruptcy claims filed within the state pursuant to state law. To simply, Florida law will dictate how Florida claims are to be handled.
In order to escape their deficits, debtors would then go into court with the hopes of discharging their legal obligation to pay or formulating a plan to pay the bills back in the future. But it is not always this simple, as there are multiple different types of bankruptcy and their own respective methodologies to take care of them. The two most common forms are Chapter 7 and Chapter 13, originating from the aforementioned U.S. Code. Chapter 7 is a process in which the filer’s debt is forgiven in exchange for nonexempt, or nonessential under the governing law of the jurisdiction, assets. Essentially, their debt is wiped clean after distributing their previously owned assets to the creditors. To contrast, though, Chapter 13 is less about the elimination of one’s debt and more about the reorganization of finances. During this kind of proceeding, a payment plan is worked out between the debtor and creditor(s) to manage the lingering debt.
Bankruptcy can be someone’s second chance for financial freedom, but it must be done meticulously and correctly as there are long term legal and financial commitments regardless of the result. And although everyone’s situation differs, it is still strongly encouraged to hire a Miami Bankruptcy Attorneys as legal counsel to guide you through the nooks and crannies that exist within bankruptcy law. PereGonza The Attorneys can offer a free consultation and give you insight on what the best course of action for your specific case may be. Fill out our personal intake form for more information.