September 6, 2009

Florida Bankruptcy Checklist

Chapter 13, or the “Wager Earner’s Plan” is a type of Florida bankruptcy that allows the debtor to keep many assets and repay some of all of his or her debts. In 2005, sweeping reforms to the Bankruptcy Code were signed into law that tightened the requirements to file certain kinds of bankruptcy and brought closer scrutiny on both filers and bankruptcy attorneys. Bankruptcy filings, including FL bankruptcy, had increased exponentially for several years before these reforms were put in place and many felt that the system was rift with abuses. As a result, debtors must pass stringent qualifications before they can file bankruptcy and, unlike before, the new reforms determine which type of bankruptcy debtors may use.

Some important points about Chapter 13:

•    Secured debts cannot exceed $922,975
•    Unsecured debts cannot exceed $307,675
•    Income must be sufficient to repay debts as structured by the court.
•    Must complete credit counseling and provide certificate to court along with filing package.
•    Must submit previous year’s tax return and proof taxes were paid to court.
•    Pay filing fee of $274.00
•    Chapter 13 payments must commence within 30 days after case is submitted to court.
•    Payments must be made to trustee or deducted from payroll check if income is regular.
•    If average monthly income over the last six months is higher than the state median income, a five year Florida bankruptcy plan is proposed.
•    If average monthly income over the last six months is lower than the state median income, then a three year plan is proposed.
•    If unavoidable circumstances prevent timely payments, then the court may adjust your plan. In the case of extreme hardship, for example the closing of the only production plant in a small town, the court may completely discharge your debts.
•    If the court will not alter your plan nor dismiss your debts, then you may convert to a Chapter 7 plan, or absolute bankruptcy, to discharge all your debts.
•    Chapter 13 ends when the payment plan is completed. All debts eligible for discharge will be discharged. Proof must be presented of successful completion of financial management education (not to be confused with the training required before the case is filed), and you are current on all child support and alimony payments.