Chapter 13 Bankruptcy
What Is Bankruptcy?
Bankruptcy is a process allowed by federal law, and administrated through federal Courts (as opposed to state courts) designed to allow businesses and consumers eliminate certain debts, refinance and restructure other debts, and generally reorganize financial affairs to allow for a financial fresh start.
Two Types Of Bankruptcy For Consumers
For most consumers looking at avoiding foreclosure in Florida, federal bankruptcy law permits two types of bankruptcy filings - Chapter 7 and Chapter 13. Individuals do not choose which type of bankruptcy they want, as much as they either qualify for Chapter 7 or they qualify for Chapter 13. The qualifications are based on a number of factors, but a general rule of thumb is that if an individual earns less income than the average income of the county in which they live are eligible to file for Chapter 7 bankruptcy, whereas individuals earning more than the average income in their county must file for Chapter 13 bankruptcy.
Find Out What Chapter 13 Bankruptcy (Florida) Is
Chapter 13 Bankruptcy is one of the more common bankruptcy types for consumers. It allows a consumer to repay a percentage of his or her debt, interest free, over a period of time depending on the consumer's income and ability to repay. Chapter 13 Bankruptcy can allow a consumer to at least temporarily pause foreclosure proceedings, catch up on past due payments, reorganize and restructure debts (including car and credit card debts), and usually make one simple payment each month to a Court appointed trustee. Consumers benefit from Chapter 13 Bankruptcy as monthly payments are reduced, it is possible to keep your home and car, and generally speaking, the consumer is put on solid financial footing again with a fresh start.
Chapter 13 Bankruptcy - Options For Homeowners
Chapter 13 Bankruptcy Information provides homeowners with many options. If the homeowner wants to remain in his or her home, Chapter 13 can temporarily pause the foreclosure proceedings while a repayment plan is worked out, and if a homeowner can afford to make payments, bankruptcy will allow a homeowner to become current on their mortgage again. On the other hand, if a homeowner does not want to keep the home, Chapter 13 is powerful because it can allow a homeowner to “give back" the home to the mortgage company.
Chapter 13 Bankruptcy May Eliminate Deficiencies In Mortgages
Due to the complexity and time involved in foreclosure sales, a deficiency claim (i.e., the amount left owing to the bank AFTER the home is sold) is rarely liquidated in time to file a proof of claim in a debtor's Chapter 13 plan. Usually the debt or deficiency is ultimately discharged and no money is repaid! But even if the mortgage company is able to file a claim, the total amount of the debt is hardly ever paid back - usually the homeowner only pays back a few pennies on the dollar.
Chapter 13 Bankruptcy Requires Some Repayment Of Debt
Bankruptcy laws require homeowners who have a regular income, which is more than the average income for a similar sized family and household in his or her county, to pay a certain amount of money each month towards his or her debts - after first paying reasonable living expenses. This payment plan lasts for approximately 5 years, after which any remaining debt is forgiven and erased. If a homeowner makes less than the average income in his or her county, that homeowner may qualify for Chapter 7 Bankruptcy, for which there is no 5 year repayment plan and instead most debts are simply eliminated.
Get Bankruptcy Advice Today From The Best Florida Foreclosure Defense Attorneys
Chapter 13 Bankruptcy is complex, but it can provide a homeowner who is contemplating avoiding foreclosure in Florida, with powerful tools and options to save their home and make a fresh start with their lives. It is important to discuss the pros and cons of a Chapter 13 Bankruptcy to determine if it may be a suitable option for you. Call the experienced attorneys at the Byrne Law Group today at 813-413-6565 to discuss your case and your options!