Which Florida Bankruptcy Chapter Is Right For You?
Bankruptcy is a legal recognition that an individual or a business cannot pay its debts. There are many sections, or “Chapters,” of the bankruptcy code. These different Chapters try to deal with the different situations debtors find themselves in. The most commonly used Chapters of the bankruptcy code are Chapters 7, 11, and 13. Debtors, assisted by the courts, must decide which Chapter best addresses their situation. If you are in Pinellas County or Tampa Bay, consult a St. Petersburg FL bankruptcy attorney can help you choose the chapter that best addresses your situation.
Chapter 7
Chapter 7 bankruptcies apply to individuals. In 1999, 69% of all bankruptcy cases were filed under Chapter 7. Under Chapter 7, all of the individual’s assets are “liquidated”–sold off–by the courts to pay creditors. To determine what assets the debtor owns, a complete list must be supplied to the federal bankruptcy court. In addition, a full accounting of all liabilities must be presented to the court. Once the assets have been liquidated, creditors start getting paid. First in line is the government! Payment of taxes gets the highest priority. Some financial obligations must be paid even after a Chapter 7 bankruptcy is finalized, including alimony and student loans. Naturally, few creditors will ever see their money because of the sad condition of the debtor’s finances. The debtor now has the bankruptcy recorded in his credit file, which means that the likelihood of receiving additional credit is slight–at least for the next ten years. If you are filing for protection under Chapter 7, you will need the services of bankruptcy attorneys. A St. Petersburg bankruptcy lawyer is your best bet.
Chapter 11
Chapter 11 bankruptcies apply to businesses. By filing under Chapter 11, a business is allowed time to reorganize the firm, and is shielded from persistent creditors. The hope is that through reorganization, the firm can return to profitability and thereby repay some of its debts. While the firm continues with its day-to-day operations, the bankruptcy court reviews the firm’s financial condition, and hears from the firm’s creditors–who may ask the court to investigate the firm for mismanagement or other wrongdoing. The Chapter 11 court proceedings may take years to complete and, even if the firm’s reorganization efforts are successful, there is a distinct possibility that the firm will pay its creditors only a fraction of what is owed to them. If you are considering Chapter 11 bankruptcy for your business, you will need the services of bankruptcy lawyers. A St. Petersburg bankruptcy lawyer can assist your business file for bankruptcy protection under Chapter 11.
Chapter 13
Chapter 13 bankruptcies apply to individuals who are not in the hopeless financial situation that individuals filing under Chapter 7 find themselves in. In 1999, 28% of bankruptcy cases were filed under Chapter 13. Under Chapter 13, debtors turn their finances over to the bankruptcy court. After examining the financial documents, the court decides how to deal with the situation. Often, the debtor’s debts are rescheduled so that a portion of the debt can be repaid over time. In addition, a bankruptcy trustee may be appointed to oversee the case for the next few years. It is also common for the debtor’s wages to be tapped by the court to help repay creditors. The benefit to the debtor is that most of his assets are protected under Chapter 13. But the bankruptcy is recorded, and the prospect of receiving future credit is slim for a decade or so.
The U.S. bankruptcy code has many different parts. One section allows companies seeking to reorganize its debt and emerge from court supervision with less debt to file under one part of the law. Another allows companies to simply pay off as much as its debt as it can and close shop under another part of the law. Chapter 11 court filings are of the former category. This bankruptcy filing allows a corporation, or an individual, to reorganize without have to liquidate all of its assets. The debtor maintains control of the business-unless the court appoints a trustee. The company typically goes into bankruptcy court to come up with a debt payment plan to submit to its creditors. If the creditors approve the plan, and if the court agrees that the plan is fair, then the company is allowed to reorganize its debts and emerge from bankruptcy court. Chapter 7 court filings, however, are more drastic. When a company has filed under this part of the bankruptcy laws, it means that all of the company’s assets will be sold to pay its debts and that the company is going out of business. This part of the law can also be used by individuals who want to eliminate debt. A third type of bankruptcy filing is a Chapter 13, where the person filing repays their debts during a three to five year time period. You can save your home from foreclosure by filing a Chapter 13 bankruptcy. If you are located in Tampa, a St. Petersburg bankruptcy lawyer can help you file for bankruptcy.
If your circumstances have brought you to the place of searching for a qualified, experienced Florida bankruptcy attorney, The Coleman Law Group of St. Petersburg offers you caring and aggressive representation. Dedicated, knowledgeable professionals will help you navigate the often confusing world of the Florida bankruptcy law, and provide a clear path to achieving your goals… freedom from debt and the ability to move forward with the rest of your life.
Please phone us today at 727-214-0400.