Recovering from debt conditions is indeed very demanding and thorny. Instances where the debtor has no way to make repayments, they need not to stay under the pressure of the creditors. Instead they should look for alternatives, there are certain laws designed by the legal authorities following which the debtors are exempted or given more time to repay their debts whatever is most appropriate according to the situation.
The Legal Laws
Most of the people, debtor as well as the creditors are generally not aware of these laws. However in such delicate situation, it is important know your rights and liabilities. There are basically chapter 13 and chapter 7 for florida bankruptcy. There is great difference between the two procedures, understanding will make the picture much clearer and you will be able to figure out what is possibly the best for you. Here is what all you need to know in the first place.
Chapter 7 Bankruptcy
This is also known as liquidation or straight bankruptcy. Under this lawsuit, the debtor is entirely discharged from making any of the payments to the creditors and the creditors could either be the bank, credit card firms, or doctors, individual lenders etc can no longer expect or try to collect the debt by any means. However all the assets of the debtor except the very valuable are turned to the liquidation trustee who can sell them and distribute the collection to the creditors. This procedure usually lasts for 3 months of time.
In order to find out if you are eligible to file under chapter 7 bankruptcy is done by the means of a test. In the test the debtor’s income is first of all compared to median income in the state to figure out if it is lower or higher for the next six months before actually filing bankruptcy. Instances where the income is lower than the median income then you are cleared to file bankruptcy under chapter 7. However if the income is higher than the debtor has to present their income and expenses, if the left income is not sufficient enough to repay the debts then only the Chapter 7 trials can continue, or else you may need to opt for chapter 13 bankruptcy.
Chapter 7 and 13: The Difference
Though chapter 7 is the most popular type of bankruptcy filing, but ineligibility leaves an option for chapter 13. A filing under chapter 13 bankruptcy involves reinitiating the repayment procedure and the debtor is given some more time to pay the debts. The time period may vary for a period of 3 to 5 years depending on the circumstances.
Some of the potential benefits of filing bankruptcy under chapter 13 over chapter 7 florida include
Gives the debtor a second chance to make up to the repayments and lessen the secured debts. All the assets which were not to be exempted under the other lawsuit are now saved and also the debtors can continue their occupancy irrespective of the debt.
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