Bankruptcy Facts

 Bankruptcy is simply  the legal process by which individuals or businesses that end up in financial trouble are able to work out their debts and settle them  under the protection of the bankruptcy court.  Often "liquidations" or "reorganizations" are the words that are used to sum up the process that unfolds when you file for bankruptcy.
The primary reason for most bankruptcies is the "discharge" of unpaid debts. Discharge is the cancellation or elimination of a debt by the bankruptcy court. Discharged debts are no longer legal obligations of the debtor. Most debts will be discharged as a result of bankruptcy.

However, the following kinds of debts will not be discharged:
-  Debts that the debtor failed to list in the bankruptcy petition. 
-  Alimony payments and child support. 
-  Most student loans. 
-  Income taxes assessed within the last 3 years.
-  Debts for cash advances in excess of $1,000 drawn on a credit line or a   
    credit card within 90 days of filing bankruptcy. 
-  Fines and penalties, including traffic violations and criminal fines. 
-  Debts incurred by using false financial statements or by fraudulent means. 
-  Claims against the debtor arising as a result of the debtor's drunk driving. 
-  Claims arisen from willful or malicious injury to another by the debtor. 
-  Embezzlement or misuse of funds by the debtor acting in a fiduciary 
   capacity,  such as an executor or trustee.

Definitions of Bankruptcy Filings

 Chapter 7
Chapter 7 bankruptcy is liquidating bankruptcy. In return for having debts discharged, the debtor must turn over to the bankruptcy trustee all property except for certain assets which Florida law allows the debtor to keep as exempt. The trustee sells the property and distributes the proceeds to the creditors according to priorities established by law. Very often there is not enough money to pay for anything more than the costs of administration, and the creditors will receive nothing.

The main advantage of Chapter 7 is that the debtor emerges from bankruptcy without any future obligations on his or her discharged debts. The court will usually discharge most or all of the debts of the debtor in order to allow the debtor to gain a fresh start.

Chapter 11

Another type of proceeding in bankruptcy is Chapter 11 reorganization. It is generally used by businesses, or by debtors who do not qualify for Chapter 13 because of substantial debts, and have assets that would be lost in Chapter 7.

Chapter 13

This proceeding is often used by individuals who want to catch up on past due mortgage or car loan payments and keep their assets. This will allow the debtor to retain his or her home even if the mortgage company has started a foreclosure proceeding. If a foreclosure sale date has been set on the property, the debtor must file his/her Chapter 13 bankruptcy prior to such date.

In Chapter 13,the debtor must propose in good faith to pay all or part of the debts from the future income over a period of time ranging from three to five years. If the court approves the plan of payment, the debts may be settled in this manner, even if the creditors are not willing to go along with the plan. If the debtor makes the payments as required, he or she will not have to surrender property to the trustee.

Chapter 13 can have more advantages than a liquidating bankruptcy (a Chapter 7). Some of the debts not discharged in Chapter 7 will be discharged once the debtor completes a Chapter 13 plan. Also, the debtor can pay most non-dischargeable federal taxes over the term of the Chapter 13 plan without interest.

Chapter 13 can only be used by an individual debtor, not by a corporation, and only if the total debts owed are less than certain limits for secured and unsecured debts. However, an individual engaged in business might use Chapter 13 to pay debts or settle them over a period of time while he or she continues to own and operate the business.

DO I HAVE TO GO TO COURT?

 

Do I have to go to court? There is a mandatory meeting that every Debtor must attend about one month after we file your case. Angela will represent you at this "Meeting of Creditors". The name of the hearing is a little misleading because in some cases, none of the Debtor's creditors actually show up. The meeting usually takes only a few minutes and Angela will have you well prepared for what to expect.

At the Law Offices of Angela M. Armstrong, P.A we understand that people may feel anxious or fearful about appearing in bankruptcy court. We want people to know that this is a relatively simple process that is not worth losing sleep over. 

 Angela Armstrong PA
1018 Nebraska Avenue

Palm Harbor, FL 34683
727.785.6200