Filing for bankruptcy is similar in most states due to the recent 2005 Bankruptcy Act. There are several district courts in Florida that adhere to the federal statutes related to bankruptcy. Individual petitioners may file for Chapter 7 or Chapter 13, while business are required to follow the code of Chapter 11 and Chapter 12.
Chapter 7 bankruptcy is used by a petitioner to eliminate as much debt as possible and is an attractive option to those with lower income and fewer assets. The non-exempt assets are liquidized to pay off outstanding debt and a petitioner will be left with non-dischargeable debt such as back taxes, student loans or child support.
Chapter 7 may only be filed if the income of the debtor is below the median for the state of Florida. This is determined by a means test which compares the most recent 6 months of income from the petitioner to the rest of the workers in Florida. A lower income can lead to Chapter 7 edibility; however, an eligible person may still choose Chapter 13.
Chapter 13 allows the person filing to keep more of what they own by restructuring and minimizing debt compared to liquidating assets. A payment plan of 3 to 5 years is assigned to those filing for Chapter 13 and many are able to keep their homes and other valuables as long as they continue making payments.
Chapter 11 is similar to Chapter 13, but the code is directed towards businesses. With Chapter 11, a business may stay in operation while taking 3 to 5 years to pay off their restructured debt. Chapter 12 is a specific type of bankruptcy for family farmers and fishermen to offer relief of debt while remaining in business.
According to the 2005 Bankruptcy Act, any person or couple filing for bankruptcy must receive credit counseling 6 months prior to filing. If bankruptcy relief is required after counseling there are several steps a petitioner must follow to complete his or her process.
Debtors must first complete a means test; this test compares the income of the petitioner with the median from the state. If their income is found to be less than the median, the debtor may file Chapter 7; if more, Chapter 13 is an option.
The next step is the gathering of paperwork. The court will want to see documentation of any recent major financial transactions, tax returns from 2 years prior, monthly living expenses, titles to vehicles, property information, a list of assets and debts and any loan information.
The schedule is the combination of bankruptcy forms and the documents provided to the court. Some petitioners choose to have legal counsel and representation for their bankruptcy, while others choose to file themselves. The cost to file for Chapter 7 is $306 and Chapter 13 is $281. Attorney fees are the responsibility of the petitioner as well.
A Chapter 13 bankruptcy must also include a proposed repayment plan that can be approved, denied or altered by the judge. Often the payments are taken directly from the petitioner's wages to comply with the court.
A trustee is charged with the responsibility of helping to structure payments and oversee the meeting of creditors, where the debtor may be interviewed and debts are restructured.
The bankruptcy is not complete until the petitioner completes a financial management instructional course.
There are 3 districts in Florida: the Middle District, the Northern District and the Southern District. The Middle District U.S. Bankruptcy Courts are located in Fort Myers, Orlando, Jacksonville and Tampa. The Northern District is home to courts in Gainesville, Panama City, Pensacola and Tallahassee. Lastly, the Southern District has locations in Ft. Lauderdale, Miami and West Palm Beach.