FAQs Bankruptcy
If you are struggling to meet your financial obligations, you may have considered bankruptcy, but have many unanswered questions. We understand the stress and anxiety that can accompany financial problems. We we will work closely with you, helping you  understand your options, so that you can make educated decisions.
 
Personal Bankruptcy FAQs
 
1. What is a discharge in bankruptcy?
 
A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from
taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Although a debtor is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.
 
2. What is exempt property?
 
The Bankruptcy Code protects certain assets belonging to a debtor and keeps them outside of the reach of creditors. These assets are referred to as "exempt". Some common examples of property that are usually exempt are your homestead, “tools of the trade” and certain retirement accounts, such as IRAs and 401Ks. A debtor is also allowed to protect personal property up to a certain value as well as equity in a vehicle. Even your wages may be exempt from your creditors. The list of possible exempt assets is extensive. The availability and amount of exemptions may vary based upon each debtor’s unique circumstances.
 
3. What is Chapter 7 Bankruptcy?
 
If your income is below the median income in Florida for a household of your size, you may be eligible for Chapter 7 bankruptcy. The Chapter 7 bankruptcy takes 4 to 6 months on average to complete. In essence, during a Chapter 7 bankruptcy, the bankruptcy trustee gathers and sells a
debtor's nonexempt assets and uses the proceeds of such assets to pay creditors in accordance with the provisions of the Bankruptcy Code. In exchange, a debtor receives a discharge of certain debt.
 
4. Do I have to qualify for Chapter 7?
 
Yes. Under the 2005 revisions to the federal bankruptcy laws, you must take a "means test" to determine eligibility for a Chapter 7 filing. Under this test, you must demonstrate to the court that you lack the financial means to repay your creditors over a three-to-five year period. If you
do not qualify for Chapter 7, you may be able to reorganize your debts under Chapter 13.
 
5. What is a Chapter 13 Bankruptcy
 
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During this time the law forbids creditors from starting or continuing collection efforts. Filing a Chapter 13 bankruptcy may provide certain debtors an advantage over filing a Chapter 7. A Chapter 13 bankruptcy can be used to stop a foreclosure sale on your home and help you catch up on the mortgage arrears and strip certain liens on your home in some circumstances. A Chapter 13 bankruptcy can also be used as a payment plan on certain non-dischargeable debts.
 
6. Can I keep my house, car or other property when I file for protection under the federal bankruptcy laws?
 
Under Chapter 7, if you want to discharge a secured debt, you must return the security to the creditor. If you no longer want to keep your home or your car, you must return the home or the car to the lender. If you want to keep your home or your car, you must keep making the
mortgage payments or car payments. Under Chapter 13, your debts, including your mortgage and car payments, will be reorganized into a repayment plan of three to five years. If you continue to  make the payments, you can keep your property.
 
7. Are there restrictions on what debts can be permanently discharged under Chapter 7?
 
Yes. Student loan payments, alimony, child support, and death or personal injury judgments against you are not dischargeable in bankruptcy. You will have to pay any fines levied against you by the government as well as any restitution as part of a criminal sentence. There are also
restrictions on certain tax debts.
 
8. Can creditors call me at work to try to collect on a debt?
 
If you have filed for bankruptcy protection, the answer is no. When you file, an automatic stay immediately goes into effect, prohibiting your creditors from calling, writing or pursuing legal action to collect a debt.
 
9. How will my credit be affected?
 
In accordance with the Fair Credit Reporting Act, a bankruptcy can remain on your record for a maximum of 10 years. Even before it is cleared from your record, however, you may find that your credit rating improves. Creditors look at your debt-to-income ratio when they make
decisions about offering credit. After you successfully complete bankruptcy, your debt-to-income ratio will be better than it was previously. You can re-establish your credit, often within 24 months of a bankruptcy filing.
 
10. How can I improve my credit after filing?
 
There are a number of steps you can take to improve your credit after bankruptcy, including:
 
-Watch your spending. Do not let your debt-to-income ratio get out of control.
- Pay your monthly bills and make loan payments on time.
- Check your credit report three months after your bankruptcy is complete to make sure all discharged debt has been removed. If there are errors, work with the credit reporting agencies to have them corrected.
 
It is a good idea to obtain a copy of your discharge to have proof that all dischargeable debts have been cleared. You can get a copy of your discharge from the clerk's office of the court you filed in.