Filing for bankruptcy can be an overwhelming process for those seeking debt relief. It is important to understand how bankruptcy works and how it may affect your future. Our Fort Lauderdale bankruptcy attorneys explain four things you should know before filing for bankruptcy.
#1: There Are 4 Types of Bankruptcy Options
If you know you need help achieving financial relief, bankruptcy may be the right option for you. There are two main types of bankruptcy options for individuals—Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is a “liquidation” bankruptcy that helps debtors discharge most of their unsecured debt, including credit card and medical debt, in about three to five months. This option is great for people who can’t make ends meet and need to get rid of their debt as quickly as possible.
Chapter 13 bankruptcy helps debtors reorganize their debt. This option helps people create a repayment plan to make their debts more manageable. This is a good option for people who have the income to make payments but are struggling with the amount.
Chapter 11 is another option available for individuals who are facing even the most complex debt problems. With Chapter 11 bankruptcy, individual debtors can modify secured debts with fewer restrictions.
Subchapter V, under Chapter 11 bankruptcy helps individuals who are also small business owners with their debt. For example, if you used your primary residence as security for a loan to fund your small business, Subchapter V under Chapter 11 can help you modify your loan.
#2: Some Debts Can’t Be Discharged Through Bankruptcy
It is essential to understand that not all debts are eligible for discharge through bankruptcy. Bankruptcy only discharges unsecured debts. This means that secured debts, like tax debt or mortgage payments, won’t be erased with bankruptcy. However, it can help make secured debts manageable by getting rid of unsecured debts.
#3: You May Be Able to Keep Some Property
When you file for bankruptcy, you can keep a certain amount of “exempt” property. Exempt property is assets that the debtor can protect from liquidation. In most cases, exempt properties include motor vehicles, pensions, household goods, and furnishings.
#4: Bankruptcy Is Complex
Bankruptcy forms and schedules can be difficult and complex. If you don’t fill out your bankruptcy forms correctly, your case can get dismissed. In fact, the success rate of filing for bankruptcy cases without legal guidance is low. If you’re planning on filing for bankruptcy, you should consider getting an experienced attorney who can help you from beginning to end.
Leiderman Shelomith Alexander + Somodevilla, PLLC has the skills and experience needed to help you achieve financial freedom. If you need legal guidance with your bankruptcy case, contact our Fort Lauderdale bankruptcy attorneys today at (954) 516-2566!