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There are a number of factors to consider when deciding which type of bankruptcy to file for in Florida. People often assume that Chapter 7 is a better choice than Chapter 13, as it allows fillers to eliminate most outstanding debt. However, there are times in which Chapter 13 is the superior option. Below are examples of situations in which Chapter 13 bankruptcy may be a debtor’s best choice.

  1. The debtor wants to retain certain property – As opposed to Chapter 7 bankruptcy, Chapter 13 doesn’t require debtors to forfeit any property. Rather, Chapter 13 allows debtors to repay outstanding debt while retaining their property. In contrast, Chapter 7 bankruptcy only allows debtors to keep certain exempt property.
  2. The debtor has a co-debtor on an outstanding debt – Chapter 7 bankruptcy doesn’t protect co-debtors from collection efforts by creditors. However, when a debtor files for Chapter 13 bankruptcy and adheres to the terms of his or her bankruptcy repayment plan, creditors are barred from seeking reimbursement from co-debtors. Therefore, if a debtor wants to shield co-debtors from collection attempts by creditors, Chapter 13 may be the best choice.
  3. The debtor isn’t eligible for Chapter 7 bankruptcy – There are certain situations in which Chapter 7 bankruptcy may not be an available option. A debtor may not file for Chapter 7 bankruptcy if:
    • The debtor’s disposable income exceeds Chapter 7’s filing limits – Eligibility for Chapter 7 bankruptcy is determined via the application of a “means test,” which is a test that balances a filer’s income against his or her expenses; or
    • The debtor’s income is above that of similarly situated households in his or her state.
  4. The debtor wishes to repay outstanding car loan or mortgage payments over time – Chapter 13 bankruptcy allows debtors to retain property while repaying outstanding loan amounts over time. Chapter 7, however, often results in the liquidation of non-exempt property.
  5. The debtor has a tax obligation, student loan, or similar debt that cannot be discharged via a Chapter 7 bankruptcy filing – While Chapter 7 bankruptcy bars the discharge of certain debts, Chapter 13 allows debtors to address the same via a repayment plan.
  6. The debtor wants to repay all of his or her debts, but requires court protection in order to do so – Chapter 13 prevents collection efforts while affording debtors the opportunity to repay outstanding debts.

Florida Chapter 13 Bankruptcy Attorneys

Bankruptcy is a complicated subject, and it can be difficult to determine which chapter to file for. Therefore, if you are considering filing for bankruptcy in Florida, please contact an experienced Florida bankruptcy attorney. At the Law Office of Jeffrey A. Herzog, P.A., our experienced Florida bankruptcy attorneys will guide you through the bankruptcy process while keeping you fully apprised of your debt relief options. Please contact us for a free consultation.