What is bankruptcy?

Bankruptcy is a federal law that allows people and businesses (even cities and municipalities) to manage or eliminate debt.  Bankruptcy is available to most everyone, and you do not even need to be insolvent to file. Bankruptcy is important because it imposes an immediate “automatic stay” on all creditors, and these creditors must stop all collection efforts.  If the creditors continue to call, send letters, file lawsuits, etc., those creditors are in violation of bankruptcy law and could be fined or required to pay sanctions.  This automatic stay gives the bankruptcy filer (or debtor) a breathing spell.
There are different chapters of bankruptcy depending on your needs or factual situation. There are Chapters 7, 9, 11, 12, and 13.  The most common chapters for everyday consumers are Chapters 7 and 13.
Chapter 7 provides a discharge of certain debts if the debtor agrees to give up all of his or her non-exempt property to a trustee for sale for the benefit of the debtor’s creditors.   Most people will find that there are very little to no assets available for creditors after the exemptions.  For example, in Florida, a person’s home can be exempt, retirement accounts can be exempt, up to $1,000 of a person’s vehicle can be exempt, property held jointly with a non-debtor spouse can be exempt, etc.
Chapter 13 provides a discharge of certain debts if the debtor agrees to pay a portion of his or her disposable income over 3 to 5 years to a trustee for the benefit of the debtor’s creditors. Chapter 13 is for regular wage earners who either make too much money to qualify for Chapter 7 bankruptcy and/or would like to keep non-exempt property from liquidation by the bankruptcy trustee.
For more information about bankruptcy, schedule a free consultation TODAY with Savage, Combs & Villoch, PLLC.  Our telephone number is 813-200-0013.  We do bankruptcies in Central Florida and we’re ready to help today!  Please visit our website to learn more about bankruptcy and refer a friend or family member too.

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