You may be in Florida affected by the COVID-19 crisis and wonder whether the Chapter 7 bankruptcy or option and other debt relief options are available. You’re in the same situation with hundreds of thousands of Americans.
The financial hardship brought by the coronavirus pandemic has made many people consider filing for bankruptcy. However, the questions in the mind of many are: What happens to my house and car in a chapter 7 bankruptcy? Can I qualify for a Chapter 7 bankruptcy? Can I afford a chapter 7 bankruptcy? We will cover all those questions and others in 3 parts.
1) Understanding Chapter 7 bankruptcy
We won’t dwell much on explaining this since chances are high that you already have a basic knowledge of what Chapter 7 bankruptcy is. However, it is vital that you are able to distinguish between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy:
A Chapter 7 bankruptcy Florida is also referred to per the IRS as liquidation bankruptcy, even though it’s possible for you to still keep your car and home. Here are some quick facts about Chapter 7 Bankruptcy:
- liquidation can occur
- it is cheaper in comparison to Chapter 13 bankruptcy
- You may get a bankruptcy discharge after 90 days
- The bankruptcy remains on your credit report for not more than ten years.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy Florida is referred to as the wage earner bankruptcy because it is an act of voluntarily organizing your debt in a payment plan. Here are some noteworthy facts about Chapter 13 bankruptcy:
- Liquidation hardly occurs
- The majority of people qualify for bankruptcy.
- Chapter 13 bankruptcy will remain on your credit report for 7 years
- You will get a bankruptcy discharge in 3 or 5 years
- Chapter 13 bankruptcy is more expensive than Chapter 7 bankruptcy
- It’s also important to understand that you can file a Chapter 13 after a Chapter 7 bankruptcy when certain conditions are met.
2) Estimating Chapter 7 Bankruptcy Qualification
Since we’ve now covered the basics of Chapter 13 and 7 bankruptcy, let’s help you understand one of the most essential parts of Chapter 7 bankruptcy. Chapter 7 bankruptcy qualification.
Do you qualify for a Chapter 7 Bankruptcy discharge?
Whether you qualify for a Chapter 7 bankruptcy or not depends on the result of the means test. The means test in itself has two main parts.
The first part compares your income with the median income of the household in your state of residence.
You may want to use a Florida Means Test calculator that helps you estimate whether you qualify for Chapter 7 bankruptcy.
3. Should I file for Chapter 7 Bankruptcy?
You may qualify for a Chapter 7 Bankruptcy discharge, and may have the financial capacity to pay necessary Florida bankruptcy lawyer fees, but should you file for a Chapter 7 bankruptcy discharge in Florida? As you go through this section, you’ll learn about Florida’s bankruptcy exemption, the effects of bankruptcy, the pros, cons, and alternatives to bankruptcy.
Chapter 7 Bankruptcy exemptions
You may be worried to lose your house, car, boat or cash. There are Florida bankruptcy exemptions that can allow you to exempt a certain amount of equity for different items. You may want to research these extensively.
How Chapter 7 Bankruptcy Affects Your Credit
One of the most common questions about a Chapter 7 bankruptcy is how does bankruptcy affect credit. The question is very important and we’ll help you answer it. We’ll also provide a resource that will help you have a more apt understanding of the subject matter.
When you file for a Chapter 7 bankruptcy discharge in Florida, you have to seek the approval of the court to incur new debt. The bankruptcy court will notify your creditors that you’ve filed for bankruptcy. Once you’ve completed your bankruptcy, you can get access to credit, however, the interest rate will be high. If you want to start rebuilding your credit as soon as possible, then you should start using your credit card and pay the debt on it as soon as you can.
If you have questions about how soon you can purchase a home after filing for bankruptcy, then you should read our article with the title: How Does Bankruptcy Affect Credit?
Pros and Cons of Chapter 7 Bankruptcy
You will want to consider Chapter 7 pros and cons. We’ve covered some of this in the sections above. Ensure that you properly acquaint yourself with those pros and cons so that you will have a desirable outcome.
Chapter 7 Bankruptcy Alternatives
You may be interested to file bankruptcy in Florida. If you’re not okay with filing for Chapter 7 bankruptcy, then you can explore the alternatives to it. Examples of those alternatives are: Debt Settlement, Chapter 13 Bankruptcy, Debt Management and Free Financial Planning.
Use the Chapter 7 calculator to estimate the cost of filing for bankruptcy and the advantages and disadvantages that come with it. You will also learn the advantages and disadvantages of debt management, debt settlement, and Chapter 13 bankruptcy. If you do not need debt relief, you may check out financial planning, a debt payoff app or even a free Google sheets budget template to assist on your debt freedom journey.