Florida Bankruptcy Laws - What You Need to Know
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Bankruptcy Laws

In years past, a certain, negative stigma surrounded the notion of bankruptcy. Declaring bankruptcy was viewed as a nail in the coffin of someone fiscally out of control, the end result of poor money management, overuse of credit cards, and consequence-free spending habits. But today, perhaps as a result of the recent economic recession that left scores of individuals (to say nothing of large corporations) with no other option, bankruptcy is no longer viewed shamefully.

While it does leave a 10-year mark on your credit report, bankruptcy is now seen as a viable, acceptable method for eliminating debt and allowing you to start fresh and financially independent. In this article, we will explore some of the more common bankruptcy laws in the United States, and how you can use them to your advantage when considering how to get out from under mountains of debt.

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A Brief Explanation

In the United States, bankruptcy law provides the foundation for people and businesses who discover they have accrued more debt than they can hope to pay back on their own. Several different types of bankruptcy exist, each with the ability to help you pay off a high amount of debt in a short amount of time. It is not without its drawbacks however - it does severely impact your credit rating for a long time, and doesn't guarantee that you (or your business) will be able to flourish after your debts have been eliminated. But as last resorts go, bankruptcy can be highly effective at giving you that financial "second chance" you need.

The different types of bankruptcy cases in America are referred to as "chapters." Each chapter targets a specific section of bankruptcy law that only applies to the individual or business looking to file for bankruptcy. Let's explore some of these:

Chapter 7 Bankruptcy

Considered the simplest, and the most common form of bankruptcy, Chapter 7 applies to individuals (and some businesses) looking to have their debts totally forgiven. Chapter 7 does allow for the entire discharge of debts, and sometimes does so through the liquidation of assets in order to secure funds for creditors. Depending on individual state law, you can try to retain as many assets as possible - your home, your car, and other property - so that once your debts are discharged, you don't have to necessarily start all the way over from scratch.

Chapter 11 Bankruptcy

Designed for businesses (or occasionally for individuals with a large amount of assets to protect and preserve), Chapter 11 is all about a reorganization, or rehabilitation, of a company. It allows the company to remain open for business while debt consolidation and repayment takes place.

Chapter 12 Bankruptcy

Chapter 12 is meant specifically for fishermen and family farmers. Like Chapter 11, it allows for a reorganization of these individuals, so that they can continue working without having to give up their home, car or other valuable assets.

Chapter 13 Bankruptcy

The second most common chapter to file under for individuals (next to Chapter 7), Chapter 13 is like Chapter 11 in that it allows individuals to restructure their debt and pay off creditors over a three to five year period, without having to liquidate any assets. This is a popular option for homeowners looking to avoid foreclosure, and is designed only for those individuals who have a steady source of income already in place.

To review debt relief alternatives to bankruptcy in California and to get a free debt relief analysis, along with a free savings estimate, simply answer a few online questions. It's free and there's no obligation.

Bankruptcy Lawyers: Champions of Bankruptcy Law

The best way to understand bankruptcy law is to speak to an attorney who specializes in it himself or herself. Seeking out this information goes beyond mere curiosity - if you're thinking about filing for bankruptcy, you absolutely should consult with an attorney first. While there will be fees involved, it is the only way you can rest assured that your interests are being watched over and that the bankruptcy process is being handled in an appropriate, orderly way. The good news about these fees is that you will usually only have to pay after the filings are completed, so that you don't have to worry about losing money and then have your case mismanaged.

Bankruptcy lawyers collaborate with appointed trustees and the bankruptcy courts to oversee your case from beginning to end. Trust us - you want an attorney helping you out here. Bankruptcy filings are very involved, specific and often complicated matters. Each state has its own set of bankruptcy rules and regulations that must be followed, and even one mistake can end up costing you in the end. Opting to forgo legal counsel is a very risky, potentially costly decision to make when filing for bankruptcy - and given the circumstances, you probably don't want to risk losing any more money at this point.

What NOT To Do!

Bankruptcy law exists for one reason only: to give you the opportunity to have a fresh start. Now that we've explained some of the steps you should take, and discussed legal counsel you should seek, here are some mistakes you will want to avoid when considering bankruptcy:

Stop borrowing

You can't borrow your way out of debt - simple as that. You only end up owing more money than you already do, and sometimes this debt ends up on the shoulders of your friends and family. You don't want to place that burden on them - or on yourself - so do not borrow any more money once your situation becomes dire.

Be Careful About Taking Out a Home Equity Loan or Deb Consolidation Loan

Borrowing against the value of your home can have disastrous consequences. Again, you CAN'T borrow your way out of debt, only now you will have put your house in jeopardy. In most cases, filing for bankruptcy allows you to keep the roof over your head - so why risk it?

Don't Touch Retirement

There's a reason the bankruptcy courts don't touch your retirement funds - it's because bankruptcy is all about a clean start, and not about taking away all the money you'll need in old age. If the courts are happy to leave retirement funds out of their equations, it's a pretty good sign that you should too.

Never Conceal Assets

Just don't do it. Bankruptcy trustees aren't stupid - they'll find out you're hiding assets, and it will only cause greater legal issues to be brought down on you. The same goes for transferring assets - don't transfer any funds to friends or family within a year of filing for bankruptcy. The courts can demand it back and have it liquidated, plus it can cause legal headaches for the person the asset was transferred to.

Consider Stopping Making Further Payments When in Financial Distress

It's time to face reality - you're filing for bankruptcy. Soon you won't need to make payments to creditors, so save the money you have and use it for necessities - food, clothing, shelter and keeping your family safe.

Don't File at the Wrong Time

How do you know when is the right time to file for bankruptcy? You don't - but a bankruptcy attorney can help you figure it out. If you file too early, you may miss out on other options that could get you out of debt without going through bankruptcy. However, waiting until it's too late - when the stress of the situation has ripped your home apart - doesn't help anyone. So learn the right time, and make the right decision when that time comes.

The bottom line? Bankruptcy laws are here to help you. So speak to an attorney, learn your options, and get back on the road to financial freedom. You, and your family, deserve it.

For a review of debt relief alternatives to bankruptcy in California and to get a free debt relief analysis along with a savings estimate, simply answer a few questions online.

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