Bankruptcy in Florida is created under the name of 11 of the United States Code, also known as the Bankruptcy Code. While bankruptcy is a federal process, including to define property rights, and to exceptions, in some regards it appears to state law as well, for example to impose certain qualifications for eligibility and to impose minimum periods of rehabilitation. The Bankruptcy Code contains some express provisions on bankruptcy and provides for nonjudicial proceedings and mandatory reconsideration of cases filed under the code. Florida’s Bankruptcy Law allows the courts to appoint a trustee, whose responsibility is to oversee and supervise the distribution of properties to pay debts and other obligations of creditors.
Bankruptcy is considered as liquidation or bankruptcy of a business or of the assets and involves a resolution of the debt by an act of bankruptcy. The debtor is personally responsible for all debts, unless the court orders otherwise. However, the Florida homestead exemption may be applicable to certain cases such that there is no ownership interest in real estate owned in the bankruptcy proceeding. Florida exemptions also allow the debtor to sell the property after bankruptcy if there is equity ownership left.
On the other hand, if the debtor files a personal bankruptcy estate in a court, the court appoints a trustee who will oversee the distribution of remaining assets. The trustee usually has the authority to negotiate with the creditors for payment of debts. He may also repossess property owned by the debtor that is exempt from bankruptcy and use it to pay debts. He may also distribute the remaining assets to pay debts, if equity does not exist.
There are several exemptions that apply to Florida. First, homeowner loans and mortgages are discharged during the filing of bankruptcy. Second, certain educational expenses are deductible if claimed, regardless of the filing date. Student loans and child support obligations are specifically excluded. Third, the tax-free value of a principal residence is exempt from bankruptcy code.
The court will notify the trustee of its intent to file a petition for an exemption on specified exemptions on the notice of exemption. Upon receipt of the notice, the trustee shall advise the debtor whether he should apply for a discharge based on the exemption or wait until the case goes to trial. If the case goes to trial, then the results will determine who gets relief.
Most creditors and debt collectors prefer the discharge of debts under chapter 13, rather than a chapter 7 case. It is important for the debtor to understand this. A chapter 7 creditor cannot collect money before the case is settled. Creditors and collection agencies do not have a right to ask for unpaid monies in a chapter 13 case. Payments in a chapter 13 case can only be made when the case is concluded and no settlement has been reached. This is the reason why most creditors settle their debts in lieu of bankruptcy.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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