How Does Bankruptcy Offer a Fresh Start?

Many Floridians who are struggling with debt consider filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, especially when they hear that bankruptcy can offer a fresh start. But what does it mean when someone says that bankruptcy can give you a fresh start? Generally speaking, the idea of a relatively quick financial “fresh start” refers to Chapter 7 bankruptcy, but Chapter 13 bankruptcy can also offer debtors a kind of fresh start when it comes to their mortgage payment and other secured debts. Our St. Petersburg bankruptcy lawyers can tell you more about the fresh starts that bankruptcy can provide.

Chapter 7 Bankruptcy and a Fresh Start with a Discharge 

When people discuss the fresh start that a Chapter 7 bankruptcy case can offer, they are usually referring to the fact that dischargeable debts can be discharged, meaning that the debtor no longer is liable for those debts and gets a fresh start financially without any of those debts hanging over them. It is important to know that, in order to get this type of fresh start, you will need to be eligible for and go through a Chapter 7 bankruptcy case.

In a Chapter 7 bankruptcy case, non-exempt assets will be liquidated so that creditors can be repaid as much as possible. We want to be clear that many assets are exempt from liquidation under Florida law, including all of the equity in your home, certain personal property, retirement accounts, a large percentage of your wages, and more. Most recently, the process for discharging student loans changed, making it easier to have student loans discharged in a Chapter 7 bankruptcy case, as well.

If you want to qualify for Chapter 7 bankruptcy in order to get a fresh start, you should talk with a bankruptcy attorney about passing the means test and being eligible to file a bankruptcy petition.

Fresh Starts in a Chapter 13 Bankruptcy Case 

At the end of a Chapter 13 bankruptcy case, remaining eligible debts can also be discharged, giving you the same type of fresh start that you receive in a Chapter 7 bankruptcy case. However, in order to have remaining debts discharged, you will need to make payments on a monthly basis for a period of three to five years, and secured and priority debts will need to be repaid in full during that time.

In addition, you can get a fresh start of sorts with your mortgage and other secured debts. Through a Chapter 13 repayment plan, you can catch up on your mortgage and other secured debts to become current on those loans.

Contact a St. Petersburg Bankruptcy Lawyer Today for Help 

If you have any questions about the benefits of bankruptcy, or if you need assistance with your bankruptcy case, it is important to contact an experienced St. Petersburg bankruptcy attorney at the Law Offices of Stephen Barszcz for help. A lawyer at our firm can answer any questions you have, can provide you with more information about the bankruptcy process more generally, and can represent you from start to finish in your Chapter 7 or Chapter 13 bankruptcy case. Contact us today to learn more about how we can assist you.

Sources:

law.cornell.edu/uscode/text/11

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html