Chapter 13 Bankruptcy

Who can File: Individuals only

Best Suited to: Individuals in the middle to upper-middle income range. Homeowners with multiple mortgages and a home that is severely upside-down in value.Persons with significant debt AND significant non-exempt personal property, such as paid-off cars or expensive jewelry.

Pros: More powerful than a chapter 7, but more work is required. Very effective at stopping foreclosures, and allows the homeowner several years to “catch up” on any mortgage arrearage. Debtors are allowed to keep non-exempt assets in most cases. Debtors can stop foreclosure, and can eliminate certain second mortgages (such as home equity loans) if their house is worth less than the first mortgage balance. Debtors can restructure car loans to lower interest rate, and in some cases, can lower the principal balance on older car loans. Credit cards and medical bills are discharged at the end of the plan. Plan can be modified if there is a substantial change in income (up or down).

Cons: There are debt limits. Debtors must show regular income. More expensive than a Chapter 7.Requires a repayment period over multiple years. Income disruption can cause the case to fail. Usually the trustee will take tax refunds while in the plan.

Attorney Fee: $3,750 to $4,100 (a portion paid upfront and then the rest through the plan)
Filing Fee: $310
Expenses: Included in fee
Financing Options: Yes, part of the fee can be financed through the plan

Chapter 13 Florida bankruptcy is available to individuals only, and is called a “wage earner case.” Under Chapter 13 in Florida, individuals typically keep all of their property (that they want to keep), and pay back some or all of their debts over a 3 to 5 year period. The Debtor files a plan with the Court to repay the debt in monthly installments. The case is administered by a court-appointed trustee.

For more information, go to Bankruptcy FAQ