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At Olivero Law, we have extensive experience representing individuals and businesses in bankruptcy. Individuals typically file bankruptcy under Chapter 7, Chapter 11 or Chapter 13 of the Bankruptcy Code.

Chapter 7 Bankruptcy
A bankruptcy case is commenced with the filing of a Chapter 7 petition with the United States Bankruptcy Court. A petition is a document which presents a snapshot of the debtor’s assets, debts, income and expenses.

Upon the filing of the petition, an automatic stay goes into effect, which provides that it is illegal for anyone to attempt to collect any money from the debtor. Any pending suits, such as foreclosures, are stopped, and all collection calls from creditors stop. In fact, anyone who violates the stay could be held in contempt of the bankruptcy court.

Approximately thirty days after the debtor files the petition, the first meeting of creditors is held by the bankruptcy trustee. The trustee is a lawyer that the court appoints to do all the “legwork” for the court in the case. At this meeting the trustee asks the debtor a series of questions under oath about his or her finances and the petition. Creditors may ask questions as well, if they choose to appear.

Once the first meeting is over, the debtor typically waits for the court to process the file. If all goes well, ninety days after the first meeting, the court will enter the discharge order. The discharge is the key order in the case, and it provides that the dischargeable debts are forgiven and the debtor is not responsible to pay them. In most cases unsecured debts (debts without collateral), such as credit card bills, medical bills, and deficiencies on foreclosed homes or repossessed cars, are discharged. This is the “fresh start” bankruptcy is designed to provide. Typically, the bankruptcy case is closed shortly after the discharge is entered.

For each secured debt (where the debtor has pledged collateral, such as a home mortgage or car loan), the debtor must decide to reaffirm the debt or surrender the collateral. To reaffirm the debtor enters into a contract with the creditor which says that the debtor will pay the debt in exchange for keeping the collateral. Alternatively, the debtor may elect to surrender the collateral in exchange for having the debt discharged.

There is a common misconception that bankrupt debtors lose all their assets. This is not true, because the Bankruptcy Code provides exemptions which state that the debtor may keep certain types and amounts of assets. For example, the debtor will keep the equity in his or home, all retirement accounts, and $1,000.00 of miscellaneous personal property. The goal in any bankruptcy is to exempt all assets, but in some cases assets over the exemptions can be claimed by the court to be sold to pay some of the creditors.

In the hands of a competent bankruptcy attorney, Chapter 7 can be an effective tool to give the debtor a fresh start while keeping his or home and other assets.

Chapter 13 Bankruptcy
In a case when a Chapter 7 filing is inappropriate, a debtor might be able to file under Chapter 13. Chapter 13 is akin to a business which files Chapter 11 to restructure its debt, then continues doing business. Chapter 13 allows an individual to restructure his or her debt to keep more assets than could be retained in a Chapter 7.

To begin a Chapter 13 case, the debtor files a petition that is very similar to a Chapter 7 petition. However, in addition to the petition, the debtor must file a Chapter 13 plan. The plan is the debtor’s proposal to restructure his or her debt.

A typical Chapter 13 plan provides that the debtor will use his or her income to pay his living expenses, then make payments to secured creditors for debts the debtor has reaffirmed, such as a home mortgage. The plan also can provide for catching up an arrearage on those debts, so that mortgages and other secured debts can be brought current. The plan then provides that any “extra” income left over will be paid to the trustee, who will pay the unsecured creditors a portion of their debts. Typically, a plan must be in effect for sixty months, and each month the debtor makes a payment to the trustee.

The Chapter 13 plan is submitted to the court for approval. If the court approves the plan, and the debtor makes all the monthly payments called for by the plan, the court enters a discharge for any unsecured debt that remains unpaid at the conclusion of the sixty months. If the debtor successfully completes the plan, he or she keeps all assets.

Which Chapter Is For You?
Most debtors attempt to file a Chapter 7 to avoid the monthly payments to the trustee. Generally, there are three reasons to file a Chapter 13. First, the debtor may have significant assets that cannot be exempted in a Chapter 7. Second, the debtor might have too much income to qualify for a Chapter 7 under the Bankruptcy Code. Third, if the debtor is “upside down” on his or her first mortgage, the debtor can ask the court to dissolve the lien related to a second mortgage.

Business Bankruptcy
In most cases where a business is going out of business, the filing of a bankruptcy is unnecessary, as Florida law provides a procedure for liquidating the company. However, in those circumstances when a business needs to file bankruptcy, we can help.

Chapter 11 Bankruptcy
Both individuals and businesses can file bankruptcy under Chapter 11 of the Bankruptcy Code. Chapter 11 provides a business the opportunity to restructure its debt and continue doing business. Chapter 11 is available for individuals whose debts are too high for them to qualify to file under Chapter 13. We have experience representing businesses and individuals in Chapter 11 cases.

Foreclosure Defense
We represent debtors in cases where a mortgage lender is attempting to foreclose on a mortgage and repossess our client’s property. In those cases we attempt to keep the property in the client’s name, ensure that all procedures are followed under law, and minimize any deficiency claimed by the lender.