Filing for bankruptcy is a major decision that often brings doubt, uncertainty, and fear. However, for thousands of people in Miami, Florida, this process represents a real opportunity to start fresh, protect important assets, and put an end to overwhelming financial pressure. Understanding what happens from the exact moment you file for bankruptcy is essential to navigating the process with confidence and making informed decisions.
At Peraza Law, we guide individuals and families through every step of the bankruptcy process so they can regain financial stability with as little stress as possible. Below, you’ll find a clear and detailed explanation of what happens when you file for bankruptcy and how this legal tool may help you move forward.
What Does Filing for Bankruptcy Mean?
Filing for bankruptcy means submitting a formal petition to the U.S. Bankruptcy Court for the Southern District of Florida in order to obtain legal protection from your debts. This process is designed to provide financial relief to individuals who can no longer keep up with their financial obligations.
Depending on the type of bankruptcy filed, the goal may be to:
Eliminate unsecured debts
Reorganize payments into a manageable plan
Halt wage garnishments
Protect essential assets
Although bankruptcy is governed by federal law, Florida has specific exemption rules regarding which assets are protected—particularly your primary residence—which can significantly impact the outcome of your case.
The First Thing That Happens: The Automatic Stay Goes Into Effect
One of the most important and immediate benefits of filing for bankruptcy is the automatic stay. This legal protection takes effect right away and stops most collection actions by creditors.
This means that the following are put on hold:
Collection calls
Ongoing lawsuits
Wage garnishments
Foreclosure proceedings
Bank account levies
Court threats
Aggressive collection letters
For many individuals, this protection provides immediate relief by ending constant harassment and creating a period of financial stability while the bankruptcy case moves forward.
Case Review by the Trustee
After filing for bankruptcy, the court assigns a trustee—an independent official responsible for reviewing your documentation, verifying financial information, and overseeing the proper administration of your case.
The trustee’s role varies depending on the type of bankruptcy:
Chapter 7 Bankruptcy
The trustee reviews your assets to determine if there are any non-exempt items that can be sold to pay creditors. In Florida, many individuals qualify for full exemptions on their home and essential property, so they usually retain most of their assets.
Chapter 13 Bankruptcy
The trustee evaluates your ability to pay and ensures that the proposed repayment plan is reasonable and complies with legal requirements.
The Creditors’ Meeting (341 Meeting)
About 20 to 40 days after filing your petition, you will attend the creditors’ meeting, also known as the 341 Meeting. This hearing is mandatory, but in most cases, it is brief and straightforward.
During this meeting:
The trustee will ask questions about your financial situation
The accuracy of your submitted documents is verified
Creditors may attend and ask questions, although this is uncommon
With proper preparation, the meeting usually lasts less than 10 minutes.
What Happens if You File Chapter 7
If you file for bankruptcy under Chapter 7, the process focuses on eliminating unsecured debts. Key steps in this process include:
Review of Assets and Exemptions
Your assets are analyzed to determine which are protected under Florida exemptions. These exemptions typically cover:
Primary residence
Vehicles up to a certain value
Essential furniture and personal belongings
Retirement accounts
Work tools
In most cases, individuals do not lose property.
Determination of Dischargeable Debts
The court determines which debts can be eliminated. The most commonly discharged debts include:
Credit card balances
Medical bills
Unsecured personal loans
Collection accounts
Issuance of the Discharge
Between 3 and 6 months after filing, the court issues a discharge, legally freeing you from the included debts.
What Happens if You File Chapter 13
In Chapter 13, the process focuses on reorganizing your debts and creating a court-supervised repayment plan. Here’s what happens:
Creating the Repayment Plan
A plan is designed based on your income, expenses, and debts. The plan typically lasts between 3 and 5 years.
Protecting Your Assets
You can:
Stop a foreclosure
Catch up on mortgage payments
Prevent vehicle repossession
Restructure past-due tax payments
Monthly Payments to the Trustee
Your payments are routed through the trustee, who distributes the funds to your creditors.
Final Discharge
Upon completing the plan, the court discharges any remaining eligible debts.
How Bankruptcy Affects Your Credit History
Filing for bankruptcy does impact your credit, but not permanently. The duration depends on the chapter filed:
Chapter 7: remains on your credit report for up to 10 years
Chapter 13: remains for up to 7 years
However, many clients begin receiving credit offers and see improvements in their scores within the first 12 to 24 months after the discharge. Rebuilding credit is a gradual process, but it is achievable with disciplined financial habits.
What Happens to Your Assets After Filing Bankruptcy
The protection of your assets depends on the type of bankruptcy, but Florida provides broad exemptions.
Common assets typically retained in Florida include:
Primary residence (homestead exemption)
Vehicles within the allowed value
IRA and 401(k) accounts
Basic personal belongings
Work tools
In Chapter 7, the trustee can only sell non-exempt assets, which is rare if your case is properly prepared. In Chapter 13, you do not lose any assets; you simply reorganize your payments.
What Happens with Garnishments and Lawsuits
Bankruptcy can stop:
Debt-related lawsuits
Wage garnishments
Bank levies
Evictions in certain cases
Foreclosures
In many situations, you may even be able to recover funds that were garnished shortly before filing.
Benefits of Filing for Bankruptcy
Filing for bankruptcy offers multiple advantages, including:
Immediate relief through the automatic stay
Partial or complete elimination of debts
Protection of important assets
A real opportunity to start fresh
Reduced financial stress
Halting of collection actions
Could Filing for Bankruptcy Be the Right Solution for You?
The answer depends on your specific financial situation. Bankruptcy may be helpful if you are facing:
Wage garnishments
Debt-related lawsuits
Foreclosure threats
Unmanageable past-due payments
Overdue credit cards
Unsustainable accumulating interest
With a professional review, it’s possible to determine whether bankruptcy is the right option or if alternatives like negotiation, debt consolidation, or loan modification may be more suitable.
At Peraza Law, we carefully evaluate each case to identify the strategy that best protects your interests and financial stability.
Frequently Asked Questions About Filing for Bankruptcy
Can creditors keep calling me after I file for bankruptcy?
No. The automatic stay stops them immediately.
Can I lose my home?
In most cases, no—thanks to Florida’s homestead exemption or Chapter 13, which allows you to catch up on mortgage payments.
Does bankruptcy eliminate taxes?
Some taxes may be discharged, but it depends on the dates, type, and age of the debt.
What happens if I don’t attend the creditors’ meeting?
The court may dismiss your case. Attendance is mandatory.
Can I file for bankruptcy again if needed?
Yes, but there are waiting periods between filings.
Disclaimer
The information provided in this blog is for general informational purposes only and should not be construed as legal advice. While we strive to present accurate and up-to-date information, the law is constantly evolving, and the content may not reflect the most recent legal developments.
No attorney-client relationship is formed by your use of this blog or any communication through it. For specific legal advice regarding your situation, please consult a qualified attorney. Your use of this blog does not constitute an invitation to create an attorney-client relationship, and any communication through this platform does not guarantee confidentiality. Always seek the advice of a licensed attorney for any legal questions or concerns you may have.
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