When your debts exceed your ability to pay and creditors start calling, garnishing your wages, or threatening legal action, it’s completely normal to feel overwhelmed. In situations like this, many individuals in Miami, Florida, consider filing for bankruptcy—a legal tool that allows you to reorganize or eliminate certain debts under the supervision of a federal court.
While the process may seem complex, bankruptcy can provide a path to regain control of your finances, protect your assets, and stop creditor harassment. In this article, we’ll clearly explain what bankruptcy is, the types of bankruptcy available, how to determine if you qualify, what the process involves, and why having experienced legal guidance is essential.
What Is Bankruptcy and How Does It Work?
Bankruptcy is a federal legal process designed to provide financial relief to individuals or businesses that are unable to pay their debts. Its purpose is not to punish, but to offer a fresh financial start.
In Miami, Florida, bankruptcy cases are filed with the U.S. Bankruptcy Court for the Southern District of Florida. Once your petition is filed, an immediate protection known as the “automatic stay” goes into effect. This legal protection temporarily halts all collection efforts, lawsuits, wage garnishments, and foreclosure proceedings.
The court will review your financial situation to determine whether certain debts can be discharged entirely or whether you will need to repay a portion through a structured repayment plan.
Types of Bankruptcy: Which One Is Right for You?
The U.S. Bankruptcy Code provides different legal chapters depending on the nature of the debtor and their ability to repay. The most common types for individuals are:
Chapter 7: Liquidation Bankruptcy
This is the most common and fastest form of bankruptcy. In this process, certain non-exempt assets may be sold by a court-appointed trustee to repay part of your debts. Remaining eligible debts can then be discharged, giving you a fresh financial start.
Key Requirements:
You must pass the means test, which compares your income to the state median.
You must not have received a Chapter 7 discharge in the past 8 years.
This chapter is typically ideal for individuals with limited income and a high amount of unsecured debt, such as credit cards or medical bills.
Chapter 13: Reorganization Bankruptcy
Instead of liquidating assets, Chapter 13 allows you to reorganize your debts and repay a portion of them through a court-approved repayment plan lasting 3 to 5 years.
Benefits:
You can stop a foreclosure and catch up on missed mortgage payments.
You keep your assets while making manageable monthly payments based on your income.
This type of bankruptcy is best suited for individuals with steady income who want to retain their property.
Other Chapters (Less Common for Individuals)
Chapter 11: Typically used by businesses, but may also be an option for individuals with exceptionally large debts.
Chapter 12: Specifically designed for family farmers and fishermen.
What Debts Can Be Discharged in Bankruptcy?
Bankruptcy can help eliminate many types of debt, including:
Credit card balances
Medical bills
Unsecured personal loans
Past-due utility bills
Certain civil lawsuit judgments
However, some debts are not dischargeable in bankruptcy. These include:
Child support or alimony obligations
Student loans (except in rare cases of extreme hardship)
Recent tax debts or debts resulting from tax fraud
Criminal fines or debts related to injuries caused while driving under the influence
A qualified bankruptcy attorney can help you clearly understand which debts can be discharged and which you will still be responsible for repaying.
How Does Bankruptcy Affect My Property?
Many people worry that filing for bankruptcy means losing their home or car—but that’s not always the case. Both federal and state laws provide exemptions that protect essential assets, such as:
Your primary residence (often protected under Florida law)
Vehicles (up to a certain value)
Tools needed for your work
Clothing, furniture, and personal belongings
Protected retirement accounts
Under Chapter 13, in particular, you can keep all of your assets as long as you comply with the approved repayment plan.
What Are the Real Benefits of Filing for Bankruptcy?
Immediate Relief from Creditor Harassment
The automatic stay stops calls, letters, lawsuits, and wage garnishments from the moment you file your case.Elimination or Reduction of Debt
Bankruptcy frees you from overwhelming financial pressure and allows you to start fresh without unmanageable debt.Protection of Your Essential Assets
Through exemptions and repayment plans, you can keep your home, car, and other necessary property.Long-Term Credit Improvement
While bankruptcy does impact your credit score initially, many people begin to see improvements within months as delinquent accounts are eliminated and new missed payments are avoided.
Why Should You Work with a Bankruptcy Attorney?
While you can file for bankruptcy on your own, it is highly recommended to work with a specialized bankruptcy attorney in Miami, Florida. Mistakes in paperwork, choosing the wrong chapter, or misunderstanding exemptions can cost you time, money, and valuable assets.
At Peraza Law, we help clients in difficult situations to:
Evaluate their legal options
Prepare and file all necessary documentation correctly
Negotiate with creditors when possible
Represent them in bankruptcy court
Proper legal guidance can make the difference between a fresh start and an expensive mistake.
Frequently Asked Questions (FAQs)
How Long Does the Process Take?
Chapter 7: Between 4 and 6 months
Chapter 13: Between 3 and 5 years (due to the repayment plan)
Can I Keep My Home If I File for Bankruptcy?
It depends on the type of bankruptcy, the value of your home, and the amount of your mortgage. Florida offers homestead exemptions that, in many cases, allow you to keep your primary residence—especially if you file under Chapter 13.
Does Bankruptcy Eliminate All My Debts?
No. Some debts, such as child support, student loans, and legal fines, are generally not dischargeable. An attorney can help review your case and estimate which debts could be eliminated.
Does Filing for Bankruptcy Affect My Family?
Not directly. Bankruptcy only affects the person who files. However, if you have joint debts with your spouse or family members, those individuals may still be responsible for repayment.
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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