An Overview Of Chapter 13 Bankruptcy In The State Of Florida

Interviewer: What are the main differences between a Chapter 7 and a Chapter 13? Which one is preferable?

Michael Golub: Most people don't know what chapter 7 and what chapter 13 are. Before they come in, we don't know whether it's going to be a 7 or 13. It just depends on the individual. For some people a chapter 7 is appropriate, for others chapters 13 is appropriate and for a few people a chapter 11 but that's a very rare situation. Normally it's going to be chapter 7 or 13 most of the time.

Bankruptcy is the Best Option When an Individual Cannot Repay Debts as they Occur from a Normal Income

Interviewer: At what point can someone decide that bankruptcy is suitable or best option especially if we're talking about chapter 13?

Michael Golub: Bankruptcy basically is going to be their best option when you can't pay your debt as they occur from your normal income, that's basically it, you can't pay the debts.

The Different Types of Bankruptcy Clients in the State of Florida

Interviewer: When people consult you; are they usually on the fence? Do they consult you to help them make that decision to go forward with it?

Michael Golub: I get all kinds of clients. I get people that are on the fence, I also get people that come to me that really shouldn't file, that are in a position where they could probably recover and pay things off. I get people that they need to file, they needed to file ages ago and they know it and they're ready to go and some people that are kind of on the borderline and just kind of weighing their options, so we get them all over the spectrum. The first thing I do when people come in is I basically ask them questions about their situation. First of all, we need to know what their family situation is, and I'm assuming for these purposes, we're talking about personal bankruptcy because there's a whole different thing that we look at when we're talking about businesses.

In Terms of Personal Bankruptcy, It is Necessary to Assess the Client's Situation

In terms of personal bankruptcy, we need to look at what their situation is, Are they married? Do they have children? How many children do they have? What is their income? What's their spouse's income? What assets do they have? What types of debts do they have? Once we look at that and get a picture of what they have, then, we can figure out what chapter would be best for them to go forward. I explain to people that there are two chapters of the bankruptcy code that can apply to them; one being chapter 7, which is probably the most common chapter of bankruptcy that's filed. That is basically just a straight debt liquidation where we list all of the debts and we ask the court to discharge all of those debts.

If An Individual's Income is Higher than a Certain Limit, they Cannot File a Chapter 7

In a chapter 7, there is a certain amount of personal property a person can keep, there's a certain amount of value for vehicles and there's exemptions that a person gets and certain limitations on the income too. Typically, we would do a chapter 7 if the income wasn't too high to do it. In other words, there are people that will not qualify because their income's too high to do a chapter 7 and we have to do chapter 13 in that case. Sometimes, the assets that they have exceed the statutory exemptions that we're allowed and if they want to keep their assets, then we have to do chapter 13. The other reason that we would go from 7 to 13 is that they have a house that they're trying to save from foreclosure or a car that they're behind on or something of that nature because the 13 enables us to catch up debts and also to modify certain debts because we're going into a payment plan. Chapter 7 is basically just letting everything go and you don't owe the debt anymore.