Pensacola Bankruptcy Attorney: The Law in Plain English –

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How to File Bankruptcy in Pensacola, FL.

How to File Bankruptcy in Pensacola, FL.

Bankruptcy Overview

Bankruptcy is fast becoming a common trend in America, Florida inclusive, as many people and businesses battle with economic upheavals and life’s hurdles. As more and more individuals and businesses file for bankruptcy gone are the days when filing for bankruptcy is viewed in a disapproving light. Yet, most of us do not fully understand bankruptcy, its process and how it affects your debt.

Why do you need a Bankruptcy Lawyer?

So many life challenges –job loss, emergency health conditions, student loans, divorce and so much more – can incur huge, unexpected debts. These debts often start out manageable but build faster than one can imagine if even one payment gets missed. When drowning in debt it is only natural to begin to look for an escape route, a safety net.

Bankruptcy may not instantly make all your financial problems go away, but it can provide reprieve and, in some cases, provide you with that safety net that that you are looking for. As different loans and debts mount that are beyond your ability to pay, you may file for bankruptcy, and officially declare your inability to repay your debts. Bankruptcy legally offers a debtor a way out of debts, affording you a second chance, a fresh start. It allows options for reorganization, repayment, or forgiveness of debts.

When we talk about debts we say they are either “secured,” which means the creditor has a lien over your property, or they are unsecured, which means there is no lien over the property. Unsecured debts are those like credit cards, medical debts and other judgments.

Types of Bankruptcy

There are three main types of consumer bankruptcy that we deal with. Each type is named after its corresponding chapters in the Bankruptcy code of the United States. Some of the common bankruptcies include Chapter 7, Chapter 11 and Chapter 13 bankruptcies. Other types of bankruptcy relief include Chapter 9, Chapter 12 and Chapter 15.

Bankruptcy Law in Florida

Bankruptcy Law in Florida

Chapter 7 Bankruptcy

This is a common and simple bankruptcy often referred to as a “straight bankruptcy” or “liquidation bankruptcy.” An individual or married couple lists all his or her assets and liabilities out on bankruptcy “schedules,” or pre-approved bankruptcy forms. Assets are your property- real estate, money in the bank, coin collections, microwaves, motorcycles, etc..

Debtors are entitled to keep all their assets up to a certain value, depending on the laws of the debtor’s state (or the federal government if the state laws are silent). These assets are called “exempt” assets. Any assets over the state limit are considered “non-exempt.”

If the debtor(s) has non-exempt assets then a bankruptcy trustee may sell the assets off to repay creditors. Any of the debts that cannot be repaid from the liquidation proceeds of a trustee sale (if any) will be discharged.

“Discharged” means that creditors may not collect the debt ever again.

There are certain income requirements to file a chapter 7 and chapter 7 is unavailable to individuals who own real property over a certain dollar amount. Chapter 7 is not generally a good option if a debtor is trying to stop the repossession of a vehicle or foreclosure of a home because chapter 7 does not allow debtors to catch up missed payments.

Individuals are only allowed to obtain a chapter 7 discharge every eight years. Debtors may “reaffirm” certain finance agreements in a chapter 7, but only with Court approval. Because a ‘fresh start’ is so valuable and only available every eight years, Courts are understandably reluctant to allow debtors to remain in high interest or high payment contracts after filing for bankruptcy relief.

Debtors are required to take an approved credit counseling course prior to filing a chapter 7 bankruptcy and must take an approved financial management course prior to obtaining a discharge. The average chapter 7 bankruptcy case takes between 90-120 days to finalize. Debtors are required to attend a meeting of their creditors, referred to as the “341 meeting.” We accompany all of our clients to their 341 meeting and to any reaffirmation hearings.

Chapter 11 Bankruptcy

This reorganization bankruptcy is basically considered a business bankruptcy though individuals can also file Chapter 11. It allows businesses to restructure their debts while still having control and possession of their business. However, the debtor can no longer make most other decisions independently.

The debtor is expected to provide a plan which restructures debts in a manner that must be approved by the creditors and the judge.

If a debtor’s debt exceeds that legally allowed in a Chapter 13 bankruptcy, then Chapter 11 is the next option. Chapter 11 can be time consuming, complicated and expensive.

Chapter 13 Bankruptcy

Chapter 13 is the most common consumer bankruptcy filed by people who are trying to avoid repossession or foreclosure. The filing of a bankruptcy can “stay” or stop a repossession or foreclosure from happening. The debtor then proposes a repayment plan which includes the arrearage, which is made up of the missed payments, collection costs, etc., and the regular payments going forward. If the debtor can show that he or she has the income to make the regular payments and make up all the missed payments, the debtor’s plan is “confirmed.”

The chapter 13 repayment plan is based on the debtor’s income. Sometimes the debtor has sufficient income to pay secured creditors and unsecured creditors. In other cases the debtor’s income is only sufficient to repay his or her secured creditors. At the end of the debtor’s chapter 13 plan period the debtor will receive a discharge just like the chapter 7 debtor.

A debtor may file for chapter 13 bankruptcy protection once every four years, but the repayment plan must be ‘feasible,’ which means that the debtor has enough income to pay their regular bills, necessities like groceries and utilities, and the chapter 13 plan payment.

Certain debts can be “crammed down” in a chapter 13 bankruptcy. For example, if you bought a car more than 920 days ago and the car is upside down, you may be able to prove the car is worth less than what you owe on it, and you can pay the value of the car back over the life of the chapter 13 plan.

Are Bankruptcies Public Record?

When you file for bankruptcy it is automatically entered into the public record, though the news will probably not make headlines. Anyone seeking information about you or your business will probably have access to your bankruptcy records from the bankruptcy court.

The details of your bankruptcy file are also available online via the Federal court’s PACER account. In addition, the information about your filing for bankruptcy is evident in your credit report for up to 10 years, depending on the type of bankruptcy filed.

When should you file bankruptcy?

Determining whether or not the time is right to file for bankruptcy can leave you anxious and uncertain. The fact that you are even considering bankruptcy is enough to fill you with dread. If your creditors are always on your neck, your bills keep rising, you are making minimum payments on your credit cards and are not even aware of the exact amount you owe, then maybe you should begin to think seriously about filing for bankruptcy.

But before you file for bankruptcy;

  • Critically examine your budget to see if you can free up some cash
  • Consider direct negotiation with your creditors
  • Attend credit counseling

How to claim Bankruptcy

  • Assess your financial situation and assemble your financial records.
  • Acquire credit counseling online or via phone call.
  • Employ an experience Pensacola bankruptcy attorney
  • Attend the legal proceedings and
  • Claim your bankruptcy

Bankruptcy Court

The federal government of the United State has special courts set up solely for handling all forms of bankruptcy cases. The court proceedings are governed by federal laws.

Each judicial district will cater to the filing and hearing of bankruptcy cases within its jurisdiction based on the location of the debtor or the business.

The federal bankruptcy courts in Florida include:

  • US Bankruptcy Court for the Northern District of Florida
  • US Bankruptcy Court for the Middle District of Florida
  • US Bankruptcy Court for the Southern District of Florida

On a final note, it should be said that it is risky to file for bankruptcy especially on your own without an experienced bankruptcy lawyer. The process is complicated and requires knowledge of the process to make sure that you get the best outcome possible.

What is involved in Filing a Personal Bankruptcy in Pensacola?


In filing bankruptcy, you are seeking to stop your creditors from harassing you or restructure your obligations, so your payments become more manageable. There may come a time when you find yourself swamped in debt. Fortunately, bankruptcy is a way out.

Bankruptcy filing options for individuals

Individuals generally file chapter 7 or chapter 13 bankruptcies. With chapter 7, the proceeds from the liquidation of assets will be used to offset debts. Filing a chapter 13 bankruptcy allows you to catch up missed payments, restructure debt, and possibly allow you to pay lower amounts by installments.

Chapter 7 bankruptcy filing

Filing Personal Bankruptcy in Pensacola

Filing Personal Bankruptcy in Pensacola

For personal bankruptcy, Chapter 7 could be suitable for you if you want a fresh start. You may have to liquidate some of your assets. To be eligible, you must indicate that your income is not above the Florida median family income, if it is, then you will undergo a ‘means test’ to ascertain your net disposable income for the month. High disposable income after expenses may render you ineligible for Chapter 7.

We can help you determine if you are eligible for a Chapter 7 bankruptcy. Call us for a free consultation.

The Chapter 13 bankruptcy process

If you own nonexempt assets, you may want to consider Chapter 13 in order to protect your property. Unlike the Chapter 7 process. Chapter 13 bankruptcy reorganizes the debtor’s finances and monthly payments thereby making it easier for them to repay their debts without accruing additional interest. This is of course dependent on the size of the disposable income of the debtor’s family.

The good thing is that an experienced Pensacola bankruptcy attorney will structure it so you pay a lower percentage of unsecured debts to your creditors if your disposable income is lower. This payment spans the duration of the Chapter 13 plan and whatever outstanding debt there is after the period will be discharged.

Bankruptcy exemptions in Florida

  • Homestead exemption – gives you the right to keep your primary home. However, the size of the property is a factor.
  • General personal property and household goods – are exempt including furniture, electronics and art.There is an additional $4,000 exemption for those without the Florida homestead exemption benefit. Also, there is personal property exemption of $1,000 or double for spouses.
  • Limited exemption of wages – applies too.
  • Vehicle exemption – of $1,000.

Other exemptions include annuity, retirement benefits, life insurance, unemployment benefits, and workers’ compensation benefits. Note that the Florida bankruptcy exemption laws will only apply to you when you have lived in the state for up to two years.

Before you file for bankruptcy, you need to ascertain your eligibility and whether you actually need bankruptcy at all. You should consult a bankruptcy attorney. The process can be complicated. You do not want tonavigate these waters alone.

What is involved in Filing a Business Bankruptcy in Pensacola?


Although Florida is notable for its fast growing economy, various businesses operating within the state, just like everywhere else, will face the challenge of excessive debt. In some cases, filing for bankruptcy will be the only option left open to them. This allows them to stay afloat or close shop amicably.

Generally, there is chapter 7 bankruptcy, then chapter 11 and 13 bankruptcies.

Filing Bankruptcy for Your Business

Filing Bankruptcy for Your Business

A skilled Bankruptcy Lawyer will help you select the right path for your business

The different bankruptcy chapters affect businesses differently, depending on the type of business. So, choose wisely when looking for a bankruptcy attorney in Pensacola. You must carefully consider the type of bankruptcy filing that is most suitable for your business.

    • In sole proprietorships, the business and the owner are the same entity. The personal assets and business assets would both be sold off in the event of liquidation of the business. Therefore, when filing for bankruptcy as a sole proprietor, it must include personal as well as business assets and debts.
      • Chapter 7 bankruptcy is more beneficial to the sole proprietor. In the event of bankruptcy, every qualifying personal and business debt will be wiped out. There are restricted exemptions. Ask us for details. The business owner will no longer need to continue paying the debts. It results in the closure of the business while the assets are sold off.
      • A sole proprietor business can consider filing for Chapter 11 bankruptcy if your debts are higher than the amount permissible under Chapter 13. With the options of Chapter 13 and 11, as the case may be, the business may continue functioning despite the bankruptcy. You must be able to generate enough income to make the monthly payments which will be lower than the pre-bankruptcy payments. You can keep your property as well as your business with this option.
      • Chapter 13 filing is only for individuals and sole proprietorships.
  • Partnerships and Corporations also often find themselves in a financial quagmire that has them resorting to bankruptcy. Debts cannot be written off, nor can your business property be shielded. However, there are certain benefits your business is entitled to in the course of bankruptcy.
    • In filing Chapter 7 bankruptcy, your business will be closed by the bankruptcy trustee handling the process. The shareholders are protected from individual liability through the process. Though in some cases, the creditors may still ask the court to compel the shareholders to pay a portion of the debt.
    • You can also file for Chapter 11 bankruptcy. This is suitable for partnerships and corporations as it affords the owners the right to keep their businesses. They can operate the businesses while paying the debt off. The downside is that for small corporations, the higher cost of legal fees and the extra rights given to the creditors increases the cost.

Filing Chapter 7 Bankruptcy in Pensacola


There are various types of bankruptcy that you can file as an individual or a business entity.  Filing for bankruptcy can become very complicated very quickly. It is vital that you retain a seasoned Pensacola bankruptcy attorney that knows the importance of keeping you well-informed so you choose the right form of bankruptcy that best suits your circumstances.

Chapter 7 bankruptcy, being the simplest and fastest bankruptcy, is more suitable for individuals with low income who find it impossible to keep up with their credit card payments, medical bills, and other loans.

How Chapter 7 Bankruptcy Will Affect You

Filing Chapter 7 Bankruptcy in Pensacola

Filing Chapter 7 Bankruptcy in Pensacola

With Chapter 7 bankruptcy, you are offered a clean slate. Most of your debts including credit cards, medical bills, and other unsecured debts will be wiped out. This means that your creditors no longer have the right to initiate further actions to retrieve their debt from you.

The downside is that you must be prepared to part with personal property. The bankruptcy code provides for the sale of your assets to pay off your debts. The trustee will be paid a commission. Your personal property under certain limits will be exempt from this rule though. Contact us for details on how much property you can keep.

For example, you may be eligible for the Florida homestead exemption if you have lived in the state for at least 2 years. You can generally also keep enough personal property to ensure your fresh start.

There are some non-dischargeable debts like fraudulent debts, alimony, student loans, and child support that will not be discharged through a Chapter 7 bankruptcy. Moreover, the court may deny the debtor a discharge if it finds out that the debtor:

  • Committed a bankruptcy crime
  • Tampered with a property that was supposed to be a property of the estate.
  • Did not provide correct financial records
  • Refused to abide by the bankruptcy court orders.

Bankruptcy Law Exemptions (Florida)

Florida, along with 37 other states, is an ‘opt out’ state in that it has its own separate state bankruptcy laws which differ from the Federal laws. Fortunately, these Florida exemption laws are quite favorable to debtors. Some of the exemptions include –

  • Homestead
  • Personal property
  • Motor Vehicle
  • Annuities
  • Alimony
  • Business/work tools
  • Wages
  • Pension payment
  • Social security benefits
  • Employment benefits
  • Damages from personal injury lawsuits up to certain limits
  • Disability income and benefits up to certain limits
Key Aspects of Chapter 7 Bankruptcy

Key Aspects of Chapter 7 Bankruptcy

Eligibility for Chapter 7 Bankruptcy

To be eligible for the Chapter 7 bankruptcy, the debtor must pass the bankruptcy means test, which is like an equation to determine whether his or her income is high enough to pay creditors.

These are the primary advantages to filing Chapter 7 bankruptcy:

  • It involves a simple and fast process that is quite easy to understand.
  • Debts can be discharged.
  • The liquidation process is transparent as it is handled by a trustee.
  • The debtor can reaffirm debts on certain assets that are necessary for the debtor to obtain a fresh start.

The biggest disadvantage is the loss of certain non-exempt properties.

We cannot stress how important it is that you enlist the services of experienced bankruptcy attorneys to help you make the right decisions.

Filing a Chapter 11 Bankruptcy in Pensacola

Chapter 11 bankruptcy is often referred to as “reorganization.” It allows debtors to reorganize their finances in order to be able to pay off debts more easily while also having control of their assets.

There are exceptions to the rules that allow debtors to stay in charge of their estate. If there have been issues of fraud or mismanagement on the part of the debtor, the debtor may no longer be allowed to oversee the business.

If you or your business is in dire financial distress – even if you are making money from the business – then you may consider filing Chapter 11 bankruptcy. An individual who cannot file for Chapter 13 bankruptcy because of a higher debt ceiling can file for Chapter 11.

Filing Chapter 11 Bankruptcy in Pensacola

Filing Chapter 11 Bankruptcy in Pensacola

Basics of Chapter 11 Bankruptcy

When you successfully file a Chapter 11 you are awarded an automatic stay forbidding your creditors from further debt collection actions. An automatic stay forbids your creditor from foreclosing on your property, filing liens against the property, filing a lawsuit against you or any further collection efforts.

Filing a reorganization plan is basically the exclusive right of the debtor. This should be done within 120 days even though a period of 180 days is allowed for submitting a plan of reorganization. An extension can be requested, but if the period lapses without a plea for extension, then other parties, including creditors, can take control of the reorganization plan.

If a creditor is able to prove that the debtor is incapable of executing the bankruptcy on the grounds of fraud, mismanagement, or unfair negotiation, the debtor’s rights can be terminated. This will allow creditors to bid for a competing plan.

Chapter 11 bankruptcy allows for the business to continue paying the owner salary if he/she was being paid prior to the bankruptcy filing. The salary is to be determined by the court based on the previous amount paid to the owner. But if the business is not able to pay its bills or generate enough money for payment of its debts after the filing, the owner may have to forfeit the salary.

Liquidation in Chapter 11 Bankruptcy

In some instances, Chapter 11 bankruptcy may lead to assets liquidation rather than a reorganization of finances. If the business has assets that could generate enough money to pay the creditors when sold and the value of the assets is more than expected future earnings, “liquidation” comes into play.

The business owner controls the liquidation process on the grounds that he or she has more knowledge about the business market. A liquidation trust is set aside for saving the proceeds of the sales. From this trust, the proceeds are shared among the creditors. It is possible to convert the Chapter 11 liquidation to Chapter 7.

Chapter 11 Bankruptcy for Individuals

Individuals who want to reorganize their finances through bankruptcy and still stay in control, or those whose debts exceed the cap for Chapter 13, can opt for Chapter 11.

For both businesses and individuals Chapter 11 bankruptcy is more expensive and complex than filing for Chapter 13. Therefore, you should seek the counsel of an experienced Pensacola bankruptcy attorney for alternative avenues of debt resolution before considering Chapter 11.

Filing Chapter 13 Bankruptcy in Pensacola

You may one day find that you have the need to file bankruptcy in order to stop your creditors from foreclosing on your house or repossessing your car, truck, boat or motorcycle.

A good bankruptcy lawyer in Pensacola can help you file Chapter 13 bankruptcy, a reorganization bankruptcy, which allows debtors with a steady income to repay the creditors monthly based on a court supervised payment plan. Once the court approves this repayment plan, the creditors are barred from harassing you for payment, but you must stick to the agreed upon plan.

The timeframe for the repayment of debt is usually between 3 to 5 years in Chapter 13 bankruptcy. The debtor should have the ability to repay the debt within that repayment period from their income. If the debtor is consistent in following the repayment plan but unable to pay off all outstanding debt within the period, then any remaining unsecured debts like credit card debts and personal loans will be discharged. The secured debts like student loans, alimony and taxes must be fully paid within the 3-5 year period.

The entire payment plan is supervised by the bankruptcy court. The court will determine the amount to be repaid monthly based on your disposable income and expenses.

Eligibility for Chapter 13 bankruptcy

Filing Chapter 13 Bankruptcy in Pensacola

Filing Chapter 13 Bankruptcy in Pensacola

The Florida means test is used to determine the amount the debtor can repay monthly.

  • Individuals, whether the owner of an unincorporated business, self-employed, or salary earner is eligible for Chapter 13.
  • You must show that you are capable of paying the monthly debts.
  • The debtor’s secured debts must be less than $1,184,200 and their unsecured debts must be less than $394,752. The amounts are open to changes depending on the consumer price index.
  • You must prove that you have filed taxes for the past 4 years.
  • You may be ineligible for Chapter 13 if in the past 180 days your previous bankruptcy petition was dismissed on the grounds of your failure to obey court orders or appear in court.
  • If you want to file Chapter 13, you must partake in credit counseling from an approved organization.

Advantages of Chapter 13 bankruptcy

  • In Chapter 13, you can typically keep more of your property than you would be able to in a Chapter 7.
  • The payment plan can reorganize repayments so that the amount you pay is reduced or the payment time extended.

Before you embark on a bankruptcy journey, consult a bankruptcy attorney to ascertain whether filing for bankruptcy is your best option and to help you determine which type of bankruptcy suits you most.

The Pros and Cons of Bankruptcy

Declaring bankruptcy is a big deal involving various complex processes. Before you finally make the decision to file for bankruptcy, it is important that you retain a competant Pensacola bankruptcy attorney who will help you evaluate all your options. You should take a close look at your finances and possibly discuss them with financial experts. Armed with the right information, you must then weigh the pros and cons and decide whether filing for bankruptcy is your best option.

What are the Pros and Cons of Bankruptcy?

What are the Pros and Cons of Bankruptcy?

The Upside of Bankruptcy

  • Bankruptcy legally protects you from undue harassment from lenders and debt collectors. Once
    the petition for bankruptcy is filed, the automatic stay goes into effect to prevent lenders and debt collectors from using aggressive or threatening means to collect debt from you. The point of the automatic stay
    is to give you, the debtor, some reprieve from collection efforts like the repossession of property, wage garnishments, eviction and foreclosures until you can put together a plan for repaying some or all of your creditors.
  • When you file for bankruptcy, you are automatically given the chance to reorganize your finances. This gives you breathing room to come up with better plans as you come face-to-face with reality. It affords the debtor the opportunity to use any assets to equitably repay creditors and to set themselves back up for solvency.
  • In some limited cases, bankruptcy can clear tax liabilities so long as the taxes were due more than three years earlier and the debtor filed the tax return timely and did not willfully evade payment of the taxes commit fraud.
  • Debtors are allowed to keep some or all of their personal property, depending on the value of the items. Statutes grant debtors exemptions from the collection of all of their personal property. The exemption levels vary from state to state but most of our clients find that they are able to hang on to the personal property, like household furnishings, clothing, automobiles and mementoes, they need in order to obtain a fresh start.
  • All debtors are required to complete a credit counseling course before being allowed to file consumer bankruptcy. The course aims to help the debtor to learn how best to budget and improve your finances.
  • It is possible to actually improve your credit ratings sometime after filing bankruptcy because some of the debtor’s debts are discharged during bankruptcy.

The Downside of Bankruptcy

  • Your bankruptcy discharge will be reflected on your credit report between 7-10 years.
  • Your application for a mortgage or loan may be stalled if you recently filed for bankruptcy and many lending underwriting rules prevent debtors from financing for several years.
  • Depending on the amount of personal property you own and the type of bankruptcy you file, you may need to surrender some of your possessions to the control of the bankruptcy trustee.
  • Credit cards and other financing arrangements are generally suspended until the underlying agreement can be reaffirmed by the bankruptcy court.
  • The bankruptcy process is often paperwork intensive.
  • If a debtor receives an inheritance or other large amount of money the proceeds will go to the trustee to pay to the creditors before the debtor.
  • Some prospective employers or landlords may view a recent bankruptcy negatively. They may review your credit report and decide against giving you the job or the apartment.
  • Certain loans like student loans, support orders and liens may be non-dischargeable.

You should definitely consult with a bankruptcy attorney in Pensacola that has good references prior to filing your case. Most bankruptcy attorneys do not charge for a consultation and he or she can answer any questions you may have. Do not rely on the internet for answering all of your bankruptcy questions. An experienced bankruptcy lawyer can explain how long your case will take, what requirements you must complete and will generally guide you through the process of filing bankruptcy.