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Nowack & Olson, PLLC Florida Bankruptcy Lawyer
  • $0 down and low payment plans available. We can assist you without having to leave your home.

Choosing the Right Bankruptcy: Questions to Ask


Consumers typically have the choice of 2 different bankruptcies, which are named after specific chapters in the Bankruptcy Code: Chapter 7 and Chapter 13. They are very different, and choosing the right one is vital so that you handle your debts in an efficient manner.

At Nowack & Olson, our Plantation bankruptcy attorneys focus on helping you pick the correct bankruptcy. Here are some questions you should ask when meeting with an attorney for a free consultation.

Do I Qualify for Chapter 7?

Chapter 7 is the faster of the 2 bankruptcies. After filing, you will manage to wipe out all qualifying debts within a matter of months. With a Chapter 13, by contrast, you have to stick with a payment plan for 3-5 years.

Given the differences, many people want a Chapter 7. However, Congress has reserved Chapter 7 for those consumers who truly cannot repay their debts, so there are income requirements found in a “means test.”

This test will compare your income to the median income in your state for your family size. For 2019, the median income in Florida for a single person is $45,703. If you’re under that number, then you qualify for Chapter 7. If you are over the median, you still might qualify. You should take a closer look with an attorney at your monthly income and expenditures.

How Many Assets Might I Lose?

In a Chapter 7 bankruptcy, you can lose property to pay off your creditors. Florida’s homestead exemption protects most homes, but you could lose your car, vacation property, or small business. Florida has other exemptions that might allow you to shield valuable property.

If you can’t shield everything, then you should seriously consider a Chapter 13. With this bankruptcy, you don’t lose any property so long as you stick to your payment plan. You will pay off a portion of your unsecured debts using your disposable income each month.

Can I Remove Junior Liens?

Chapter 13 has a process called “lien stripping.” It allows you to remove a junior lien, like a second or third mortgage from a home, if the value of the asset is less than the balance of the senior mortgage. So if a home is underwater, you could remove a second mortgage from the property (but not eliminate the senior mortgage).

Lien stripping can work toward our clients’ advantage in many situations and can help a homeowner build equity much faster once they emerge from bankruptcy. The Supreme Court has decided that lien stripping is not an option in a Chapter 7 case.

Contact Us Today to Discuss Your Options

Both Chapter 7 and 13 bankruptcy protection can help a consumer dig out from under piles of debt. However, choosing the correct one is vital to getting back on your feet as soon as possible.

For help analyzing your case, speak to a lawyer at Nowack & Olson. One of our bankruptcy lawyers in South Florida will be happy to advise you and then go ahead and file the correct paperwork. Contact us today by calling 888-813-4737 to schedule a free consultation.


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