This page was written, edited, reviewed & approved by Emil J. Fleysher following our comprehensive editorial guidelines. Emil J. Fleysher, the Founding Partner, has 15+ years of legal experience as a bankruptcy attorney. Our last modified date shows when this page was last reviewed.
When debt becomes unmanageable, filing for bankruptcy gives people a legal way to get a fresh start. This choice has both good and bad points; you should know before making such a big financial decision.
What are the pros and cons of filing for bankruptcy? At Fleysher Law Bankruptcy and Debt Attorneys, we help clients across Florida understand their options. Our team knows how to handle both Chapter 7 and Chapter 13 bankruptcy cases. We guide you through the bankruptcy filing process from start to finish.
Filing for bankruptcy can offer relief from unmanageable debt. When you can't pay what you owe, this option offers a way to either clear debts or create a payment plan to repay creditors. The bankruptcy code gives you legal rights when debt becomes too heavy to carry.
People think about filing for bankruptcy after losing a job, facing big medical bills, going through a divorce, or when debt payments become impossible. If collection agencies keep calling, your wages are being taken, or you might lose your home, bankruptcy could help your financial situation.
The primary forms of personal bankruptcy—Chapter 7 and Chapter 13—serve different financial needs. Chapter 7 discharges debts by selling certain assets, while Chapter 13 reorganizes them into a manageable payment plan.
Getting help from a bankruptcy attorney is key when starting the legal process. Bankruptcy proceedings have complex rules, court dates, and strict deadlines. We at Fleysher Law explain these steps and how they affect your money. Without good advice, you might lose your case or lose property you could have kept.
Chapter 7 bankruptcy, also called liquidation bankruptcy, works best for people with low income or few assets. This bankruptcy process lets you eliminate unsecured debts like credit card debt and medical bills. Most Chapter 7 cases finish in just 3-4 months, making it a quick process for debt relief.
Filing for Chapter 7 requires passing a means test to determine if your income is too high for debt discharge. If you earn less than Florida's median income, you qualify right away. If you earn more, the bankruptcy court looks at your expenses. Not everyone passes this test, so talking to a credit counselor or bankruptcy attorney early helps you understand if you qualify.
The Chapter 7 process begins with filing forms that show all your debts, property, income, and expenses. You must take credit counseling before you file and meet with creditors after filing. A trustee looks at your bankruptcy case and might sell non-exempt assets to repay creditors. Most people keep all their things because bankruptcy exemptions in Florida protect many common assets up to certain value limits.
Chapter 13 bankruptcy helps people with steady income create a repayment plan for their debts. Unlike Chapter 7, you keep all your property while making monthly payments to a trustee for 3-5 years. The trustee then gives this money to your creditors based on a court-approved plan.
You can file Chapter 13 if your secured debts (like mortgage loans and car loans) are under $1,395,875 and unsecured debts (like credit card debt and personal loans) are under $465,275. You also need enough income to make the payments while paying for living costs. This makes Chapter 13 good for people with regular income who want to catch up on late payments.
Chapter 13 offers benefits that Chapter 7 doesn't provide:
If federal student loans are causing undue hardship, Chapter 13 might help by letting you focus on these debts through a structured payment plan.
When debts become overwhelming, bankruptcy offers strong legal help to get back on your feet. The bankruptcy process gives you tools to handle creditors and start fresh. Here are some key bankruptcy pros that make it worth thinking about when you face serious money problems.
Bankruptcy isn't just a last option—it's a legal process designed to give honest people a second chance. The system knows that good people sometimes face money problems they didn't create. Whether from job loss, health emergencies, or other unexpected troubles, this legal safety net helps you recover without crushing debt.
One advantage of filing for bankruptcy is the quick end to creditor harassment. As soon as you file, the "automatic stay" takes effect. This legal shield stops collection agencies, creditors, and debt collectors from contacting you about debts. The phone calls, letters, and lawsuits must stop right away.
The automatic stay also blocks:
This gives you room to fix your finances without constant pressure from collection attempts. For many people, just ending the stress of creditors makes bankruptcy worthwhile, even before any debts are wiped out.
If creditors break the automatic stay rules by trying to collect after you file, they face penalties. The bankruptcy court can make them pay damages, attorney fees, and extra money for willful violations. We help report these violations if creditors ignore your legal rights.
Filing for bankruptcy may pause foreclosure and allow you to catch up on payments. When you file, the automatic stay keeps lenders from moving ahead with foreclosure sales or evictions. This protection works even if your home sale is scheduled for tomorrow.
We at Fleysher Law know both bankruptcy and foreclosure defense. This complete approach gives you more ways to save your home. Instead of just delaying foreclosure, we build plans to fix the mortgage issues while handling your other debts through bankruptcy.
With Chapter 13 bankruptcy, past-due mortgage payments can be added to your repayment plan. This lets you catch up over 3-5 years while keeping up with regular monthly payments. Meanwhile, Chapter 7 can wipe out other debts, freeing up money for your mortgage. Our foreclosure defense work might also find lender mistakes that help when asking for loan modifications.
Bankruptcy lets you eliminate many unsecured debts. Credit card debt, medical bills, personal loans, and old utility bills can all be erased. This gives you a fresh financial start without these burdens.
Getting rid of these debts creates room to focus on basics like housing, food, and transportation. Many clients tell us they feel much better once they get their discharge from bankruptcy court. The constant worry about unpayable debts goes away, letting them sleep better and focus on rebuilding their credit.
After bankruptcy, you can start rebuilding your credit record right away. While bankruptcy stays on your credit report for several years, its effect gets smaller over time. Many people can get secured credit cards within months and car loans within 1-2 years. With careful money management, most former bankruptcy filers see better credit scores within 2 years.
The automatic stay works as a powerful shield during your bankruptcy. This court order freezes almost all collection efforts while your case moves forward. It stops lawsuits, foreclosures, repossessions, and wage garnishments as soon as you file your bankruptcy petition.
The stay blocks creditors from:
This complete protection gives you time to work through bankruptcy without new money emergencies popping up.
The automatic stay has some limits. It doesn't stop criminal cases, certain tax actions, or the collection of child support obligations. If you file multiple bankruptcies in one year, the stay might not last as long. The stay also doesn't stop secured creditors from eventually taking collateral if you don't make payments.
While bankruptcy offers help, it also has drawbacks you should think about carefully. Filing for bankruptcy affects your financial options for years to come. Never make this choice without understanding the downsides.
Before filing, weigh all pros and cons based on your specific needs. What works for someone else might not work for you. We help our clients look at all sides, including other alternatives that might fix money problems without bankruptcy's downsides. Sometimes, debt relief through settlement or talking with creditors makes more sense than filing for bankruptcy.
Filing for bankruptcy will drop your credit score, often by 100-200 points. If you had good credit before filing, the hit would be bigger than if your score had already been low. This drop makes getting new credit harder and more expensive for some time.
A Chapter 7 bankruptcy stays on your credit report for 10 years as public record, while a Chapter 13 stays for 7 years. During this time, lenders see your bankruptcy when you apply for loans or credit cards. Many will either say no or charge higher interest rates because they see you as risky. Getting a mortgage loan typically means waiting 2-4 years after bankruptcy discharge.
You can rebuild credit after bankruptcy by:
Making all payments on time is crucial. Many bankruptcy filers reach decent credit scores within 2-3 years by making smart choices after filing.
In Chapter 7 bankruptcy, the court may sell some of your property to repay creditors. The trustee could take any items not protected by bankruptcy exemptions. These are called non-exempt assets or non-exempt property.
Florida offers good bankruptcy exemptions that protect many assets. Your home (up to certain value limits), personal car (up to $1,000 in equity), and basic personal belongings are usually safe. However, luxury items, investments, second homes, or valuable collections might not be protected if they are worth more than the exemption limits.
We help clients understand how exemptions work and protect assets through legal planning. This might include:
With proper planning, most of our clients keep everything they own while still eliminating their debts.
Bankruptcy creates problems beyond just credit scoring. Some employers check credit reports when hiring, especially for money-related jobs. While federal law stops employers from firing someone just for filing bankruptcy, it doesn't prevent them from thinking about it when hiring new staff.
The bankruptcy code limits how often you can file. After a Chapter 7 discharge, you must wait 8 years before filing another Chapter 7, or 4 years before filing Chapter 13. After Chapter 13, you must wait 6 years before filing Chapter 7 (with some exceptions) or 2 years before another Chapter 13.
Tax issues also matter. Forgiven debt outside bankruptcy often counts as taxable income. While debts discharged in bankruptcy don't create tax bills, other parts of bankruptcy can cause tax problems. For example, if non-exempt property is sold, you might face capital gains taxes.
When facing both heavy debt and possible home foreclosure, you need a lawyer who understands how these problems connect. A foreclosure defense lawyer who also handles bankruptcy brings valuable combined expertise to your case. This dual knowledge creates plans that address both issues at once.
At Fleysher Law, we know both bankruptcy and foreclosure defense throughout Florida. This combination lets us see options other attorneys might miss. For example, we might use Chapter 13 to stop foreclosure while challenging the mortgage company's right to foreclose. We might also work on loan modifications while using Chapter 7 to eliminate other debts and make your mortgage more affordable.
You should call a foreclosure attorney at the first sign of mortgage trouble—don't wait until you're months behind. Warning signs include:
The earlier you seek help, the more options you have. Early legal help gives you the strongest position for talking with lenders. Many foreclosure defense strategies work best before the foreclosure process gets too far along. At Fleysher Law, we offer free consultations to review your situation and explain your options.
Loan modification changes your original mortgage terms to make payments more affordable. This might include making the loan longer, lowering the interest rate, or even forgiving some of what you owe. A good modification can prevent foreclosure without filing for bankruptcy in some cases.
We talk with lenders to get favorable modifications based on your financial situation. Lenders often prefer modification over foreclosure because it saves them money. While bankruptcy might still make sense if you have other big debts, loan modification can sometimes be an advantage over bankruptcy when mortgage trouble is your main concern.
If you're struggling with debt or facing foreclosure, contact Fleysher Law today for a free bankruptcy consultation. We'll look at your financial situation, explain your options, and help you decide if bankruptcy is right for you. Our team is ready to answer all your questions about the bankruptcy process.
We have extensive experience handling both Chapter 7 and Chapter 13 bankruptcy cases throughout Florida. Our knowledge of state and federal bankruptcy laws helps us protect your assets while eliminating your debts. Don't face financial challenges alone—let us help you get the fresh start you deserve.
Emil specializes in consumer bankruptcy, debt settlement, and mortgage modification, offering a holistic approach to solving mortgage and debt problems. Emil listens to clients, understands their circumstances and goals, and helps them make the right choices by presenting all options and contingencies.
He is dedicated to helping South Floridians regain their financial freedom from overwhelming debt caused by high interest credit cards, bad mortgage loans, and uninsured medical expenses.
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