If you are like a lot of people facing serious financial struggles in Florida, you might not know that you have a choice when it comes to which type of bankruptcy plan might be able to help you get out from under your mound of debt. There are actually two common forms of bankruptcy available to consumers and each has times when it may be the better option.
As explained by Experian, a Chapter 7 bankruptcy offers debtors a relatively expedient path to debt discharge as it can generally be completed within a matter of a few months. This type of bankruptcy plan may also involve the loss of assets related to any secured debt. A secured debt is any debt that has some type of property associated with it as collateral. Homes, vehicles, boats and more may be taken and sold in order to repay the creditors. No such asset loss occurs for unsecured debts like credit card debt or medical bills.
A Chapter 13 bankruptcy, in contrast, does not involve any seizure of assets even for secured debts. Instead, consumers make payments every month for three to five years to repay at least a portion of what was originally owed. A trustee works with creditors to agree on an amount they will accept.
This information is not intended to provide legal advice but is instead meant to help educate residents in Florida about the two primary forms of consumer bankruptcy and how to identify which type of plan might be right for their circumstances.