Preparation is the key for success when filing bankruptcy in Florida. The best bankruptcy cases go unnoticed as debtors glide through the system without attracting attention to receive a full discharges in record time. Luck is not involved. Planning began months before filing.
The most successful filers know something that you don’t. Small lifestyle changes may alter means test income and expenses before filing. Well-planned strategic changes will have a dramatic effect on the results of the means test. With a few weeks or months to plan, creating $300 improvement on the bankruptcy means test calculation will save $18,000 in wasted Chapter 13 payments. Just as easily, many people avoid Chapter 13 altogether and may file Chapter 7 when understanding the test procedure. Timing is critical.
2010 Bankruptcy Strategies and the Means Test Explained
For the purpose of filing Florida bankruptcy, property is considered to be of two general classes: real estate and personal. Within the RE class, sub-classification is based upon homestead status. Personal items are sub-classified based upon the state legislatures assessment of necessity and are subject to value limitations. If equity value exceeds the statutory limit by a significant amount, trustees routinely require forfeiture of assets.
Property retained in Florida bankruptcies depend on the chapter under which relief is sought. Chapter 7 liquidation of debts requires strict compliance with statutory allotments. Chapter 13 takes a less direct approach requiring, as a condition for plan confirmation, that the court determine creditors receive more favorable treatment under the plan than would be available if the debtor filed Chapter 7. Most valid liens are unaffected by filing. Creditors remain free to foreclose liens (with court approval) in the event of non-payment whether in Ch. 7 or under the terms of a Ch. 13 plan. In addition to purchase money security interests, other liens may be created automatically by operation of law to insure payment of child support, taxes, and emergency hospital treatments. These statutory interests also remain largely unaffected.
State law determines a debtor's title, right and interest in real estate. Primary residences receive special protection out of necessity, while secondary homes, invest property, and non-possessory interests are subject to forfeiture. For more information, see: Constitutional Authority, Designating Property, and Survey Requirements.
All assets owned must be reported to a trustee appointed by Florida bankruptcy courts. The definition of property ownership is construed broadly to include not only physical assets, but also intangible, contingent and mixed. Contractual rights and options, potential causes of action against others, and legal entitlements may represent a bona fide value and must be reported. Only specific assets may be retained under Florida bankruptcy statutes, including:
Creditors are subject to state law provisions incorporated into Florida bankruptcy cases. If a Florida bankruptcy court lifts the automatic stay and permits a specific creditor to seize and liquidate property subject to a lien, creditors must obey all state law limitations on collection practices. For more information, see legal assistance for debtors. Also, all statutory provisions depend on conformity with the prohibition against fraudulent conversions creating exempt property.
