Question 1

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Accepted Answer

Chapter 7 bankruptcy, often called 'liquidation bankruptcy,' allows you to discharge most unsecured debts (credit cards, medical bills) relatively quickly — typically in 3 to 6 months. Chapter 13 is a 'reorganization' bankruptcy where you repay some or all of your debts over a 3 to 5 year plan. Chapter 13 is often used to save a home from foreclosure or to catch up on car payments. The best option depends on your income, assets, and specific financial situation.

Question 2

Will I lose my home or car if I file for bankruptcy?

Accepted Answer

Not necessarily. Florida has generous bankruptcy exemptions that protect your primary residence (homestead exemption), your vehicle up to a certain value, retirement accounts, and other essential property. In a Chapter 7 case, you can often keep your home and car if you are current on payments and the equity is within the exemption limits. Chapter 13 is specifically designed to help you keep assets while catching up on missed payments.

Question 3

How long does bankruptcy stay on my credit report?

Accepted Answer

A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. A Chapter 13 bankruptcy remains for 7 years. However, many clients find that their credit score actually begins to improve within 1 to 2 years of filing, as the discharged debts are removed and they begin rebuilding credit responsibly.

Question 4

What debts can be discharged in bankruptcy?

Accepted Answer

Most unsecured debts can be discharged, including credit card balances, medical bills, personal loans, utility bills, and certain older income tax debts. Debts that generally cannot be discharged include student loans (with limited exceptions), recent tax debts, child support, alimony, and debts from fraud or criminal activity.

Question 5

What is the automatic stay?

Accepted Answer

The automatic stay is one of the most powerful protections in bankruptcy law. The moment you file your bankruptcy petition, an automatic stay goes into effect that immediately stops most collection actions against you — including creditor calls and letters, wage garnishments, bank levies, foreclosure proceedings, and repossessions. This gives you immediate breathing room while your case is processed.

Question 6

Do I qualify for Chapter 7 bankruptcy?

Accepted Answer

To qualify for Chapter 7, you must pass the 'means test,' which compares your income to the median income for a household of your size in Florida. If your income is below the median, you automatically qualify. If it is above, you may still qualify based on your allowable expenses. Attorney Hosein can quickly assess your eligibility during a free consultation.

Question 7

How much does it cost to file for bankruptcy?

Accepted Answer

The court filing fee for Chapter 7 is $338 and for Chapter 13 is $313. Attorney fees vary based on the complexity of your case. Attorney Hosein offers a free initial consultation and will provide a clear, transparent fee structure before you commit to anything. Many clients find that the cost of bankruptcy is far less than the ongoing cost of their debt.

Question 8

How long does the bankruptcy process take?

Accepted Answer

A Chapter 7 case typically takes 3 to 6 months from filing to discharge. A Chapter 13 case takes 3 to 5 years, as it involves a court-approved repayment plan. The initial consultation and preparation of your petition can often be completed within a few weeks of contacting our office.

Question 9

Can I file for bankruptcy more than once?

Accepted Answer

Yes, but there are waiting periods between filings. If you previously received a Chapter 7 discharge, you must wait 8 years before filing Chapter 7 again. If you previously received a Chapter 13 discharge, you must wait 2 years before filing Chapter 13 again. Different combinations have different waiting periods. Attorney Hosein can advise you on your specific situation.

Question 10

Will bankruptcy stop a wage garnishment?

Accepted Answer

Yes. The automatic stay that takes effect when you file for bankruptcy immediately stops wage garnishments. Your employer must stop the garnishment as soon as they are notified of the bankruptcy filing. Any wages garnished within 90 days before your filing may potentially be recovered.

Question 11

Will bankruptcy stop a lawsuit?

Accepted Answer

Yes. The automatic stay halts most pending civil lawsuits against you. This includes creditor collection lawsuits, foreclosure actions, and repossession proceedings. Some lawsuits — such as criminal proceedings, domestic support actions, and certain tax proceedings — are not affected by the automatic stay.

Question 12

Can I keep my retirement accounts in bankruptcy?

Accepted Answer

In most cases, yes. Retirement accounts such as 401(k)s, IRAs, pensions, and similar accounts are fully exempt under both federal bankruptcy law and Florida law. This means creditors cannot reach your retirement savings in a bankruptcy case.

Question 13

What is the credit counseling requirement?

Accepted Answer

Federal law requires you to complete a credit counseling course from an approved provider within 180 days before filing for bankruptcy. The course typically takes about 1 hour and can be completed online. After filing, you must also complete a debtor education course before your discharge is issued.

Question 14

Will my employer find out about my bankruptcy?

Accepted Answer

Bankruptcy filings are public records, but employers do not typically monitor bankruptcy filings. Your employer will only be notified if you have a wage garnishment that needs to be stopped, or if your employer is a creditor in your case. Federal law prohibits government employers from firing you solely because you filed for bankruptcy.

Question 15

Can bankruptcy help with tax debt?

Accepted Answer

Bankruptcy can help with some tax debts. Income tax debts that are more than 3 years old, were assessed more than 240 days before filing, and meet other requirements may be dischargeable in Chapter 7. Chapter 13 can allow you to pay tax debts over 3 to 5 years without penalties and interest accruing. Attorney Hosein can analyze your specific tax situation.

Question 16

What happens to my credit cards after I file for bankruptcy?

Accepted Answer

Credit card accounts included in your bankruptcy will be closed by the credit card companies. After your discharge, you can begin rebuilding credit. Many clients are able to obtain secured credit cards within a few months of their discharge, and some receive unsecured credit card offers within 1 to 2 years.

Bankruptcy FAQ — Fort Walton Beach, FL

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