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Ways to recover from a bankruptcy

Few Florida residents plan on needing to file for personal or business bankruptcy; however, having some information in advance can help people understand a bit more about the process and the best way to help recover financially after filing.

One common mistake that people make in a bankruptcy is that they allow themselves to lose their homes to foreclosure. This is simply unnecessary as the law actually provides for a homestead exemption that protects a person's home from being taken to pay creditors. Florida has one of the highest levels of homestead exemption in the country; O.J. Simpson, for instance, was able to avoid paying a multimillion-dollar wrongful death judgment by purchasing a home in Florida. Any resident can take advantage of these laws to keep his or her home after filing for bankruptcy. It is important to also be aware of other exemptions, including cookware, some jewelry, some tools used for business and retirement funds.

In addition, it helps to be aware of the differences in the bankruptcy statutes. Chapter 7 allows a person to sell assets to pay debts. It can take up to 120 days and may cost up to $10,000. A Chapter 13 bankruptcy provides for debt reorganization. It may take up to two years and could cost a consumer more than $15,000.

A licensed bankruptcy attorney may be able to help those struggling to pay their debts to determine whether bankruptcy is the best option for addressing their debts and making a fresh start. It may be possible to determine whether Chapter 7 or Chapter 13 is more beneficial in a given situation. An attorney may also be able to explain which of a person's assets may be exempt from being taken by creditors and help establish a budget or payment plan during bankruptcy.

Source: Forbes, "How To Bounce Back From Bankruptcy & The Loss Of Your Home", Cameron Keng, August 05, 2013