Bankruptcy in Florida

THE BASICS OF FILING FOR BANKRUPTCY

Bankruptcy

What a Bankruptcy Lawyer Can Help You With:

If you are concerned about repossession, foreclosure or wage garnishment or are overwhelmed by credit card debt, medical debt or any other kind of debt, you may want to avail yourself of a free consultation with an experienced bankruptcy lawyer. They will look at your income, your assets, your liabilities and your necessary living expenses. If your difficulties can be managed in some way other than bankruptcy, they should let you know what that way is and how to get there. On the other hand, if your situation reveals to them that you may benefit from a bankruptcy, they will also let you know if that is an option that you might consider.

Placing Your Finances in Order:

When looking for a way to put your finances in order, that doesn’t always mean that you must pay all of your creditors and pay in full; it often means that the matter should be dealt with so that it is not a distraction, anymore, and bankruptcy may be the most effective tool.

Selecting the right bankruptcy attorney is important:

Unless your bankruptcy is an exceedingly simple Chapter 7 and you are unusually learned in accounting and finance terms and methods, not to mention the local bankruptcy bar’s way of conducting business, you will want to hire a bankruptcy attorney to shepherd you through this process. The necessary forms are complex and, in many places, not intuitive. A local bankruptcy attorney will be familiar with what the local judges like and don’t like and with what the local trustees tolerate and what they do not. This is invaluable in completing the bankruptcy process and successfully erasing the debt that is bothering you. Many people file bankruptcy without an attorney and end up succeeding with it, but they are doing their own research, navigating an unfamiliar system for the first time and leaving more to chance than we would recommend. An experienced bankruptcy attorney who does bankruptcy for a living will have a better chance of helping your bankruptcy to go smoothly and successfully with the maximum benefit to you.

Chapter 7 Bankruptcy

 The most common and the most liberating one.

In Chapter 7 bankruptcy, one is essentially declaring that they have no extra income after necessary living expenses to pay the creditors any of what is owed to them. In this situation, the bankruptcy code is designed to relieve the individual of debt (because its realistically never going to get repaid) and, at the same time, get that debt off of the books of the creditors (because its realistically never going to get repaid). In other words, a Chapter 7 forces everyone involved to acknowledge the reality of the situation and to behave accordingly: you can’t pay if you don’t have the funds and a bank can’t collect if there are no funds, so the matter is resolved in an orderly fashion so everyone can go on their way. You go on your way without fear of lawsuits, garnishment or levy and creditors go in their way no longer in suspense as to whether they can or should try to collect. A clean and liberating finality for both.

To file a Chapter 7, you must first conduct a means test calculation for the Court to determine if your income is below the adjusted median for your state of residence and family size. If so, you qualify to file a Chapter 7. However, even if your income is above the median, you may still qualify for Chapter 7 once a series of exemptions and allowances are taken into consideration. These medians, exemptions and allowances change frequently and your attorney will know the current values and how to calculate them.

Your attorney should clearly explain the process to you and tell you what to expect. Very broadly, and under ordinary circumstances, the Chapter 7 process unfolds as follows:

  • A bankruptcy petition is filed with the Court. As of that very moment, a stay goes into effect which prevents any of your creditors from contacting you to demand payment. The Court will send each of them formal notice of this. The calls and the letters should then stop. If they don’t, call your attorney and your attorney will take the necessary steps to see that they do.
  • About a month after the filing of the petition, you will appear, along with your attorney, at a Meeting of Creditors. The name “Meeting of Creditors” is often a misnomer as creditors will rarely appear at this meeting. Rather, the purpose of this meeting is to permit the Chapter 7 Trustee (an appointee of the Court) in your case to review your petition, ask questions of you and to determine if there are any recoverable assets that, in fairness to your creditors, should be forfeited for the benefit of your creditors. Your attorney should discuss with you, long before any filing takes place, whether you are likely to forfeit any assets in Chapter 7. In the majority of cases, nothing is forfeited. The Trustee also wants to hear you attest, under oath, that everything in the petition is true and correct. Most Meetings of Creditors are informal and last only five or seven minutes. More complicated ones can take much longer. In any case, the Meeting of Creditors is normally nothing to be dreaded; it isn’t a courtroom, debtors need not dress up for the occasion, there is no judge and nothing final will be decided there.
  • Following the Meeting of Creditors, you normally will not have to appear again. About two more months will pass and then a Discharge will be issued by the Court declaring that your debts are erased and the matter is at an end. It will come to you in the mail. Once you get the Discharge, keep it in a safe place where you keep other important papers because the Chapter 7 will remain visible on your credit report for the following ten years. Normally, your credit score will grow back to where its reasonable, again, after two years or so (provided that you are reasonable with credit during that time), but it will remain visible on your credit report for the ten years and during those ten years any secured creditor you seek a loan from (mortgage, car loan, etc.) will insist on seeing a copy of the Discharge before lending to you no matter how high your credit score has gotten.

Chapter 13 Bankruptcy

A repayment plan according to your ability to pay.

Chapter 13 is designed for people who can afford to repay some of what they owe, but not all of it. Or perhaps they can repay all of what they owe, but not when or under the conditions that their creditors would prefer. As with Chapter 7, a Means Test Calculation is performed and an amount is arrived at that you should be able to afford to pay each month. A Chapter 13 Plan is devised and filed with the Court showing how your creditors will share in what you are able to pay. Your monthly payments begin about six weeks after the petition is filed and are paid to a Chapter 13 Trustee. This trustee then, after an administrative fee, will disburse your money to the creditors according to the Chapter 13 Plan filed and approved by the Court. Chapter 13 lasts for three to five years and represents your best attempt to pay what you can during that period. At the end of the Plan, a Discharge is issued by the Court declaring that the remaining general unsecured debt is erased and the case is at an end. Chapter 13 is not as damaging to your credit score because it represents an effort on your part to repay debt as opposed to Chapter 7 where the creditors seldom get paid at all. It remains visible on your credit report for seven years.

Other Information

Individual or Joint Bankruptcy?

If you are married and both you and your spouse have significant debt, it may be advisable to file a joint bankruptcy to deal with both of your debts at the same time. Often, when debts are joint, it will be necessary to file a joint bankruptcy because it does no good to erase a debt for one of you while leaving the entire debt for the other spouse. Only a married couple may file a joint bankruptcy petition.

On the other hand, if you are married and all of the debt is in one spouse's name and not in the other's, then an individual filing may be the more appropriate option as it makes little to no sense for a person to file a bankruptcy when they are not in debt.

Home Foreclosures

Chapter 13 can be used as a way to save your home if it is being foreclosed upon. No matter where you are in the foreclosure process, a Chapter 13 filing stops that process as soon as you file a bankruptcy petition so long as the foreclosure sale has not actually taken place, yet. Then you will be expected to begin making regular monthly mortgage payments, again, plus enough to cure the amount that you are behind by within the life of your Chapter 13 Plan. An example using simple figures: Your mortgage payment is $1,000.00 per month and you are behind in payments in the amount of $6,000.00. You file Chapter 13 to stop the foreclosure and must then begin, again, paying the $1,000.00 per month plus $100.00 per month to cure the arrearage in the course of a five-year Plan. This would help you if you can afford the $1,100.00 per month (plus a fee 6% trustee fee, for example) but cannot afford to stop a foreclosure by paying the $6,000.00 to come current all at once.

Another helpful feature of Chapter 13 is that a second mortgage may be removed and discharged in Chapter 13 under some circumstances. An experienced Chapter 13 bankruptcy attorney can tell you if this is an option for your second mortgage or other liens that may be on your house.

Taxes and Money Owed to the Internal Revenue Service

Back taxes can be a significant source of financial stress in a person's life. Filing a bankruptcy petition can be an effective way of reducing or even eliminating your tax liability. Depending on the age and nature of your debt, either Chapter 7 or Chapter 13 will present different ways of dealing with tax liability. Even if none of your tax liability is subject to discharge, Chapter 13 can offer a way for you to repay it in an orderly fashion rather than remain exposed to action by the I.R.S. which can include pay garnishment, levy on bank accounts and a lien placed on your house.

Repossessions

Filing bankruptcy will stop the repossession of a car, boat, motorcycle or other asset. However, if you want to keep that asset, you will still need to pay for it. The bankruptcy process can offer ways to bring down interest rates, lower balances or, at the very least, allow you to catch up on payments over the course of time instead of all at once. A bankruptcy attorney can explain the details to you.

Liens on Your House

If you have a lien on your house due to tax debt or legal judgment, you may be able to have that lien removed in the course of a bankruptcy. They do not come off automatically, however; to make this happen, a separate motion must be filed with the Court in which the legal grounds are cited. Often a hearing is necessary.

Consumer Credit Counseling

Before you can obtain debt relief by filing a bankruptcy petition, you must complete a consumer credit counseling course. Actually, one must be completed before filing and another must then be completed before your case closes. This requirement is in place in order to try to educate people who are filing bankruptcy in the hopes that they will be able to avoid the same or similar difficulty in the future. In the past, one had to sit in a classroom in order to obtain a credit counseling certificate. While those classes may still be available in some areas, the usual practice is to take the courses online at your own convenience. They only take a couple of hours and usually cost less than $35.00 each. Your attorney will be able to direct you to reputable credit counseling services that are acceptable to the bankruptcy division in which you plan to file.

Bankruptcy Client Checklist

*Please make sure you make copies and do not give originals to us of any documents as they will NOT be returned.*

  1. 6 months of paycheck stub if you are employed. – *place on a flash drive/USB or email them to our office in PDF format only*
  2. Income tax returns for the past two years. – *place on a flash drive/USB or email them to our office in PDF format only*
  3. 6 months of all bank statements (in your name) that verify the income provided on the paycheck stubs, or social security and pension deposits, etc. *place on a computer disc or email them to our office in PDF format only*
  4. Copies of titles, registration and proof of insurance to all motor vehicles or vessels that are owned by you, not attached to a lien with a bank.
  5. Current payoff from lender on any vehicles with loans with a lender.
  6. If you own property – no loans: recorded mortgage and deed for all real property. These documents are normally obtained from the Recorder’s Office for the county where the real property is located.
  7. Copies of any and all lease agreements, including motor vehicles lease, rent-to-own property, contracts, etc.
  8. A copy of appraisals made within the past 12 months for all real property. If one has not already been done in the last 12 months you may disregard, you do not need to get one unless you already have it.
  9. Copies of any lawsuits, foreclosures, judgments, liens or garnishments filed within the past two years.
  10. Copies of all insurance policies life, disability insurance, homeowners, renters, motor vehicles or any other insured assets. Be sure to include any “riders” which cover any specific items of personal property with insured values.
  11. All documents relating to retirement accounts, IRAs, 401Ks, etc.
  12. Separation agreements, decrees of dissolution, divorce decrees or support obligations filed within the past one year.
  13. Security agreement, financing statements and any or all personal property leases.
  14. Stock certificates, bonds, credit union and passbook saving accounts and statements evidencing investments or savings.
  15. Documents verifying interest in any future property (such as a Will or Trust).
  16. Copies of any previous bankruptcy cases filed within the past eight years.
  17. Copies of most recent statements from any educations IRS and/ or Tuition Trust accounts.
  18. Copies of the most recent statements from any student loans.
  19. Copy of license or state issued identification card.
  20. Copy of social security card.
  21. Any documents relating to disabled veteran status.

If you wish to retain the originals of your documents, you may either copy them at a copy shop or scan them into PDF format and place on a flash drive or email the documents.

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