FAQTEXT-Bankruptcy

Is Chapter 7 Bankruptcy Still Available After the New Bankruptcy Laws?

Yes. In fact, the new bankruptcy laws will have little or no effect on most people.

Do I need an attorney to file bankruptcy?

Paralegal companies advertise bankruptcies at a discount. Paralegals are prohibited by law from rendering any legal advice. Consequently, paralegals can only provide you with forms for you to fill out and are nothing more than glorified typing services. Bankruptcy is a complex area of the law. An attorney can make sure that the benefits of bankruptcy are maximized for you and that your interests are properly represented when it comes to the valuation of assets, exemptions, challenges to your automatic stay, objections from creditors and dealing with secured creditors. An attorney can help you avoid the nightmare scenario of losing all your assets and then finding out that some of your debts were not discharged. It is therefore critical that your bankruptcy case is handled correctly and that your interests are fully represented. Only an experienced bankruptcy attorney can provide you with competent advice to help you navigate the many intricacies of the bankruptcy process, eliminate the majority, if not all, of your debt and let you keep most, if not all, of your property. The one or two hundred dollars you may save by hiring a paralegal versus a qualified bankruptcy attorney may ultimately cost you thousands of dollars and years of frustration. Lastly, our firm does provide service for people who have misfiled their bankruptcy cases, however, the fee for this bankruptcy "re-filing" service is typically 2 to 3 times the amount we would normally charge the client for an original filing.

How much does your firm charge for a bankruptcy?

The cost to an individual of filing for bankruptcy can be broken down into two parts: Costs and Attorney fees. The Bankruptcy court currently charges a filing fee of $259 for a Chapter 7 and $185 for a Chapter 13 (as of 6/2006). The filing fee is assessed whether the individual represents themselves or hires an attorney. The attorney fee that we charge is as follows: Chapter 7: $199 initial retainer, and an additional $400 before we file; Chapter 13: $199 initial retainer gets you filed, and the remainder of our fee is paid as part of the chapter 13 plan payments which are based primarily on your disposable income.

How long does it take before my creditors stop harassing me?

Once your case has been filed with the Bankruptcy Court, your creditors MUST cease all attempts to collect money from you. That means that they will be prohibited from contacting you, filing lawsuits, or taking any other action to attempt to collect.

Will I be able to keep my house?

Yes. You will be able to keep any secured property as long as you are current on your payments and continue to make your payments to the mortgage company.

Will I be able to keep my car?

Yes. If you are making payments and have no equity, you will be able to keep any secured property, including your car, as long as you are current on your payments and continue to make your payments to the finance company. If you own the car outright, often the answer to this question is still yes depending on the value of the car. Florida Law partially protects a motor vehicle from the claims of unsecured creditors.

Will I be able to keep my retirement?

Yes. Florida law allows you to keep exempt assets or retirement entitlements such as your pension, IRA or 401(k).

Will My Public Utilities Be Turned Off?

No. Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills for services after bankruptcy is filed.

Will I Be Required to Go To Court?

Not usually. In the vast majority of bankruptcy cases, you only have to go to a proceeding called the "meeting of creditors" (341 Meeting) to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. This meeting usually takes 2-5 minutes.

How long does bankruptcy take?

3 to 5 months. A chapter 7 takes from about 3 to 5 months, however, your relief from creditors starts once your case is filed. A Chapter 13 involves a payment plan that ranges from 36 to 60 months.

Should I File for Bankruptcy?

Bankruptcy is a legitimate solution to eliminate all of your debt in a legally recognized and widely accepted procedure. It's amazing that more people don’t file bankruptcy even when they desperately need to. We appreciate that it is a tough decision to call a bankruptcy attorney, but we know from experience that you wouldn’t be reading this unless you really needed our services. The decision to file bankruptcy is more of a personal one than a legal one. It is important that you do what’s right for you and your family. Many of our clients struggle for years trying to pay down credit card debt or medical bills in order to save face. Of course, during this time your creditors become increasingly aggressive, charging additional late fees, penalties and mounting interest while you and your family suffer in order to just make the minimum monthly payments. If you realistically are unable to pay off your debt in the next few years without significantly foregoing your basic necessities while you do so, then bankruptcy is clearly an appropriate option. It is important that you accept your present circumstances and take action to correct them. Remember, that we can’t help you unless you help yourself by giving us an opportunity to review your finances and provide you with viable recommendations

Why Do I Feel Guilty About Filing for Bankruptcy?

Many people express their reluctance to file bankruptcy because they feel guilty. These feelings are normal, but should be put into context. Credit card companies are currently reporting record profits. You are nothing more than a file number to the credit companies and an opportunity to make money. In most instances, you have most likely already paid back the principal amount of the debt which was borrowed. Although the credit card companies are no longer going to make more money on you, they certainly are not going to take a loss. In addition, credit card companies’ policies to charge you exorbitant interest, penalties and late fees once you miss a payment or two demonstrate their lack of compassion and fairness. Your struggles represent an opportunity for them to take advantage of your situation and gouge you for more money. The most important thing to remember is that you have to do what is right for you and your family. If you cannot realistically pay back your debts within a couple of years, than you have a choice to make. You can live the rest of your life in poverty while you and your family suffer so a credit company can make more profit, or, you can take control of your own financial destiny, take advantage of a legitimate solution to eliminate your debts and live a debt-free life after you file for bankruptcy. The choice should be easy

Who Will Know I Filed for Bankruptcy?

The only parties that receive notice of the bankruptcy are your creditors, the bankruptcy court, and the Internal Revenue Service. Your employer will not be notified of the bankruptcy unless your employer is also a creditor. The bankruptcy is public record so anyone who wants to find out could determine that you have filed if they specifically search for your name. Generally, however, only you, your creditors, and the Internal Revenue Service will know about the bankruptcy.

Will filing for bankruptcy hurt my credit rating?

While Bankruptcy will adversely affect your credit rating, it often represents the first step towards reestablishing your credit. As a practical matter, most people contemplating bankruptcy no longer have credit or have simply maintained their credit rating in somewhat good standing by using one credit card to pay off another. Any negative information on your credit report concerning unpaid bills, whether you file for bankruptcy or not, will stay on your report until paid in full or until reported as bad debt. Once such items are reported as bad debt they will still remain on your credit history for 7 years. Federal law limits the length of time that a bankruptcy can be reflected on your credit report to 10 years. Thus, bankruptcy draws a proverbial line in the sand and prevents negative information from being carried on your credit report indefinitely. Although bankruptcy is reflected on your credit report, it is still possible to gain renewed confidence from creditors and reestablish your credit. You can typically obtain credit if you demonstrate a consistent employment record and signs of financial rehabilitation. Most people find that if, after filing bankruptcy, they promptly make the payments they are left with such as car payments, house payments, rent or utility payment, they can reestablish their credit in only two years.

Can I Discharge Taxes If I File For Bankruptcy?

Under certain circumstances, bankruptcy can eliminate many federal and state tax obligations. Only an experienced bankruptcy attorney can evaluate whether your taxes can be eliminated by a bankruptcy.

I Lost My Drivers License, Can Bankruptcy Help Me Get It Back?

If you lost your license solely because you couldn't pay damages caused in an accident, bankruptcy will allow you to get your license back.

If I file a Chapter 13, will I be able to stop foreclosures or automobile repossessions?

Yes. When a person is behind on a house payment or a car payment their creditor may decide to either foreclosure or repossess their property. However, the filing of bankruptcy requires creditors to cease these efforts. Creditors must then petition the court for permission to continue their collection efforts. Usually, an individual can keep their house and car if they can propose a workable plan where payments on their mortgage and auto loan will continue and arrearages will be paid off over a reasonable period of time. Thus, a chapter 13 plan can provide an individual the chance to keep their property by forcing their creditors to accept payment of their past due payments over a reasonable period of time.

Will I be able to buy another car or house if I declare bankruptcy?

First, it is important to note that many people are able to keep their house and their car(s) while still obtaining the benefits of bankruptcy. However, many people worry that if they file bankruptcy that they will never be able to buy another house or finance another car. The truth is that many finance companies see an individual as a better credit risk afterward rather than before when that person had so much outstanding debt. Under the current FHA rules, you may be eligible for a standard mortgage at a favorable rate just two years after the completion of your bankruptcy.

If I file a Chapter 7 will the creditors be able to take the possessions of my friends and my family?

No. Your creditors can only attempt to collect against property that you own. Anything that you gave as a gift to your friends, family and children will not be reachable by your creditors unless made for the purpose of defrauding your creditor. Attempting to make gifts for this purpose may jeopardize your chances of a successful bankruptcy proceeding.

What is Bankruptcy?

Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

What are the different types of consumer bankruptcy?

There are two types of consumer bankruptcy. Each one is controlled by a different chapter of the bankruptcy code. Chapter 7 is a liquidation proceeding while Chapter 13 is a reorganization plan.

What is Chapter 7 - “straight bankruptcy”

Chapter 7 is the liquidation or “straight bankruptcy” chapter of the Code. Both individuals and businesses can file under this Chapter. The basic idea behind a Chapter 7 is that all non-exempt property is surrendered, liquidated and distributed by the trustee to the creditors. However, it is often the case that unsecured creditors receive nothing in a Chapter 7 bankruptcy. This result can sometimes be reached by properly claiming exemptions, by giving assets their proper valuation in light of the Chapter 7 proceeding and by negotiating with secured creditors.

What is Chapter 13 – "Debt Consolidation & Reorganization"

Chapter 13 is a reorganization plan for individuals. An individual in a Chapter 13 is put on a payment plan for a period of 3-5 years. The advantage of a Chapter 13 is that the individual does not have to surrender any of his/her assets so long as payments are made on the plan. A Chapter 13 petition is ideal for someone who has a steady income and (1) needs some time to catch up on a mortgage payment, (2) has valuable non-exempt property or (3) has debts that are not dischargeable in a Chapter 7 proceeding.

If I file a Chapter 13, will I be able to keep my assets?

In a chapter 13 there are two kinds of assets: (1) assets that the individual owns free and clear; and, (2) assets that secured creditors have security interests. A person that successfully completes a chapter 13 will not have to give up any property that is unencumbered. An individual also will likely be able to keep encumbered property, such as a house and a car, if they can propose and implement a chapter 13 plan that will provide for the payment of the amount the individual is in default.

Do I have to repay all my debts in full if I file for Chapter 13?

For most types of unsecured debt the answer is no. What is required is that the individual pay to these companies an amount that the individual can reasonably afford. However, secured creditors and a few types of unsecured creditors must be paid in full. Upon the successful completion of a chapter 13 plan, an individual will not be liable for debts that are dischargeable.

How long does a Chapter 13 take?

It can take several months to get a Chapter 13 plan proposed and approved by the court. The plan itself will last between 36 and 60 months. The debtor’s only obligation during this time is to make the monthly payment required by the plan. Upon the completion of this plan the individual is granted a discharge.

What is exempt property?

Under Florida Law, there are certain types of property that you are able to protect in part or in whole from the claims of unsecured creditors and judgment creditors. The preeminent exemption provided for by Florida Law is the homestead exemption which protects your primary residence. Only creditors that you have voluntarily given a security interest to can reach the exempt property. There are certain limitations to the homestead exemption that should be discussed with a qualified bankruptcy attorney.

Can I discharge my student loans by filing bankruptcy?

Generally, student loans are not discharged in bankruptcy, with two exceptions: (1) The student loan may be discharged if it is neither insured or guaranteed by a governmental unit, nor made under any program funded in whole or in part by a governmental unit or nonprofit institution; or, (2) The student loan may be discharged if paying the loan will "impose an undue hardship on the debtor and the debtor's dependents." An adversary proceeding in the bankruptcy court may have to be filed to obtain a court order declaring the debt discharged.