Bankruptcy is a legal recourse available to most individuals and businesses faced with financial distress. It is widely used in our country as a means to obtain financial freedom, protect assets, or obtain a fresh start. Bankruptcy is governed by the Federal Rules of Bankruptcy Procedure and local bankruptcy court rules.
Chapter 7 is the most common type of bankruptcy filed by individuals. In a chapter 7 nonexempt assets can be liquidated to pay your creditors.
Chapter 13 can only be filed by individuals seeking to reorganize their debts.
Chapter 11 filed mostly by corporations and individuals with a high net worth seeking to reorganize their debts.
It is a misconception that Bankruptcy is the result of bad financial decisions or improper money management. Most people file for bankruptcy because of unforeseen circumstances that arise in life. The majority of our clients faced financially difficult situations resulting from illness, exorbitant medical bills, reduction in work hours, inability to work, loss of work, having to support a family member, or legal actions such as foreclosures or credit card lawsuits. These factors usually lead to creditors taking action to collect on debts which include filing lawsuits, collection efforts, wage garnishments, bank account garnishment, vehicle repossessions, and even seeking to auction your home or property.
Any person residing, domiciled, or having property or a place of business in the United States may file Chapter 7. A business may also file a Chapter 7. The new bankruptcy law includes a “means test” which applies an income vs. expense test in order to file Chapter 7 bankruptcy. There are currently no minimum or maximum income limits or other income requirements or limitations for people whose unsecured debts are primarily non-consumer debts such as investment liability, business losses, taxes, or student loans.
Chapter 13 is reorganization bankruptcy commonly incorrectly referred to as the repayment Bankruptcy. A reorganization may include eliminating a second mortgage, seeking a modification of your home loan through the Mortgage Modification Mediation Program, catching up on missed mortgage payments or association fees, and even reducing the loan amount on investment property. Depending on the debtors income, a Chapter 13 reorganization takes 36 or 60 months.
Chapter 7 bankruptcy is the most common type of bankruptcy and is often referred to as a “liquidation bankruptcy.” Chapter 7 bankruptcy is used to eliminate, or discharge, primarily unsecured debts such as credit cards or medical bills. Chapter 7 does not eliminate secured debts, such as vehicles (unless the secured item is surrendered). Under the new bankruptcy law, only people who pass the “means test” may file a Chapter 7 bankruptcy. An experienced bankruptcy attorney can determine your eligibility and advise if Ch 13 is applicable and of benefit for your particular situation.
Married debtors can file a joint bankruptcy petition for a single filing fee, and Stiberman Law’s attorneys charge the same legal fee for joint cases as they do for individual cases. Married couples who are jointly liable on most debts should file a joint bankruptcy. On the other hand, if only one spouse is liable on most of the debts, the indebted spouse may file an individual bankruptcy, and in most cases, the individual debtor’s bankruptcy will have no adverse effect on the non-filing spouse.
The decision to file for bankruptcy is nothing more than a decision to seek a path forward of financial freedom. Filing your case in a timely fashion can spare you from unnecessary losses or payments on debts that can be discharged in bankruptcy.
The vast majority of debts can be discharged in bankruptcy. These include credit cards, vehicle repossession, wage garnishments, foreclosure deficiencies, and personal loans. Even if you file for bankruptcy, you will still need to pay your child support, back taxes, federal student loans or debts incurred as a result of fraud or theft (writing bad checks, for example).
The new bankruptcy law requires all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course before obtaining a discharge. It’s not difficult but it has to be done. Failure to complete either of these courses and file the appropriate certificates with the court will prevent a successful bankruptcy. Courses van be done over the phone or online. In our experience, online is quicker. You can use one of our computers at Stiberman Law if you do not have a access to a computer or an internet connection.
You can keep your house in bankruptcy Chapter 7 if it is your primary residence and if you are able to claim the full Florida homestead exemption. You can keep you car if it does not have more than $1000 in equity and you claim the Florida motor vehicle exemption.
A monetary judgment is a ruling entered by the court against a party determining an amount owed on a debt. Creditors can seek to collect on a monetary judgment through wage garnishment.
Yes, in most cases where the payday creditor obtains a judgment against you, unless you are exempt form garnishment, the Court can order your employer to deduct up to 25% of you paycheck.
The most common Trustees are Chapter 7 Trustees and Chapter 13 Trustees. A chapter 7 trustee can seek to liquidate any nonexempt assets and sell them to pay your creditors. Some chapter 7 trustees will give you the option to buy back any nonexempt assets.
A chapter 13 bankruptcy trustee will review your chapter 13 plan for confirmation, receive you monthly chapter 13 payments, and disburse the plan payments in accordance with your chapter 13 plan. Different than a Chapter 7 Trustee, a chapter 13 trustee will not seek to take any property from you.
Learn more about the different types of Trustees in our Complete Guide to Filing Bankruptcy In Florida 2022.
Every case is different, but most of our clients file bankruptcy when they are facing a wage garnishment, lawsuit, or at risk of losing their home.
Chapter 7 does not have a minimum or maximum amount of debt to file for bankruptcy, but in our experience most people file with at least $10,000 in unsecured debt.
Absent a court order to the contrary, there is no limit on how often you can file for bankruptcy. A distinction needs to be made between filing for bankruptcy and receiving a discharge, which is the main reason why most people file bankruptcy. Although you may be able to file again, you must wait 8 years from the time you filed a prior chapter 7 in which you received a discharge.
There is no bankruptcy rule prohibiting you from renting after bankruptcy, but most landlords will check your credit and see that you have a bankruptcy filing. In many cases you may be able to explain to your potential landlord that after bankruptcy you are in a better position to pay rent since you no longer carry all of the pre-bankruptcy debt.
Garnishments can last until the judgment debt is paid in full. In some instances you may be able to claim an exemption to the garnishment or stop the garnishment by filing bankruptcy.
In the majority of cases filing for bankruptcy should not affect your job. There may be instances where it may affect jobs involving the handling of finances or dealing with financial or insurance information.
Yes, in most cases bankruptcy clears evictions. An eviction judgment is a dischargeable debt that can be included in a bankruptcy.
You need to request court permission when seeking to get a car loan while in chapter 13 bankruptcy. In the Southern District of Florida you need to submit a request to incur debt your chapter 13 trustee with the vehicle and loan payment information for your Trustees approval.
You can request secured credit cards which may require a deposit to guarantee any charges incurred with the card. In many cases you will receive traditional cards shortly after receiving your bankruptcy discharge but make sure to check the interest rate which may be higher than normal.
A chapter 13 cramdown allows you reduce the loan amount on personal or real property not secured by your homestead the value of the property as of the time time the bankruptcy is filed. With regards to motor vehicles you can seek to cramdown or reduce the loan balance if you have owned the vehicle for at least 910 days prior to filing bankruptcy.
You are allowed to file an individual bankruptcy without an attorney but not a business bankruptcy. Due to the potential loss of property involved when you file for bankruptcy as well as the strict court requirements, it is recommended that you file with an experienced bankruptcy attorney.
It is a bankruptcy where you do not have any assets that the bankruptcy trustee can liquidate to pay your creditors.
Yes, a bankruptcy will stop a civil lawsuit in most cases. The automatic stay, which stops most legal and collection action, goes into effect the moment the bankruptcy is filed. You or your attorney should prepare and file a suggestion of bankruptcy in the civil lawsuit case to inform all parties of your bankruptcy filing and that the automatic stay is in effect.
A chapter 13 will typically delay a foreclosure for at least a few months or until the foreclosure plaintiff obtains relief from the bankruptcy court to continue to pursue foreclosure proceedings.
The foreclosure may be delayed indefinitely if you are making adequate payments to your secured lender through your chapter 13 plan and your plan is confirmed by the court.
Although a chapter 13 bankruptcy may delay a foreclosure, you should not file bankruptcy in bath faith.
Yes, you can buy a car after receiving a bankruptcy discharge. Your interest rate will probably be high if you are seeking financing.
Yes, you can file a convert a chapter 13 to a chapter 7 by filing a Notice of Conversion to chapter 7. It is much more difficult to convert a 7 to a 13.
The best way to file for bankruptcy is with a bankruptcy lawyer. A bankruptcy attorney will know what you need to file and the best way to protect your property and obtain a discharge.
There are income limits in chapter 7 but not in chapter 13 bankruptcy. In chapter 7 you must pass the means test to be eligible. In the first part of the means test your income is first compared the the average income of a household of your size in Florida. If you fail the first part of the means test, you may still be able to pass by deducting certain expenses in the second part of the means test.
Learn more about income limits here.
Bankruptcy can stop the eviction temporarily if your landlord has not yet obtained an eviction judgment against you. It is not a permanent solution, but it may buy you some time.
Through chapter 13 bankruptcy you can attempt to get current with your past due rent but your landlord may object.
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