Tag Archives: Chapter 7 Bankruptcy

When the Spotlight Dims

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A group of former NFL players recently filed a lawsuit against the league, claiming that it exposed them to probable brain damage.National Football League players aren’t the only footballers who struggle with life after retirement.

According to a charity set up for former English League soccer players, 33% of players are divorced within one year of retirement, 40% file bankruptcy within five years, and 80% ultimately suffer from osteoarthritis. While the average salary in the Premier league is about 23,000 £ (38,000 USD) per week, that salary drops to 5,000 £ (8,000 USD) per week in the Champions league.

Causes of bankruptcy

While it is difficult to have sympathy for some professional athletes on both sides of the Atlantic, there is a connection between their bankruptcy and your bankruptcy. They each emerge from common causes:

  • Divorce: One of the most common marital stress factors is money, so it is little wonder that couples who are in divorce court sooner or later wind up in bankruptcy court. After divorce, the two new families must often try to survive on drastically reduced incomes, which makes these problems even worse.
  • Medical bills: Even if you have insurance, the cost of long-term rehabilitative care is staggering, to say the least. Medical bills can eat away your savings almost before you know what’s happening.

While bankruptcy cannot eliminate child-support payments and alimony, bankruptcy can eliminate many of your other unsecured debts to free up your limited cash for other obligations. Bankruptcy can eliminate medical bills, in most cases, giving you the financial fresh start that you need so desperately.

Contact us for your free bankruptcy consultation.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

Did The Means Test Effectively End Chapter 7 Bankruptcy?

Bankruptcy Worry

The means test is essentially just another form to file on an already-long list, and has very little, if any, impact on your decision to file Chapter 7 Bankruptcy.

The 2005 Bankruptcy reforms

While most “reform” legislation is usually a proposed solution to an existing problem, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA, pronounced bap-see-pa) was more of a solution to a nonexistent problem. There was a perception among moneylenders, most often in the credit card sector, that consumers were using bankruptcy to avoid paying huge credit card bills that had been amassed solely on luxury items.

That may have been true in a few cases. But the vast majority of Chapter 7 debtors, especially in the last five or six years, are forced to file bankruptcy because of medical bills, job loss or some other emergency situation basically beyond their control.

The means test

BAPCPA introduced the means test as a way to push debtors into Chapter 13, where they would be required to, at least theoretically, repay more of their unsecured debt than was mandated in a Chapter 7.

To be eligible to file Chapter 7, your income must be lower than the median income in your home town, or your disposable income over five years must be less than 25% of your unsecured debt. The actual amount varies, but, generally speaking, if you are part of a family of four and you earn less than $65,000 per year, you are eligible to file.

Only your attorney can tell you for sure, as the government allows certain expenses, disallows certain expenses and sometimes, albeit rarely, makes exceptions in close cases.

Contact our office to find out if bankruptcy is appropriate for you, and which chapter is best for your family.


Is the Credit Counseling Requirement a Legitimate Excuse to Avoid Filing?

Debts

The credit counseling requirement was one of the more talked-about Chapter 7 reforms in the last round of legislative updates. Now, almost a decade later, what does this prerequisite mean in practical terms? Does the average consumer filer even notice this requirement?

Background

The main reason that legislators took up bankruptcy reform in 2005 was that consumer bankruptcy had finally lost its stigma as a financial failure and was instead seen as a logical alternative to repaying an excessive amount of debt. That attitude was good news for consumers, but very bad news for credit card companies and other moneylenders.

So, the moneylenders lobbied Congress to change the rules and make bankruptcy harder to file. The idea was to create obstacles that made bankruptcy less attractive.

Credit counseling requirement

Beginning in 2005, Chapter 7 filers were required to attend and complete a certified credit counseling class, which, at least in theory, delved into the reasons behind the contemplated bankruptcy filing. Ten or fifteen years ago, when the Internet was still in its infancy, speaking with a licensed credit counselor still probably meant an afternoon off from work for a trip to someone’s office.

Today, there are literally hundreds of providers approved by the Florida bankruptcy courts. Typically, the approved classes are offered online in both English and Spanish. There is still a nominal investment of time (about 30 minutes) and money (about $30) involved.

After your bankruptcy is filed, there is a second class to take. The debtor education class may be taken in the same manner as the pre-filing course.  Faro & Crowder PA sends clients to the Dave Ramsey debtor education class.  Clients rave about the class because they actually learn to change the way they live and free themselves from the cycle of debt and insolvency.

Don’t put it off. To get started on your Chapter 7 Bankruptcy today, contact our office located in Melbourne, Florida.


Consumer Debt Reaches Pre-Recession Levels

Chapter 13 Bankruptcy Attorney

Household debt rose $241 billion in the third quarter of 2013.

Analysts at the New York Fed say the 2.1 percent increase was the largest jump since 2007. The debt was primarily mortgage debt and new car loans, which is seen as a sign that consumers are gaining confidence in an improving economy. However, student-loan debt rose 5.3 percent, which was the largest single percentage increase. Some experts say that increasing student-loan debt, which just topped $1 trillion overall, is creating a drag on disposable income that is delaying the formation of new households: recent graduates are moving back home and young families are renting instead of buying.

Despite the fact that wages and job growth are both static, the borrowing trend is expected to continue.

Debt and bankruptcy

Many types of debt are dischargeable under a bankruptcy. It’s important to remember that bankruptcy may eliminate the obligation to repay the debt, but does not affect any other aspect of the agreement. A good example is past-due college tuition: bankruptcy may mean that you no longer owe the money; however, your school may continue to withhold your transcript or enforce other penalties.

Broadly speaking, there are three types of debt in a bankruptcy case:

  • Unsecured debt: Credit cards, payday loans, medical bills and other such obligations are generally dischargeable immediately in a Chapter 7 and after the expiration of three or five years in a Chapter 13.
  • Secured debt: Secured debts are a home mortgage, car note and so on. The underlying debt may be wiped out, but you still have an obligation to pay the note if you want to keep the secured item.
  • Priority debt: Unsecured debt that is related to federal or state taxes, child support, attorneys’ fees, student loans and a few other categories. Priority debts get repaid in full before other unsecured debts get paid at all, which is a good thing because many priority debts are also non-dischargeable.

Contact Faro & Crowder, PA today to schedule your free initial bankruptcy consultation

For a free consultation with attorneys who understand how the process works in Central Florida, contact our office.


Avoiding Consequences of Long-Term Unemployment through Bankruptcy

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Sustained high unemployment has permanently changed our economy, and the middle class must change to keep up.

This situation is not entirely new; for example, unemployment peaked at 10.8% in 1982. But then, the jobless could count on unemployment benefits and other government benefits to tide them over. The unemployment rate quickly went back down once the economy recovered, and the system worked. This time, long-term unemployment has overwhelmed government benefit programs designed to provide short-term relief, and the government has no money for new relief efforts. The result is that many American families are in an almost untenable financial position.

Many have been forced to liquidate their savings just to stay afloat. Once the savings run out, they sink. A proactive bankruptcy may be the answer to this dilemma.

Proactive bankruptcy

Some people hesitate to file bankruptcy because they are afraid that they will lose everything, but that is simply not the case. By the time they file, it may be too late to take advantage of the financial fresh start that bankruptcy affords.

Assume that you are over age 50, and become unemployed. There is a real possibility that you may be unemployed for a number of months and/or you may have to adjust to a permanently lower standard of living. Instead of cashing in your 401k to pay bills, Chapter 7 bankruptcy may be a better option.

Chapter 7 can eliminate most or all of your unsecured debt, thus minimizing the bills you have to pay and giving you more time above water. You can then focus on keeping your secured debt current, and preserve the money in your retirement nest egg as opposed to giving it to credit card companies and debt-buyers.

If you are facing long-term unemployment, Chapter 7 bankruptcy can give you the time you need to work things out. For a free consultation with attorneys who understand how bankruptcy works, contact our office. Follow us on Twitter @Faro_Crowder.


Giving a Face to the Long-Term Unemployed

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Florida has more long-term unemployed workers than almost any other state in the country.

A recent report gave more identity to the long-term unemployed, or those who have been jobless for more than 26 weeks. In Florida, Alaska, California, Illinois, North Carolina, New York, Connecticut and Rhode Island, between 46% and 60% of the jobless are long-term unemployed. 14% of these workers were in wholesale or retail trade; services, hospitality and manufacturing workers were also in double-digits. Statistically speaking, most of these displaced employees are between 25 and 34.

In his most recent State of the Union speech, President Barak Obama highlighted long-term unemployed and asked that American companies not discriminate against the jobless when making hiring decisions.

Unemployment and bankruptcy

Many jobless turn to seasonal work or day-labor in an attempt to keep some money coming in. In terms of motivations for filing bankruptcy, unemployment has taken a back seat to medical bills in recent years. Nonetheless, the unemployed are still highly at-risk for filing bankruptcy:

  • When cash becomes scarce, many families begin borrowing money to make ends meet. Many times, this debt is credit cards or perhaps payday loans.
  • Other families stop paying their unsecured debts altogether and commit all their funds to secured debts.
  • A near-universal effect is that families liquidate their savings, making them very vulnerable to financial emergencies.

Factors that lead to a bankruptcy filing, such as medical bills and unemployment, are hardly ever your fault. But, you must still take charge of the situation to keep it from getting worse. Consumer bankruptcy can eliminate excess debt and get you back on the right track.

To take charge of your pocketbook, contact us for your free consultation.


Returning What You Never Had

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Assume that you and your neighbor disagree over the ownership of a house, and you file a lawsuit to quiet title. Before the case is heard, the house burns down. What happens at the court date?

Most courts have refused to enter a decision in this situation, explaining that the point is now moot because it does not matter who owned the house. But now, according to the Ninth Circuit, you may owe your neighbor a new house.

In Shapiro v. Henson, Ms. Henson filed a voluntary Chapter 7 petition in 2009. She listed roughly $6,900 in a checking account on Schedule A, but she was not actually in possession of those funds because several checks were outstanding. The trustee filed a motion for turnover, and Ms. Shapiro refused to turn over money that she never really had. The bankruptcy court denied the motion, and the district court affirmed that decision.

On appeal, the court focused on two phrases in Section 542(a). The court interpreted the first phrase – “during the case” – as meaning that if a debtor had possession of property at any time during the case, as opposed to at all times during the case, that the trustee could file a turnover motion. The second phrase – “or the value of such property” – meant that the trustee could either recover the property itself or the cash equivalent of the property.

Relying exclusively on its interpretation of the statute and pre-Bankruptcy Code protocols, the court distinguished an Eighth Circuit case, In re Pryatt, which had reached the opposite result.

Application

This situation is not at all unusual, as a checking account’s actual balance and available balance are often two very different figures. The same applies to ACH payments and other automatic deductions: if the bank is making a $500 payment on your behalf from your account, for all practical purposes, that money is never in your possession.

Ms. Henson’s best option would have been to wait a day or two until the checks had cleared, and then file her Chapter 7 petition. If there was a pending foreclosure or repossession and waiting was not an option, most courts allow a debtor to file a petition first and then the schedules later.

Bankruptcy forms are like income tax forms: if you include the wrong information or file at the wrong time, such an error can cause an awful lot of problems later. For a free consultation with attorneys who understand how bankruptcy works, contact our office in Melbourne, Florida.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

More Mortgages to More Consumers?

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A major mortgage lender is returning to the subprime market.

Since the mortgage collapse in 2008, skittish banks have only loaned money to the most credit-worthy consumers. Now, faced with a major revenue loss as mortgage lending volume declines overall, Wells Fargo may be loaning money to consumers with credit scores as low as 600. Other banks may follow suit, rolling out such programs as “second chance mortgage” or “alternative mortgage programs.”

The 2010 Dodd-Frank Act, along with some other structural changes, may have given banks the confidence they need to begin loaning more money to more people.

Borrowing money again

Wells has stated that it will steer clear of some of the more controversial sub-prime lending programs, such as zero-documentation loans and introductory-rate mortgages (a/k/a adjustable-rate mortgages). Just like a bank must lend money responsibly to make a profit, a bankruptcy consumer must borrow money responsibly in order to fully recover:

  • Chapter 7: As soon as you receive your discharge, you may be inundated with credit card offers. That is because the moneylenders know you cannot file another Chapter 7 for another several years. Don’t give into temptation or fall back into old habits. Start with one card with a very low limit, paying off the balance in full every month, and move forward from there as your credit score improves.
  • Chapter 13: Depending on the circumstances, you should be able to start borrowing money again after making a handful of on-time plan payments. The same rules apply: start slowly and build up gradually.

Bankruptcy gives you a fresh start. It is then up to you as to whether you move forward or move backwards. By borrowing money responsibly, your bankruptcy filing will only be a memory in just a few short years.

Claim your financial fresh start by contacting us for your free consultation. Our main office is conveniently located in Melbourne, Florida.

2014 Bankruptcy Filings Expected to Remain High

Consumer bankruptcy filings are expected to remain high in certain parts of the country.

Although the filing rate is expected to decline overall in 2014, consumers in areas dominated by high unemployment and a poor housing market are expected to keep filing Chapter 13 Bankruptcy in large numbers. Meanwhile, more and more Chapter 7 bankruptcies are linked to medical bills. Three out of five debtors now have more medical debt than credit card debt.

Nationwide, there were over one million consumer bankruptcy filings in 2013; volume has now eclipsed one million for six consecutive years.

Reasons people file bankruptcy

Here in Central Florida, the poor housing market has contributed mightily to persistently high unemployment. The Sunshine State’s population is also significantly older than that of other states, making the people susceptible to more and higher medical bills.

Families and individuals often have few ways to deal with these crises: the housing and employment markets are driven by macroeconomic factors that few people can control, and no one can turn back the clock on the aging process. So, consumer bankruptcy is the best option for dealing with these negative economic forces:

  • Chapter 13 bankruptcy can help you stay in your home and catch up on delinquent payments, while helping you rebuild your credit.
  • Chapter 7 bankruptcy can eliminate many medical bills in only a matter of months, giving you more money to commit elsewhere.

Poor market conditions and poor physical health may not be your fault, but it is still your responsibility to take charge of your family’s financial future. Bankruptcy is the best way to retake control over your money.

Do something about your finances by contacting us for your free consultation. Our attorneys and staff has years of experience.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

Are HELOCS Dischargeable in Bankruptcy?

Home equity is exempt in Florida, although the amount of the exemption may be a matter of time. If you have a Home Equity Line of Credit, the actual debt may be wiped out but not the lien on your property

HELOCS Discharable in Bankruptcy | Brevard County Bankruptcy Attorney

What is a HELOC?

Many people refer to a HELOC as a “home equity loan.” But, strictly speaking, a HELOC is not a loan. A HELOC is more like a secured credit card: the bank agrees to extend a predetermined line of credit and, if you default on the payments, the bank may foreclose on the lien you gave the bank.

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy discharges the debt, but does not erase the lien. So, you have no personal liability to repay the note, but the bank can take your house if you default on the payments.

What’s the difference? Assume there is a deficiency, because you are underwater (your mortgage balance exceeds the fair market value of your home). Because the bankruptcy discharged the underlying debt, the bank may not sue you for the deficient amount.

Chapter 13 Bankruptcy

You may not have to repay the entire HELOC balance in a Chapter 13. If you are underwater on the mortgage, the court may allow you to strip-off all or part of the amount.

If you must repay the entire amount, which is likely, you can set the payments yourself in the Chapter 13 plan. As long as the trustee finds that the plan is reasonable, you can pay back the HELOC in equal monthly installments through the plan period, as opposed to the lump-sum payment that the moneylender is probably demanding.

For more information about what debts are dischargeable in bankruptcy, contact us for your free consultation.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

Contact Us For A Free Consultation






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