Reestablishing their good credit score is a top priority for most debtors. One way to do just that is by paying your current obligations on time: your mortgage, your car note and any other secured debts that you may have. Responsible use of credit cards is another good way to raise your credit[…]
The Chapter 13 plan essentially puts you on an allowance for a period of time, to help you catch up on your bills, start rebuilding your credit score and get on with your life free of creditor harassment.
A Chapter 13 bankruptcy is sometimes referred to as the “wage-earner plan” or “repayment plan bankruptcy.”
Just like your petition was voluntary, you also have the first chance to put together a Chapter 13 plan. Depending on your income, the plan period may be either three or five years; generally speaking, a higher income means a longer plan, because the law assumes that you have more ability to pay back your debts.
At a minimum, the plan must account for current payments on secured debts, the total arrearage on secured debts and the trustee’s fee. Bear in mind that the “total arrearage” is not necessarily the amount the moneylender demands that you pay.
The plan must also be feasible. If you are behind on your mortgage, you must demonstrate the ability to pay off the total arrearage amount within the plan period. It is possible to go back and modify the plan later, should your income or expenses change significantly.
Creditors are prohibited from contacting you for the entire time that your bankruptcy is pending. As a practical matter, moneylenders often communicate to your attorney, who then forwards the information to you. While cumbersome, this process gives your attorney the opportunity to negotiate with moneylenders right from the start. It also gives you the freedom to check your mail without that sinking feeling that there will be more bills in the box than you can possibly pay.
When you file bankruptcy it can help you obtain a fresh financial start. However, it can be difficult to know when the best time to file your case is. There is no magic formula for pin-pointing the best time to file a Chapter 7 or Chapter 13, but there are many warning signs that a bankruptcy filing should be considered.
A few examples of warning signs that a bankruptcy filing should be considered include:
Your mortgage lender is threatening foreclosure of your home
Your car, boat, ATV or other assets are being repossessed by creditors
Collection lawsuits are pending against you
You do not have insurance and your medical bills are overwhelming you
Your wages and/or your bank account is being garnished
You are being harassed by debt collectors
You are delinquent on your taxes
Most of your debt is unsecured (such as credit cards)
You do not have an emergency fund or any savings
Excluding your secured loans (mortgage, vehicle loan, etc), you cannot pay your total debt in full within five years
It May Be Difficult to Figure out the Best Timing to File Bankruptcy
Deciding whether to file a personal bankruptcy case is difficult, but figuring out the best timing can be even harder. The above list is just a few examples of the situations that may warrant filing for bankruptcy.
Collection Efforts Will Stop When You File a Bankruptcy Case
The good news is that whatever your circumstances, if you decide to file a bankruptcy case, the collection efforts against you will stop. The automatic stay is immediately effective when you file your petition, which prohibits any further collection activity against you. We can review your finances and decide if bankruptcy can provide you the debt relief you need.
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If you have recently lost your job or you have been unemployed for a while, you are probably delinquent on your bills and debt collectors are harassing you. If you have considered filing for bankruptcy protection but you are concerned that you won’t qualify if you don’t have a job, it is important to understand that now may be the ideal time for you to file a case.
Bankruptcy Attorney serving Brevard County
Every individual’s situation is unique, so it is essential to have an experienced attorney review your circumstances to determine the best strategy for you to take. While you are unemployed, you may be “judgment proof.” This means that you do not have any non-exempt assets or funds that a creditor can attack in collecting the debt from you. As a result, your creditors may not be taking any collection actions against you.
The Means Test
However, while you do not have a job you will likely pass the means test and qualify for a Chapter 7 filing. The means test is a mathematical formula used by the bankruptcy court to ensure that you are not abusing the bankruptcy process in attempting to discharge your debt. The means test looks at your income from the prior six months to determine whether or not you have the ability to repay your creditors. If you have been unemployed for several months and show no income during that time, you may be eligible for a Chapter 7 filing when you otherwise would not qualify.
Your future income may be considered by the trustee even if you pass the means test. In other words, if the trustee thinks you are capable of paying your creditors, he or she has the ability to object to your discharge of debt. However, if you are not receiving any income, there is a very small likelihood that the trustee will file this type of objection.
If you are unemployed and read to obtain relief from your overwhelming debt, let us help. We can review your individual finances and determine whether or not a bankruptcy filing or other form of debt relief would benefit you.
Contact Faro & Crowder, PA to learn about your Bankruptcy Options in Brevard County FL
If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals, families and businesses across the State of Florida. We also offer free initial consultations for foreclosure defense and defense against debt collection.
Payday loans are generally dischargeable without any arguments in a Chapter 7 Bankruptcy, because these loans are unsecured debts. There are, however, a few special cases.
If you borrowed money within 90 days prior to filing bankruptcy, there is a presumption of bankruptcy fraud. Simply stated, the law presumes that you never intended to repay the money and that you used your bankruptcy filing as a sword instead of a shield. In such a situation, the payday lender may file an objection to discharge and a motion to remove the stay.
Many bankruptcy judges do not like payday lenders, believing that these lenders charge usurious rates and take advantage of consumers. Whether that perception is true or false is not the point. Because of this attitude, some judges may require the payday lender to prove fraudulent intent. Intent is particularly hard to prove if the actual loan was originally taken out more than 90 days prior to filing, and the consumer had to keep renewing the loan.
Some payday lenders may require you to surrender a postdated check. After you file, they may attempt to cash the check, arguing that they deposited the instrument in the normal course of business.
But the automatic stay prohibits creditors from taking any action against you, and the payday lender is clearly a “creditor” at that point.
Vehicle Title Loan
Many people place title loans and payday loans in the same category. For non-bankruptcy purposes, this classification may be appropriate. But, by accepting cash and putting up your car title as security for repayment, the vehicle title loan is a secured debt. The debt itself may be dischargeable, but the lender’s lien on your car title is still valid.
One option is a cram-down. If you borrowed $3000 but your car is only worth $1000, you may be able to pay the $1000 and keep your car. Another option is a conversion to a Chapter 13 bankruptcy, when the automatic stay stays in effect much longer, giving you time to pay off the loan.
If you have fallen behind on your bills and collection lawsuits have been filed against you, it is important to understand that once a creditor obtains a court judgment against you collection efforts will begin. Once powerful and commonly used collection tool is the garnishment of your accounts and/or wages. The creditor serves either your bank (or other account holder) or your employer with an order instructing it to pay money that is owed to you, directly to the creditor instead.
Bank or Account Garnishments
If you hold money in an account, a creditor can generally file a garnishment action against the funds being held by the account-holder. In some cases the creditor can take all of the funds in your account, but you should be aware that there are certain exemptions provided by law that can protect certain types of funds. Thus, if you are served with notice of a garnishment, you should confer with an attorney to determine if any exemptions apply in your case.
Wage or Paycheck Garnishments
If a judgment creditor serves your employer with a wage garnishment, your employer will be required to pay a certain portion of your wages directly to the creditor (or in some cases to the court). A garnishment against your paycheck is often “continuing.” This means that the deductions will continue to be made against every paycheck you receive until the creditor’s judgment against you has been paid in full. If your employer refuses or fails to comply with the terms of the garnishment order, the court can hold the employer liable to pay the total amount that is due.
Under the federal law, the percentage of your income that can be garnished by a creditor is limited. Only your “disposable income” or the amount of your paycheck less any required deductions (such as taxes) is subject to being garnished.
Filing Bankruptcy Can Help
As soon as you file your Chapter 7 or Chapter 13 petition, the automatic stay goes into effect. The stay prevents any further collection activity against you while your bankruptcy case is pending. This includes any collection lawsuits or garnishments against you, so they are immediately halted. Additionally, you will start receiving the full amount of your paycheck again. In certain instances, you may even be able to recover some amounts that were previously garnished. You may also be able to discharge or eliminate the debt linked to the garnishment in your bankruptcy filing, which means you are no longer liable to pay it when your case is successfully concluded.
Contact Faro & Crowder, Pa to Learn About Your Bankruptcy Options
If you are the owner of a small business, your personal finances are probably closely linked with your business. Most small business owners invest a large amount of their time and money in trying to ensure their entity is successful. However, when the business faces financial struggles, it means the business owner is likely to experience financial troubles too.
It is common for an owner to obtain business loans by providing the lender with a personal guarantee. It is also likely that you have used personal credit cards or personal savings, including loans from your retirement account, to help keep the business afloat. This can result in you accumulating an overwhelming amount of personal debt, as well as the business debt.
If this is the situation you are facing, it may be time to consider filing a business bankruptcy and/or a personal bankruptcy. If the business is an incorporated entity, it can file its own case. Depending on the circumstances, a Chapter 7 or 11, or a state-court supervised dissolution could allow the business to reorganize its debt and obtain a fresh start, or it could assist with providing an orderly liquidation and closure of the business.
Bankruptcy can also benefit the business owner with eliminating personal debt incurred in connection with the business, in addition to any other personal debt such as credit card and medical bills. If the business is a separate legal entity and it does not file for bankruptcy protection, the owner’s filing typically will not impact the business and it can continue normal operations. It is important to understand, however, that the value of an owner’s stock interest in the business is considered an asset, which means it must be disclosed in the personal filing. Usually a trustee has no interest in the business assets when the business owner files bankruptcy, but it is vital that you seek legal counsel to determine if or how your filing could affect your business.
A financial emergency may occur due to a sudden job loss or overwhelming medical bills. When you are struggling to pay your bills and considering filing bankruptcy, it is important to understand which type of filing is best for you.
In this blog, we’ll take a look at Chapter 7, Chapter 13 and breakdown how the automatic stay works in an bankruptcy.
Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy, or liquidation bankruptcy can wipe out your general unsecured debt.
Comprehensive debt relief. Most, if not all, of your unsecured debts will be discharged or eliminated in a Chapter 7. The most common unsecured debts are credit card bills and medical debt.
Protection from creditors. As soon as you file your bankruptcy, the automatic stay is effective. The stay prohibits most collection activity from continuing against you while your bankruptcy is pending.
Timely debt relief. A typical Chapter 7 filing lasts four to six months, which is a relatively short period of time when compared to the three to five years a Chapter 13 case lasts.
Assets protected by exemptions. While a Chapter 7 filing is often called a “liquidation bankruptcy,” the reality is that most debtors do not lose their assets. Under the law, there are numerous exemptions that protect certain assets from being included in your bankruptcy estate.
Examples include protections for your home, vehicle, qualified retirement account and other types of valuable assets. In fact, it is common for a Chapter 7 debtor to discharge all of his or her debt while maintaining possession of all of his or her assets.
Affordable. A Chapter 7 case is generally less expensive than filing a Chapter 13 case. A Chapter 7 doesn’t last as long, so your lawyer’s fees and costs are usually lower.
Chapter 13 Bankruptcy
Filing a Chapter 13 provides you more flexibility in restructuring your debt and the following benefits:
Debt consolidation. Your Chapter 13 plan allows you to reorganize your debt and consolidate it into one monthly payment that you make to the trustee, who then disburses the funds to your creditors as set forth in the terms of your plan.
Elimination of debt. Your unsecured debt, such as credit cards and medical bills, is paid a percentage of what is owed under your repayment plan. The percentage depends on your income and debt, but most debtors pay pennies on the dollar owed, if anything at all.
Cure delinquencies. If you have fallen behind on your mortgage loan payments or your vehicle loan payments, you can include small payments in your Chapter 13 plan to be applied to curing your delinquencies. A Chapter 13 case lasts three to five years, which typically gives you plenty of time to cure your payment defaults and get your secured loan back on track.
Lien stripping of inferior mortgages. If you have a second or third mortgage on your home, you may be able to “strip” the lien and treat it as an unsecured debt. To qualify, the value of your home must be less than what is owed on the first mortgage. To learn more about lien stripping, please read out blog titled “Stripping Off Junior Mortgages in Bankruptcy.”
The Automatic Stay
One of the benefits of filing a Chapter 7 or Chapter 13 case is the automatic stay.
The stay is immediately effective upon your bankruptcy filing and it prevents creditors from taking any further collection activities against you. This can be very helpful when you are facing a financial emergency:
Foreclosure of your home. Whether your mortgage lender is threatening to foreclose or you already have a foreclosure lawsuit filed against you, a bankruptcy filing can halt (at least temporarily) your lender’s actions. At a minimum, your filing will allow you to have more time in your house.
Eviction from rental property. Depending on where you are in the eviction process, a bankruptcy filing may allow you to delay it.
Account or wage garnishment. If a creditor has a judgment against you, it is likely that a garnishment of your paycheck or your bank account has been filed against you. As soon as you file your bankruptcy petition, the automatic stay stops all garnishments. Additionally, it is possible the debt linked to the garnishment can be discharged or eliminated in your filing. In fact, it is possible that the creditor will be ordered to refund a portion of the funds previously garnished.
Disconnection of utilities. Even if your electricity has been turned off, a bankruptcy filing may allow you to get it reinstated. This can be a real advantage if you are in the middle of summer or a terrible winter and you do not want your utilities to be turned off.
If your financial struggles have put you in one of the above situations or a similar circumstance, it is time to consider your debt relief options. We can help you understand how filing a bankruptcy case will benefit you. We can also explain your other debt relief options. Call us to schedule a free consultation today.
Speak with an experienced Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158
It is a natural reaction for parents to attempt to shield their children from dealing with financial troubles. However, if you are considering filing a personal bankruptcy case, it is wise to discuss it with your entire family, including your children. You can tailor the conversation to fit the age of your children, but it is important that they hear it directly from you.
So, how should you go about discussing filing a Chapter 7 or Chapter 13 case with your kids? There is no magic formula, but below are a few considerations:
You should be open and honest about your financial situation. This may mean different things depending upon the age of your children, but the primary focus should be on how the bankruptcy filing will be beneficial for the family. It is essential that your entire family understand how adjustments in your finances will need to be made.
One of the most important ways you can make your family feel secure while going through bankruptcy is to have a plan for your housing situation. When your kids know that they have a safe place to live, it makes them feel more secure. Thus, even if you intend to surrender your house back to your mortgage lender during the bankruptcy case, having a plan for new housing will help the family feel more comfortable about your circumstances.
Try your hardest to keep your normal schedule and routine while your bankruptcy case is pending. Children feel secure when they know what to expect. The less you disrupt their daily lives, the better they will feel about the process.
Finally, if possible you should strive to keep your kids in the same schools. Having to change schools, especially in the middle of the school year, can be very disconcerting. However, if it is necessary for your children to switch schools, be sure to make an effort to keep them in-touch with their established friends.
We understand that filing for bankruptcy can be stressful for everyone involved. We assist families every day in obtaining the debt relief they need in the least disruptive way possible. Let us help you get the financial help you need and ensure that the process goes as smoothly as possible.
Speak with an experienced Foreclosure Defense and Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158
The legal team at Faro & Crowder is ready to help. Our office is located in Melbourne, but we proudly serve individuals, families and businesses across the State of Florida.
Credit card debt is one of the most common factors that contribute to individuals filing for bankruptcy protection.
If you are overwhelmed by your credit card bills, filing a Chapter 7 or Chapter 13 may be the solution. In a typical Chapter 7, the majority (if not all) of your credit card debt will be discharged or eliminated. In a typical Chapter 13, you will pay a percentage (typically a very low percentage, if anything at all) of what is owed on your unsecured debts.
It is important to understand, however, that there are exceptions to the general rule. Pursuant to 11 U.S.C. §523(a), there are a few exceptions to the rule of dischargeability. The two most common types of credit card debt to be excluded from discharge, include:
Credit obtained by lying. When a debtor puts false information on his or her credit application in order to qualify for the credit card, the lender can seek to have all of the purchases made on the credit card to be non-dischargeable. If the court agrees with your lender, you will remain liable to pay the debt even after your bankruptcy case has concluded. The most common occurrences of lying to obtain credit include significantly over-estimating income or under-estimating debt.
Fraudulent purchases. Many people incorrectly believe that they can make purchases on their credit card in the days leading up to their bankruptcy filing and discharge the debt. Any charges that are incurred by fraud or false representations can be held to be non-dischargeable. If the court holds that you used your credit card to buy items with no intent to pay for them, you will remain liable to pay the debt. Additionally, if a debtor buys frivolous items, maxes out the limit on the credit card, or even drastically increases credit card use just prior to filing bankruptcy, the creditor can challenge the dischargeability of the debt.
Questions About Bankruptcy Protection?
If you have questions about filing for bankruptcy protection, we have the answers.
Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
Speak with an experienced Foreclosure Defense and Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158
One of the main concerns people have when they are facing bankruptcy or another negative financial event is whether or not they will ever be able to own a home again. You may have heard that it is not possible to buy a home after you have experienced an adverse financial event, such as a foreclosure or bankruptcy, but this typically is not true.
Bankruptcy Attorney serving Cocoa Beach, Florida
Before you give up hope consider the following:
It takes time. You may not be eligible to qualify for a mortgage immediately, but give it time. For example, if you completed a Chapter 13 bankruptcy and you have good credit afterward, you may be able to get a home loan after one year. However, after a foreclosure, you will need to wait seven years before you qualify for a conventional loan that can be sold to Fannie Mae or Freddie Mac. There are also several time frames between these two. The point is, don’t assume that filing for bankruptcy will prevent you from every owning a home again. It will take time and hard work, but you might be surprised at how quickly you can qualify for a mortgage again.
Work on your credit score. After a bankruptcy, foreclosure or short sale, it is important that you work on improving your credit score. This means making payments on time and showing financial responsibility. Additionally, you should review your credit report on a regular basis to ensure it is correct. If you discover any errors, you should immediately have them corrected.
Plan ahead. It is essential to understand what the consequences are of filing for bankruptcy protection or foreclosure or short sale of your home. A seasoned attorney can help you understand what to expect and to assist you in obtaining the necessary financing when you are ready to buy a new home.
If you have questions regarding how a foreclosure, bankruptcy or short sale will impact your ability to buy a new home in the future, contact Faro & Crowder today.
Don’t delay any longer. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
Speak with an experienced Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158