Fort Lauderdale Bankruptcy Lawyer Blog

The Number One question that most people have when inquiring about a Chapter 7 or a Chapter 13 bankruptcy is whether they will lose their home because of the bankruptcy. The short answer is no. You will not lose your home because of a bankruptcy filing. The house you live in is protected by Florida's constitution under Homestead Exemption. You can only lose your home if you are not making the payments on it.

Filing a Chapter 7 bankruptcy will not help you keep your home but it won't hasten the loss of it either. On the contrary, filing a Chapter 7 bankruptcy will slow down the foreclosure process and let you stay in your home a little longer.

Filing a Chapter 13 bankruptcy may help you keep your home because it offers an opportunity to catch up on your arrears (the amount of money you are behind) and a Chapter 13 also offers options in dealing with second mortgages and homeowner associations.

When bankruptcy is mentioned, many automatically assume that the rising number of bankruptcies can be blamed on poor personal money management and over-spending with credit cards. However, statistically and from what I see in real life, the major bankruptcy driver for many tends to be uninsured medical costs for health care or as a result of an unexpected illness or injury.

Another contributing factor that I've experienced first-hand is that medical providers are becoming increasingly inflexible with their co-payments and other accounts receivables. In the past few years, the medical industry has started to use aggressive collection agencies on minor amounts ($100 or less). Once collection fees are added, a minor debt can turn into several hundred dollars and countless phone calls, letters and other forms of abuse. To those facing chronic illness or serious health concerns, it can be debilitating. When you're ill or in poor health, I strongly feel that your first and only priority is to get better.

The good news is that a Chapter 7 bankruptcy can eliminate your medical debt completely. Medical bills are a type of unsecured debt, meaning none of your property was pledged as collateral for it. A Chapter 7 Bankruptcy can have all medical bills: including hospital or doctor charges, dental bills, lab bills, and diagnostic charges wiped out. Consulting with a bankruptcy attorney is your first step in finding out if you can eliminate your medical debt through bankruptcy.

A common reason that most people delay finding out about bankruptcy is a fear that they can't afford the process. You don't have enough money to pay your bills. You're drowning in debt. The mortgage is behind six months or more - how can you afford a bankruptcy?

The better question is: "How can you afford not to?" Although there are some costs associated with filing for bankruptcy, remaining in debt will cost you far more in interest, late fees, stress-related health issues and overall quality-of-life in the end.

If the total cost of filing a Chapter 7 bankruptcy is less than $2,300, what you need to ask yourself is this: If my creditors offered me a deal to wipe out all my credit debt right now for less than $2,300 - would I take it? Most people would jump at it! Filing a Chapter 7 bankruptcy is creating that deal for yourself and forcing the creditors to take the deal -- No more begging them to give you a break. But lets take a look at some of the costs:

Court Costs
There are costs involved with filing for bankruptcy. First there is a fee that must be paid to the court for filing the case. That fee is currently $299 for a Chapter 7 and $274 for a Chapter 13. There are costs associated with preparing the petition such as pulling all three credit reports, mailings, copies, and administrative costs for maintaining your case file. Those costs are $150. These are normally the only costs associated with filing a bankruptcy case and fortunately, they're both pretty manageable. The next cost are attorney fees.

Attorney Costs
The legal fees for hiring an attorney can vary greatly by firm, city or state. The average cost for a Chapter 7 case can range between $1,000 and $2,500. Before you automatically think that you can't afford those fees, think about what you could lose in a bankruptcy if you don't know the law and how it may affect your assets (if any). I was in a 341 meeting and saw a woman who filed her own case lose a $9,000 car (her only transportation) because it was paid off and she had no idea that it would become property of the bankruptcy estate and she would lose it. She lost it. Having the proper legal representation may not have saved the car but at least she would have known it was at risk and made a different decision or she could have made arrangements to keep it.

Hiring An Attorney versus Doing It Yourself
As stated above, you may file for bankruptcy in Coral Springs or Fort Lauderdale and complete the process yourself. You don't have to hire an attorney. But, hiring a bankruptcy attorney can often make the process much smoother and less scary.

An experienced bankruptcy attorney will manage the paperwork, trustee paperwork and court filings, as well as provide you with the resources you need to complete your debtor education courses. A good bankruptcy attorney is your representative and should convey a sense of compassion and flexibility while managing your case.

Your attorney should be able to tell you within a certain amount of probability what property (if any) is at risk and how to prepare for it. It's mush easier to deal with an asset case (a case that has assets which the trustee can liquidate) if you know what they are and how to keep them if you'd like. It's also easier to get a fresh start if you have someone that knows what exemption laws are available to help you keep your assets by protecting them. But how do you pay for it all??

Payment Plans
The most common way that people get out of debt through bankruptcy is to hire an attorney that accepts installment payments. Many people stop paying their credit cards and apply those payments towards the bankruptcy filing costs. A Chapter 7 bankruptcy case must be paid in full prior to filing but a Chapter 13 case can have some of the fees rolled into the payment plan.

At Casas & Mayor, P.A., we want everyone that is in need of a fresh start and sleep to find both. We offer very flexible payment plans that are crafted around your budget and needs. We don't believe that anyone should remain shackled to debt because of the cost of filing. During your free consultation, we will discuss all fees, costs and how to pay for them. You'll be surprised how flexible our payment terms are and pleased to know that you can start all over again! Find out today at either our Coral Springs or Davie location. You have nothing to lose but the debt!

Not every bankruptcy case is a "no-asset" case. A Chapter 7 is called a "liquidation" bankruptcy for two reasons: 1) you liquidate all of your debts; and 2) the trustee has the right to liquidate all unprotected assets for the benefit of the creditors.

A no-asset case is one that doesn't have any assets for a trustee to administer. Florida law gives bankruptcy filers $1,000 with which to protect personal assets and $1,000 to protect a motor vehicle (can be a car or motorcycle). If you do not claim homestead exemption (you rent instead of having a mortgage), you also get a wild card exemption of $4,000 to protect property with.

Sometimes clients want to transfer assets right before a bankrutpcy so they don't lose them. Bad idea. Doing so is bankruptcy fraud and it is always better to simply plan for the assets within the bankruptcy case then to do something that could have crinimal consequences.

So what happens with assets in a Chapter 7 bankruptcy case? You have two choices. You can either pay the trustee the value of the asset and keep it or you can turn the asset over to the trustee and he/she will sell it and liquidate the asset for the benefit of the creditors. The trustees in this area will work with you if you need to make payments for a short time (six to eight months is the norm) or they may settle for a lump sum payment that is less than the amount owed.

Even if your case is an asset case, the odds are that you are still wiping out a huge sum of debt for a fraction of what you owe. Ask yourself: If my creditors had gotten together and offered to cancel my debt for $5,000, would I have taken it? There's really no difference here except the payment is being administered by a third party.

The key is to make sure that you understand the details of your particular case and what assets you may have to pay to keep. Then be prepared for it by having family loans lined up, budgeting for the trustee payments or considering a Chapter 13 so you can pay the assets out over 3 to 5 years instead of 6 to 8 months.

You may be surprised to learn that filing bankruptcy may be the fastest way to repair your credit and get back on your feet.

While you owe money to the credit card companies and are not paying, your delinquency is reported to the credit bureau. Every time your credit card debt is sold, it's usually reported again by the debt buyer or the collection agency. All of these entries remain on your credit report for 7 years from the date of entry. Many times, debt collectors will alter a number on the account number (never on purpose, I'm sure) and report the debt again a couple of years later. Every time this happens, it will be on your credit report for 7 additional years. It could take you significantly more than 10 years to clean that up or qualify for a mortgage.

A Chapter 7 bankruptcy remains on your credit report for 10 years from the day of filing. But that doesn't mean that you won't have credit for 10 years or that you have to wait that long to buy a house. You will get credit card offers in the mail within a couple of months after your case closes. Two years after you receive your order of discharge, you also may qualify for FHA loans again.

Don't listen to what others say about bankrutpcy and keep yourself from enjoying the pease of mind that being debt free brings. You probably don't have credit now and really have nothing to lose except the creditor phone calls and harassment. In fact, you will probably recover much quicker.

We offer free consultations where you can get all the facts about how a bankruptcy might be able to help you enjoy life again. Call or email us today!

Under Florida law, a bankrupcy filer gets $1,000 to protect personal property. Florida law also allows a debtor to claim a personal property exemption up to $4,000 if they do not claim or receive the benefits of a homestead exemption (unlimited protectic on equity in your homestead residence) under the state constitution.

Osborne v. Dumoulin
In the case of Osborne v. Dumoulin, the debtor filed a Chapter 7 bankruptcy in Fort Lauderdale. She originally claimed a homestead exemption and among her other personal property, she listed a car worth $5,925 that was paid off. Overall, she had about $4,000 in assets that exceeded the amount she had available to protect property. The trustee demanded that she pay him the $4,000 in order to keep the property.

Instead, Ms. Dumoulin amended her bankrutpcy schedules and did not claim her home as exempt anymore. Instead, she claimed the additional $4,000 available under F.S. 222.25(4) for those who do not claim or receive the benefit of a homestead exemption. Under the amended schedules, she had an additional $4,000 to protect her assets and would not have to pay the trustee anything to keep her property.

The bankruptcy trustee objected to the personal property exemption, arguing that it was unavailable to the debtor because she had a homestead.

The Florida Supreme Court just released their decision in this case and held that where a debtor in bankruptcy elects not to claim the article X, section 4, homestead exemption and the trustee's administration of the bankruptcy estate is not otherwise obstructed by the existence of the homestead exemption, the debtor does not receive the benefits of the homestead exemption and may claim the section 222.25(4) personal property exemption of $4000.

This decision helps many homeowners who are filing bankruptcy but do not intend to keep their home and need the additional $4,000 to protect cars or other assets.

But the Florida Supreme Court also stated that it depends on the facts in a given case as to whether the existence of a homestead precludes a debtor from claiming the state's personal property exemption. An example of that would be a scenario where there is a married couple that jointly own a home but only one of the them file bankruptcy. In that scenario, the wildcard exemption of $4,000 may not be available because the debtor is still receiving the benefit of the homestead exemption through their spouse that did not file.

Although this decision provides great clarity on an issue that has been debated in the bankruptcy courts, the Court did state that it's availability would be specific to the facts in each case.

Continue reading "Osborne v. Dumoulin: Florida Supreme Court Decision Clarifies Use Of The $4000 "Wildcard" Personal Exemptions in Florida Bankruptcy" »

When you file a Chapter 7 bankruptcy petition in Fort Lauderdale, Florida and forget to include an unsecured creditor, the debt may be discharged anyway. If your case is declared to be a "no asset" case (nothing to distribute to your creditors), and the omitted debt was not incurred as a result of any fraud on your part, the debt is discharged even though you did not list it.

A reaffirmation agreement is a formal contract made between you and the creditor that states you will pay all or a portion of the money you owe in spite of the Chapter 7 bankruptcy filing. These are commonly entered into for car loans. To simplify it a little, it can be explained as: you had to list your car as a debt in the bankruptcy and the reaffirmation agreement pulls it out of the bankruptcy. As long as you make your scheduled payments underthe reaffirmation agreement, you can keep your property after the bankruptcy and the creditor gives their promise that they will not repossess or take back the property as long as your payments are made.

It is important to consult with an attorney before entering into a reaffirmation agreement to ensure that your rights are protected and that it's in your best interest. If you are not represented by an attorney, then you must have a bankruptcy judge approve your reaffirmation agreement. The judge will ask questions to make sure that the reaffirmation agreement does not impose an excessive, unnecessary burden on you or your dependents.

Many times people contemplate bankruptcy because they want to start over again and get rid of payments that they can no longer make. One of the more common debts are lease payments on cars that they can no longer afford after an income reduction or job loss. The question that arises is whether they can turn in their car and be able to discharge lease turn-in expenses. The answer is "yes!" You can take advantage of the "surrender" option available for secured debts.

The "surrender process" in a Chapter 7 bankruptcy permits a debtor to give up property that is subject to a lien and/or outstanding loan. Through the surrender process, when the creditor receives the property back, the debtor is relieved of any further obligation for the debt. The release of any further obligation occurs upon a surrender in bankruptcy even if the value of the property returned is not sufficient to cover the outstanding balance on the loan.

So, if you can't afford to keep a car anymore, you can surrender the vehicle to the creditor through a bankruptcy proceeding. Doing so ensures that any debt which arises from the surrender of the vehicle is included in your bankruptcy and discharged.

In a previous blog entry, I answered a common concern that people have when considering whether to file bankruptcy. Can I buy a house again? The answer to that is yes, you can. After two years, you can qualify for an FHA mortgage again if you have qualify. So, how do you qualify?

In order to qualify for an FHA mortgage after a Chapter 7 bankruptcy, you must first wait until two years have passed since you received your discharge. During this two year period, you must have also re-established good credit and achieved a minimum credit score of 620. FHA guidelines currently define that as having at least three (3) credit lines that have been active for at least twelve months and always paid on time.

There is a misperception that once you file bankruptcy, you won't be able to get credit or buy a house for as long as the bankruptcy is on your credit report. This is false. Most of my clients begin to receive credit card offers in the mail again just months after their case is discharged.

Don't let what other people have told you about bankruptcy keep you from finding out the facts from a quaified professional.

A Chapter 7 bankruptcy does not disqualify you from qualifying for an FHA mortgage. In order to qulify, you must wait until two years after you receive your discharge. During those two years, you must re-establish good credit and demonstrate an ability to manage your financial affairs. Your credit score must also be a minimum of 620 by then. Additionally, the lender must document that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur.

A Chapter 13 bankruptcy does not disqualify you from obtaining an FHA mortgage. In a Chapter 13, the lender must show that one year of the payout period under the bankruptcy has elapsed and your payment performance has been satisfactory (i.e., all required payments made on time). In addition, you must receive permission from the court to enter into the mortgage transaction.

If you're like most people, you think income is only what you earn from a job or through a business venture. For the most part, that's true. In a Chapter 7 bankruptcy, what you earn from an employer or though your business is considered income for the means test, but bankruptcy law also recognizes any other regular contribution to your household as income.

What does that mean? Let's start with a bried look at what "current monthly income" is according to bankruptcy law.

The "current monthly income" received by the debtor means the average monthly income received over the six calendar months before filing the bankruptcy case. Monthly income includes regular contributions to household expenses from non-debtors and includes income from the debtor's spouse if the petition is a joint petition. For the purpose of the means test, social security income or certain payments made because the debtor is the victim of certain crimes [11 U.S.C. § 101(10A)] arenot included as income. But what is included as income that is often overlooked?

Any regular contributions to your household is considered income. This means all those cash deposits to your bank account from family members to help you make ends meet. Unemployment compensation is considered income. If you collect rent from someone, that is considered income (it's offset later in the petition but still considered income). Child support and domestic support is income. A general rule of thumb is to consider any source of money coming to you as income and talk to a Broward County bankrutpcy attorney on whether you need to include it on the means test or elsewhere on your petition.

Most people are aware that if you are a head of household in Florida and file Chapter 7 bankruptcy, your wages for the past six months are 100% exempt from your creditors under Florida Statute 222.11. But what if you are a single person with no dependents?

Under Florida Statute 222.11(2)(c), non-head-of-household debtors may exempt 75% of wages that were earned in the six months before the bankruptcy filing.

F.S. 222.11 (2)(c) states: Disposable earnings of a person other than a head of family may not be attached or garnished in excess of the amount allowed under the Consumer Credit Protection Act, 15 U.S.C. s. 1673. A further reading of F.S. 222.11(3) shows that these wages deposited into a bank that are received in the six months before filing are protected.

Surprisingly, this section of the law is not as well known and even though it's pretty clearly stated that non-head of household bankruptcy filers can exempt 75% of their wages, this law was challenged by a local trustee. In Re Weinshank, U.S. Bankruptcy Court Case No. 08-25508-PGH was decided by Judge Hyman on May 28, 2009.

The facts were simple enough: Mr. Weinshank was a single man with no dependents who filed for Chapter 7 bankruptcy protection. He had $4,500 in the bank at the time and claimed 75% of that money exempt under F.S. 222.11(2)(c). The trustee disagreed that he was entitled to any Florida exemption for the money because he was not a head of household. The question before the Court was whether Mr. Weinshank could apply F.S. 222.11(2)(c) and (3) to exempt the money in his checking account.

Judge Hyman ruled in favor of Mr. Weinshank, specifically stating:

"Based upon a plain reading of Fla. Stat. § 222.11 and the undisputed facts of this matter, the Court finds that even though the Debtor is not a head of family, he may exempt funds deposited into his Washington Mutual checking account within six months of his bankruptcy filing that can be traced and properly identified as earnings."

If you are thinking about filing Chapter 7 bankruptcy in Broward County, I offer a free consultation to answer your questions and discuss your options. Contact my office today!

You've done your research and read everything you can on the internet about Chapter 7 bankruptcy. The forms don't look too difficult. Why not do it yourself? After all, representing yourself in court proceedings is a fundamental right, isn't it?

Having the right to do something doesn't mean that doing so is always the wisest thing to do. I've sat through many 341 meetings where the debtor represented themselves and although they were good enough in filling out the forms to get to the 341 meeting - once there, the result wasn't exactly what they thought it would be. I've seen cases get dismissed for a variety of reasons that had nothing to do with filling out the forms. In most cases, do-it-yourselfers get through that part okay. They are able to put the correct information in the right box. But there's more to filing a Chapter 7 bankruptcy than that.

Filing Chapter 7 bankruptcy is a major decision that will impact your life for years. What many people overlook is the law behind the forms that will dictate many things such as when you file your case (timing can sometimes be very important); how to list certain assets; what assets to list; what is exempt and what isn't; how to allocate exemption money; are you missing exemptions that you don't know about? The list goes on and on.

Just this week, I saw someone get their case dismissed for failing to provide the trustee with supplemental documents. We do have very good trustees in this district and many times I have heard them suggest to non-lawyer filers that they consult with an attorney. Usually that means that their bankruptcy filing has major problems and they should take the trustee's advice to heart. They're only trying to help them.

So what should you do? You should take the time to discuss your financial situation with a qualified Broward County area bankruptcy attorney. In most cases, the cost of hiring an attorney is small in comparison to the amount of debt you will be getting rid of.

Continue reading "Should I Hire a Fort Lauderdale Chapter 7 Bankruptcy Attorney Or File It Myself?" »