FAQ

How can I stop creditor harassment?

We don't have to tell you that creditors can be annoying.

But we can tell you that you may have the power to silence them.

If you decide to file bankruptcy, you can silence your creditors and reclaim your phone, voicemail and mailbox.  This is because a bankruptcy filing results in an automatic stay order, which makes it illegal for creditors to attempt to collect on your debt.

Can I still file bankruptcy after the new bankruptcy laws?

Yes.  The new laws changed the bankruptcy rules, but the laws did not eliminate your right to bankruptcy protection.

Do I have to take a credit counseling course before I file bankruptcy?

Yes.  The new bankruptcy laws require all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course before obtaining a discharge.  Failure to complete either of these courses and file the appropriate certificates with the court will prevent a successful bankruptcy.  All bankruptcy education courses are available in person, by phone, or over the internet, but must be approved for the district in which you are filing.

Do I have to qualify for bankruptcy?

In general, there is no standard requirement for filing for bankruptcy. However, whether or not your income is more or less than the median income in the state of Florida will determine whether you can file under Chapter 7 or must file under Chapter 13.  These questions are best answered by speaking to an experienced bankruptcy attorney.

What is a Chapter 7 bankruptcy?

Chapter 7 bankruptcy is the most common type of bankruptcy and is often referred to as a "liquidation bankruptcy."  In Chapter 7, all of the debtor's assets, other than those types of assets specifically exempt from liquidation by statute, are turned over to a bankruptcy trustee for sale.  Sale proceeds, if any, are distributed among the creditors.  Most Florida Chapter 7 debtors have little non-exempt personal property because of Florida's liberal exemption laws.  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).  Chapter 7 will not save a house from foreclosure nor a car from repossession if you are delinquent in payments.  Under the new bankruptcy laws, only people who pass the "means test" may file a Chapter 7 bankruptcy.  People who fail the means test have to file Chapter 13 bankruptcy. The means test is a complicated mathematical formula.  Your bankruptcy attorney can run a means test using bankruptcy software after he collects necessary information from you.

Can I file Chapter 7 bankruptcy?

To file for Chapter 7 bankruptcy, you must qualify under the Chapter 7 means test. The means test first compares your income to the median income in your state.  If your income is lower than the median income in your state, you can file for Chapter 7 bankruptcy.  However, if your income is greater than the median income in your state, other calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.

Will I lose my property if I file for Chapter 7 bankruptcy?

The concept of filing bankruptcy is an intimidating prospect to some people, who believe that they will lose all of their property and possessions in a filing.  Because of several exemptions built into the Florida bankruptcy law, however, most people who qualify for and file for Chapter 7 bankruptcy protection do not lose any property at all.

What is a Chapter 13 bankruptcy?

Chapter 13 bankruptcy results in a plan to repay all or part of your debt, but it is not designed to discharge or eliminate most debts.  Chapter 13 is used most often to save a house from a foreclosure sale.  Chapter 13 is also useful to eliminate some IRS debt and to establish an affordable plan to pay IRS debt that cannot be eliminated.  Chapter 13 bankruptcy is available to debtors with regular income.  A business cannot file Chapter 13.  In addition, there are upper limits on the amount of the individual's secured and unsecured debts in Chapter 13 cases.

Who can file Chapter 13 bankruptcy?

In one sense, it's easier to qualify for Chapter 13 bankruptcy than for Chapter 7 bankruptcy. There's no means test for Chapter 13 bankruptcy, and some debtors who cannot qualify for Chapter 7 bankruptcy opt to file under Chapter 13 bankruptcy instead. However, Chapter 13 bankruptcy requires a regular income that will allow you to create a budget and make predictable and reliable payments to the trustee.

Is Chapter 13 bankruptcy the right option for me?

A Chapter 13 bankruptcy can stop mortgage foreclosure and other repossessions.

Chapter 13 bankruptcy is often a good option for people who are facing short-term financial setbacks, such as a job loss or illness. It also may be a good choice for someone who is suddenly faced with unexpected expenses.

In short, a Chapter 13 repayment plan can silence creditors through an automatic stay and give a person the chance to repay their debts in three to five years after the bankruptcy filing.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

In order to file under Chapter 7, your income must be less than the median income in the state of Florida. If you qualify, your unsecured debt - credit cards, medical bills, and certain kinds of loans - will be wiped out. However, the court may sell some of your property in order to pay your creditors a portion of what you owe. Typically, non-essential or luxury items are sold, if at all. If you cannot maintain monthly payments on your house, it may be foreclosed upon as well.

In a Chapter 13 bankruptcy, your debt is restructured according to a repayment plan. A trustee is appointed by the court, tasked with ensuring you make payments on time and creditors receive what they are owed.  In general, people who file under Chapter 13 are required to pay back 80% to 100% of what they owe over the course of 3 or 5 years.  Debts remaining after this timeframe are wiped out.  Chapter 13 enables a debtor to pay off his debts without the interest.

Is Chapter 7 or Chapter 13 bankruptcy better?

The answer to this question depends on your specific circumstances. Generally speaking, Chapter 7 bankruptcy is better for people who have a lot of unsecured debts, like credit card debt and medical bills. If you don't have much property, your income is low, and most of your debts are unsecured, you might want to consider Chapter 7 bankruptcy.  Chapter 13 bankruptcy, on the other hand, tends to be a better option for those who have regular income and non-exempt property they'd like to keep.  Our attorneys can review your specific financial circumstances and advise you as to which type of bankruptcy protection might be best for you.

What is a Chapter 11 bankruptcy?

Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees

Can taxes be discharged in bankruptcy?

While it is true that some taxes will not be discharged, others can be.  There are many rules that we will explain to you: Some federal taxes may be excepted from discharge.  Income taxes under three years old are not dischargeable in bankruptcy.  Income taxes over three years old can be discharged, subject to a few restrictions.

Can student loans be discharged in bankruptcy?

Student loans generally are never dischargeable.  There are a few exceptions, but severe hardship must be shown.

Can married people file bankruptcy jointly?

Married debtors can file a joint bankruptcy petition for a single filing fee, and most 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.

Can I file alone if I am married?

Yes, if the debt in question is yours and yours alone.  When one spouse has incurred a great deal of debt in his or her name only, he or she can file for bankruptcy without requiring their spouse to do so as well. However, in filing for bankruptcy, salary and other asset information of the non-filing spouse is required in order to determine if the filing spouse qualifies for Chapter 7 or Chapter 13.  If property is owned jointly, both spouses may have to file for bankruptcy.

Will one spouse's bankruptcy affect the credit of the non-filing spouse?

Bankruptcy on the part of one spouse should not appear on the credit report of a non-filing spouse unless they have joint debt together.

How does divorce impact bankruptcy?

Divorce impacts bankruptcy in the division of marital property and the division of marital debt.  In the state of Florida, any assets or property acquired over the course of a marriage must be equitably divided, including retirement funds, equity in a home, bank accounts, and other assets.  In the case of debt, however, the terms of a divorce settlement do not affect the agreement you and your spouse have with creditors.  As such, even if you never used a credit card or drove your spouse's car, if your name is on the loan or account, you can be held responsible for its debt - even if your divorce settlement indicates your spouse will pay it off.  Since your divorce settlement does not modify your legal contractual obligations to your creditors, you may have very little choice but to pay off the debt or declare bankruptcy yourself.  You would then have the option of suing your former spouse for violating the terms of the divorce agreement.

How does bankruptcy affect obligations under your divorce settlement?

Filing for bankruptcy will not discharge child custody or spousal support obligations.  If you can no longer afford child support or spousal support payments, you will need a post-divorce modification in order to modify payments without threat of wage garnishment, asset seizure, or jail time.

Do I need an attorney to file bankruptcy?

No, you can represent yourself in your bankruptcy case.  However, bankruptcy is a complicated area of the law, and the bankruptcy law gives no special treatment to debtors who file their own petition.  The new bankruptcy laws make filing bankruptcy substantially more complicated and the practice of bankruptcy law is extremely specialized.  In our opinion, the financial risks of filing your bankruptcy incorrectly under the new bankruptcy laws are much greater than the amount of a reasonable fee paid to a bankruptcy attorney.

Can I get a credit card after bankruptcy?

It is relatively easy to rebuild your credit after bankruptcy. If you diligently pay your bills, especially your mortgage, and do not fall behind on payments, you should be able to qualify for a low-balance credit card a few months after filing for bankruptcy.  If you handle your credit card responsibly, you can often quickly improve your credit score.

Should I cancel my credit cards to improve my credit score?

Your credit score reflects a number of factors - not just whether you are late on payments.  Creditors look at how much credit you have in proportion to your debt.  So, for instance, if you have 4 credit cards with a credit line of $10,000 on each, your credit line equals $40,000.  If you have $5,000 of debt on each one, you owe 50% of your total credit line.  If you decide to cancel two cards and consolidate the remaining balance on the other two cards, you would now have $20,000 in credit and $20,000 in debt.  This would hurt your credit score since your cards would now be maxed out.

If you are trying to protect your credit score or rebuild it, cancelling credit cards may be counterproductive. Additionally, applying for credit cards in order to transfer balances on existing ones could negatively impact your credit score. When creditors check your credit report, other creditors often assume it's because you need to borrow money or apply for additional credit to handle existing debt.  As a result, your credit score could be reduced.

How long will my bankruptcy take?

While each case is different, the typical Chapter 7 bankruptcy takes roughly 90-100 days from start to finish.  During this time, creditors have to stop contacting you and must communicate with you through your attorney. The typical Chapter 13 bankruptcy takes 3-5 years from start to finish with just one monthly payment to the trustee for all of your debt.  Upon completion of your reorganization payment plan, you will be discharged.

Will filing bankruptcy affect my credit?

Bankruptcy can be an effective way to regain control and tackle mounting debt.  Many people find that their credit scores improve not too long after they file bankruptcy.

Your credit will likely be affected if you decide to file bankruptcy, but that's not necessarily bad news. Many people who decide to file bankruptcy don't have the greatest credit to begin with and they find that once their debt is relieved, their credit score starts to improve.

But you should also know that most types of bankruptcy will stay on your credit report for a period of at least ten years. (In some cases, the time period can be reduced.)  During that time, it may negatively affect your credit.

But bankruptcy can also provide you with a chance to "start fresh" and rebuild your credit.

Keep in mind that how your credit will be affected will depend on a number of factors, such as where your credit level is at today and which type of bankruptcy you file.

Can co-signors be protected in bankruptcy?

Co-signors can be protected in certain bankruptcies. If you are concerned about protecting your co-signors, a bankruptcy lawyer may be able to help you determine which bankruptcy filing is best for you.

In general, if you decide to file Chapter 7 bankruptcy, creditors are still able to proceed with collection efforts against your co-signors, even if you were let off the hook for the debt.

However, if you file Chapter 13 bankruptcy, a co-signor is protected if the following provisions are met:

• The debt must be a consumer debt;
• The debt can't be incurred in the ordinary course of business;
• The co-signor can't benefit from the proceeds of the debt; and
• The debtor sticks to the Chapter 13 bankruptcy payment agreement.

You should note that if you fail to complete the requirements of your Chapter 13 repayment plan, the creditors have the legal right to pursue your co-signors.

What is a debt discharge?

Under Chapter 7 bankruptcy, a debt discharge eliminates debt.

That's right, the Chapter 7 debt discharge releases a debtor from personal liability for his or her debts. That means that the debtor never has to pay those debts off.

There are requirements to who may be eligible to file Chapter 7 bankruptcy.  A bankruptcy lawyer may be able to help you decide if you qualify for Chapter 7 bankruptcy and if it's the right debt solution for you.