Bankruptcy
I heard that you can not discharge credit cards in bankruptcy anymore. Is
that true?
NO!!!!!!! The President signed a bill which significantly changed the
bankruptcy law and the law went into effect on October 17, 2005. Although
the bankruptcy law was changed, it did not eliminate Chapter 7 nor did it make
credit card debt not dischargeable. I have heard that some debt collectors
are telling consumers that they can not discharge debts in bankruptcy anymore. If
a debt collector has told you that, call me right away as that debt collector
has violated your rights under the Federal Fair Debt Collection Practices Act
and you may be entitled to damages.
What are the changes that were made to the bankruptcy law?
The most significant change to the law is the means test. The
means test is a calculation using the previous 6 months of income
for the debtor, co-debtor or non-filing spouse. You take the
previous 6 months for the household and multiply it by 2. If
the total is less than the medium income for a family of that size,
you probably qualify for Chapter 7. If the total is over the
median income for a family of that size, additional calculations
are necessary. However, even if you make more than the median
income, you may still qualify for Chapter 7. There are many
more changes to the law but the means test is the most significant. It
is very important that you consult, and preferably hire a qualified
consumer bankruptcy attorney before filing bankruptcy.
How much does it cost to hire an attorney to represent me in a Bankruptcy?
Since there are different types of Bankruptcy (Chapter 7 and Chapter
13), the fee will depend on which chapter of bankruptcy is right
for you. Most attorneys do free initial consultations. During
the consultation, the attorney will analyze your financial situation,
make a recommendation of which chapter of bankruptcy is right for
you and then quote you a fee.
What are the Court filing fees for Chapter 7 and Chapter 13?
Currently, the Court filing fee for a Chapter 7 is $299 and for Chapter
13 it is $274. The Court filing fees are usually in addition
to the attorney's fee.
Do I have to hire a lawyer to file Bankruptcy?
No. You have the right to represent yourself in your bankruptcy
case. However, I don=t recommend it. There are many pit
falls which even inexperienced bankruptcy lawyers can fall into. Now
that the law has changed, there are even more mistakes that can be
made. Therefore, it is best to seek the advice and counsel
of an experienced bankruptcy attorney who is qualified to guide you
through the process.
What is the difference between Chapter 7 and Chapter 13?
In a Chapter 7, Debtors list all their debts and all their assets.
They are permitted to retain certain exempt property, while the
remaining assets are liquidated by the trustee. The trustee will
distribute the funds from the liquidation to holders of claims
(creditors) in accordance with the provisions of the Bankruptcy
Code. Accordingly, potential Debtors should realize that the filing
of a petition under chapter 7 might result in the loss of non-exempt
property. However, most chapter 7 cases are what we call no asset
cases. This means that most Debtors will be allowed to keep all
of their assets and will then receive a discharge of all their
unsecured debts.
Chapter 13 is designed for individuals with regular income who wish
to repay a portion or all of their debt over an extended period of
time. Chapter 13 may be appropriate for Debtors who seek to
retain certain non-exempt assets through a repayment plan. An
attorney will also usually recommend Chapter 13 if you are delinquent
on your mortgage payments and wish to save your home, if you owe
Federal Income Taxes, if you have enough disposable income to pay
at least 20% of your unsecured debts by making payments over a 3
year period, or if you have fraudulently used your credit cards.
What property can I keep if I file a Chapter 7 Bankruptcy?
You are only allowed to keep your exempt assets when you file a Chapter
7 Bankruptcy. Florida has opted out of the Federal exemptions.
Therefore, we must look to Florida law to determine which assets
are exempt. Most of the exemptions can be found in Florida Statute
Chapter 222. However, there are still some federal exemptions which
apply to Florida residents and they can be found in 11 U.S.C. '522
(d) (10).
Can I keep my home in a Chapter 7 Case?
Yes. Your home is exempt so long as it is your personal residence
plus 160 contiguous acres if located outside a municipality or your
personal residence plus 2 acre within a municipality.
Can I keep my car in a Chapter 7 Case?
Florida law allows each debtor to exempt $1,000 of equity in an automobile. If
a husband and wife are filing a joint bankruptcy case, they are each
entitled to use the $1,000 vehicle exemption. Equity is the
value of the car less the amount owed to the bank or finance company. For
example, if the car is worth $6,000 and you owe $5,000 to the bank,
you have $1,000 of equity and will be able to keep the car.
Is there a way for me to keep non-exempt assets in a Chapter 7 Case?
The answer to this question depends on which Chapter 7 Trustee is
assigned to your case. Some Trustees will allow you to buy
back the bankruptcy estate's interest in your non-exempt assets.
If the Trustee agrees to allow you to buy back the estate=s interest,
they will either require lump sum payment or sometimes monthly
payments not to exceed 6 months.
Can I file a Chapter 7 if I have filed one in the past?
Yes, if you received a discharge and it has been at least 8 years
since the other case was commenced. If it has been less than
8 years since your other case was commenced, you still may qualify
for relief under Chapter 13 of the Code.
I filed a Chapter 13 but it was dismissed by the Court. Can
I file another one?
Yes, so long as the case was dismissed without prejudice. If
it was dismissed with prejudice you must wait 6 months before you
file another case.
I want to pay some of my credit cards and not list them in the case.
Can I do that?
The Bankruptcy Code requires that you list all of your debts. You
are not allowed to leave out some creditors and list others. Also,
creditors will periodically pull your credit report and they will
find out you filed bankruptcy. When they do, they will likely
cancel your card and you will not have the ability to make charges.
However, the Code also states that after the discharge is entered,
you can voluntarily repay any debt you choose to, even one discharged
in the bankruptcy.
Will I be able to get credit again after I file bankruptcy?
Yes. Most of my clients receive pre-approved credit applications
in the mail shortly after their bankruptcy is discharged. However,
you will probably have to pay higher interest rates.
How long does a Chapter 7 take?
Once a case is filed, a meeting of
creditors will be held in about 30 days. Once the meeting has been
concluded, the creditors have 60 days to object to discharge. If
no objections are filed before the deadline, the discharge will be
entered shortly thereafter. Usually 60-90 days after the conclusion
of the meeting of creditors. |
