What is Bankruptcy?
Bankruptcy is a process by which you are able to eliminate or repay some or all of your debts under the protection of the federal bankruptcy court. This is usually done through liquidation or reorganization of your debts.
What Are Two Benefits To Filing Bankruptcy?
Bankruptcy can stop continued efforts by creditors to collect debts that you owe. Most importantly, bankruptcy can allow you to have a fresh start by eliminating your obligations to repay or provide you with an opportunity to restructure the debts you owe to enable you to make a monthly payment you can afford.
Alternatives to Bankruptcy
There are alternatives to Bankruptcy but you should consider bankruptcy and all of your options so you can make an informed decision about what is best for you short term and long term. In some cases, a bankruptcy can even prevent a foreclosure or repossession, however, this is only available prior to the sale and termination of your legal rights to the property. Other options include settlements, modifications, and negotiations. You should get legal advice as soon as possible on your specific situation to determine the options available to you.
Credit Card Assistance and Unsecured Debt
You may be able to avoid bankruptcy by hiring an experienced attorney who can negotiate with your credit card companies and those you owe money to so you can afford the monthly payments and/or reduce your overall debt.
Collection Harassment
Individuals with outstanding debt may receive constant harassing telephone calls and letters from creditors. In addition to being annoying and inconvenient, bankruptcy can eliminate calls and letters from your creditors. The Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) are laws put into place to protect you as the consumer and provide you with invaluable rights that prevent illegal and harassing debt collection activity.
What Bankruptcy Can and Cannot Do
Bankruptcy may make it possible for you to:
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- Eliminate all debt
- Re-organize your debt so that you can afford your monthly payments using a payment plan that is worked out in court
- Allow you to maintain a home, car, and other property under the condition you agree to continue to make payments on that debt and it is not "discharged" in the bankruptcy
- Stop foreclosure on your home
- Stop creditors from being able to collect payments from wages you have earned
Bankruptcy, usually cannot:
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- Modify certain rights of secured creditors.
- Discharge certain types of debts that receive special treatment under the Bankruptcy Code, such as child support, alimony, most student loans, court restitution orders, criminal fines and most taxes
- Protect all co-signers on their debts. When a friend, relative, or other individual has co-signed a loan and the debtor discharges the loan in bankruptcy, the co-signor may still have an obligation to repay all or part of the loan.
- Discharge debts that are incurred after bankruptcy has been filed.
Types of Bankruptcy
There are six basic types of bankruptcy cases provided under the Bankruptcy code. The two most commonly used bankruptcies are Chapter 7 and Chapter 13. Which Chapter of Bankruptcy you will use is based upon analysis of your specific situation including your income, assets, debts, and your goals.
Chapter 7
Chapter 7 bankruptcy is titled “Liquidation” and is where the court provides a trustee and your assets are examined to determine if any property is available to be sold or recovered for the benefit of the creditors you owe. In most cases, Florida law does not consider liquidation of personal property.
Usually, in Chapter 7 Bankruptcy cases, you receive a discharge that releases you from personal liability for dischargeable debts a few months after filing a case. This allows you to begin fresh without any future obligations on those debts.
Chapter 13
Chapter 13 bankruptcy is titled “Adjustments of Debts of an Individual with Regular Income” and is also known as “reorganization.” A Chapter 13 is typically filed by individuals who need an opportunity to catch up on a past-due mortgage or car loan, modify their mortgage payment through bankruptcy or to keep their assets.
In a Chapter 13 case, a plan is submitted to the court for you to repay all or part of the money owed to creditors over a three to five-year period. The bankruptcy court confirms the plan meets the requirements set out in the Bankruptcy Code and a copy of your plan is given to each of your creditors by the Chapter 13 trustee.
Chapter 13 does not give you immediate discharge of debt. Instead, you must complete the payments required under the plan and then the debts will be discharged.
Student Loans
In most situations student loans will not be discharged in bankruptcy. The only exception to this in The Bankruptcy Code is if you are able to demonstrate that payment of the debt “will impose an undue hardship on the debtor and the debtor's dependents.” This isn't easy to accomplish in bankruptcy.
However, in regards to student loans, filing a bankruptcy will create an automatic stay which prohibits creditors from continuing collection actions. In addition, if your wages or tax returns are being garnished for unpaid student loans, a bankruptcy can stop that garnishment while the automatic stay is in effect.
Will Bankruptcy Affect My Credit?
Under the Fair Credit Reporting Act, information about a bankruptcy filing can be reported on your credit report for a period of 10 years after the case is filed, rather than the normal seven years allowed for other credit information. Nevertheless, many consumers are able to obtain credit after filing bankruptcy.
Can I File Bankruptcy More Than Once
Yes. However, you may not obtain another Chapter 7 discharge for a period of eight years after filing a Chapter 7 case in which a discharge was received (though the filing of a Chapter 13 case may be possible).
Caution
If you are considering bankruptcy, you should avoid incurring new or additional debts. Property cannot be transferred or concealed to avoid its loss to creditors during the bankruptcy proceeding. This can be bankruptcy fraud which is a criminal act that can result in you being denied a discharge of your debts and can result in imprisonment.
Do I Need a Attorney?
As in any court, individuals have a right to represent themselves before the Bankruptcy Court. However, bankruptcy is a complex area and involves many considerations including whether to file, the election of the appropriate chapter, use of exemptions, understanding all protections of the Bankruptcy Code and using them to your advantage. The right decision for you depends on an evaluation of your family status, your assets, your obligations and other factors. It is a serious decision that could affect you for the rest of your life. It is possible in a bankruptcy that you will lose all assets and still come out owing all of your debts. A attorney can explain to you how the process works and can help you reach an informed decision.
Kyle & Kyle Law
We care about you and your future. We have helped individuals and families like yours and can evaluate your specific situation and explain the possibilities so you can make an informed decision. Our goal is to help you understand your options and help you get a "fresh start" so you can focus on what matters most to you so you can Smile With Kyle. Kyle & Kyle Law is ready to help.
YOUR NEXT STEPS
1) Call 877-595-3529 to schedule a free consultation with a bankruptcy attorney.
2) Get sound legal advice and find out what legal options are available to you.
3) Let us take action to resolve the issue(s) so you can focus on what matters most.
4) Smile with Kyle.