Facing the need to file bankruptcy can be very stressful. However, if you are facing foreclosure, garnished wages, or repossession of your assets, and you have no way to pay your mounting debt, bankruptcy may be able to keep a bad financial situation from getting even worse. If you are considering filing for bankruptcy, contact an attorney to discuss your options. Putting off the decision may come with serious repercussions like the loss of wages, assets, or your home.
The Law Offices of Jeffrey A. Herzog, P.A. are here to help you through perhaps the most difficult financial times you and your family may face. Financial trouble is scary enough as is. Don’t go through this alone. The dedicated bankruptcy attorneys at The Law Offices of Jeffrey A. Herzog are here to support and guide you through the intricacies of bankruptcy.
The Laws of Personal Bankruptcy
If you owe more money than you currently have the ability to pay, you may be able to go through the legal process of bankruptcy. There are two types of personal bankruptcy that you may file are Chapter 7 and Chapter 13. Under Chapter 13, you may be able to repay a portion of the money over time and, at the end of the payment plan, the rest of your debt is forgiven, or “discharged.” With Chapter 7, your entire debt is forgiven, or “discharged,” however, you may be required to surrender assets to a trustee.
In all bankruptcy proceedings, you must disclose every debt and asset. Be aware, however, that some debts may not be discharged even through bankruptcy. These debts include:
- Child support
- Some property settlement agreements
- Some income tax liabilities
- Department of Revenue sales tax liability
- IRS pay roll tax liability or trust fund liability
- Most student loans
In Chapter 7 bankruptcy, debtors are allowed to keep certain “exempt” property and the remaining assets are liquidated by the trustee. This is why Chapter 7 is referred to as a liquidation type of bankruptcy. The trustee then disburses the funds from the liquidation to creditors in accordance with the Bankruptcy Code.
A Chapter 7 bankruptcy might be right for you if you do not make enough money to pay part of your debts. You may still be able to keep some of your secured debts like your car or your home, but you must reaffirm your commitment to paying these debts by voluntarily signing a reaffirmation agreement.
“Exempt status” for an asset means you can protect it from your creditors and from the Chapter 7 trustee. In Florida, here are some of the bankruptcy exempt assets:
- Homestead: exempt the value in your home. The property cannot be larger than half an acre in a municipality or 160 acres outside of a municipality.
- Personal property exemptions:
- Personal property up to $1,000.
- Education savings
- Health savings
- Hurricane savings
- Prescribed health aids
- Up to $1,000 in motor vehicle equity (more if you are married, filing jointly)
- Up to $750 per week of income if you are the head of household.
- ERISA qualified retirement plans
- IRA’s and Roth IRA’s
- If you do not use the homestead exemption, you may claim up to $4,000 of additional personal property as exempt.
A word of caution is needed here. If you attempt to transfer certain assets to avoid them being taken away in bankruptcy, you risk violating Florida’s Fraudulent Transfer statute and 11 U.S.C. Section 548 of the Federal Bankruptcy Code. If you are a Chapter 7 debtor found guilty of a fraudulent transfer, you may lose your entire discharge and may be subject to criminal prosecution.
In order to qualify for filing Chapter 7, you must be able to pass the “means test.” This test determines your income level and whether it is sufficiently low enough that you would be unable to consistently pay off a portion of your debt over time. If you earn enough income to go on a payment plan to pay off part of your debt over a certain length of time, you may have to file Chapter 13 bankruptcy.
Chapter 13 Bankruptcy is another type of personal bankruptcy you may be able to file. If you receive regular income that you are able to use to repay a portion or all of your debt over an extended period of time, Chapter 13 might be right for you. Filing this type of bankruptcy may allow you to keep certain assets by agreeing to the terms of a payment plan. Chapter 13 bankruptcy is referred to as a reorganization type of bankruptcy.
The repayment plan established under Chapter 13 usually spans 3 to 5 years. Chapter 13 has several important benefits:
- You can save your home from foreclosure.
- You can stop the repossession of your car.
- You can keep nonexempt property.
- You want to pay back taxes.
- You want a structured repayment plan for non-dischargeable debt such as student loans.
Bankruptcy can help you out of a really bad financial situation. However, it can stay on the public records section of your credit bureau report for up to ten years. Additionally, your bank or credit union may choose to close your accounts. Carefully consider bankruptcy and make sure to consult with a bankruptcy attorney to discuss your specific situation. Additionally, to file bankruptcy, you must undergo credit counseling from an approved credit counseling agency, which we will assist you with that process.
Experienced Bankruptcy Counsel You Can Trust
Financial trouble can put a terrible strain on a family. If you are having trouble keeping up with your debts, contact the knowledgeable bankruptcy attorneys at The Law Offices of Jeffrey A. Herzog, P.A. Our attorneys can help prevent a bad financial situation from getting worse. Find comfort knowing we will be by your side every step of the way.