Bankruptcy Law

The Pre-Bankruptcy Credit Counseling Requirement and What Filers Need to Know

All bankruptcy filers are required to take and complete two educational courses before receiving a final bankruptcy discharge. These courses are required for both Chapter 7 and Chapter 13 filers. It is important that individuals considering bankruptcy be aware of these requirements for their cases to be successful.  

At the start of a bankruptcy case, the individual filing must meet certain requirements. The filer must disclose his or her complete financial picture by submitting required bankruptcy financial declarations. He or she must also pay a filing fee, request a fee waiver, or request an installment payment for the fee. Lastly, the individual must submit proof that he or she received credit counseling from an agency approved by the U.S. Trustee’s office. This proof of completion must show that the course was taken within 180 days prior to filing.

Pre-bankruptcy credit counseling helps determine whether bankruptcy is necessary. Granted, bankruptcy law only requires the consumer to participate in the counseling program. This participation does not mean the person has to do everything recommended to him or her. However, if the credit counseling agency prepares a debt repayment plan for the consumer, and the bankruptcy court views the repayment plan as something the filer could feasibly do, they may use this repayment plan in an effort to push the person from proceeding with a Chapter 7 bankruptcy case to filing a Chapter 13 case.  

A list of approved credit counseling courses and agencies can be found on the U.S. Trustee’s website. These agencies can charge a reasonable fee for their services, but if the filer is not able to pay the fee and falls below a certain income threshold, the agency must either provide the services for a reduced rate or for free. 

The second credit counseling required by bankruptcy courts is called debtor education. This course must be completed after filing for bankruptcy. The purpose of this second course is to give the filer resources and tools to help him or her create a budget, rebuild his or her credit after bankruptcy, and avoid falling into the same situation again.  Proof of completion must be provided by the filer within 60 days of date first set for the case’s meeting of creditors 

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Debt Relief

Credit Counseling vs. Bankruptcy- Which one is right for you?

When it comes to dealing with debt, you have options.  Debt relief can ease the burden of overwhelming debt, but it’s not right for everyone. Given a person’s financial and personal circumstances, certain considerations should be kept in mind when making the determination between credit counseling and bankruptcy.

If the consumer has a steady income and can pay back his or her debt within a few months to a year, credit counseling may be the wise choice for him or her. However, if the person has an overwhelming amount of debt in comparison to his or her income, filing for Chapter 7 or Chapter 13 bankruptcy may be the better option.  

Credit counseling involves consumer education from a certified credit counselor regarding a variety of topics, including improving a credit score, managing money, preparing, and sticking to a budget, and improving the person’s credit score. The goal is to educate the consumer and prepare him or her to handle his or her finances independently to avoid the need to file for bankruptcy.  

Credit counselors can be found through the assistance of the consumer’s bank or credit union, as well as a consumer protection agency. It is extremely important that the consumer does his or her research before selecting a credit counseling agency. The National Foundation for Credit Counseling (NFCC) can also be an excellent resource for finding credible nonprofit credit counseling agencies.

This type of credit counseling should not be confused with the credit counseling that is required when filing for bankruptcy. Bankruptcy courts require filers to receive debt and credit-related financial counseling at least 180 days before filing for bankruptcy. 

A legitimate nonprofit credit counseling agency should offer free credit counseling services and should not charge a fee upfront before offering these services. These free consultations normally last up to an hour and should provide long-term solutions for the consumer on how to handle his or her debt. 

Unfortunately, credit counseling scams do exist. It is important that the consumer does his or her research to ensure that the agency selected is not one of them. Never provide personal or financial information to the agency until the consumer is sure the credit counseling agency is legitimate.  Research the company with the Better Business Bureau to see if any scams have been reported.

It is equally as important that the consumer realize when enough is enough and when bankruptcy is the better course of action. Many times, the financial burden becomes too much to handle through counseling along. At this point, it may be wise to move forward towards formally filing for bankruptcy. Before making this decision, the consumer should consult an experienced bankruptcy attorney and talk to him or her about the situation. An experienced bankruptcy attorney will be able to help the individual make the decision of whether to pursue credit counseling first or file for bankruptcy. Additionally, the attorney will be able to guide the person as to which form of bankruptcy, Chapter 7 or Chapter 13, would be best.

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law, Debt Collection

Understanding the Fair Debt Collection Practices Act (FDCPA) 

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

The FDCPA was signed into law in 1978. The law designates what type of behavior is acceptable by debt collectors and what type is considered abusive and unethical.  The law was created to curb tactics that had largely gotten out of control by companies engaging in debt collection.  

Bankruptcy Law, Debt Collection

Can a Debt Collector Try To Collect on Debts Discharged in Bankruptcy?

A bankruptcy discharge gives a person a fresh financial start, freeing him or her from the stress of collection calls and aggressive debt collection practices. However, the fact that a debt has been discharged successfully in a bankruptcy case does not necessarily mean debt collectors will still not try and attempt to pursue collection of the debt. What happens in these situations?  

Under the U.S. Bankruptcy Code, a discharge is a permanent court order that prohibits creditors from pursuing any type of collection on discharged debts. These prohibited actions include filing legal cases to collect on the debt, as well as communications with the consumer via personal contacts, letters, and phone calls. Essentially, the discharge in a Chapter 7 or Chapter 13 bankruptcy case relieves the filer from any personal responsibility to pay off the debt.  

Not all consumer debts are dischargeable in a bankruptcy caseCertain debts are prohibited as a matter of public policy from being discharged, including government-backed student loans, child support, alimony, tax debt, and any debts incurred because of improper or illegal behavior.  Creditors for these debts can continue collecting on them even after the bankruptcy case is finalized.  

Bankruptcy Law, Credit Score

When Can I Apply for a Credit Card after Bankruptcy?

The type of bankruptcy can affect how soon someone can apply for a credit card after bankruptcy. A Chapter 7 bankruptcy case allows the consumer’s debts to be discharged fairly quickly, within a few months, after non-exempt assets are liquidated and used to pay off the filer’s debts.

A Chapter 13 bankruptcy case takes longer than a Chapter 7 case since it involves a three-to-five-year long repayment plan where the consumer works with the bankruptcy trustee on paying down qualifying debts while discharging what is left at the end of the repayment period.

Bankruptcy Law, Credit Score

Tips for Rebuilding Credit After Bankruptcy

Sometimes people hold off filing for bankruptcy for fear of what it will do to their credit and financial future. While filing for bankruptcy will impact a person’s credit score, this damage is not irreparable. In fact, with good financial habits a consumer can rebuild his or her credit to better than it was before filing for bankruptcy. 

After the consumer’s debts are discharged at the end of a bankruptcy case, it is recommended that the consumer monitor his or her credit report to ensure that any outstanding or past-due balances are reported as zero if they have been successfully discharged. If any discrepancies are found, these errors should be reported right away to the credit bureaus via a formal dispute.  

Bankruptcy Law

How Will Filing For Bankruptcy Affect My Spouse?

Filing for bankruptcy when someone is married can be a joint process, or it can be done by only one spouse proceeding with the case. Ultimately, it depends on the type of debt and the financial situations for both spouses. For example, if one only spouse owes a specific debt or debts, then that spouse may be able to proceed on a bankruptcy alone, especially if the other spouse has good credit and very few other debts. Proceeding with a single bankruptcy case while married can be complicated, and in certain situations, it can adversely affect the non-filing spouse, but not always 

Joint Debts

In any marriage, parties bring in their own, individual debts, and debts are almost always incurred during the marriage, as well. One spouse may choose to take out a loan, not naming the other spouse on the debt, which means only the spouse whose name is on the debt is responsible for what is owed. If that spouse is not able to continue making payments on the debt, he or she can proceed with a bankruptcy to discharge that debt. If the debts listed in that bankruptcy case belong to the filing spouse alone and not the non-filing spouse, discharging the filer’s debts and liabilities should be a straightforward process. It becomes more complicated if any of the debts listed in the bankruptcy case belong to the non-filing spouse. In these situations, these joint debts will normally remain with the non-filing spouse. 

Bankruptcy Law

How to Know which Type of Bankruptcy is Right for You

Making the choice to file for bankruptcy is not an easy decision to make, but it is the first step towards a financial fresh start. However, choosing which type of bankruptcy to pursue can be a difficult decision to make.  

Typically, consumers choose between a Chapter 7 “liquidation” bankruptcy or a Chapter 13 “reorganization” bankruptcy. Both forms of bankruptcy have their positive attributes, as well as their negative ones, and it ultimately depends on the consumer’s financial situation and the goals he or she wants to achieve as to which type of consumer bankruptcy will be best for him or her.  

Bankruptcy Law

The Pros and Cons of Filing Chapter 7 Bankruptcy in 2020

For someone struggling financially, a Chapter 7 bankruptcy case can offer him or her a fresh start and freedom from insurmountable debt. The year 2020 has pushed many consumers to the brink financially, and bankruptcy can offer the help a person needs to start the New Year debt-free.  

Pros of Filing Chapter 7  

As soon as a Chapter 7 bankruptcy case is filed, the consumer receives immediate protection from his or her creditors. This protection comes from the automatic stay that is issued by the court upon filing. The automatic stay puts a pause on all collection actions, including collection phone calls, legal proceedings to collect on a debt, wage garnishments, evictions, and foreclosures. The automatic stay also gives consumers a chance to breathe and work with the court and bankruptcy trustee.   

Business Bankruptcy, COVID-19

Stimulus Relief Fails to Save Hundreds of Businesses

The financial ramifications of the COVID-19 pandemic have been significant for countless businesses throughout the United States.  At the start of the pandemic, federal stimulus funds were issued in various forms to help businesses survive the economic crisis. However, as the virus continues, many of these businesses are being forced to close.  

According to a Wall Street Journal analysis of legal filings and government data, over 300 U.S. companies that received approximately half a billion dollars in stimulus relief have also filed for bankruptcy this year. These 300 companies employ a total of 23,400 workers who are being adversely affected.