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.   

Bankruptcy Law

Steps for Filing Chapter 7 Bankruptcy in Florida

If someone is considering filing for Chapter 7 bankruptcy, the path that person needs to take may not always be clear. While everyone’s situation differs in some respects, certain steps must be taken when it comes to proceeding with Chapter 7 bankruptcy.

Review Your Financial Situation

Before proceeding, it is always recommended that the filer sit down with an experienced bankruptcy attorney and go over what types of debt the person has, as well as what property would be protected by Florida’s bankruptcy exemptions.

Bankruptcy Law

Converting a Chapter 13 Bankruptcy to a Chapter 7

On occasion, a Chapter 13 bankruptcy case may need to be converted to a Chapter 7 case. This transition may be on the request of the individual filer or the bankruptcy court. Many bankruptcy filers will decide to convert their Chapter 13 case into a Chapter 7 case in the event their financial situations have changed after the initial filing, or if the filer had originally chosen to pursue a Chapter 13 case to protect property that no longer needs protection.

The Conversion Process

Florida bankruptcy courts have specific guidelines that must be followed for converting a case from Chapter 13 to Chapter 7.  Unless the filer has already received a Chapter 7 bankruptcy discharge within the most recent eight years, he or she should be able to convert a Chapter 13 case into a Chapter 7 at any time.

Bankruptcy Law

Understanding the Bankruptcy Process: How to File & the Qualifications

Filing for bankruptcy can be an emotional and sometimes stressful process. However, enlisting the help of an experienced bankruptcy attorney can make the process painless and worry-free.  Many clients have little understanding about what is involved when they file for bankruptcy.  Bankruptcy is a legal proceeding where a judge and bankruptcy trustee review the financial situation of individuals or businesses who are not able to pay their financial obligations and discharge qualifying debts that they are no longer able to pay.

The Purpose of Bankruptcy

Bankruptcy is meant to give an individual a fresh financial start, allowing that person to wipe the slate clean. It also serves as a way to give the filer some sense of relief through the protection of the automatic stay, which means creditors are prohibited from continuing collection actions against the filer. This allows the person time to regroup, protect valuable assets and work with the bankruptcy trustee to handle their debts.

Bankruptcy Law

How to Time Your Bankruptcy Filing

Deciding when to file for bankruptcy can be a complicated one. Many times, it makes sense to delay filing for bankruptcy, while other times it makes sense to file right away.  In some situations, people are able to work out a plan to pay off their debt without having to file at all. If someone is struggling with making that determination, a bankruptcy attorney can help talk that person through his or her life situation and can help the individual decide when a good time would be for filing for bankruptcy.

Modifying a Mortgage

Bankruptcy is often used as a means of delaying foreclosure. In a Chapter 13 bankruptcy case, a bankruptcy filing will often allow the person to catch up on past-due payments while continuing to make current ones. However, sometimes a mortgage modification may be all the filer needs to hold onto his or her home. If the person files too quickly, he or she may have a harder time obtaining a modification of the mortgage. In fact, once a bankruptcy case has been filed, many lenders will not even talk to the borrower in terms of negotiations over the mortgage. If the borrower is anticipating a mortgage modification, it may be best to wait before filing for bankruptcy.

Income Qualifications

If someone is wanting to pursue a Chapter 7 bankruptcy case, he or she will need to pass the “means test” requirements set by the bankruptcy courts in Florida. If the filer’s income is too high, he or she will be prevented from pursuing a Chapter 7 liquidation bankruptcy case. Not passing the means test does not necessarily mean the person cannot pursue any type of bankruptcy. The filer may still qualify for a Chapter 13 bankruptcy plan, which requires him or her to repay a portion of the qualifying debts over a three to five-year period. The means test calculates the person’s income over a period of several months. Therefore, if the person’s income has dropped recently, he or she may still be able to qualify for Chapter 7 by holding off on filing for a few months.

Keeping Certain Property

Many times, the filer may have certain property that he or she would lose in a Chapter 7 bankruptcy case, such as an incoming tax refund. If the case is filed too soon, that tax refund may be liquidated and used to pay off certain debts. If the potential filer expects a large income tax refund, he or she may wish to hold off on filing for bankruptcy temporarily and use that money to pay for living expenses over the course of a few months before filing. However, make sure that the expenses being paid with this refund are for necessities and not luxury items. Otherwise the bankruptcy trustee may see the filer as trying to conceal or hide this income before filing. Also, this situation only matters for property that does not fall under an exemption, including the personal property exemption for Florida filers.

New Incoming Debts

If the filer anticipates some additional debts coming in the near future, it may also be wise to hold off on filing for bankruptcy. For most cases, a Chapter 7 bankruptcy case will only liquidate debts the filer has as of the date the petition was filed. Any debt that is incurred after the date of filing will stay with the filer after discharge. If the filer anticipates a major medical expense that will result in debt or necessary home improvement expense, it may be best to wait for filing until after that expense has been incurred, making it possible for that debt to be discharged.

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.

Related Resources:

https://www.nolo.com/legal-encyclopedia/file-bankruptcy-or-wait-29955.html

 

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

When to File for Bankruptcy

Coming to the decision to file for bankruptcy is not an easy choice to make. Many individuals consider bankruptcy to be an admission of failure, but it can oftentimes be the only way for them to truly obtain a fresh financial start. Certain decisions and factors must be considered when coming to the decision to file for bankruptcy.

One consideration that often holds people back from making the decision to file is the effect the filing will have on their credit. The effects of bankruptcy on a person’s credit score depends on the score the filer had before filing for bankruptcy. If you have a higher credit score, the effect the bankruptcy will have will be more noticeable. However, if you have a lower credit score to begin with, the change may not be as much after filing for bankruptcy.

It helps to sort through the myths and facts before making that final decision, and if you do choose to file for bankruptcy, this does not mean all hope is loss. There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

Traditionally, two of the biggest reasons people file for bankruptcy are the result of a serious medical crisis or a divorce. Both can cause a person’s financial situation to change overnight. Even if someone has medical insurance, a major medical crisis can still put them in a tough financial spot, especially if that person must pay a high deductible for his or her medical costs. The same goes for a divorce and losing the financial support of another person in a relationship.

Several factors need to be considered when deciding which form of bankruptcy to choose. Chapter 7 bankruptcy takes approximately three to six months to have the debt discharged, which includes most of the filer’s unsecured debt, including medical bills, credit card debt and personal loans. Other types of debt are excluded for the most part, including student loan debt, child support, spousal support and tax obligations. The bankruptcy trustee may choose to sell of non-exempt property to pay off the debt, although most property falls under an exemption- which means you can keep it. Property that is secured and is associated with a piece of property, like a home, can be kept so long as the debtor is able to keep up on payments and maintain the property. Therefore, if most of your debt involves credit card debt or medical debt, Chapter 7 may be the best option for you to eliminate this burden.

If you are behind on your mortgage payments but want to keep your home, many times, the Chapter 13 filing is a more logical choice. In a Chapter 13 case, you can lump past due mortgage payments into the repayment plan and pay them over time while keeping current on payments.

The bankruptcy means test determines whether or not you are eligible to file for debt forgiveness through Chapter 7 bankruptcy. The test uses factors such as: income, expenses and family size to determine who can afford to repay their debts through reorganization and who cannot.

It is always recommended that you speak with an experienced bankruptcy attorney before making any decision to file or not file. If you are expecting a large lump sum payment, such as an inheritance or tax refund, the attorney may advise you to wait on filing and utilize that money on needed expenses first before filing to avoid losing it in a bankruptcy. Be honest with your attorney during this meeting and fully disclose all your financial circumstances so that the best decision can be made.

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.

Related Resources:

https://www.magnifymoney.com/blog/pay-down-my-debt/debt-guide-file-bankruptcy/

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Life after Bankruptcy: 5 Things You Need to Do After Bankruptcy

If you recently filed for bankruptcy, you are likely experiencing a sense of relief from having your debts discharged and getting a fresh start financially.  These tips for “life after bankruptcy” will help you avoid future debt problems and improve your credit score once your case is finalized.

Collect and preserve all paperwork from your case. Your bankruptcy attorney should provide you with a copy of your bankruptcy petition (i.e. – 40-50 pages of detailed financial information – including the facts about the debts and assets involved in your case.)  You should also have a notice of bankruptcy filing directly from the court, which shows the deadlines that affected your case.  Finally, you should have a copy of your discharge order entered by the bankruptcy judge. This is important as some lenders require to see a copy of the bankruptcy papers before lending you new credit.

Check your credit reports regularly. You can obtain your credit report for FREE from each of the three main credit bureaus once a year.  It is important to see what creditors are saying about you.  Especially after a bankruptcy, you want to make sure that all of the discharged debt is being reported to the credit bureaus with a zero balance so it does not count against you as outstanding debt.  You also want to make sure the account is not transferred to a new collection agency who falsely pursues you for the discharged debt.

Start a budget and review it regularly. Creating and sticking to a budget is the key to staying on track financially.  It is also a great way to manage your income and expenses and see where every dollar is going.  Just like in the Means Test that compared your income and expenses over a six-month period to standards set by the Census Bureau and the IRS. The concept was to identify those who actually had the means to pay their debts, but who were living an extravagant lifestyle financed on credit cards and other debt.  It’s an urban myth that people who file for bankruptcy live lavishly and are financially irresponsible. Statistics monitored since 2005 show that a very small percentage fit into this category.  Most bankruptcies are caused by an unforeseen illness or medical expense,  job loss, or even a divorce.

Start an emergency fund.  When establishing a budget for yourself, make sure you put aside a portion of your income for savings.  Having an emergency fund will help you avoid incurring unplanned debt or taking out cash advances to cover unexpected costs like a car repair or appliance repair.

Think about new credit.  A great way to rebuild your credit after filing for bankruptcy is to obtain a secured credit card.  You can open this card by depositing money into an account as security.  Your credit limit is the amount you deposited into the account.

If you have any 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.

Related Resources:

http://blog.credit.com/2014/12/5-things-to-do-after-bankruptcy-103308/

https://www.legalzoom.com/articles/life-after-bankruptcy-get-back-on-your-feet-after-filing-chapter-7

 

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

A WIN for Bankruptcy Filers on Means Test Expense Issue

In the case Lynch v. Jackson, No. 16-1358 (4th Cir. Jan. 4, 2017), the two debtors filing for Chapter 7 bankruptcy complied with Form 22A’s instructions to list their expenses using the IRS National and Local Standard amounts rather than their actual expenses, which were less.

The bankruptcy administrator moved to dismiss their case as “abusive” under section 707(b)(2)(A)(i). Section 707(b)(2) permits a debtor to take the full National and Local Standard amounts for expenses even though the debtor’s actual expenses are less. The bankruptcy court denied the motion to dismiss.

The administrator argued that Form 22A’s instructions were erroneous and that the expense deduction amounts listed in the IRS Standards represent a cap on how high an expense amount may be claimed for certain expenses, but that if the actual amount is less, the debtor must use the lesser amount.

The Fourth Circuit found the answer in the plain language of the statute: “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards. 11 U.S.C. § 707(b)(2)(A)(ii)(I).”

The fact that Congress used the word “actual” elsewhere in the same statute indicates that it made a distinction between applicable and actual. The court also recognized how outlandish it was to punish a frugal debtor should the bankruptcy administrator’s interpretation of the statute be accepted.

Click here to read more on this case.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all 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, P.A. 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 website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

11 Steps to Take When Bankruptcy is Your Best Option

Many Americans have had difficulties keeping up with their debts and credit obligations since the Recession. If you have similar difficulties, filing for bankruptcy may be your best option.

Here are 11 steps you should take if you are filing for bankruptcy.

  1. Explore your options. Before filing for bankruptcy, it is best to educate yourself on what filing for bankruptcy means. For example, you need to determine if you need to file Chapter 7 bankruptcy or Chapter 13 bankruptcy. Most individuals file Chapter 7 bankruptcy, which means that you, as the debtor are relieved from some or all of your financial obligations.
  2. Complete the means test. This is a standard test that will compare your income to your debts to determine if you are eligible to file for Chapter 7 bankruptcy.
  3. Hire an experienced bankruptcy attorney. A bankruptcy attorney is invaluable to you during the bankruptcy process. Your attorney will explain your options, answer your questions, make informed recommendations and even fill out the forms for you and make sure they are filed correctly and on time.
  4. Pay the fees. When filing for bankruptcy, you will be responsible for legal fees and application fees. The application fees alone can cost between $300-$500 and once you include your attorney fees, you may spend around $2,000 total.
  5. Assemble your information. Gather and organize all of your financial information. This includes: your income, expenses, assets, debts and property exemptions. You need to have all of your financial information ranging over the past six months for the bankruptcy procedure. You have to list this information in order to have your debts discharged.
  6. Determine which debts are excusable. Although bankruptcy is considered a clean slate, there are debts you will still be responsible for after your bankruptcy proceedings. For example, you will most likely still be responsible for: student loans, child support and tax debts.
  7. Attend a credit-counseling program. Within six months before filing your petition, you will need to attend a credit-counseling program at a court-approved agency. The counseling can usually be completed online or over the phone.
  8. File the forms. One reason it is important to hire a bankruptcy attorney is so that they can help you fill out the necessary forms and can remind you of the deadline.
  9. Automatic Stay. Once you complete all of the paperwork and file it, you will be granted an automatic stay that prohibits almost all creditors from continuing collection actions against you.
  10. Attend the meeting. Oftentimes, Chapter 7 bankruptcies do not end up in court. However, you will need to attend a mandatory meeting known as a 341 meeting with the creditors and a court-appointed trustee. The trustee will ask questions pertaining to your finances and your petition.
  11. Post-Bankruptcy Obligations. Once you have successfully filed for bankruptcy, you will need to attend a post-bankruptcy credit counseling. This will help you successfully manage your finances and proceed forward so that you do not end up in a financial crisis again.

Click here to read more on this story.

If you 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, P.A. 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 website at www.miamibankruptcy.com.