Filing bankruptcy is a serious step, not to be taken lightly. For instance, if debtors owe only a small amount to a few creditors, it might make more sense to consult a credit counseling service. Bankruptcy might be necessary however, under certain situations: For example, do you have large credit balances, and can not meet minimum installment payments? Are you borrowing from one credit card to pay another? Are you swamped by uninsured medical bills or judgments? Is there a pending or threatened foreclosure, garnishment, or repossession? Do you need a "fresh start" to relieve financial stress? Do you have a auto accident judgment against you and cannot renew your driver's license until it is paid? Once you obtain a bankruptcy, you cannot obtain another one for six years. Furthermore, credit reporting agencies will report that you went bankrupt on your credit report for ten years after the bankruptcy.
Can I keep my home and other possessions?
Generally, debtors in Florida can keep their homes because of the homestead laws but Congress' new revision has placed some limits on this. They are entitled to keep $1000 worth of personal possessions valued at used or "flea market" value. Careful planning with an attorney will maximize the end result.
What types of bankruptcy are there?
Chapter 7 "liquidation" is the most common form of bankruptcy. It provides debt relief, stops creditor harassment, garnishments, and collection lawsuits. In theory your property is supposed to be sold by a trustee in a Chapter 7. However, this usually is avoided because debtors are entitled to exemptions which protect most, if not all, of their property from liquidation. The new revision requires that the debtor take and pass a "means test" to determine whether he/she is eligible under federal law to obtain a Chapter 7 Bankruptcy. If the debtor is not eligible for a Chapter 7, then he/she can enter a Chapter 13 Bankruptcy which requires the debtor to pay down a percentage of their total debt in monthly installments taken from their paycheck, over a period of from 3 to 5 years. Chapter 13 repayment plans will stop foreclosures and give you a chance to catch up these and other debts.
Are there debts I can`t discharge?
Certain obligations are automatically not discharged. These include alimony, child support, most income taxes, most student loans, criminal fines, and injuries from DUls. Other debts are not discharged if a complaining creditor can show he meets certain criteria (such as fraud) to justify a denial of discharge. Usually these issues can be anticipated by your attorney.
What is Pre-bankruptcy Planning?
Sometimes debtors can arrange their affairs in a legal manner to ensure that they emerge from the bankruptcy in the best financial position possible. A good attorney should be able to recognize when such preliminary steps are beneficial.