Bankruptcy has often been viewed as a last resort when a person loses everything. However, this process sometimes can be a smart way to start over and reorganize your finances without overwhelming debt. The knowledgeable bankruptcy attorneys at The Law Offices of Michael J. Owen help people in Brandon and other nearby areas who are fighting hard to get themselves back on track. We take the time to examine each of our clients’ finances and options to guide them in making good choices suited to their individual circumstances.Types of Bankruptcy and Florida Exemptions
Bankruptcy refers to the process by which people as well as businesses may eliminate or pay off some or all of their debts under the protection of a specifically designated court. The two most common types of procedures for individuals fall under Chapter 7 or Chapter 13 of the Bankruptcy Code. Under Chapter 7, a liquidation bankruptcy, most debts are discharged and the assigned trustee takes and sells any assets that are not subject to exemption. Conversely, under a Chapter 13, or reorganization bankruptcy, an individual may retain his or her property but make monthly payments for a period of three to five years in order to relieve debts.
In determining which procedure an individual should use, courts in Florida use the means test. This establishes whether a person’s income is low enough to be eligible for filing Chapter 7 bankruptcy, judging by a specific formula to ensure someone who has a high enough income does not avoid feasibly repaying debts by using this section of the Code. Under the means test, the Florida court will compare your income to the state’s median for a similar person or family.
Under the Bankruptcy Code, individuals are allowed to keep certain assets, or exempt property, considered necessary for starting over following the process. Florida chose to opt out of the federal exemptions and instead created its own list, which is considered more generous. To retain property that is not exempt, a debtor typically must pay the trustee for its value.Credit Card Negotiations, Collection Practices, and Foreclosure
Prior to filing for bankruptcy, it is important to consider alternate options for dealing with your debt. For example, with the help of a knowledgeable attorney, you could attempt to engage in negotiations with your credit card companies to reach a settlement. Several possibilities to consider in this process include:
- Changing payment dates;
- Seeking interest rate reductions;
- Requesting a temporary reduction in payments;
- Asking for forbearances; or
- Arranging long-term repayment plans or a reduced lump sum settlement.
Once an individual petitions for bankruptcy, an automatic stay is put in place, which bars creditors from engaging in collection actions. This means that they are no longer allowed to make calls, send letters, or initiate lawsuits to pursue your assets.
Often, people considering filing bankruptcy have also fallen behind on mortgage payments and are subject to foreclosure actions. Once a borrower is served with a foreclosure complaint, a lender can obtain a deficiency judgment, which aims to collect the difference between the total debt owed by the debtor and the amount the property sold for in the foreclosure sale. However, in Florida, deficiency judgments are dischargeable in bankruptcy, and therefore the lender is not allowed to pursue collection after the debtor files.Discuss Your Bankruptcy Options with a Riverview Attorney
If you are considering reorganizing your finances and would like to know more about your options, the bankruptcy lawyers at The Law Offices of Michael J. Owen can help you weigh your options. We represent individuals near Riverview as well as in Tampa and other places in Hillsborough County. The decision to start over should be made with as much knowledge as possible, and consulting an experienced attorney is the first step in the process. Please contact us online or by phone at 813-502-6768 to discuss your financial situation.