Chapter 7 Bankruptcy

 

Fresh Start in Chapter 7 Bankruptcy & Debt Relief Provided

BENEFITS: Bankruptcy in Chapter 7 will provide you with the debt relief you need and give you a fresh start without being hounded by your creditors and debt collectors and without being tormented by the lawsuits they file against you. It will also stop creditors from taking away your possession, assets, and income if they obtain a Judgment against you and begin to execute (collect) on the Judgment by garnishing your wages or levying/attaching (take away) your assets and possessions. As soon as you file bankruptcy the law called the automatic stay will stop all collections and phone calls, collection letters, and any garnishments and protect your assets and possessions from the levies, even your secured assets. Creditors who are secured can ask the bankruptcy court to obtain relief from the automatic stay and then start repossessing their secured asset if you are not current on the monthly payments, but the automatic stay can delay their repossession/foreclosure actions for several weeks or months. That could give you time to catch up on the payments or do what you need to do to obtain some assets or income. Call us Now at (239) 542-2002.

FUTURE CREDIT: Some people worry that filing for bankruptcy will ruin their credit rating and hurt their financial future. It is important to remember that defaulting loans, late credit card payments or suffering through repossessions can hurt your credit rating as much as, or more than, filing for bankruptcy. Bankruptcy can give you the chance for a fresh financial start by discharging most of all kinds of debts. Having less debts is a big plus on your credit score. Many people obtain credit after bankruptcy within two years or less and most of the time within a year or less. The interest rate may be a little higher, but perhaps not. It depends on the type of loan you seek and the type of creditor, your income and many other factors. Certain creditors will not want to see you for a few years before considering you, such as some mortgage companies, but every creditor is different. Since one can only obtain a Chapter 7 discharge of debts once every 8 years then the creditors know they have 8 years to collect on any loans or credit they provide to you. Thus, they are more likely to provide credit to you based on their 8 years of protection (and 6 years until you can obtain a Chapter 13 discharge after a prior Chapter 7 discharge).

FEARS & FALSE PERCEPTIONS: Many people are terrified about considering filing for personal bankruptcy based on their perceptions of what bankruptcy is and they feel like they would become a failure in life. Some people view bankruptcy as being about one step away from being something morally evil. However, I remind my clients that the vast majority of people I see filing bankruptcy are filing due to circumstances beyond their control. They want to pay their debts but something happened and now they are not able to pay their debts. In the last few years millions of Americans had to file bankruptcy far above the normal amounts of cases, so you are not alone. Some feel like they would be stealing from the creditors but most of the commercial creditors have already made their money off people or they can protect their interests on various ways. Credit cards charge very high interest rates and they already made their money off of you. Some obtain their secured assets back; some receive government bailouts or grants, which is your money being stolen from you by your government and given to private businesses who are your creditors. Most commercial creditors are not being ripped off when one individual files for bankruptcy. If you do not file bankruptcy you may not survive, but if you do file the business creditors will easily survive and they will not be hurt much at all. You will survive also and save yourself from drowning in debt. Call us Today at (239) 542-2002.

IS BANKRUPTCY MORALLY EVIL?: Some people view bankruptcy as being about one step away from being morally evil. Bankruptcy could not be morally evil when bankruptcies were commanded by God to Israel in the Old Testament (see Deut. 15). Every seven (7) years ALL debts in the entire nation were to be cancelled in Israel. God told the creditors to cancel the debts and He would greatly bless them more than they lost. The point is that it is good to be debt free and have creditors who care about other people. Some creditors do not care if your next home is under a bridge as long as they get their money to make another billion or two for their company. Getting a fresh start and being debt free is a great blessing and will eliminate much of your stress and worries and give you some peace of mind so you can live again.

BANKRUPTCY ASSET PROTECTION PLANNING SESSION: If you have any questions about filing for bankruptcy or see how you situation in bankruptcy would help you , contact the Law Firm of Raymond Mitchell and ask for your valuable but totally free Bankruptcy Asset Protection Planning Session (valued at $300) so you can understand how to protect your assets as much as possible and obtain debt relief and stop the creditor harassment calls and letters. Call us Now at (239) 542-2002.

When deciding whether filing for Chapter 7 bankruptcy is the right choice, individuals have several questions or concerns, including:

  • Can I file and qualify for Chapter 7 bankruptcy?
  • Do I have to file with my spouse if I’m married? Is there an extra fee if a married couple is filing?
  • How long does it take to get my debts discharged?
  • Which debts are discharged?
  • Do I lose my assets if I file Chapter 7?

 

The answers to these questions are briefly explained below, but it will not cover all the issues, laws, and situations you may be in. Asking us for your Bankruptcy Asset Protection Planning Session will help you understand all the issues, laws, and situations in bankruptcy and how many assets you can protect. If you have these, or any other, questions about filing for bankruptcy contact the Law Firm of Raymond Mitchell. Our free Bankruptcy Asset Protection Planning Session is valued at $300, but at no charge if you ask us for it, where I can meet with you to review your situation and circumstances and help you decide if bankruptcy is the right option for you. Call us Now at (239) 542-2002.

One important issue to know is that often the IRS will consider any debts reduced or eliminated outside of bankruptcy (such as a debt consolidation plan, etc.) as income you must report on your next income tax return. However, the IRS cannot count discharged debts in bankruptcy as income at all. If they do the IRS could be held in contempt of the bankruptcy court (as they often have been).

Facts About Chapter 7 Bankruptcy

Chapter 7 is different from Chapter 13 in several ways, including:

  • Chapter 7 is a debt discharge case, there is no repayment of any debts required, but you can choose to pay secured debts to keep your car or other secured asset if you desire. You can also choose to buy back any unexempt assets you may have if you want to keep them, but you are not forced to do so.
  • Eliminates or discharges the majority of the various kinds of debt.
  • Certain federal income taxes can be discharged and you can get the IRS off your back and assets. Income taxes over three years old or more can be discharged. Many other types of taxes can be discharged depending on the age and history of your taxes. Property taxes over one year can be discharged.
  • You will stop wage garnishments and end lawsuits filed by creditors as soon as you file for Chapter 7 via the Automatic Stay. However, child support and alimony income deduction orders will not be stopped.
  • Bankruptcy can be used to stop a foreclosure case against your home or property to give you time to do what you need to do. In some situation you can strip the lien of a second mortgage off of your homestead home, discharge the debt, and only owe the first mortgage. You can also cram down first mortgages down to the value of the property on property that is not your homestead in many cases.
  • A potential danger is that some assets can potentially be liquidated or sold off for debt repayment. The assets you have that are exempt from the taking process (liquidation) you keep, but any assets that are not exempt will be taken and sold or you will have the option to buy back the unexempt assets from the bankruptcy estate & Trustee. You can buy them back with a lump sum payment or you are allowed up to a one year payment plan buy back period.
  • If you have lived in Florida for over two years then you would use Florida exemption laws to keep your assets and possessions. In Florida most of the exemptions are good but the personal property exemptions are not very good at all, depending on what you own. Here are the basic Florida Exemptions you would claim:
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  • EXEMPTIONS IN BANKRUPTCY – What You Can Keep!
  •         (Personal Property assets are all assets and possessions that are not real estate [land and buildings].)
  •         Call us Now at (239) 542-2002.
  • FLORIDA EXEMPTIONS: The basic exemptions in Florida for each debtor (married couples double these when both file together) are any Retirement, Social Security & Pension investments, Disability & Workers Compensation payments, the cash value of Life Insurance or Annuities, the Homestead Exemption (unlimited if owned over 3.33 years, if owned less then capped at $155,875 of equity), $1000 wildcard personal property exemption, $1000 vehicle exemption, and an additional $4000 personal property exemption wildcard if you do not claim a homestead exemption, and possibly Tenancy by the Entirety exemption for married filers if only one spouse files (for Married Joint assets), medical & health aids, among others.
  • OTHER STATES OR FEDERAL EXEMPTIONS: If you have lived in Florida for less than two years when you file bankruptcy then you would file here in Florida but would use the exemption laws of another state that you lived in before but depending on that state’s laws you may have to use federal bankruptcy exemptions. Federal exemptions are very generous providing about $30,000 +/- of personal property exemptions to each filer, but only $22,975 of equity in your homestead exemption. The other states have various and different exemptions and laws but most states have personal property exemptions much greater than Florida where you will get only $6000 or $2000 (with a vehicle) depending on whether you claim the homestead exemption in the bankruptcy case or not. In many states one will have from $10,000 to $50,000 of personal property exemptions.
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  • If you have too many unexempt assets and possessions then perhaps chapter 13 would be better because you are not forced to lose any of your unexempt assets in chapter 13. You keep all your assets, property and possessions in chapter 13 and nothing is sold off. You keep them all! You can surrender assets (usually secured) if you want to but you are not required to do so. You still have to buy back the value of the unexempt assets if you decide to keep all of them but you get a 3-5 year payment plan to pay for them instead of only a 1 year buy back plan in chapter 7. Thus, chapter 13 lowers the payments 3 to 5 times smaller if you have many unexempt assets to keep. For more information on chapter 13 click the chapter 13 link above.
  • Personal property is anything that you own that is not real estate (land and buildings). Thus, cars, money, clothes, furniture, computers, stocks, digital money, intellectual property, boats, and everything else is personal property.
  • If you have a business that is a corporation or LLC then all the assets and liabilities of that business are separate from a personal bankruptcy, unless you have joint names on them (you and the business).
  • Everyone must qualify under a “means test” which means that if your income is too high you cannot qualify for chapter 7. You would be forced into a chapter 13 to pay back some of your debts. The means test is very complex and you would have to consult us to know if you qualify, but generally the maximum income levels are fairly high and most people would qualify. The means test only counts your income for the six months before you file bankruptcy. The means test is a two step process, the first being gross income for the prior six months, and step two is “extra credit” for most of your expenses. A very rough ‘guesstimate’ is that for someone in Florida they would have to have an annualized income of around 1.- $60,000 or less (6 months $30,000 x 2= annual $60,000) to qualify for chapter 7 for a one person household; 2.- the two person household is around $70,000 to $75,000 or less [three is about the same as two +$3000];  4.- Four person household is about $85,000 to $90,000 or less to qualify. ) Add $8,100 for each family member above the total of 4. These estimates are approximations and would have to be determined by running the information on the actual means test itself in our computer programs since the means test is extremely complex. Only dependents are counted on the means test along with the filers to determine the number of people in the household.
  • You can file bankruptcy solo without your spouse even if you are married and living together. However, you still have to list and count your spouse’s income as part of your income and means test even when your spouse is not filing with you. But the nonfiling spouse does not have to appear in court for any hearings or meetings, unless some rare special hearing occurs where the spouse may be a witness.
  • Married couples can file together in the same case and the fee is only $100 more than a single person case with the Law Firm of Raymond Mitchell.
  • Chapter 7 cases usually take about 4 months or less from the filing of the petition to open the bankruptcy case until the debtor receives the Discharge of Debts Order from the court. It could take two or more months to gather all the information and documents needed before the case is filed.
  • Most types of debts/liabilities are discharged. Some of the most common types of debts that are NOT discharged are: Income taxes less then 3-4 years old from the filing of the tax return, tax liens, sales taxes; child support, alimony; debts based on fraud or false financial statements; DUI debts only if it resulted in injury or death; debts from willful injury to another and their property; debts not listed in the bankruptcy case or a prior case; larceny & embezzlement; fraud against banks; luxury debts over $600 within 90 days of filing or cash advances over $875 within 70 days of filing; student loans [except for a hardship discharge]; debts owed to pension or retirement plans; fines and penalties to government units; court fees & costs; criminal restitution judgments; certain home or condo association fees; priority debts, among others. Almost all other debts are discharged.
  • The common types of debts and liabilities that are discharged are credit cards, medical bills, personal liability for mortgage debts, judgments for money, judgment liens are eliminated, car and vehicle debts (if you do not keep the vehicle), most unsecured debts, most unsecured contract debts, among others.
  • You can restore you driver’s license if it was suspended due to lack of payment on a judgment for money (not including ones for child support or alimony) as soon as the case is filed under the automatic stay provisions of the bankruptcy code.
  • The automatic stay will also stop all collections from creditors and almost all lawsuits and garnishments as soon as the case is filed.

Call Today at (239) 542-2002.

If you have any questions about filing for bankruptcy or see how you situation in bankruptcy would help you , contact the Law Firm of Raymond Mitchell for your valuable but totally free Bankruptcy Asset Protection Planning Session* (valued at $300) so you can understand how to protect your assets as much as possible and obtain debt relief and stop the creditor harassment calls and letters. Call us Now at (239) 542-2002.

 

* For cases not yet filed or near the beginning of the case in our judgment, or a trial has been set and you are seeking an attorney for the trial in our judgment. See Attorneys for more information.