- Will my credit be ruined for the rest of my life?
- Can my wages be garnished
- When is the best time to file bankruptcy?
- How long do I have to file in Florida?
- What hearings are required in court?
- What about purchases on store credit cards?
- What if I should inherit money afterward?
- Will my federal income taxes be discharged?
- Are student loans dischargeable?
- What debts cannot be discharged?
- What are fraudulent acts?
- How many of my assets can I keep?
- How is the $1,000 property amount calculated?
- What about my vehicles?
- Will the Trustee come to my home to inspect?
- What other items can I keep?
- Is there life after bankruptcy?
- Can a credit agency "fix" my bankruptcy?
Do you have more questions? Get the answers you need now by calling our office toll free at:
1. Will my credit be ruined for the rest of my life?
Hardly! While the filing of a Petition in Bankruptcy will remain on
your credit rating for ten years (as opposed to simple bad credit
which will only remain for seven years), judgments resulting from
lawsuits filed against you can remain in place for a maximum time of
20 years. Based upon my experience of representing over 3000
bankruptcy clients, many clients are able to obtain unsecured credit
cards after one year, finance a new motor vehicle or purchase a home
right after discharge.
Please understand that credit approval can depend upon a number of
factors. For example, if you are able to continue making your
mortgage payments and keep your home through the filing of a
bankruptcy, then your credit will improve more rapidly than someone
who does not own any property. In short, while the filing of a
Petition in Bankruptcy can be detrimental to your credit history, it
can ultimately lead to a better credit rating than having judgments
obtained against you, having your wages garnished and having your
bank accounts taken.
If you do not file bankruptcy and a judgment is obtained against
you, your wages may be garnished. This can only be accomplished
after you have been served with a lawsuit and a judge has ruled
against you after trial or based upon your failure to defend your
case. If you do file bankruptcy, then your wages can never be
garnished and judgments can never be obtained against you so long as
all of your debts were listed on your bankruptcy petition.
3. When is the best time to file bankruptcy?
The best time to file bankruptcy is when you have no other choice.
Simply owing money is not a reason to file bankruptcy. If you are
having a temporary "cash flow" problem and feel that you can get
back on your feet if given a short breathing spell, then you may
wish to consult the Consumer Credit Counseling Service of the Palm
Beaches, a United Way agency. This group will deal with those
creditors that agree to deal with them by reducing your payments.
Unfortunately, interest can still run and this may only postpone the
inevitable. However, their services are relatively inexpensive since
they are subsidized by the county and state and it may be worth a
try. Once you decide, after due consideration, that the filing of a
Petition in Bankruptcy is right, you should not procrastinate or
postpone this decision.
4. How long do I have to live in Florida in order to file
bankruptcy?
Generally, the minimum period of time is ninety days. However, under
certain circumstances, this period of time may be shorter.
In order to use the exemptions available to residents of the State
of Florida you must have lived here for the last 730 days
(approximately 2 years). In addition, in order to utilize the
full Florida homestead exemption, you must have lived within Florida
for the last 1215 days (approximately 3 years 4 months).
5. What hearings are required in court?
Generally, the only hearing that is required is a meeting of
creditors where everybody to whom you owe money has the right to be
present and ask you questions for approximately five minutes. This
hearing does not take place in court. Instead, it takes place in the
Trustee's meeting room. In the vast majority of the cases, no
creditors show up since it is generally a waste of time for them to
do so.
When your bankruptcy petition is filed with the court a trustee will
be appointed. A trustee is simply a person, not a judge, whose task
it is to inquire as to any assets that you may own.
Prior to the meeting of creditors, the trustee will have reviewed
your tax returns for the last four years and possibly your
canceled checks for the last twelve months in order to see if you
have hidden any property. If you have nothing to hide, then this
meeting should not cause you any concern.
All of us get enticed into using the store’s “own” credit cards
because we like the fact that no payments will be due for a period
of time or that no interest will be charged. These are quite
tempting. However, unlike MasterCard or Visa cards the finance
company retains a lien on your purchase until it is paid in full.
These finance companies may attempt to force you to re-obligate
yourself on the original agreement in order to keep the furniture,
may settle for a lesser cash sum in order for you to keep the
furniture or, if you do neither of the aforementioned alternatives,
these companies will have the right to file a lawsuit against you in
state court in order to obtain possession of the furniture.
Generally, we recommend that you do not re-sign or “reaffirm” a
finance agreement and instead, we suggest that you retain possession
of the furniture and see whether the finance company pursues an
action against you in state court. Frankly, I have never seen
finance companies do this since the only result would be that they
could simply obtain possession of the furniture again. This
would be a costly process for them to obtain your used furniture
which will not yield very much money for them. They do much
better if they simply pester you into making payments.
Naturally, if you are represented by an attorney they will be unable
to contact you after you file for bankruptcy. If I represent
you, the “pestering” is not a real issue. Again, I generally
suggest that you stop making payments to them and keep your
furniture.
7. What if I should inherit money within six months of bankruptcy?
If you inherit money within six months after filing for
bankruptcy, then this money may belong to the bankruptcy estate for
the benefit of your creditors. If you feel that this is a
possibility, then you should advise this office. We may advise you
to be “written out” of a Will for the present time. Other than
by inheritance, if you acquire money through virtually any source
the day after your petition is filed, this money should be yours to
keep.
8. Will my federal income taxes be discharged in bankruptcy?
Federal taxes are generally not dischargeable. However,
if your 1040 income tax return was filed on a timely basis and was
otherwise not fraudulently filed, then your income taxes may be
discharged if they have become due and payable at least three years
prior to the time that we file your petition in bankruptcy and if
the taxes were assessed by the Internal Revenue Service for at least
240 days prior to the date of the filing. This is an extremely
complex area of law and we can advise you better after your case is
fully reviewed. If you had employees, then 941 taxes (tax
withholding for employees) are never dischargeable nor is any sales
tax discharged that is owed to the State of Florida. Penalties and
fines may also be assessed. However, generally, if the tax
itself is discharged, then the penalties and interest would also be
discharged.
9. Are student loans dischargeable?
Student loans are not dischargeable unless they cause an undue
hardship. "The Undue Hardship" standard is quite rigorous and is
rarely met.
10. What debts cannot be discharged?
Alimony, child support, certain taxes as mentioned previously as
well as debts based upon fraudulent acts are generally not
dischargeable. Other debts may not be discharged as well,
which could include debts arising from drunk driving offenses,
credit card charges owed to a single company that exceed $500.00 for
a luxury good or service used by you within 90 days before you file
for bankruptcy, or taking out a cash advance in excess of $750.00
within seventy days before you file for bankruptcy relief. If,
however, these charges or cash advances were for things reasonably
necessary for your support then they would not present a problem
with your discharge. If this is the case, then it may be
advisable to wait a short period of time before you file for
bankruptcy. Certainly, you should immediately cease
using your credit cards for anything after today since those debts
may not be discharged in bankruptcy.
Debts obtained through fraud or deceit may not be discharged in
bankruptcy. An example of an act which might not be dischargeable is
securing a credit card or a mortgage by lying about your income.
This is a complex area of law and these matters should be discussed
with me.
12. When I file bankruptcy, how many of my personal assets will I be
allowed to keep?
You can generally keep your homestead, whether it is a mobile home,
a condominium, or single- family home, as long as you pay any
mortgages that are outstanding including first or second mortgages.
The dollar amount of your homestead that you can keep is unlimited.
However, the acreage may vary. You may keep up to 160 acres of your
homestead if you reside outside of the city limits; however, if you
are within the city limits, then you would be limited to ½ acre. If
you have not lived in Florida for the last 1215 days then your
equity would be limited to $125,000.00 of value per person filing
for bankruptcy. In addition, each person filing would be able
to keep $1,000.00 of personal property.
13. How is this amount of $1,000.00 of personal property calculated?
Generally, you assign a fair market value to all of your property.
Please bear in mind that fair market value is generally not the
price that you paid for an item since, as soon as you purchase
something, it rapidly depreciates. Clothing almost always has no
value and most household items have an extremely limited value. We
will review your values with you. However, since we will not inspect
your assets, you alone would be responsible for arriving at the
values.
You may exempt and therefore keep one motor vehicle per individual
filing for bankruptcy valued at up to $1000.00 per vehicle.
Many people have leased their vehicles and leased vehicles would be
exempt. In addition, if you owe more on your vehicle than what
it would bring at sale or if you have no more than $1,000.00 of
value in your vehicle over and above what is owed on the vehicle
loan, then you could keep that vehicle. In addition, there are
other ways for you to keep your vehicle and we can discuss these
when we discuss your case.
15. Will the Trustee come to my home to inspect my property?
The Trustee may very well come to your home, however, the trustee
would call and make an appointment. In addition, when the
trustee arrives do not be concerned that his vehicle will have a
sign on it that says “Bankruptcy Trustee’s Office”. This does
not happen and the trustee is not interested in causing you any
embarrassment or undue hardship. The trustee will not open
closed boxes or go through your drawers. Instead, they will
simply take photographs of the furniture and try to assess the value
of your furniture. The trustee would basically consider what
your property would bring at an auction or garage sale. These
values are low and I very seldom have clients lose any personal
property. Instead, if their property exceeds their $1,000.00
allowance, then we make arrangements to repay to the trustee the
value of this property over a six month period.
16. What other items can I keep?
You should be able to keep Individual Retirement Accounts (IRAs).
However, they are limited to $1,000,000.00 in value. In
addition, you should be able to keep life insurance policies
including cash surrender values, annuities and worker's compensation
claims. You generally cannot keep any proceeds from personal injury
claims or class actions suits which are pending before you file.
17. Is there life after bankruptcy?
There is life and, in fact, perhaps a far better life. Bill
collectors will not plague you, your wages will not be garnished,
and lawsuits cannot be filed against you. In most cases, no one will
know that you filed bankruptcy. However this will be reported on
your credit bureau report. The time that it takes to re-establish
credit will vary. You will find that because you will no longer have
many debts and cannot file bankruptcy again for eight years, you may
very well be in a better position to borrow money than will many of
your friends. In most cases, you will be able to refinance your home
or purchase another after discharge for approximately one to two
percentage points over the standard conventional rate. At the
two year mark after your discharge you should be able to obtain the
lowest conventional mortgage rate available to anyone. Indeed,
most of our clients are flooded with applications for secured credit
cards immediately after filing and they find, after use of secured
credit cards with a prompt payment history, that these secured
credit cards will be converted to traditional unsecured credit
cards. Having said that, I do not advocate the use of credit
cards if the charges are not paid in full every month. If you
continue to run a balance, then unfortunately you may be back to
file for bankruptcy protection.
No. These companies are routinely investigated by state and federal
authorities for misleading and fraudulent acts and, in fact, they
can do nothing more than what you can do for yourself. You are
allowed to write to the credit bureau and advise it as to why you
had to file bankruptcy as well as any other factors that would
induce a loan company to give you credit. This letter would be sent
to any company running a credit check on you and they could consider
it. Unfortunately, there is little else that you can do. Again, even
though the fact that you filed bankruptcy within the last ten years
would be indicated on your credit bureau report, this alone should
not prevent you from obtaining credit again within several years
after you have filed bankruptcy.