Bankruptcy

bankruptcy, chapter 13, fort lauderdale

Is your credit card debt getting beyond your control? Are creditors' harassing phone calls making you dread answering your telephone? A bankruptcy may allow you to eliminate most of all of your debt and stop creditor harassment.

Are you being sued for debts that you will never be able to repay? Is your home in foreclosure or your vehicle on the verge of repossession? A bankruptcy may allow you to stop creditor lawsuits and protect your home and property.

Please call The Law Offices of Elkins & Freedman for a free bankruptcy consultation. With offices in Broward, Palm Beach, Seminole, and Osceola Counties, our firm is dedicated to helping people in situations such as these.

What is bankruptcy?

Individuals and businesses who are having trouble paying their debts may consider filing for bankruptcy as a remedy for their situation. In the most general terms, a bankruptcy is a legal proceeding whereby an individual or married couple attempts to obtain a discharge, which will wipe out some or all of their debts, and at the same time protect their home, vehicle(s), personal property, and wages.

What is a discharge?

A discharge is a court order which releases you from personal liability for paying your unsecured debts (that is, those debts that are not specifically attached to your home, vehicle(s) or furnishings). This is typically granted once a bankruptcy case has been completed. Creditors are prohibited from attempting to collect on any debts that have been discharged through bankruptcy. This means that they cannot contact you, harass you, sue you, get a judgment against you or try to take any of your property (including wages) once their debt has been discharged. In fact, if a creditor attempts to do any of these things after being notified of your bankruptcy, they may be sanctioned (punished) by the Court.

Although most unsecured debts can be discharged through bankruptcy, some cannot. Some examples of these are as follows: most taxes; child support and alimony; student loans; court-ordered fines and criminal restitution penalties; debts obtained through fraud or deception; and intentional personal injury debts. Further, secured debts (that is, those debts that are specifically attached to your home, vehicle(s) or furnishings) can only be discharged if the property is surrendered to the specific creditor.

What are the most common types of bankruptcies?

The two most common types of bankruptcies that can be filed by individuals and small businesses are referred to as Chapter 7 and Chapter 13.

CHAPTER 7:

Chapter 7, which is the type that is most often filed, is often referred to as the "Fresh Start" or "Liquidation" bankruptcy. This type is used by individuals and companies (including corporations) who have relatively little in the way of personal property and little or no monthly disposable income (that is, income left over after all necessary monthly expenses have been paid). Chapter 7 is used to discharge debts such as credit cards, personal loans, medical bills, repossessions, and money judgment.

In return for having these debts discharged, the bankruptcy court puts a limit on the amount of property that you are entitled to keep. This property is referred to as exempt property. The most common type of exempt property are as follows:

In the majority of Chapter 7 cases, most, if not all, of your property will be protected under the above exemptions. However, in those cases that it is not, you may be required to turn over all non-exempt property to the bankruptcy court in order to be sold for the benefit of your creditors.

CHAPTER 13:

Chapter 13, which is also referred to as the "Personal Reorganization" bankruptcy, may be used by individuals and small businesses who have some monthly disposable income to potentially do any or all of the following (as needed):

You must put together a Chapter 13 Plan (normally with the help of an attorney) which makes a good faith proposal to do any or all of the above by making monthly payments over a period of three to five years (that is 36 to 60 months). If your plan is confirmed (approved) by the bankruptcy court and you make all of your payments as required, then your mortgage and other home-related debts will be reinstated, your IRS and secured personal property debts will be paid off, all remaining balances on your unsecured debts will be discharged, and you will not be forced to surrender any of your property.

Can a Chapter 13 Bankruptcy really help me save my home?

Yes. In fact, the most common use for a Chapter 13 Bankruptcy is to save a home that is currently in foreclosure. It is important to understand that you own your home up until the time that it is actually sold at a foreclosure sale (which occurs at the very end of a foreclosure lawsuit). This means that the property can be saved by filing a Chapter 13 Bankruptcy any time before the actual sale. The Chapter 13 Bankruptcy will then allow you to catch up on your arrearage (that is, the local amount that you are behind on your mortgage) by breaking it up into monthly payments divided over the length of your plan (that is, from 36 to 60 months). Even a very large arrearage can become manageable when it is broken up into many, much smaller, payments.