How Chapter 13 Bankruptcy Works

Most individuals who file for bankruptcy protection would do so under Chapter 13 bankruptcy instead of Chapter 7 because of the means test that limits the number of those who are eligible to file for Chapter 7. Chapter 13 bankruptcy is also known as the wage earner’s bankruptcy. Chapter 13 bankruptcy requires you to meet income requirements, too but not pass a means test. You would also need to attend compulsory credit counseling and complete the necessary documents. If you are considering filing for Chapter 13 bankruptcy, read on and discover what you need to do once your petition is granted.

Chapter 13 bankruptcy is where the bankruptcy court draws up a repayment schedule for you to pay off all your debts over a period of time up to 5 years. The bankruptcy court will appoint a bankruptcy trustee who will oversee your case during your repayment period. Your bankruptcy trustee is also the one to whom you repay your debts and he or she will send your payments to your creditors.

Your creditors will be given their respective priorities in receiving payments. Every month, you are to pay off your debts according to the priorities. High priority debts will include your ex-spouse and children who are owed alimony and child support, the IRS who are owed any back taxes and any employee benefit fund to which you are a contributor.

The amount you pay will depend on what creditors are entitled to. Secured debts would normally be paid in full while unsecured debts may be paid in full or in part depending on whether or not you have disposable income to pay toward them, the length of your bankruptcy and the value of nonexempt debt. So some creditors will be paid the entire debt they are owed while other creditors may be paid a smaller percentage or nothing at all.

The main advantage of Chapter 13 bankruptcy over Chapter 7 is that in Chapter 13 bankruptcy you get to keep your assets provided you keep to your repayment plan. All mortgage debts and car loans will be included in your list of debts so you will be paying them off while getting to keep your property and your vehicles.

Finally, the term of your Chapter 13 bankruptcy is dependent upon your income. If you have any questions or would like to file a bankruptcy petition (Chapter 13 or Chapter 7) call us at (813) 200 4133 for a free consultation.

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    How Chapter 7 Bankruptcy Works

    Chapter 7 bankruptcy gives you a chance to wipe your financial slate clean by eliminating your debts and starting afresh financially. Your debts will either be paid off or are discharged. If you desire to file a Chapter 7 bankruptcy petition, you need to read on to discover how it works.

    In order to qualify for a Chapter 7 bankruptcy filing, you need to fulfill certain income requirements. Your income must be below the average household income that is determined by your state. This is called the means test. If you pass the means test, you also would be required to take compulsory credit counseling classes and pay the filing fee.
    When filing your Chapter 7 bankruptcy, you must list all your assets and liabilities. The record of all your assets and liabilities is lodged in documents at the bankruptcy court. The bankruptcy court will appoint a bankruptcy trustee who will oversee the repayments of your listed debts. Your bankruptcy trustee will notify your creditors that you have filed for Chapter 7 bankruptcy and call for a meeting of creditors. Most of the time, creditors do not attend the meeting but you will be asked questions about your finances under oath. Then the trustee will draw up a report about your financial situation and file it with the bankruptcy court. Creditors have about 60 days to object but most times, there would be no objections if all the information you have given are accurate.

    Once the 60 days are up, your bankruptcy trustee will take steps to pay off your debts. In order to do so, your bankruptcy trustee will arrange for your non-exempt assets to be sold in order to raise the funds to pay your debts. When all your non-exempt assets have been liquidated to pay off your debts, any other unsecured debts remaining will be discharged. Unsecured debt that may qualify to be discharged includes medical bills and credit cards.
    Finally, in order to receive the discharge of your remaining debts, you will have to complete a financial management course. Once these are all done, you will successfully exit Chapter 7 bankruptcy.


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      Where to File Bankruptcy if Relocating to Another State

      Each state in the US has its own regulations that pertain to bankruptcy. Each state has its own median income that determines the means test, each state has different criteria for eligibility to file for bankruptcy, state regulators vary in the way they handle bankruptcy cases in each respective state. So if you are going to move to another state, you should consider a few factors that may help you decide which state to file bankruptcy in.

      The time when you are to move will be a deciding factor. Some states have a minimum period of time you should be a resident there to qualify you to file for bankruptcy. It is likely that the state you have lived in the longest will be the state that allows you to file for bankruptcy.

      The types of exemptions each state gives you will also be a deciding factor. Obviously, you would choose the state where you qualify for more exemptions. One of the exemptions you should check out is the types of personal assets that are protected in bankruptcy.

      Another deciding factor would be the state’s credit counseling requirements. You have to attend credit counseling no matter which state you file bankruptcy in, but states vary in their regulations on when and how you are to sign up for credit counseling. So choose the state where the credit counseling requirements are the most suitable for you.

      Finally, check out the median income for the state you are moving to. Your median income is what you earned in the last 6 months to a year and this determines if you will pass the means test in your state. Each state has its own median income level on which they base the means test. If you wish to file for Chapter 7 bankruptcy, you have to do it in the state where your mean level of income is lower than the median income for that particular state. If you do not pass the means test, then you can only file for Chapter 13 bankruptcy, not Chapter 7.

      These are some of the factors you should consider when deciding which state to file bankruptcy. If you need more information, call us at (813) 200 4133 for a free consultation.

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        What Causes Bankruptcy and How to Avoid Them

        No one likes to be a bankrupt. Although bankruptcy protection is one way the law provides for you to resolve your debt problem, it is nevertheless not something people readily go into for obvious reasons. So if you can prevent bankruptcy and remain financially solvent it would be far better than having to seek bankruptcy protection to overcome financial problems.

        In my experience as a bankruptcy attorney, I have come across countless individuals who have had to file for bankruptcy because they ran out of options to resolve their problem of debts. And I have noticed that a majority of people who file for bankruptcy got themselves into debt because of certain financial moves they made that went awry. Let me share some of the reasons people have to file for bankruptcy and how to avoid them.

        One major cause for filing for bankruptcy is buying a property at too high a price. While everyone would like to own a home, it is vitally important to buy one that is affordable and suitable. If you overcommit yourself to a property that is overpriced, it could spell financial problems for you down the road. Another reason closely linked to that is buying more properties than is needed. Some people want to buy property for investment purposes but doing so carries risk. If your property devalues or cannot fetch enough rental income then you will be saddled with the debt.

        Another major cause for filing for bankruptcy is spending too much on credit. Credit spending is dangerous because you do not feel the pinch in terms of cash flow. But you must always remember spending money on credit means spending borrowed money. And just like you would not borrow money you cannot repay, you should not spend on credit more than you can afford to pay off every month. The habit of paying only the minimum amount on your credit cards each month will someday catch up with you and result in a default in your credit card.

        Finally, who does not experience unexpected financial setbacks once in a while? We all do and it is only a matter of degree that spells the difference between financial survival and financial disaster. In light of unexpected financial setbacks like sudden high medical bills or a job lay off, one should always have enough cash for contingencies. So a lack of such emergency funds is another major cause for bankruptcy filings.

        To avoid declaring bankruptcy, you should avoid the above matters if you can help it. But if you are already in these problems, bankruptcy can help. That’s where I come in, as a bankruptcy attorney. Call us at (813) 200 4133 for a free consultation on how bankruptcy can help you overcome debt and start afresh financially.

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          The Means Test Eligibility for Bankruptcy

          There are two types of bankruptcy open to most individuals – Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is also known as liquidation bankruptcy where your non-exempt assets are liquidated to pay off your debts. Once all such assets have been liquidated, your remaining debts are forgiven. This makes Chapter 7 bankruptcy quite appealing. In view of that, the law states that not everyone is eligible for Chapter 7 bankruptcy. Those who do not qualify for Chapter 7 bankruptcy will have to file for Chapter 13 bankruptcy instead.

          What determines eligibility for Chapter 7 bankruptcy is the means test. The means test is a way to determine if your average household income is below the average set by your state. In addition, other factors such as average household expenses are also taken into consideration. This means even if your income is relatively high, you might still qualify to file for Chapter 7 bankruptcy if your average expenses are high, for example a high mortgage payment.

          The means test also determines how much disposable income you have on average per month. This amount is the portion of your income after deducting usual expenses and is what will be used to pay off outstanding debts. If you have disposable income above a certain amount, the bankruptcy court will not grant you a Chapter 7 bankruptcy filing. In such a case, you can file for Chapter 13 instead. The average household income is set by the state government.
          Other factors such as your family size, the amount you spend on necessities are also taken into consideration when determining if you are eligible for Chapter 7 bankruptcy. So the means test is to determine only those who genuinely need it can file for Chapter 7 bankruptcy at the same time eliminate abuse of the system by those who want to use it as a means to shirk their responsibility to repay their debts.

          If you do not qualify for Chapter 7 bankruptcy, you may consider Chapter 13 bankruptcy instead. Chapter 13 bankruptcy is known as the wage earner’s bankruptcy. It basically entails repaying your debt according to a payment plan for up to 5 years as set by the bankruptcy court. Although your debts are not forgiven under Chapter 13, the plus side to this is that you do not lose any of your assets.

          If you are considering filing for bankruptcy to rid yourself of your crippling debts, or want to have more information on the types of bankruptcy open to you, call us at (813) 200 4133 for a free consultation.

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            Fight Foreclosure with Bankruptc

            Here’s a fact that few people realize – Bankruptcy is your friend. Seriously. Bankruptcy is your right under the law. The bankruptcy code gives you the option of filing for bankruptcy protection and have your debts restructured and made more affordable or even written off completely after you have made all the debt payments you could. Hence, bankruptcy is actually your weapon against financial problems like foreclosure.

            Foreclosure is the procedure where your lender takes over the right to liquidate your property in order to pay off the amount you owe them under your mortgage. Your lender will exercise their rights to foreclose your property once you fail to make at least 2 consecutive monthly payments to service your loan. But you can file for bankruptcy which can prevent your lender from foreclosing and liquidating your property.

            But despite this, you should not file for bankruptcy merely to absolve yourself from your financial obligations to your lender. That is not the purpose of bankruptcy. Bankruptcy is to help genuine debtors get over their financial problems and start afresh. Therefore, before filing for bankruptcy, you should approach your lender within 90 days of missing your mortgage payment and discuss other options like a new, more affordable repayment plan. The 90 day time limit is the amount of time you have before your lender files to foreclose your property. Most lenders would gladly help you keep up your payments even though they have to alter your repayment plan. The expenses to them for doing so is often lower than the expenses and inconvenience in foreclosing your property.

            But if you have a lender that is unwilling to help you continue your mortgage payments under a different plan, you should consider filing for bankruptcy protection. The best plan for bankruptcy that would stop foreclosure and allow you to keep your property is Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, you get to keep your property while repaying your debts according to an affordable repayment plan set by the bankruptcy court that may stretch over several years.

            Once you file for bankruptcy, an automatic stay on creditors collection efforts come into being. This means all creditors (including your mortgage lender) are prohibited from making any more collection efforts. Should any creditor approach you after you have filed your bankruptcy petition, refer them to your bankruptcy attorney. If you do not have your own bankruptcy attorney, call us at (813) 200 4133 for a free consultation and we will help you do what is best to overcome your financial problems.


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              Bankruptcy Alternatives

              Filing for bankruptcy is your right under the law. But it is nevertheless a step that should be taken only after careful consideration and consultation with a bankruptcy attorney. So while you consider bankruptcy, you should also look into these bankruptcy alternatives at the same time.

              Your first commonsense thing to do is to discuss your debt problem with your creditors. Most creditors would rather help you meet your obligations to them rather than see you file for bankruptcy protection. Bankruptcy protection means an automatic stay in which they as creditors cannot make any collection efforts against you at all. In view of this, many creditors are more than willing to work out a plan to help you pay off the debt you owe them. This might be formulating a payment plan, extending your loan term, exempting you from repayment for a few months or reducing your interest rates. So the first alternative to bankruptcy is to discuss how to clear your debts with your creditors.

              Another alternative to bankruptcy is to consolidate all your loans into one. Some financial institutions grant consolidation loans. This would save you from having to deal with multiple creditors and give you the convenience of dealing with only one. But you should only take up this alternative to bankruptcy if you can find a consolidation loan that helps you save money on your loans. So you should examine the terms and conditions of the consolidation loan before you decide to take it up. If the terms and conditions of this loan are worse than your other individual loans, then it is pointless to consolidate them.

              A third alternative would be to raise money from personal or unofficial channels. For most people, this entails borrowing money from family or friends who would not charge you interest or be too demanding on you. So if you have some rich friends who owe you a favor or a wealthy relative you who cannot bear to see you struggle financially, then you should talk to them about your debt problems.

              One thing you should not do is to take up a loan to pay off existing loans, unless the new loan has much more favorable terms or rates. You should cut your losses, not get into more debt with anyone.
              If all these alternatives are not suitable for you, then the most viable option would be to exercise your right under the law to file a bankruptcy petition. In that case, you should hire a bankruptcy attorney who will advise you through the whole process.

              Call us at (813) 200 4133 for a free consultation on how bankruptcy can give you a fresh start financially by ridding you of all your debt problems.

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                How to Avoid Getting Fleeced by Credit Card Issuers after Bankruptcy

                When you exit bankruptcy, life is supposed to return to “normal” minus the stress of insurmountable debts. And for most people in the 21st century, “normal” life entails living with credit. But would credit card issuers do business with a discharged bankrupt? You might be surprised but the answer is “Yes”. In fact there are many credit card companies that specialize in granting credit to people who have exited bankruptcy and are starting anew financially.

                But as you might guess, the interest rates charged to you would be higher than that for other customers because the credit card issuer assumes you pose a higher risk to them. This justifies their high interest rates, which can sometimes be rather exorbitant. Should you resign yourself to paying sky high interest rates for credit just because you have been declared a bankrupt before? Fortunately, the answer is “No”.

                So if you have been offered a credit card(s) but are being charged higher than usual interest rates, you need to know how to address this matter.

                The first thing you can do is look around for cheaper rates. One place you can look at is where you can get all sorts of advice on credit card usage, compare credit card companies and find credit cards for people with bad credit scores. Although you probably would not qualify for all the cards listed there, you could find one that suits your circumstances. If so, you could apply for a card and either transfer your existing balance to your new card and enjoy lower rates or cancel your existing card and just use your new one.

                If you are not interested in obtaining another card, your other option is to negotiate with your existing card issuer. Most credit card issuers would be open to discussing with you on terms that could lower your interest rate.
                If your credit card company is not willing to lower your interest rates, ask to convert your existing card to a secured credit card. A secured card is a card where your credit is backed up by a cash deposit as collateral. This type of credit card carries lower interest rates than unsecured cards but they are treated the same way as unsecured ones on your credit score.

                If you are considering filing for bankruptcy to overcome your debts, call us at (813) 200 4133 for a free consultation.

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                  Points to Consider Before Filing Bankruptcy

                  Is it possible to wipe out all your debts and live debt-free? Yes, it is. But this is somewhat of a pipe dream for 99.9% of people in the world. Yet if you are smart, you can have all your debts wiped out in a short length of time. How? Through filing for a bankruptcy petition.

                  If you are already sold on the idea of finally wiping your financial slate clean through bankruptcy, do not rush headlong into it so quickly even though I’m sure you cannot wait to end your ordeal of debt. You should consider the following matters first.

                  Where your debts come from

                  There are certain types of debt that cannot be discharged by bankruptcy so filing a bankruptcy petition would be of no use. If most of your debts are in the form of student loans, child support or alimony, tax debts then bankruptcy may not be the ideal solution as these debts are typically non-dischargeable by bankruptcy.

                  However, if your debts are mostly credit card debts, medical bills, mortgage debts and car loans, then it would make sense to file for bankruptcy because these debts can be discharged by a bankruptcy filing.

                  Which type of bankruptcy to file

                  For most individuals, the two types of bankruptcy that apply are Chapter 7 and Chapter 13 bankruptcy. There is another type of bankruptcy open to individuals called Chapter 11 bankruptcy but it is generally too expensive for most individuals and as such is only used for businesses.

                  The choice between Chapter 7 and Chapter 13 is crucial so that you can go through the bankruptcy process as smoothly and quickly as possible. Generally, you should weigh your income against your debts. If you are generally able to repay your debts in installments over a period of time with your present income, then Chapter 13 bankruptcy is suitable for you. Chapter 13 bankruptcy also allows you to keep your assets (they do not have to be liquidated to pay your debts) and generally has a shorter period where the bankruptcy stays on your credit record.

                  But if your debts are insurmountable compared to your income, then you should consider Chapter 7 bankruptcy. But in order to qualify for Chapter 7, you need to pass a means test. A means test is to determine if your household income is below the average income set by your state. If you pass the means test, then you are eligible for Chapter 7. In Chapter 7 bankruptcy, you do not have to repay all your debts. Those which you cannot repay will be forgiven. But the downside to Chapter 7 is that your non-exempt assets will have to be liquidated to pay off your debts. And your bankruptcy generally stays longer on your credit record than Chapter 13.

                  If you are considering filing for bankruptcy protection, call us at (813) 200 4133 for a free consultation.

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                    Identity Theft during Bankruptcy and How to Avoid It

                    No event in your life will uncover all your personal financial information the way bankruptcy does. By its very nature, bankruptcy entails you disclosing every asset and liability you have. Only then can the bankruptcy court administer your bankruptcy effectively. However, due to the high level of disclosure of such sensitive information, identity theft can very easily take place during and even after bankruptcy is filed. But the good news is that you can take some practical steps to avoid becoming a victim of identity theft because of bankruptcy.

                    Firstly, you should always have a copy of your credit score with you to see if any debts have been opened under your name without your knowledge or consent. Your credit score will show the debts under your name. Granted, if you file for Chapter 7 bankruptcy, these debts might very well be forgiven but still, you should know what debts are under your name and whether they are accurate. After all, if someone has racked up debts using your name, it is your assets that will be liquidated to pay off those debts. Obviously, you should not pay for these debts if you did not incur them.

                    Secondly, be careful to whom you divulge your financial information. Once you file for bankruptcy, technically you do not have to communicate with anyone other than the bankruptcy court and your bankruptcy lawyer. If any other party such as debt collectors approaches you, you can rightfully inform them you have filed for bankruptcy and tell them to contact your lawyer. If they ask you any questions about your finances, you are not obliged to answer them. By doing so, you reduce the chances of your personal financial details being leaked out to unauthorized persons.
                    Thirdly, you might want to consider a credit monitoring service. Such services are normally available through your bank or credit card issuer and will monitor your credit standing.

                    And fourthly, after you exit bankruptcy, you might very well receive offers from credit card companies or other lenders. Be careful – some of these so-called credit providers may be scams out to obtain your identity through fraudulent means. You should only accept credit offers coming from reputable lenders who have worked with discharged bankrupts before.

                    Finally, take all common sense steps to avoid scams like email solicitations of your personal details. Phishing scams commonly use email to obtain your financial details. You should never divulge such information online.


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