How Chapter 13 Bankruptcy affects Debt and Assets

Under Chapter 13 bankruptcy, you are required to follow a court-ordered payment plan over 3 to 5 years to clear off your debts. During this period, you need to be very austere with your spending. There are several restrictions you must impose on how you spend your money. The bankruptcy trustee will make sure that as much of your income as possible goes towards repaying your debt each month. You have to live very frugally according to a pre-determined limit of expenditure for essential needs like food, transport and accommodation.

So long as you are still under bankruptcy protection, you are not allowed to accrue more debt without permission from the bankruptcy court. For example, you have to obtain permission from the bankruptcy court to take up a car loan if you wish to buy a new car. This is to ensure that your ability to keep to your payment plan under Chapter 13 is not adversely affected.
Likewise, you cannot change the number of assets you own without permission from the bankruptcy court. This means you cannot simply give away any asset you have to charity or transfer it to another individual (like a family member) as long as you are still under bankruptcy. In the same way, you cannot sell your home even if it is to raise funds to keep to your Chapter 13 payment obligation. In order to sell a home while in Chapter 13 bankruptcy, you again need to get the bankruptcy court’s approval.

What if you overlooked these restrictions and went ahead to do something you were not allowed to without permission of the bankruptcy court? In such cases, sometimes your bankruptcy attorney can help you get the court approval even after the action was taken. For more information about these Chapter 13 rules, call us at (813) 200 4133 for a free consultation.

 

Which Assets are Exempted in Bankruptcy?

If you have been following my blog for any length of time, you probably know that there are two types of bankruptcy that are available to individuals namely Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is liquidation bankruptcy where your assets are sold off (liquidated) to pay your creditors whereas Chapter 13 bankruptcy is workers bankruptcy where you utilize a major portion of your salary to pay your creditors under a payment plan lasting 3 to 5 years.

You would be glad to know that under both types of bankruptcies there are exempted assets i.e. assets that are protected from liquidation under Chapter 7 bankruptcy and assets that help you obtain affordable payment plans under Chapter 13. So what are these exempted assets?

There are different types of exemptions and they each provide property protection based on asset value. Some exemptions will protect the entire value of an asset or personal property. There is also what is called a wildcard exemption that can provide additional protection. The types of assets that are exempted will vary according to the state you live in. For example, in Florida the exempted assets include your primary home up to half an acre if your house is in a municipality area and 160 acres if it is located elsewhere. Another type of exempted asset under Florida state law is personal properties up to $1,000 in value. Personal properties can include assets like furniture, art and electronic items.

Florida law also permits you to exempt up to $1,000 worth of your motor vehicle if you are single. This amount increases for married filers applying for joint bankruptcy with their spouse. If you are the head of your household, your wages are exempted up to $750 per week in Florida.

In addition, there are also assets that are exempted under federal law and some states allow you to use both state and federal law exemptions at the same time but not in all states is this the case. For example, Florida does not permit both state and federal law exemptions to be used. These assets cannot be sold under Chapter 7 bankruptcy and under Chapter 13 they will be taken into consideration in determining your monthly payment amount.

For more information on this and other aspects of bankruptcy, call us at (813) 200 4133 for a free consultation.

Income of Spouse in Bankruptcy filing

One of the requirements in any bankruptcy filing is an income declaration. Your income will determine which type of bankruptcy you are eligible to file. If you are filing a joint bankruptcy petition with your spouse, it would be quite straightforward. Both your incomes need to be declared.

But if you are making a bankruptcy filing as an individual, you are still required to declare your spouse’s income. This is because you have to declare your whole household income. This applies to both types of bankruptcy, Chapter 7 and Chapter 13.

If you and your spouse live together in the same home, you would have to report the income of both you and your spouse so that it can be used for the means test which reviews eligibility of the individual spouse seeking protection under Chapter 7 bankruptcy.

On the other hand, if you file a Chapter 13 petition (assuming you do not earn below the means test level of income to qualify for Chapter 7), the income of your spouse is still needed to determine how much disposable income you may have. Disposable income is the amount of money you have left each month after paying necessary expenses. This information helps determine monthly payments for the repayment plan. In some cases, the income of the non-filing spouse could affect eligibility of Chapter 7, unless their income contributes more to household and living expenses.

Another consideration is the marital adjustment deduction. If you are married and filing for bankruptcy on your own without your spouse, you may qualify for a marital adjustment deduction. This depends on how much income your spouse contributes to the household income or if you have your own expenses you cover such as credit card debt, student loan debt, or other obligations in your own name.

For more information and to discuss how bankruptcy can help you eliminate your debts, call us at (813) 200 4133 for a free consultation.

Eliminating Tax Debt through Bankruptcy

Many people think that tax debt cannot be eliminated through bankruptcy. This is not entirely true. In some cases, you may be allowed to pay off your tax debt at a rate you can afford every month. This is beneficial to you because it gets the IRS off your back and you will not have to face wage garnishment, asset levies, property liens and other forms of nasty IRS collection efforts.

There are two types of bankruptcies you may file for namely Chapter 7 and Chapter 13 bankruptcy (named according to the chapters of the Bankruptcy Code). So under certain specific circumstances, your tax debt can be discharged or paid off by these two types of bankruptcy.

If you file a Chapter 7 bankruptcy, your tax debt is eligible for discharge if it is at least 3 years old, be accessed by the IRS within 240 days of filing for bankruptcy and are personal income taxes. You should also ensure that you are current with your tax filing. Under such circumstances, as long as tax fraud or evasion isn’t committed, you may be eligible to have the debt discharged.

If your case does not fit into the circumstances described above, you should file under Chapter 13 bankruptcy. In this case, your tax debt will be added to your other debts and a payment plan will be drawn up to clear all your debts (tax debt included) over a period of 3 to 5 years. During this period, you will have to be very austere with how you spend your money as the bankruptcy court will not allow you to have any luxuries, only enough for basic needs until all your debts are paid off. As long as you keep up with the repayment every month, the IRS will not hound you for money.

So if you have not been able to agree on a payment arrangement with the IRS on your own then you should file a chapter 13 bankruptcy petition. Once the amount of payment is set by the bankruptcy court, the IRS is obligated to accept the payment.
For more information and a free consultation on bankruptcy, call us at (813) 200 4133.

 

Reinstating Driver’s License through Bankruptcy

Did you know that bankruptcy can get your suspended driver’s license reinstated? Let me explain. If you owe money due to an outstanding debt related to a civil judgment, you may get your driver’s license suspended. Two common examples of such debt are owing child support and lack of insurance. So if your driver’s license is suspended due to such reasons and you are struggling to pay off your debts with creditors breathing down your neck, read on and I’ll show you how you can overcome such financial problems through filing a bankruptcy petition.

What you need to do is file a bankruptcy petition and in your filing, you must list the outstanding debt that got your driver’s license suspended. Most likely the debt is dischargeable under bankruptcy law. For example, debt owing to an individual or insurance company because of a minor accident or monetary damages in relation to a civil judgment or vehicle accident may be dischargeable. Debt from malicious injury or drinking under the influence of alcohol may be satisfied through a Chapter 13 repayment plan. As long as you make payments according to your plan you can get your licenses reinstated.

Once the petition is approved by the bankruptcy court, contact the DMV and show them your bankruptcy petition papers. Ask them if there are any other requirements you need to fulfill in order to get your driver’s license reinstated. Usually, reinstatement will be granted based on your bankruptcy petition. You may have to pay a reinstatement fee, though.
Bear in mind that if you file a chapter 13 bankruptcy, you need to keep up to date with your payments, otherwise your driver’s license may be suspended again.

So if you already have your driver’s license suspended or are about to be suspended, call us at (813) 200 4133 for a free consultation.

 

What Happens to Payday Loans in Bankruptcy

Payday loans are short term loans mostly taken by the lower income group of people to pay for immediate expenses.  The good thing is that payday loans are generally easy to obtain but the bad thing is that these loans usually accrue high interest rates.  Due to these high rates, you end up repaying more than just the original amount of the loan.  If you have outstanding payday loans, they may be eligible for discharge or be included in a repayment plan if you are considering bankruptcy.

So what happens to your outstanding payday loans when you file a bankruptcy petition?  It will be treated the same way as your other debts without collateral such as credit card debts.  As an individual, you would be filing either Chapter 7 or Chapter 13 bankruptcy.  In both cases, your payday loan will be discharged, meaning you would no longer be liable to repay it.

In Chapter 7 bankruptcy, your payday loan will be lumped together with all your other unsecured loans and your non-exempt assets will be used to pay off your debts through liquidation.  In Chapter 13 bankruptcy, the bankruptcy court approves a repayment plan to pay off your debts (including your payday loan) based on your income.  While you may be required to repay a portion of unsecured debt you include in your filing, the remaining that is unpaid will be discharged when the case is completed.  But if it can be proven that you took up the loan without any intention of repaying it, your payday loan may not be discharged.

In the first place, you should be aware of your borrower’s rights when engaging with payday loan lenders.  Some states have regulations in place that limit interest rates of the amount you borrow.  Call us at (813) 200 4133 for a free consultation on bankruptcy and how it can help you discharge your payday loans and other debts.

How to Plan for Bankruptcy

If you intend to file for bankruptcy protection, you should consider how you would do so.  You see, if you plan it right, you can save yourself a princely sum of money.  Planning ahead includes taking a number of important steps to ensure you complete the process faithfully to the best of your knowledge.  The two most important things to achieve in bankruptcy is firstly to have your case approved by the bankruptcy court and secondly to obtain a favorable outcome for your case.
In this regard, it’s important to receive information and guidance from a qualified bankruptcy lawyer.  Your lawyer will tell you the do’s and don’ts before filing your bankruptcy petition.  For example, you should not wantonly charge expenses to your credit card at least 12 months before you file for bankruptcy.  Likewise, you should not transfer any assets to another family member during that time period either.  These actions may be interpreted as bankruptcy fraud and could jeopardize your entire case.

Once your bankruptcy petition is successfully filed, your bankruptcy lawyer should advise you on the exemptions you may be entitled to.  Exemptions are assets that are protected from being sold off to pay your debts.  Typically, these are assets such as your primary residence and vehicle.  In some states, the location of the residence makes a difference.  For example, in Texas, your home of up to 10 acres can be exempted if it is situated in an urban area but if it is in a rural area, the exemption applies to a primary residence, including surrounding land, of up to 100 acres.

In view of this, one of the steps you might want to consider taking is living in a rural homestead to have more of your assets protected.  So if personal bankruptcy is something that you may consider in the years ahead, it may be wise to be prepared for every contingency and plan for how to best shield your assets.  Call us at (813) 200 4133 for a free consultation on how bankruptcy can protect your assets from your creditors.

Chapter 13 Bankruptcy and your Debts and Property

The debtor is required to repay all or a portion of his/her debt over the course of 3 to 5 years if he/she files for Chapter 13 bankruptcy. A debtor is prohibited from taking actions while in Chapter 13 bankruptcy. Listed below are the following actions to avoid:

– Without the approval of the bankruptcy court, you are not allowed to sell or to “get rid of” your property. For instance, if you own a car and decides that you want to give it away to charity, you will need to have the permission first of the bankruptcy court before you give it away when you have filed for Chapter 13 bankruptcy. Another example would be selling your home. You would still need to get the bankruptcy court’s approval before you try to sell it when you’re in Chapter 13 bankruptcy.

– Accruing more debt without about bankruptcy court approval. When you’re in Chapter 13 bankruptcy, you will have to keep in mind that you are not allowed to borrow money unless you get an approval of the bankruptcy court. For instance, you want to give away your old card and want to buy a new one, you would have to get the permission from bankruptcy court first before you could proceed with it.

If you mistakenly took an action in any of those stated above without the permission of the bankruptcy court, a bankruptcy attorney might come in handy as your attorney can help you get the court approval even after the fact. Contact a Florida Bankruptcy attorney today if you want to get more information about the rules of Chapter 13 bankruptcy.

Please call us at (813) 200 4133 to discuss (for free) if bankruptcy is suitable for you.

How to Lower Your Medical Bills

Every American should ever think about is paying expensive medical bills, whether they are anticipating medical debt or that they currently have medical debt or even if they aren’t thinking about it. In this country, the cost of medical care has skyrocketed that even those people who have insurance are noticing that it isn’t enough to protect them from astounding medical bills. Being proactive about cutting your medical bills is the best way to do it and begin the process before you even have to. Listed below are the following tips that can help you cut your medical bills.

Compare Costs and Care

Many of us believe that it is okay to pay for something that is expensive as long as it is for our healthcare because we think that we get what we pay for and because of that, most of us don’t want to get the bargain basement price. You do have to keep in mind that the more pricier the option is for you, the better it is for your health. Don’t just look at the cost of procedures but at the hospital’s complication and survival rates as well.

Outsource Your Tests

You don’t have to get your x-rays or other tests performed at the same clinic or hospital your doctor is affiliated with. You might want to check out other clinics or hospitals if they are offering the same services with a lesser cost. Free standing imaging centers do tend to be less expensive, so give them a shot.

Prescriptions

Eveyone should be looking into ways to cut costs in their prescriptions as there are so many ways to save on them. Initially, you might want to talk to your doctor and your pharmacist as each of them knows what drugs will work best for you and the cost of those drugs. You might also want to check into discount programs, generics, over the counter medications, even pharmaceutical sponsored programs.

Don’t let the healthcare industry dictate what you will pay for your medical bills and where you will get treatment, take charge of your life, your health and your finances.

If you want to discuss bankrutpcy, call us at (813) 200 4133 for a free consultation.

How Chapter 13 Bankruptcy can Help Home Owners

When it comes to dealing with foreclosure, Chapter 13 bankruptcy offers homeowners several options including a mortgage default or even a second or third mortgage. Chapter 13 is very popular among homeowners who needs help to abtain affortable mortgage payments that will give them the capability to keep their homes. You can help maintain your home through the help of Chapter 13.

Firstly, you can help save your home while you’re still repaying your debts when filing Chapter 13. The homeowners are allowed to restructure debt obligations when filing for this chapter including their mortgage; payments can be made during the duration of 3 to 5 years. Those late or even missed mortgage payments will be cured while those current mortgage payments are made.

Secondly, your second and third mortgages can be eliminated through Chapter 13. If you don’t have equity with your first mortgage to possibly cover your second or third then this may be the best option for you. There may not be enough equity to secure the value of the later mortgages if your home has dropped in value. The later mortgages may be decided to strip or may redefine them as an unsecured debt by the court, which will then be a less priority in a Chapter 13 case.

Thirdly, any foreclosure proceedings can be delyed or stopped through Chapter 13 bankruptcy. Any actions related to foreclosure can be halted by Chapter 13 through its automatic stay that goes into effect once you file this chapter. If your repayment plan includes provisions for curing your mortgage after being approved by the court, the mortgage lender won’t be able to enforce collection actions against you.

Finally, your mortgage modification may be granted. the court may modified certain mortgages especially if the mortgage amount is much greater than the value of the property. Also known as a mortgage cram down, there are exceptions to this option. This option may help you retain your property such as a farm, multiunit building or a mobile home.

Please call us at (813) 200 4133 to discuss (for free) if bankruptcy is suitable for you.