For most of us, a car is a necessity. Very few people can survive in an urban setting without a car in the 21st century. At the same time, most people own a car through obtaining a car loan. If you fall behind in your car loan repayments, the lender has a right to repossess the car. When you file for bankruptcy, that is what is likely to happen. The lender would demand the car back and sell it at an auction. If the proceeds of the auction is insufficient to cover the outstanding loan, the lender will initiate a lawsuit against you to recover the balance.

So is there a way to keep your car when you file for bankruptcy? Here are some things you can do.

When you file for Chapter 7 bankruptcy, you can “redeem” the car by paying the lender the value of the car and discharging the rest of the car loan in bankruptcy. On the other hand, if you file for a Chapter 13 bankruptcy, your car can also be “redeemed” if the car loan is more than 910 days old or if the loan was not used only for purchasing the loan (i.e. a rollover loan from a trade-in).

Furthermore, if you do not have enough money to pay the value of the car to the lender, you may take up a loan to do so even while in bankruptcy. This is good news if you have an upside down car loan (a situation in which the market value of the car is less than the outstanding car loan). You can file for bankruptcy and keep your car.

Another thing you can do to keep your car in bankruptcy is reaffirm your car loan with the lender. This means you confirm with the lender that despite filing for Chapter 7 bankruptcy, you will continue paying the car loan installments. And the lender agrees not to repossess your car as long as you maintain the car loan repayments during bankruptcy.

The only problem with reaffirming your car loan is that if you fall behind on your payments after your bankruptcy is discharged, the lender can still repossess the car and sue you for the balance of loan. in view of this, you should always discuss your reaffirmation agreement with a bankruptcy attorney before entering into one with your lender.

If you wish to file for bankruptcy or discuss matters about bankruptcy, call us at (813) 200 4133 for a free consultation.

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If you are a married couple thinking of filing a bankruptcy petition, there are some considerations you should bear in mind before doing so. You may opt either to file a petition jointly as a couple or separately as individuals. If that is the case, which is more advantageous? It usually depends on how your debts are structured.

If most of your debts are in joint names, it makes more sense to file a joint petition for bankruptcy protection. But if your debts are incurred separately, filing individually would make more sense, since your creditors would have accounts with your separately.

Another consideration you should think about is the type of bankruptcy to file under. If you file for a separate Chapter 7 bankruptcy, the filing may not protect your spouse from being contacted by creditors. Chapter 7 bankruptcy brings along an automatic stay on creditors that prevents them from contacting you for payment but it may not protect your non-filing spouse from creditor actions. On the other hand, filing for Chapter 13 bankruptcy may entail co-debtor protection while the petition is ongoing.

There are many types of debts that may be in joint names such as credit card debts. These debts can be cleared through a joint bankruptcy filing. A joint filing may also save you money since you will only be charged for one filing.

If you and your spouse are headed for a divorce, you may want to consider filing bankruptcy separately. This would help make things easier when it comes to distribution of assets and debts later. A bankruptcy filing may carry different implications depending on which state you reside in. If you file in a community property state, it is possible for bankruptcy laws to protect the non-filing spouse.

If you wish to discuss your financial situation and explore the possibility of bankruptcy as a way to wipe your slate clean of all your debts, call us at (813) 200 4133 for a free consultation.

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If you are under bankruptcy protection or considering filing a bankruptcy petition, you may be wondering how long the whole process would take. Well, the answer to that largely depends on which chapter of bankruptcy you file for. In addition, it usually also depend on the amount of debt you hold. Let’s look at the two applicable types of bankruptcy for individuals – Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is known as liquidation bankruptcy because you have to liquidate certain assets to pay off your debts. Chapter 7 bankruptcy normally takes between 4 to 6 months before all your qualified debts can be discharged if there are no objections filed by any of your creditors. The types of debts that are dischargeable under Chapter 7 are usually unsecured debts such as credit card debts or medical bills. If you have little or no source of income and few assets, it is advisable for you to file for Chapter 7 bankruptcy.

Under Chapter 7, you provide a list of all assets and debts to the bankruptcy court. A bankruptcy trustee (who is appointed by the bankruptcy court to administer your bankruptcy) will review your list of assets and liabilities. Then you bankruptcy trustee calls for a meeting with creditors. If everything goes smoothly, the whole process is normally over within 6 months.

Chapter 13 bankruptcy is also called the workers’ bankruptcy and it is basically a consolidation of your debts by the bankruptcy court. The court assigns you a bankruptcy trustee who draws up a payment plan to clear your debts within 3 to 5 years. Once the bankruptcy court approves of the plan, you start repaying your debts. The advantage of a Chapter 13 is that you do not have to liquidate any of your assets.

To comply with the payment plan, you would normally have to be employed or have a steady source of income. Don’t worry about whether you can fulfill your obligation to pay because the repayment amount would be set by the bankruptcy court in accordance with your level of income. In fact, it is not uncommon for the amount of payment on some of your debts (such as your car loan installments) to be reduced by the court.

Your bankruptcy trustee will also call for a meeting with creditors and then monitor your repayments during the period of your bankruptcy. As long as you keep up with your payments, things will go smoothly and you should exit bankruptcy after your debts have been paid up according to your repayment schedule.

Chapter 13 bankruptcy has helped many people pay off outstanding debt, retain personal property and discharge qualifying debt at the end of the payment period.

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If you wish to file for bankruptcy, there are two options for you as an individual. Both have their pros and cons and which is better suited for you depends on your circumstances. The two options are Chapter 7 and Chapter 13 bankruptcy.

In essence, Chapter 7 bankruptcy allows you to discharge certain debts that qualify even if you do not repay them. To the debtor, this is great but to the creditor, this sounds like a cop-out. Actually, it is not because there are stringent conditions to be met before this can be applied to any situation. In Chapter 7 bankruptcy, you non-exempt assets will be liquidated to pay off your debts. So this means you lose some of your assets. But don’t worry about losing the roof over your head. Generally, your principal residence is one of the exempted assets that will not be liquidated. Only after all your non-exempt assets have been liquidated will any further outstanding debt be considered for discharge. For more information about which assets are exempted and which are not, consult a bankruptcy attorney.

If you are thinking of filing for bankruptcy protection and have not engaged a bankruptcy attorney (or have engaged one but wish to change), call us at (813) 200 4133 for a free consultation.

Besides having to lose some of your assets, the other disadvantage of Chapter 7 bankruptcy is that you have to pass a means test in order to be eligible to make a petition. The means test is the average amount of income a household earns in your state. If you income is lower than the average income in your state, then you are eligible to make a Chapter 7 petition in your state. So if you are unemployed, you should seriously consider filing for Chapter 7 bankruptcy because you will pass the means test. If you do not pass the test, you will have to file for Chapter 13 bankruptcy instead.

On the other hand, the advantages of Chapter 13 are also many. Chapter 13 bankruptcy allows you to clear all your debts through a payment plan over 3 to 5 years. And the best thing about this is that none of your assets need to be liquidated, so you do not lose any of them.

Chapter 13 bankruptcy can help you cure missed mortgage payments, obtain modifications to your loan and remove any liens against second and third mortgages. All this can be done during the payment plan period set during the Chapter 13 filing. Also, you may be able to lower the amount of repayment you make on your vehicle payments under a Chapter 13 bankruptcy. If you have a qualifying vehicle, the principal loan amount along with the interest rate can be reduced. Furthermore, there are certain debts that are not dischargeable under Chapter 7 but are under Chapter 13 bankruptcy.

The final advantage I’d like to bring up for Chapter 13 bankruptcy is that you can file a Chapter 13 bankruptcy more often than you can for Chapter 7. Under both types of bankruptcy, there will be an automatic stay that comes into effect the moment your make your petition. This means your creditors are barred by the law from contacting you or harassing you for payment.

However, the clear disadvantage of Chapter 13 bankruptcy is that to be eligible, you have to have a steady source of income i.e. you have to be employed.

So in brief, if you are unemployed and do not mind losing some of your assets, you should file for Chapter 7 but if you are employed and wish to keep your assets, you should opt for Chapter 13 instead. Both have their advantages as listed above.

If you wish to discuss bankruptcy for your situation, call us at (813) 200 4133 for a free consultation.

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Credit and Financial Management Courses in Bankruptcy

As a prerequisite for filing for bankruptcy, you have to take up a course that gives you credit counseling. This applies to both Chapter 7 and Chapter 13 bankruptcy. Once you complete this credit counseling class, you would be allowed to file your bankruptcy petition. After filing for bankruptcy, there is another course that you are obligated to take. It is a course on financial management. This is a prerequisite for receiving your discharge through bankruptcy and must be taken within the first 45 days of filing for bankruptcy.

The purpose of the financial management course is threefold:

1. The enlighten you on the benefits of creating short-term and long-term financial goals
2. To guide you on how to draw up a budget
3. To give you practical instructions on how to balance a checkbook and reconcile bank statements

Both these courses are designed to improve your financial knowledge and skills and help you avoid having to file for another bankruptcy in future. There is usually a list of centers approved by the US government you can register with to take up these two courses. Consult your bankruptcy attorney on where and how you can take these two mandatory courses. Failing to take up the course on financial management would likely result in your bankruptcy case being closed.

After you file for bankruptcy, there are often many things to attend to and you may inadvertently forget to attend the financial management course by the 45 day deadline. If that happens, you should check with your bankruptcy attorney or trustee to find out if your case has been closed. If it has not, it is not too late to attend the course. You will be awarded a certificate upon successful completion of the course, which you need to file with the bankruptcy court.

However, if your bankruptcy case has been closed, you should appeal to the judge to reopen the case for the purpose of filing the Financial Management course certificate. Most judges would allow you to do so. But you do need to pay a fee to reopen your case, which is about $200. But this fee would be worth it if you can have your qualified debts discharged through bankruptcy.

If you wish to file for bankruptcy, call us at (813) 200 4133 for a free consultation. Bankruptcy is your right under the law and is a provision for you to have your qualified financial debts discharged, thereby enabling you to have a fresh start financially.

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Filing for bankruptcy should not be something you take lightly. Filing for bankruptcy will entail a lot of work and discipline, not to mention have an effect on your credit rating for a number of years. It may affect your financial dealings in future as you may find it more difficult to obtain credit after bankruptcy. But these factors should not dissuade you from filing for bankruptcy if you need to. If bankruptcy is a viable option for you, you should file a petition without hesitating. Millions of people have been helped by filing a bankruptcy petition. You can be one of them, too.

So the important thing is to determine if bankruptcy is a viable option for you. How do you tell?

1. Evaluate your debts
If your debts are increasing and it appears as though you would spend many years struggling to clear them, then you should seriously consider filing a bankruptcy petition. Bankruptcy is designed to wipe your slate clean and give you a fresh start financially. It is better to bite the bullet and go through the bankruptcy process and have a clean slate in a matter of months (or at most 5 years) than suffer decades of stress and heartache struggling under insurmountable financial debt.

2. Consider your credit score
Yes, bankruptcy does have an effect on your credit score, but so does not filing bankruptcy and missing monthly payments on your car loan, mortgage, credit card payments etc. So which is more damaging, being a discharged bankrupt and have your credit score repaired after bankruptcy or not being a bankrupt and having your credit rating plunge down the financial abyss?

3. Consider your sanity
Are you being hounded by creditors or debt collectors? You can put a stop to the incessant phone calls, notices of demand, lawyer’s letters, threats of lawsuits etc and reclaim your sanity by filing a bankruptcy petition. Once you file for bankruptcy, an automatic stay comes into immediate effect and your creditors are barred from contacting you or demanding for money.

4. Evaluate you financial habits
Do you consistently end up spending more than you earn? Do you suck at keeping to a budget? If so, filing bankruptcy would be beneficial to you as you would be obligated to attend credit counseling and financial management classes as a prerequisite to exiting bankruptcy. These lessons may well be the new start to your financial life that could put you on a firm footing to financial freedom in your future.

If any or all of these factors are applicable to you, then do consider filing for bankruptcy as it is a viable option for you. Call us now at (813) 200 4133 for a free consultation.

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Suppose you have filed for Chapter 13 bankruptcy but some change in circumstances (usually having to do with your finances) take place that make it difficult for you to continue with Chapter 13 bankruptcy. What do you do then?

Chapter 13 bankruptcy means you need to follow a payment plan to repay all your debts over a 3 to 5 year period of time. But if you lose your job, take a pay cut or have to reduce your work hours, you might not be able to keep to your payment plan. If such developments take place you may have no choice but convert your Chapter 13 bankruptcy to a Chapter 7 one.

Consult your bankruptcy trustee or bankruptcy attorney and discuss what to do. Converting from Chapter 13 to Chapter 7 is possible but it depends on whether you qualify. To qualify for Chapter 7 bankruptcy, you have to pass a means test which gives an idea of what disposable income you have left after taking care of pertinent expenses. To find out how much disposable income you have after essential expenses, an evaluation of your annual income is done to see if it exceeds the mean income level per household in your state. If you exceed it, then you may not qualify for Chapter 7 bankruptcy.

So if the circumstance precipitating your intended change from Chapter 13 to Chapter 7 is a loss of your job leaving you without income, then you should qualify for Chapter 7. But if you still hold a job but your income has reduced, then you need to see if you pass the means test based on your reduced income.

If you pass the means test and qualify to convert from Chapter 13 to Chapter 7 bankruptcy, you have to file a motion to convert your Chapter 13 case to Chapter 7. You do so by filing a notice of conversion with the bankruptcy court. Most motions to convert from Chapter 13 to Chapter 7 bankruptcy are not challenged by the bankruptcy court if all relevant information is presented and all necessary paperwork is done.

It is rather common to have changes in your financial situation. If this happens to you, you should consider converting your bankruptcy case as it may allow you to get certain debts discharged (meaning you do not have to pay them off).

If you wish to wish to file for bankruptcy protection or convert your bankruptcy case after filing your petition, call us at (813) 200 4133 for a free consultation.

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Once you file for bankruptcy protection, an automatic stay on all collection efforts by creditors comes into immediate effect. This gives you the opportunity to proceed with the bankruptcy process without disturbance or distraction from creditors. But there are a few exceptions to the automatic stay rule such as collection efforts arising from a criminal case, collection for child support, student loans and certain taxes. Automatic stay is also not applicable for debts you incur after filing for bankruptcy. Other than these, by and large all creditors must abide by the automatic stay rule and cease collection efforts during your bankruptcy.

What should you do if one or more creditors violate this rule? Now if the creditor(s) are not aware of your bankruptcy filing, then you should instruct your bankruptcy attorney or trustee to inform him or her of it. This should stop all forms of collection efforts by these creditors. If collection efforts still persist, you ought to inform the bankruptcy court.

The bankruptcy court will reprove the creditor(s) violating automatic stay with a court order and impose a fine on the creditor(s).

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Tax season has just ended and if you are expecting a refund while intending to file for bankruptcy (or already have done so), you may be wondering how your bankruptcy would affect your tax refund. It is common to receive a tax refund as most people withhold more than required from their salaries. And to the average taxpayer, the refund comes as handy spending money for essential expenses. But do you have to surrender your tax refund (or any portion of it) if you file for bankruptcy?

The answer depends on various factors such as the type of bankruptcy you file, when you file for bankruptcy compared to when you file your tax return. If you have not filed for bankruptcy yet you may consider spending your tax refund before filing, then the problem of how the bankruptcy would affect your tax refund would not arise. For example, you could use it to contribute toward a retirement account or pay the pre-bankruptcy filing fees.

Also, if you have not filed for bankruptcy yet, you may want to adjust your withholding so as to keep your refund to a minimum and have more take home pay. When you do file for bankruptcy, you may be required to present tax information along with your income. So if you have already adjusted your withholding, you can declare a minimal tax refund amount.

If you have already filed for bankruptcy and you are expecting a tax refund, this refund is considered part of your bankruptcy estate. If the tax refund is minimal, the bankruptcy trustee may consider it not worthwhile to use it to pay unsecured creditors as it may not make significant difference to your debt amount.

Another scenario is if you owe tax debt. A tax debt is a priority debt meaning it has to be paid off before paying unsecured creditors. So your tax refund may be utilized to repay any tax debt you may have and the bankruptcy trustee will not administer the tax refund. You should discuss with your bankruptcy attorney on what to do if you have or are expecting a tax refund during bankruptcy.

If you need to discuss these or other matters with a bankruptcy attorney call us at (813) 200 4133 for a free consultation.

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The last thing you want after exiting bankruptcy is to get into financial problems again. You might think it is common sense that he who has recovered from drug addiction should not go back to taking drugs. But sometimes with financial matters, it is not so simple. It is well and good to say after exiting bankruptcy you should try not to borrow as far as possible and if you do, you should honor your debts. But there are some subtle traps you might make if you are not aware or careful enough after exiting bankruptcy.

Trap #1: Applying for too much credit
I have written in my previous articles that you should not shun credit after exiting bankruptcy and that many financial institutions are prepared to extend credit to you even though you are a discharged bankrupt. But this does not mean you should bite off more than you can chew. If you apply for too much credit, you may not be able to repay your debts and end up in financial problems again.

Furthermore, your primary concern after exiting bankruptcy is to repair your credit rating. You can only do that by responsible credit management. But having too many credit lines may jeopardize that. Financial institutions offering credit may charge high interest rates, exorbitant late fees or other forms of charges that may make it difficult for you to stay current in your monthly payments.

Trap #2: Applying for long-term loans
If you apply for loans with a term longer than 2 years, it does not augur well in repairing your credit rating. Let’s say you apply for a car loan. If you opt for a term of longer than 2 years, it signals to credit rating agencies that you are financially unable to support larger debt burdens. So my advice is to either make your purchases in cash or put down a substantial down payment to reduce the amount you borrow to a minimum.

Trap #3: Not finding the most competitive interest rates
Just because you been through bankruptcy before does not mean you have to accept high interest rates on loans or credit. You should shop around for the most competitive interest rates and the fairest terms in any loans you apply for.

If you want to apply for bankruptcy protection to overcome your debt problems, give us a call at (813) 200 4133 for a free consultation.

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