If you are in business for yourself, you face challenges of different kinds compared to a wage earner. Under today’s economic recession, going into business for yourself is especially challenging as the possibility of failure is high. If you encounter crippling financial debts, you may file for bankruptcy just like wage earners do. But there are some things you need to do differently.
To file for bankruptcy, you need to furnish the bankruptcy court with proof of income and meet specific income requirements for the chapter you wish to file (the types of bankruptcy follows the chapters in the bankruptcy code). Generally, individuals file for either Chapter 7 or Chapter 13 bankruptcy. Under Chapter 7 bankruptcy, you liquidate your non-exempt assets to pay off your debts while under Chapter 13 bankruptcy, you pay off your debts through a payment plan set by the court of between 3 to 5 years.
Wage earners can use documents such as their recent pay slips, W-2 or tax information to show proof of income. But if you are a sole proprietor or self-employed, you need to provide some documentation to show how much you have earned. Documents such as your bank statements, a profit and loss account or balance sheet and income tax information should suffice. Be prepared with at least 6 months’ worth of income information to present when filing for bankruptcy.
To determine which chapter of bankruptcy to file you need to look at your income statements. If you do not have records of your income in order, then filing for bankruptcy can be difficult.
If you are self-employed and are considering filing for bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Apr 20th, 2012. Comment. 
Many people are reluctant to file a bankruptcy petition even though they are drowning in debts because of various reasons connected to the social stigma of being declared a bankrupt. However, there are other obstacles that may hinder you from seeking bankruptcy protection. Here are three common ones that may sound familiar to you.
Unrealistic Expectations
You may be hoping for a windfall in terms of a raise in salary, inheriting a fortune or winning the lottery to bail you out of your debts. But so are thousands of other people. In reality, in today’s economic recession, you would be more likely to get hit by a truck on a desert road than for a substantial amount of cash to suddenly fall on your lap.
So be realistic. If things keep going the way it has been for the last 12 months, would you be able to repay your debts by any significant amount? One good gauge is whether you have been paying only the minimum amount on your credit cards each month. We all know that if your credit cards are maxed out and you only pay the minimum amounts, it would be only a matter of time when you exceed your credit balance due to the high interest rates charged by credit card companies even if you do not make any new expenses.
Under such circumstances, it would be more practical to file for bankruptcy rather than wait for a financial windfall.
Personal morality
You may feel obligated morally to repay all your debts by yourself. This personal burden is a common obstacle to filing for bankruptcy. So you resist filing for bankruptcy because you feel morally obliged to pay off all your debts even if it takes forever. But this would mean never ever feeling debt free and forever living under a burden of debt. Why should you continue living this way?
It would be more sensible to file for bankruptcy. Filing for bankruptcy does not make you a dishonest or irresponsible person. It just means that life has taken a turn for the worse for you and you need to appropriate the provisions of the law (in this case, the bankruptcy code) to free yourself from insurmountable debt. So you shouldn’t feel bad if you have to file for bankruptcy. On the contrary, filing for bankruptcy means you are facing up to the truth and taking responsibility by doing something once and for all to overcome your debts.
Advice from creditors
Your creditors like your banker would naturally discourage you from filing a bankruptcy petition. But who are they to decide your financial future? They are not the ones responsible for you or your family. So they have little to lose if you continue to struggle under your present debt load.
Therefore, do not heed the advice of these ones with vested interests. For an honest review of your financial situation and a free non-obligatory discussion on bankruptcy, call us at (813) 200 4133.
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Filed under Chapter 7 (Tampa) by on Mar 7th, 2012. Comment.
Bankruptcy is a provision in the bankruptcy code that allows the bankruptcy court the right to declare your personal debts (or business debts) resolved either through liquidation of your assets or gradual payment via a payment plan. With the prolonged economic recession more and more people are contemplating filing for bankruptcy to overcome their tremendous financial debts. For most people, a bankruptcy filing would be a once-in-a-lifetime experience as you would not want to have to do it multiple times. In view of that, if you are contemplating filing for bankruptcy, it would be natural to have some questions about the process. Here are some of the most common questions about bankruptcy.
Can bankruptcy relieve me of all my debts?
Most of your debts can be resolved either through payment from the sale of assets or payment plan, but some debts cannot. Some examples are child support and certain tax debts.
What are the types of bankruptcies that apply to individuals?
The bankruptcies that apply to individuals are Chapter 7 and Chapter 13 bankruptcies (named according to the sections of the bankruptcy code that govern them).
What are the differences between Chapter 7 and Chapter 13 bankruptcies?
Chapter 7 bankruptcy is known as liquidation bankruptcy and it is where the court orders you to liquidate your non-exempt assets to pay of as much of your debts as possible. The remaining debts after liquidation are forgiven. Chapter 13 bankruptcy is known as the wage earners’ bankruptcy and is technically a court-ordered payment plan where you get to keep your assets but repay your debts over a period of up to 5 years.
What effect will filing for bankruptcy have on my credit rating?
Your credit rating will show that you have filed for bankruptcy before and such a rating will be on your record for between 7 to 10 years. However, this does not mean that you would not be able to obtain credit. If you keep up your payments promptly, you will repair your credit rating and will be able to obtain credit in due course, often even before the expiry of 7 years.
Which type of bankruptcy should I file for?
There are certain prerequisites you have to fulfill in order to qualify for each type of bankruptcy. So which type to file for would depend on your personal financial situation. Generally, the prerequisite to be eligible for Chapter 7 bankruptcy is more stringent than Chapter 13. The best thing to do would be to discuss your situation with an experienced bankruptcy attorney. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Feb 13th, 2012. Comment.
With the prolonged economic recession, many people are burdened with debt. As lay-offs continue among big and small companies, people face an increased possibility of losing their jobs. Higher interest rates, salary cuts and job retrenchments exacerbate the debt problem. Filing for bankruptcy is usually the last resort in solving the debt crisis. But before taking that step, there may be other things you can do.
First, review all your expenses, not just the major fixed expenses like mortgage and lease payments but also the minor, incidental expenses like your morning cup of coffee, your massage sessions or pedicures. These may be small and irregular but when you add them up, they come up to quite a sizable amount of money.
Next do something about your credit card debts. The most obvious thing to do would be to spend less on credit and keep up with at least the minimum payments due each month. Also, most people have more than one card. Consider transferring part of your balance from the card with the higher interest rate to the other one with the lower interest rate.
Finally, do not hesitate to negotiate with your creditors for a lower interest rate or extended payment period, both of which would reduce your monthly expenses and ease your debt situation. Here’s a tip – when you mention that you are likely to file for bankruptcy, some creditors may be more willing to reduce their interest rates or give you more favorable terms because they would want to avoid having their debt discharged in bankruptcy.
Now assuming you have taken every step you possibly could to alleviate as much of your debt problem and still find yourself mired in insurmountable debt then it is time to consider filing for bankruptcy. The question then is when you should do so. Every person’s situation is different so it pays to consult a bankruptcy lawyer to decide when the best time would be.
For example, if you have charged a lot of expenses to your credit cards recently, it may not be a good time to file for bankruptcy just yet. This is because the bankruptcy trustee might decide that your recent credit card debts are exempt from discharge which means you have to pay them in full. The worst outcome is the bankruptcy trustee dismisses your case if you have racked up your credit card debts just so that they can be discharged by the bankruptcy. Likewise, if you expect your debts to pile up soon, it might not be the best time to file for bankruptcy.
You can discuss all this with an experienced bankruptcy lawyer who will help you save money and discharge as much of your debt as possible through bankruptcy. Call us at (813) 200 4133 for a free consultation on how bankruptcy can benefit you.
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Filed under Chapter 7 (Tampa) by on Dec 30th, 2011. Comment.
Is a Deed in Lieu of Foreclosure for You?
Foreclosures are rampant these days due to the economic recession. If you have defaulted on your mortgage and foreclosure seems inevitable, is there any option left? Yes, there is. You can file for a Deed in Lieu of Foreclosure (DILF). A DILF means you voluntarily surrender your property back to the lender and vacate the premises. This will save you the hassle of going through the foreclosure process and might be less detrimental to your credit score.
A DILF is usually initiated by the borrower. The lender may or may not agree to the DILF. A lender may reject a DILF proposal because accepting it might entail giving up on certain rights under a foreclosure like mortgage insurance claims. On the other hand, going ahead with the foreclosure would inevitably incur foreclosure expenses and may run the risk of property damage in the process of foreclosure. So these factors might cause the lender to agree to a DILF.
In any case, before agreeing to a DILF, the lender will ask the borrower to arrange and pay for an appraisal of the property and perform a title search. The search is to see if any other interested party has placed a lien on the property. In some situations, the lender may set aside the DILF if it discovers later that there were other liens against the property because the lender may not be interested in a DILF if the property lacks equity.
For the borrower, there are also pros and cons in a DILF. The pros are that you will not have to endure the embarrassment of a foreclosure. It is also usually a quick and straightforward process that does not entail lots of negotiation, unlike a short sale or loan modification. You could be over and done with your mortgage through a DILF in a matter of weeks.
On the other hand, although in theory your credit score should not be as adversely affected in a DILF as in a foreclosure, there is no guarantee. This is because when a DILF is granted, the borrower has already defaulted on the mortgage, which causes some credit damage. But unlike a foreclosure, a DILF should not affect your credit score that badly because the mortgage debt is resolved much faster with less missed payments.
The other con is that under a DILF, you the borrower would forfeit all your rights to the property, including whatever surplus there may be in the sale of it. In a foreclosure situation, if the property is sold at a price that is much higher than the amount of loan outstanding, the borrower may receive a portion of the sale price, something you would not enjoy if you go the route of a DILF.
Finally, a DILF would also require that the borrower pay the deficiency balance on the property, or the difference between the loan balance on the property and what the lender sold the property for. The lender has the right to waive the deficiency balance requirement and may choose to do so. But then you the borrower would have to pay taxes on the deficiency forgiveness.
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Filed under Chapter 7 (Tampa) by on Dec 13th, 2011. Comment.
