Chapter 7 bankruptcy is often referred to as "total" or "liquidation" type of bankruptcy, giving the impression that folks who file for Chapter 7 lose all of their property. This could not be further from the truth!

The vast majority of our clients who file for Chapter 7 do not lose any of their property!This is because when you file for bankrupcty, the bankruptcy laws give you various "exemptions" which we use to protect the personal property you wish to keep.

If you are not facing a foreclosure (and wanting to keep the home) or vehicle repossession (and wanting to get the car back) and simply have too many bills which are overwhelming you, then a Chapter 7 could be great option for you!

When you file a Chapter 7 bankruptcy in Dade County, Broward County or Palm Beach County, Florida, you can usually:

• keep any "secured" debts (i.e. home loans, car loans, furniture loans, jewelry loans, etc.) that you want to keep; and

• wipe out (i.e. discharge) most if not all of your "unsecured" debt (i.e. credit card debt, medical bills, personal loans, etc.). Debts which are discharged do not need to be repaid to any extent whatsoever!

However, if you are electing to keep any secured debts (home loans, car loans, etc.), you must keep making the payments on them of course.

Certain types of unsecured debts are not wiped out (discharged) in a Chapter 7. These are unsecured debts such as:

• back child support

• alimony

• certain governmental fine

• newer taxes (taxes that are 3 years old or less)

If you are:

• behind on your mortgage and/or facing foreclosure and want to keep your home; or

• have a vehicle that has recently been repossessed, or is about to be repossessed and you want to keep the vehicle; or

• due to your income, you do not qualify for a Chapter 7...but still have bills you can no longer keep up with

then a Chapter 13 bankruptcy could be an excellent option for you!

Chapter 13 bankruptcy is a repayment type of bankruptcy wherein you:

• keep any secured debt (home loans, car loans, etc.) that you want to keep; and

• repay any unsecured debt (credit cards, medical bills, personal loans, etc.) at a certain percentage...as payment in full!

• and very often this percentage could be as little as 1-2%!

Up until now, the banks have beentelling you how much you need to pay to keep your property. However, when you file a Chapter 13 bankruptcy, it enables you to tell the banks how you will repay their debt(s).

If you are facing foreclosure, because you are behind on your mortgage and cannot afford to pay to get it up to date, you can file a Chapter 13 and repay the back mortgage (i.e. mortgage "arrears") through your Chapter 13 plan. This is because in a Chapter 13, your mortgage arrears are spread out over the next 36-60 months. This gives you "room to breathe" and makes the mortgage payments affordable.

If you are facing a vehicle repossession, because you fell behind on your car payments, your filing a Chapter 13 enables you to keep the vehicle an

d pay off the vehicle loan balance over the next 36-60 months. This often times makes your payments much more affordable! However, if your vehicle has already been repossessed, then it is urgent that you contact us as soon as possible, as the law only affords you a limited time to get a vehicle back that has already been repossessed.

Another huge advantage with Chapter 13's is that they enable you to "cram down" certain secured debts (car loans, furniture loans, jewelry loans, etc.) that you want to keep. When you repay a secured debt by cramming it down in a Chapter 13, you are allowed to repay the debt by paying its fair market value vs. the balance you owe on the loan!

• For example - Joe owes $35,000.00 on a car loan he's had for 3 years. But Joe's car only has a fair market value of $20,000.00. So when Joe files his Chapter 13, he repays the car lender the $20,000.00 in full (over the next 36-60 months) and the remaining $15,000.00 of his car loan gets repaid as if it's an unsecured debt (just like his credit cards and medical bills are being repaid) and usually at 1-2% as payment in full!

If you owe back taxes and cannot afford the monthly payments the IRS is demanding, than a Chapter 13 could be an excellent option! This is because in a Chapter 13, you can often:

• spread out the payments on your "newer" taxes (i.e. 3 years old or less) over the next 36-60 months

• treat older taxes as "unsecured" and repay them a mere percentage...as payment in full!

If you are working, you should bring copies of your

most recent paystub

. If you are married, bring copies of both you and

your spouse's paystubs

. We need the paystubs to determine what deductions come out of your pay (for taxes, insurance, etc.) and to help us determine what types of bankruptcy are available to you.

While you do NOT need to bring in copies of all of your outstanding bills, it would be helpful if you would be able to tell us, in general, how much you owe in total on:

• outstanding credit card debt?

• outstanding medical bills?

• outstanding personal loans?

• taxes?

A "secured" debt is a debt where there is property that serves as "security" or "collateral" for the debt.

The property helps protect the lender because if you fail to make your payments on the loan, the lender can take the property back (i.e. foreclose on the home or repossess the vehicle)

"Unsecured" debts are debts such as:

• credit card debt

• medical bills

• personal loans

where there is no property put up as security/collateral for the debt. So there is nothing for a lender/creditor to take back if you fail to make your payments.

The first things I tell my clients is :

"Don't worry about determining how much equity you have in your property. That's our job, that's what you hired us to do."

"Let us worry about how much equity you have in your property and how to protect it."

The concept or definition of equity is quite simple. "Equity" is the value of your property - over and above any amount(s) that you owe on it.

Example:

• Joe owns a Harley-Dadvidson Fat Boy motorcycle that is worth $20,000.00.

• but Joe also still owes $13,000.00 on the loan he got to buy the motorcycle.

• therefore Joe has $7,000.00 equity in his cycle

  • ( = $20k value minus $13k owed on the cycle = $7k equity).

Now as far as how equity comes into play with bankruptcies – that depends on whether you’re filing a chapter 7 or a 13.

Because with chapter 7’s, you can’t have too much equity in your property, or the chapter 7 Trustee will want to take it and sell it to repay your creditors.

However, you really shouldn’t worry about that because, by far, the vast majority of clients can file a Chapter 7 and keep all of their property because we’re able to protect it applying “exemptions” to your property & protect it.

When the bankruptcy laws were written, the legislators created "exemptions" which can be used to protect the property that you own.

There are MANY different exemptions that are available like:

• exemptions to protect cars

• exemptions to protect household goods – like furniture, appliances, clothes

• exemptions to protect retirement a/c’s like pensions or 401k’s

• they even included a “wildcard” exemption – that can be used in addition to/on top of the other exemptions!

But please let us worry about protecting your properrty. We’ll be able to tell you right away if there are any issues and, odds are, there won’t be – so don’t worry.

Now, in chapter 13’s - the equity you have in your property plays a little different role

because Chapter 13’s are a repayment type of bankruptcy wherein over the next 36-60 months, you keep and repay the secured debts that you want to keep (like houses or cars or furniture), and you repay your unsecured debts (credit cards, medical bills, personal loans) at a certain percentage ... as pymt in full!

Now, one of the things that determines what percentage the credit cards gets paid back a– is the amount of equity you have in your property that we cannot cover with your exemptions (your "unexempt equity").

Because, the general rule is - if you have unexempt equity in your property, you’ve got to pay back at least that much to your unsecured creditors (credit cards, medical bills, etc.).

Example =

• say all your property is worth $50k

• and after we apply all the available exemptions – they only add up to $45k

• so if your property is worth $50k and we can only cover $45k with the available exemptions = you have $5k unexempt equity in your property.

• And in a Chapter 13 – that would mean that your unsecureds (cc, med bills) would need to get paid back at least $5k over the life of the chapter 13 plan.

So that’s how equity comes into play with Chapter13’s.

But again – LET US WORRY ABOUT THAT. We’ll figure out if you have any unexempt equity in your property, and we’ll then determine what your minimum chapter 13 plan payments would need to be.

And then it’s up to you to decide.

So that’s it as far as what equity is and how it comes into play with bankruptcies.

But seriously, let us worry about that. Let us worry about protecting your equity.

We’re used to it, we do it every day, and it’s no big deal…

Many folks believe that you lose all of your property if you file for bankruptcy.

Quite simply, this is not true!

Well over 95% of clients can file for bankruptcy and keep all of their property.

The way we are able to protect your property is with bankruptcy The bankruptcy laws created these exemptions so that folks who file bankruptcy can claim their property as "exempt" (or protected) and therefore it cannot be sold off to repay creditors.

It is through our use of the available bankruptcy exemptions that the vast majority of clients can file bankruptcy and keep all their property.

While the list of available exemptions is large, some examples of available exemptions include:

• homestead exemption (covering any equity you have in your home - which is the amount by which your home fair market value exceeds any of your home loans)

• vehicle exemption

• household goods exemption

• retirement account exemption (IRA, 401K, pensions, etc.)

• life insurance exemption

The short answer to that is, in all likelihood – NO. Not unless a friend or family member is also a creditor of yours and they are listed in your bankruptcy case.

This is another common misconception about bankruptcy...that "if I file all my friends or family or even my employer will find out about it !"

This is absolutely not the case.

While the fact that someone filed for bankruptcy is technically a matter of public record, the only people that really have access to the bankruptcy filing information are:

• attorneys that have access to the federal court docketing system – which is also limited; and

• your creditors – who obviously get notice that you filed.

A lot of people still think that bankruptcies are still published in the paper!

This is also not true. While that may have been done many, many years ago – it really doesn’t happen anymore.

CHAPTER 7:

If your main problem is that you have

credit card debt:

medical bills:

personal loans:

and you cannot afford to repay them, then a Chapter 7 could be an excellent choice for you!

In a Chapter 7, you keep any secured debts (i.e. home loans, car loans, furniture loans, etc.) that you want to keep, and you wipe out (i.e. "discharge") your unsecured debts.

Debts that are discharged in a Chapter 7 are completely wiped out and you do not owe anything on them any more!

However, if you have secured debts (such as home or car loans) that you want to keep in your Chapter 7, you must be current (i.e not behind) on the payments.

CHAPTER 13:

Chapter 13 bankruptcies usually involve folks who are either:

behind on their mortgage and facing foreclosure (and want to keep their home):

dealing with a vehicle repossession (and want to keep or get back their vehicle):

because in Chapter 13's, your mortgage arrearage (i.e. back mortgage payments you owe) is not due right now. Instead, your mortgage arrears are spread out over the next 36-60 months! This has the effect of making the payments affordable and enables folks to stop foreclosure and keep their homes!

Likewise, if your vehicle either has been (or is about to be) repossessed, when you file a Chapter 13, your missed vehicle payments are no longer immediately. In a Chapter 13, your car loan is repaid by spreading your car loan balance out over the next 36-60 months. This makes the payments affordable and enables you to keep your vehicle!

Also, when you repay a vehicle through a Chapter 13, the loan is repaid at only 6..25% and this also saves you money!

Another amazing benefit with Chapter 13's is that you can sometimes "cram-down" secured debts (such as car loans, furniture loans, jewelry loans, etc.). When a loan is crammed-down, it is repaid by only paying the fair market value of the property vs. how much you owe on the loan. This often times saves you thousands of dollars!

Florida is a judicial foreclosure state which means that your mortgage lender needs to file a foreclosure action with the court and obtain a court order before they can foreclose on your property.

During this process, if you were to file for bankruptcy, the foreclosure process would automatically stop! This is because when you file for bankruptcy, an "automatic stay" goes into effect. This is an automatic stopping of any and all collection efforts (and when you think about it, a foreclosure is a type of collection effort).

At the beginning of the foreclosure process, you mortgage lender files a "Notice of Default" advising you that you are behind on your mortage payments (usually if you are 3 months or more behind).

Next, your mortgage lender will file a Notice of "Lis Pendens" (which means notice of foreclosure lawsuit pending) with the Clerk of Court and you are supposed to be served with a copy of it.

After being served with the foreclosure lawsuit, you then have 20 days to file your "Answer" to the complaint. In your Answer is where we present any defenses you may have to the foreclosure. Such defenses may include:

• your mortgage lender engaged in deceptive lending tactics at the time your mortgage contract was entered into.

• the party who filed the foreclosure suit lacks "standing" to bring the suit (i.e. they are not the correct party to file the lawsuit).

• your mortgage lender's witness, who signed the lawsuit documents, lacked personal knowledge of the facts asserted.

• your mortgage lender failed to follow proper procedure prior to filing the foreclosure lawsuit.

Foreclosure lawsuits are presided over by a Judge and jury trials are not utilized.

At some point, a foreclosure hearing will be held in front of the Judge.

If you are unable to successfully contest your lender's foreclosure action, the Judge will rule in favor of the lender and set a foreclosure sale date. (the sale is usually set out about 30-45 days after the foreclosure hearing).

Foreclosure sales are typically held at the Courthouse and the property is sold to the highest bidder. While foreclosure sales are sometimes continued, at the request of the mortgage lender, there is no way to predict for sure whether a particular sale will be continued.

After a foreclosure sale takes place, there is a 10 day waiting period. After the expiration of the 10 day waiting period, the Clerk of Court issues the "Certificate of Title" to whoever purchased your property at the foreclosure sale.

If you were to file a Chapter 13 bankruptcy, in order to keep your home, you must file the bankruptcy prior to the expiration of the 10 day waiting period!

However, we always recommend that clients get their bankruptcy case filed even prior to the foreclosure sale ever taking place.

It usually takes around 200 days to complete the foreclosure process in Florida. However, if you were to either contest the foreclosure or , the foreclosure process is likely to be either delayed much longer or cancelled all together!

After being served with the foreclosure lawsuit, you then have 20 days to file your "Answer" to the complaint. In your Answer is where we present any defenses you may have to the foreclosure. Such defenses may include:

• your mortgage lender engaged in deceptive lending tactics at the time your mortgage contract was entered into.

• the party who filed the foreclosure suit lacks "standing" to bring the suit (i.e. they are not the correct party to file the lawsuit).

• your mortgage lender's witness, who signed the lawsuit documents, lacked personal knowledge of the facts asserted.

• your mortgage lender failed to follow proper procedure prior to filing the foreclosure lawsuit.

Foreclosure lawsuits are presided over by a Judge and jury trials are not utilized.

In Florida, if you were to lose a home in a foreclosure, or a car in a repossession, the lender can, if the property is later sold for LESS than the amount you owed them, sue you and obtain a judgement against you for the difference (i.e. the "deficiency judgement").

However, if you were to file bankruptcy and surrender the property in your bankruptcy case, the lender then gets the property back...and that's it!

Since you surrendered the property in a bankruptcy case, the lender loses their right to come after you for a deficiency amount!

Yes. You can file an individual bankruptcy case...even if you are married.

However, if you and your spouse have any "joint debts" (i.e. debts that you are both responsible for), your spouse may continue to be responsible for the debt after your personal responsibility for the debt was wiped out through your bankruptcy.

If you are married and have a lot of debt in your name only, then filing an individual bankruptcy could be an excellent solution for you.

Additionally, filing an individual bankruptcy enables your spouse (i.e. the non-filing spouse) to not have a bankruptcy filing on his/her credit.

"Cram-downs" occur in Chapter 13 cases only (cannot do this in a Chapter 7) and can be an amazing benefit to debtors!

"Cram-down" referrs to the way in which certain secured debts (usually car loans, furniture loans, jewelry loans, etc.) are repaid in Chapter 13 cases.

When you cram-down a secured debt in a Chapter 13, the debt is repaid by paying the "fair market value" of the property vs. the amount you owe on the loan!

So for example, if you are way under water on a car and owe $35,000.00 on a car that is only worth $20,000.00...you could file a Chapter 13 and cram-down this car by repaying the auto lender $20,000.00 through your Chapter 13 plan.

In order to cram-down a car loan, you have to have owned the car for at least 2.5 years (i.e. 910 days).

In order to cram-down other secured debts (i.e. furniture, jewelry, etc.), you have to have owned it for at least 12 months.

Many folks have loans they obtained from businesses that had them list out property (that they already owned) as security or collateral for the loan.

These types of loans are called "non-purchase money loans".

With these types of loans, you can:

• file a Chapter 7 bankruptcy and wipe out (i.e discharge) the debt...and still keep all the propery you listed as collateral !

• file a Chapter 13 bankruptcy and treat the loan as "unsecured" so that it will be repaid only a mere percentage...as payment in full ! Additionally, you still keep all the property.

Regarding pay day loans, you can:

• file a Chapter 7 bankruptcy and wipe out (i.e. discharge) the loan entirely. Debts discharged in a bankruptcy do not need to be repaid to any extent.

• file a Chapter 13 bankruptcy and treat this debt as "unsecured" where it will be repaid at a mere percentage...as payment in full!

However, payday loans obtained within the 90 days preceeding your bankruptcy could be challenged by the lender as being "non-dischargable" (but in most circumstances the amount involved doesn't warrant the lender hiring an attorney to challenge it).

One of the huge benefits of a Chapter 13 bankruptcy is that it enables you to :

• keep and repay any secured debts you want to keep; and

• repay any unsecured debts (such as credit cards, medical bills, personal loans) at a mere percentage ... as payment in full !

The percentage that your unsecured creditors get repaid (as payment in full) is called the "dividend".

Often times, the dividend can be as little as 1-2% !

In Chapter 7 cases, if you are current (or can get current) on your home or vehicle payments, you can keep them. However, you'll need to keep making the loan payments of course.

This is assuming we can cover any equity (i.e. the fair market value of your property minus any liens against it) you have in your property with the bankruptcy exemptions available to you. In the event that you have "excess equity" in your property (i.e. equity over and above what we can cover with your exemptions), we usually can "strike a deal" with the Chapter 7 Trustee wherein we negotiate to allow you to keep the property and repay the Chapter 7 Trustee your excess equity amount over the following 3-12 months.

In Chapter 13 cases, you generally can keep any home or car loans that you want to keep. If you do not want to keep them, you can then "surrender" them in your Chapter 13.

If you are behind on your mortgage and keeping the home in your Chapter 13, the back mortgage that you owe (i.e. the "arrears") are not due immediately. Instead, they are spread out over the next 36-60 months, making the payments affordable!

If you are keeping a car loan and owned the car less than 2.5 years (910 days), then your car loan will be spread out over the next 60 months and repaid through your Chapter 13 plan. Additionally, the interest rate will be changed to only 6.25%!

If you are keeping a car loan and have owned it more than 2.5 years (910 days) then we can often times "cram down" your car loan. Cramming down your car loan in a Chapter 13 often time saves you a lot of money because when you cram down a car loan, you repay the loan by paying your car lender the fair market value of the car vs. the amount due on the loan!

When you file a bankruptcy case (either a Chapter 7 or 13) a bankruptcy Trustee is assigned to your case.

The bankruptcy Trustee works for the Court and it is the Trustee's job to make sure that:

• you are being treated fairly

• your creditors are being treated fairly

• that your attorney is handling your case adequately

The Trustee also presides over your first hearing, called the 341 Hearing (also called the "Meeting of Creditors"). If any creditors show up for your hearing (which is extremely rare), the Trustee will allow them to ask a limited amount of questions.

When filing a Chapter 7 bankruptcy, the Trustee will review the case and determine if there are any assets that the Trustee could look to sell, to get money which can be used to repay your creditors to some extent. However, this is rarely the case as we are usually able to cover all of your property with the bankruptcy exemptions that are available to you.

When filing a Chapter 13 bankruptcy (which is the repayment type of bankruptcy), the Trustee will review the case and determine if your proposed monthly Chapter 13 plan payments are sufficient to treat your creditors fairly.

In a Chapter 13 case, you make monthly payments to the Chapter 13 Trustee. The Trustee then makes payments on any:

• monthly mortgage payments you owe

• back mortgage payments you owe

• car loan payments you owe

• back taxes you owe

• your unsecured debts (credit cards, medical bills, personal loans, etc.)(but at a mere percentage ... as payment in full!)

Then, at the end of your case:

• your house is caught back up to date

• your cars are paid off

• any taxes are paid off

• and all your unsecured debt is done! (except for any outstanding student loans, alimony, child support, etc.)

When you file a bankruptcy case, an "automatic stay" goes into effect. This is an automatic stopping of any and all collection efforts.

So your filing a bankruptcy automatically stops any:

• foreclosures

• lawsuits against you

• wage garnishments

• pending vehicle repossessions

• creditor collections

• harrassing phone calls

• bank levies

Generally speaking, creditors know how serious a bankruptcy automatic stay is and immediately abide by it once they recieve notice of your bankruptcy.

In the event that a creditor ignores the bankruptcy and continue to attempt to collect, we can then turn around and sue them for violating the automatic stay!

Another bankruptcy myth is that you will never be able to obtain credit after filing for bankruptcy.

This is absolutely not true!

When filing a Chapter 7, you will be able to obtain credit even before your Chapter 7 case is concluded! You will likely be getting solicited for credit cards even before you receive your Chapter 7 discharge. This is because creditors know that once you file a Chapter 7, you cannot file another Chapter 7 for 8 years (so it's not like you can run up credit and simply refile another Chapter 7).

In Chapter 13 cases, you are usually in the Chapter 13 plan for 36-60 months. As Chapter 13's are the "repayment type" of bankruptcy, you are in the 13 to handle the debts you already have. It is for this reason that the Court frowns on your incurring new debt while you are in your Chapter 13 case.

However, the Court will allow you to incur new debt for things that are considered a necessity (such as replacing a broken down vehicle which is obviously needed to get to work, or replacing an A/C unit in the home, etc.). Additionally, creditors routinely do extend credit to clients who are in an active Chapter 13 case.