Articles Posted in Chapter 13

Bankruptcy laws help U.S. Citizens who can no longer pay their creditors pay their debts by liquidating their assets or creating a repayment plan. Most bankruptcies filed in the United States are either a Chapter 7 or Chapter 13. In order to decide which bankruptcy to file, the choice often depends on a client’s income, debts, assets, and financial goals.

The most common bankruptcy filed is a Chapter 7. Those who are allowed to file a Chapter 7 bankruptcy include companies, married couples, and individuals. A Chapter 7 bankruptcy is designed to wipe out a person’s unsecured debt, such as credit cards and medical bills.

With the ever-changing funding from Florida and the federal government, Legal Services organizations who provide free legal services for the nation’s poor are being subjected to annual budget cutting and lay-offs. As a result, the numbers of individuals receiving these pro bono services continues to shrink on an annual basis. However, the needs of the poor have not shrunk and citizens filing cases on their own, or pro se, have risen sharply. Along with the budgetary restrictions and cuts, Legal Services Organizations (LSOs) have had to narrow the scope of those who qualify for free legal services. This has created a larger class who cannot afford traditional legal services, namely those who make too much money to qualify for free legal services, but not enough money to afford being able to hire an attorney to meet their needs.

I have had the privilege over the years to work with LSOs to offer free consultations with an attorney to discuss their financial problems. Within the monthly clinics, I have reviewed their finances and warned them of the consequences of failing to take some action to correct these problems. Within the Federal Bankruptcy Court, I have served in the capacity of helping pro se clients review reaffirmation agreements to make sure their best interest was being served. Pro bono needs are yet still great.

Are you in financial distress? Are the bills just keep piling up with no ending in sight? Are collection agencies calling you all the time? Are you being threatened with lawsuit for unpaid debts? If you answered, “YES” to any of the above questions or questions similar in nature; a Bankruptcy may be a way to alleviate your worries.

As a Jacksonville Bankruptcy Attorney, I assist clients in getting that “fresh start” in Life. In these tough economic times a Bankruptcy may be your only way out. However, when deciding Bankruptcy is the best approach in moving forward, I find the same question always being asked, “Will I lose my Personal Property?” Unfortunately, the answer is not as straightforward as most would like. Let me explain.

When you file for Chapter 7 Bankruptcy in Jacksonville, Florida and across the State there are certain limitation as to exempt (the ability to keep) personal property. The Florida exemptions allow a person to keep (exempt) $1000.00 worth of personal property. In addition, if filing jointly that amount increases to $2000.00. Now, before you start thinking that amount will not even cover the TV in your house, wait. When determining the value of your property you must take into consideration the age and condition. This will give you an approximate amount in which to exempt. In addition to the $1000.00, Florida allows an additional $4000.00 to be exempted if one is not claiming Homestead. Meaning, if your home is in foreclosure or you just want to surrender the property you can use this exemption to keep more personal property.

Let’s say you’re a business owner and in need of filing bankruptcy. What happens to your company when you’re finally forced to file?

The first thing you need to understand is that in most cases your company, whether it’s an LLC or a corporation, is a separate and distinct entity under the law. Envision your company as it’s own legal person, totally separate from yourself. Just because you file for bankruptcy protection does not always mean that your company must follow suit. In fact, if the company is small and closely held there may be nothing for a trustee to distribute to creditors and there may not be a reason to have the company file.

There are, however, situations where you may need to have your company file bankruptcy. In cases where there are assets that are being chased by creditors and the company owes payroll taxes, having your company file for bankruptcy may be helpful. Owners of small companies are often liable for certain payroll taxes which are non-dischargeable in bankruptcy. Rather than allowing the creditors to get ahold of your assets and satisfy your obligations to them, it’s sometimes preferable to file bankruptcy to stop all the collection activity. Tax claims are then be given priority so they will be paid and satisfied before any other creditors.

Though it may not be the first thing that comes to mind, homeowners’ dues can be an important consideration in your bankruptcy. Homeowner’s dues can serve as a pretty large umbrella encompassing an array of fees such as condo dues and other fees to a housing association.

It’s important to understand that whether you’ve filed bankruptcy or not, unpaid dues act as a lien on your property. A “lien” is a property right given to another person or entity which is used to secure payment of a debt. If you take out an auto loan, the lender then has a lien on the car. If you don’t pay, you lose the car. The same thing goes with a mortgage.

Unpaid homeowners’ dues are liens as well. Typically, if you have unpaid dues creating a lien prior to bankruptcy, you have that lien after bankruptcy as well. The general rule is that liens survive bankruptcy.

The federal government is an excellent source of valuable information when it comes to filing bankruptcy. On the official website for the federal courts, www.USCourts.gov, the federal government provides you with all of the necessary information on bankruptcy basics. The website will provide you with background information on what a bankruptcy is, which chapter may be best for you, and the procedure to successfully accomplish the task. Despite this great source of information, it’s still recommended that you consult with an experienced Jacksonville bankruptcy attorney before filing.

The Bankruptcy Code, found in Title 11 of the United States Code, provides for six different varieties of bankruptcies. Some of them are more popular than others, the most common being Chapter 7 and Chapter 13. Chapter 7 is called a “Liquidation” bankruptcy. During this process, the trustee takes possession and control of the debtor’s assets and property. The trustee sells the assets and then pays off the creditors. Some of the property owned by the debtor is exempt from becoming property of the bankruptcy estate.

Chapter 9 is the chapter that allows municipalities, like cities and towns, to reorganize. It does the same as a Chapter 11 only it is reserved for government entities. Chapter 11 allows business, and some individuals, to stay in business and pay creditors without having to give up the business. A court-approved reorganization plan guarantees that creditors will receive what is owed to them, but the business remains in operation. Several major US companies have recently filed for Chapter 11; General Motors is a prime example.

Are these tough financial times impacting you? Are bills starting to pile up without a way to pay them? Are you facing foreclosure on your home? Are you drowning in debt? If you have answered, “yes” to any of the previous questions a Bankruptcy may be in your best interest. However, a simple blog or description of Bankruptcy cannot tell you if Bankruptcy is right for you, but a FREE consultation with a Jacksonville Bankruptcy can give you the insight and knowledge to make the right decision.

As a Bankruptcy Lawyer, I can review your financial documents and make an educated decision on which chapter of Bankruptcy will be best suited for your current needs. With that being said, most clients are not aware there are four (4) chapters of Bankruptcy that are available. Most clients have heard of Chapter 7 or Chapter 13, however, few have knowledge of Chapter 11, and Chapter 12. In order to better inform the general public and my potential clients, I will give a brief summary of each Chapter of Bankruptcy. Then armed with that knowledge our initial consultation can be more productive and directed at getting you the best result possible.

Chapter 7