As an Orlando bankruptcy attorney, I’ve come across a lot of questions in over 20 years of helping clients with bankruptcy. Here are answers to the most common ones.
Should I file bankruptcy to get rid of credit card debts?
In most cases, bankruptcy should be your last option. Your asset exemptions in bankruptcy are significantly worse than your asset exemptions outside of bankruptcy in state court collections. For instance, bankruptcy has significant limits on protection of your homestead, whereas outside of bankruptcy your homestead protection is almost unlimited and unconditional. Be wary of people who advise you to file bankruptcy without exploring your options to protect assets outside of bankruptcy court.
Do I have to take a credit counseling course before I file bankruptcy?
The new bankruptcy law requires all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course after the filing date. Your case cannot be filed until you complete the pre-bankruptcy course and you will not receive a discharge of your debts unless you complete the personal financial management course and file the required certificates with the Court. The Chapter 13 Trustee offers the required personal financial management course to Chapter 13 debtors, but Chapter 7 debtors are required to take the courses on their own. All bankruptcy education courses are available in person, by phone, or over the internet with agencies that are approved for the district in which you are filing. Most courses take less than one hour to complete and costs less than $50. Your attorney will provide you with a list of approved agencies.
Who can file bankruptcy?
Any person residing, domiciled, or having property or a place of business in the United States may file Chapter 7. A business may also file a Chapter 7. Bankruptcy law includes a “means test” (which is a complicated formula of income vs. expense) iin order to qualify for a Chapter 7 bankruptcy. If the means test indicates you have enough disposible income to pay more than 25 percent of your unsecured debts, you have to file under Chapter 13, provided you meet Chapter 13 debt ceilings. There are currently no minimum or maximum income limits or other income requirements or limitations for people whose unsecured debts are primarily non-consumer debts such as investment liability, business losses, taxes, or student loans.
What is a Chapter 7 bankruptcy?
Chapter 7 bankruptcy is the most common type of bankruptcy and is often referred to as a “liquidation bankruptcy.” Chapter 7 bankruptcy is used to eliminate, or discharge, primarily unsecured debts such as credit cards or medical bills. Chapter 7 does not eliminate secured debts, such as vehicles (unless the secured item is surrendered). Chapter 7 will not save a house from foreclosure nor a car from repossession if you are delinquent in payments. You must qualify for Chapter 7 by passing a “Means Test” (discussed elsewhere on this website). In Chapter 7, all of the debtor’s non-exempt assets are turned over to a bankruptcy trustee for sale. Sale proceeds, if any, are distributed among the unsecured creditors. Most Florida Chapter 7 debtors have little non-exempt personal property because of Florida’s liberal exemption laws.
What is a Chapter 13 bankruptcy?
Chapter 13 bankruptcy results in a plan to repay all or part of your debt, but it is not designed to discharge or eliminate most debts. Chapter 13 is used most often to save a house from a foreclosure sale. You can use Chapter 13 to “strip” a second mortgage under certain circumstances. You may also be able to obtain a mortgage modification through mediation in Chapter 13. Chapter 13 is also useful to eliminate some IRS debt and to establish an affordable plan to pay IRS debt that cannot be eliminated. Chapter 13 bankruptcy is available to individual or joint debtors with regular income. In addition, there are upper limits on the amount of the individual’s secured and unsecured debts in Chapter 13 cases.
Who can file bankruptcy in the Middle District – Orlando Division?
The Orlando Division accepts bankruptcy filings from individuals who reside or are domiciled in one of several Central Florida counties including Orange County, Seminole County, Volusia County, Lake County, and other surrounding counties. Anyone who resides in the Middle District of Florida may be able to file in the Orlando Division (even though a resident of a county in the Jacksonville, Fort Meyers, or Tampa Division). Any Florida resident can file bankruptcy in Florida. If you file bankruptcy in Florida, however, you can only claim Florida’s asset exemptions if you have resided in Florida for the previous two (2) years. Otherwise, you must use exemptions of the state where you previously lived for two years or, in some cases, the default set of federal bankruptcy exemptions.
Can married people file bankruptcy jointly?
Married debtors can file a joint bankruptcy petition for a single filing fee, and most attorneys charge the same legal fee for joint cases as they do for individual cases. Married couples who are jointly liable on most debts should file a joint bankruptcy. On the other hand, if only one spouse is liable on most of the debts, the indebted spouse may file an individual bankruptcy, and in most cases, the individual debtor’s bankruptcy will have no adverse effect on the non-filing spouse.
Do I need an attorney to file bankruptcy?
Bankruptcy law does not require that you hire an attorney to prepare a bankruptcy petition or to represent you in your bankruptcy case. If you enjoy doing things yourself, or if you really cannot afford an attorney, you can find forms on the internet to file your own petition. However, bankruptcy is a complicated area of the law, and the bankruptcy law gives no special treatment to debtors who file their own petition. The 2005 Bankruptcy Reform Act made filing bankruptcy substantially more complicated and the practice of bankruptcy law is therefore more specialized. I strongly believe that the financial risk of filing your bankruptcy incorrectly is much greater than the amount of a reasonable fee paid to an experienced bankruptcy attorney.
How much do attorneys charge for bankruptcy?
In the past, most consumer bankruptcies were relatively simple and legal fees were low. The 2005 Bankruptcy Reform Act increased the amount and complexity of legal work required to prepare a bankruptcy petition and successfully complete a filing, and as a result, legal fees are higher than they used to be. Also, the amount of work and fees will vary according to the debtor’s income level. As a general guideline, a debtorbelow Florida’s median income should not have to pay more than $1,500 in legal fees for a simple Chapter 7 bankruptcy. The court charges a $306 filing fee. A debtor with income above Florida’s median income will usually have to pay $200 to $500 more as additional paperwork is required. It is possible, but difficult, to file bankruptcy without the help of an experienced bankruptcy attorney.
Chapter 13 cases are more complicated, and therefore, legal fees are higher. The Orlando judges expect and approve legal fees of approximately$4,500 (in addition to the filing fee of $281) to file and complete a standard Chapter 13 case. If your Chapter 13 case involves complicated legal issues, multiple properties, and/or mortgage modification, legal fees will be higher. The good news is that most attorneys require a down payment of approximately $2,500 to $3,000 (plus the filing fee) to prepare and file a Chapter 13 case. The balance is paid through the Chapter 13 plan over a period of several months.