The mere premise of filing bankruptcy can make Orlando, Florida residents uncomfortable. Financial struggles often times bring with them feelings of guilt, shame and embarrassment. Character attributes such as ego, pride and fear often times come into play. This should not be the case as filing bankruptcy is a very common real life occurrence and in many cases it is due to circumstances beyond our control such as job loss, divorce and health issues. The fact of the matter is that most people do not have a good idea of what it actually is, what is involved and how it can benefit them. The only thing they may know is that it can prevent them from making purchases in the future and that it can haunt them for years after the filing is finalized.
If you would like to learn more about Florida bankruptcy laws, how bankruptcy can help you and your family and how to file bankruptcy please call the Orlando bankruptcy lawyers at Lyons Law. Dial (407) 476-3437 for a free no pressure consultation. She proudly serves the Seminole, Lake, Brevard, Polk, Orange and Volusia County areas.
Different Types Of Bankruptcy
Chapter 7 bankruptcy is by far the most common, most cost effective and least complex form of bankruptcy. Many times it is referred to as a liquidation bankruptcy. This is due to the fact that some of the assets a person owns may be sold, or liquidated, to repay some of the debts that they open. There are certain properties, however, that are exempt under Florida state bankruptcy law, but a person should clearly understand what these protective properties are so that they do not face an unpleasant surprise once they are ready to file. Some of the property that is considered exempt includes things like household furnishings, and automobile, clothes, and other personal items that debtors cannot use to repay the debts that a person owes.
When it comes to secured debts that a person has going into a Chapter 7 bankruptcy, they often have a choice of options available to them. If, for example, an individual has a car loan they can either choose to allow the creditor to repossess the automobile, keep making payments under the existing contract, or they may be able to simply pay a lump sum to the creditor and keep the property. Of course, it will be necessary for the lender to agree to the terms.
Most people are able to qualify for a Chapter 7 bankruptcy. but there are always exceptions. An example of an individual that would not qualify would be if the person had enough income at their disposal to qualify for a repayment plan under Chapter 13. It’s also important to bear in mind that bankruptcy does not wipe out every type of debt out there. While things like unsecured loans, credit card debt, and medical bills can be covered by a Chapter 7 bankruptcy, things like student loans, spousal support, tax debts (federal and state), as well as child support arrears cannot be rolled into the Chapter 13 plan according to federal as well as Florida bankruptcy laws.
Chapter 13 bankruptcy differs from a Chapter 7 bankruptcy in several key ways. A Chapter 13 bankruptcy does not allow you to walk away from most, if not all outstanding debts. Rather, Ch. 13 is a repayment plan that allows an individual to pay back their debts over the course of 3 to 5 years. How much a person has to repay will be dependent on the amount of money that they earn, the amount of money that they owe, and the amount of money that creditors would have gotten if the person had filed instead for Chapter 7 bankruptcy.
According to federal bankruptcy law there are parameters with a Chapter 13 bankruptcy. With that there are certain debt limits. A person cannot have more than $1,149,525 in secured debt (real estate, automobiles) or more than $383,175 in unsecured debt (credit cards, medical bills, etc).
Individuals who have a number of secured debt may find that the fact that they can make up any missed payments so that they can avoid something like a foreclosure or repossession. In this case, considerations such as this make Chapter 13 a good option for some. These past missed payments can be included in the repayment plan, which allows a person to make up for them over an extended period of time.
It is important to note that in a Chapter 13 not only do you have to show enough income to be able to adhere to the repayment plan but you also have to resume payments on assets and properties you are keeping upon filing Chapter 13 bankruptcy. Qualifying is something that an experienced Orange County Florida bankruptcy attorney will help you with via the bankruptcy means test.
Other Bankruptcy Types In Florida
There other types of bankruptcies including Chapter 11 and Chapter 12. Chapter 11 bankruptcy is the one used by businesses that are struggling financially who are looking for an option to help them reorganize. Individuals may also be able to use Chapter 11, but they generally don’t because of the fact that it is quite time-consuming and very expensive.
Chapter 12 bankruptcy is very similar to chapter 13, but is only available to individuals for whom 80% of the debts they have come from operating a family farm.
Life After Bankruptcy
Bankruptcy is a great tool to provide a financial fresh start. After a bankruptcy your financial future can be bright or it can be dimmed by unwise financial decisions. It helps to consider bankruptcy as an opportunity to permanently secure your financial future rather than a quick way to resolve debt. To benefit in the long run from a bankruptcy you must make smart financial decisions and change your personal spending habits. Bankruptcy is a fix to your current problem but it does not shield your future decisions forever.
Do not get new high fee, high interest credit cards. Credit cards are the easiest way to incur massive debt with their high interest rates and enticing ways to spend. Credit cards are often extended to those who have filed bankruptcy causing the cycle of debt to continue. As a general rule, if you are unable to pay off the balance of your credit card every month, you should not have one.
Control your spending and live within a budget. Learn how much you spend, where you spend it, and why you spend it. For one month write down every single thing you spend money on, where, and why. You will be surprised at how much money you are spending on unnecessary things or overspending on necessary things. From this you can change your spending habits by creating a budget to maximize your money. This may mean clipping coupons, eating out less, not making impulse buys, or shutting off your cable. However you decide to tighten your budget, it saves you money and changes your spending habits, making you more aware and financially smarter.
Try to build a savings account. Saving money is hard for everyone, but having a cushion can be invaluable when life tends to happen. If you have trouble saving try signing up for a forced savings plan such as an employer 401K or 529 college savings plan. These types of plans put someone else in charge of taking the money from your check and investing it for you. You never have a chance to decide to spend the money. If none of those are available you will have to learn to save on your own. This can be done by setting aside a little bit of money from every pay check or even saving up loose change. There are no rules as to how much you should save in a given month, every little bit helps.
Rebuild your credit. While we do not recommend acquiring more debt, there are situations where a loan or credit is needed such as, obtaining a mortgage, auto loan, or student loan. Because you have filed bankruptcy anyone considering extending you credit will scrutinize you closely. Think of this as financial probation. This does not mean you will never be given credit, it only means that you have rebuild a better credit rating in order to get better interest rates and be viewed as low risk.
You need credit to get credit and correcting inaccuracies can be difficult and time consuming. In order to facilitate this, get current and pay off any remaining debts that were not discharged. Be sure to check your credit report and fix anything that is inaccurate. However, be cautious when using companies that offer credit repair and educate yourself on the proper procedures.
Bankruptcy can be a beneficial tool for changing our financial futures, however many people do not learn from their mistakes the first time. Bankruptcy will not help you in the long run if you do not change your habits and take proactive steps to become smarter about your spending, saving, and credit.
How An Orlando Bankruptcy Lawyer Can Help You
Whether or not to actually file for bankruptcy is a decision that requires great thought. More often than not there are substantially more pros than cons to filing bankruptcy. While it may provide some relief by allowing them the opportunity to get out from under seemingly insurmountable debt, it can also impact their credit for a number of years once discharged. Individuals may find that it is quite difficult to qualify for an auto loan, a credit card, or a mortgage. Although for what it is worth if one gets to the point that bankruptcy is even an option their credit is most likely severely blemished to begin with.
Not everyone will qualify for bankruptcy and not everyone actually wants to go through that once they learned little bit more about the terms and conditions that are placed upon them. For example, if an individual’s debts are mostly from the types of debts that are protected from bankers to filings, such as student loans or alimony payments, they may find that filing for bankruptcy really provides them no relief whatsoever. There are also other options available to individuals that are looking to get their debt under control without having to actually go through a bankruptcy filing. Repayment plans or debt consolidation are both options a person should seriously consider before making their final decision.
Lastly, it is also very important to remember that filing for bankruptcy is not something that is free. An individual may find that they simply cannot keep up with their regular monthly bills so they turn to bankruptcy only to find that the filing fees add an extra expense that they may not be able to afford. Since most bankruptcy attorneys will not accept any type of payment plan, preferring instead to get paid up front before the filing actually occurs, a person will need to know exactly how much it is going to cost for them to start getting out from under the debt that is causing them so much anxiety and stress.
If you are barely treading water financially in the Orange County, Florida or Orlando, Florida area do not hesitate to contact our Orlando bankruptcy lawyers today to discuss your options. Ms. Lyons possesses a wealth of experience handling bankruptcy options and offers free consultations.
‘We are a debt relief agency. We help people file bankruptcy under the Bankruptcy Code’.