We Take the Time To Keep Our Clients Informed

Legal procedures can be scary and adversarial, that’s why you hire us. But knowing the bankruptcy basics regarding Chapter 7 & Chapter 13 makes for happy, educated, relaxed clients.

  • Chapter 7

    • What is Chapter 7 Bankruptcy and How Does It Work?
      In a Chapter 7, a debtor turns in their nonexempt property to a trustee, who then liquidates it to pay creditors. Most cases; however, are called “no-asset” cases because the debtors don’t have any non-exempt assets or are so minimal the trustee will disclaim and abandon it in favor of the debtor.  Florida’s exemptions are very favorable!
    • What is Chapter 7 Discharge?
      A federal court order relieving you of liability from the debt. It further provides a discharge injunction which prohibits creditors from contacting you or trying to collect on the debt!
    • What Kind of Debts Are Not Dischargeable Under Chapter 7?

      The following types of debt may not be dischargeable under Chapter 7: (there are intricate rules; however, so it is important to speak with an experienced attorney if you feel any of these apply to you)

      • Most newer tax debts.
      • Debts obtained by means of false pretenses, fraud, or a false financial statement.
      • Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the case.
      • Debts for alimony, child support and certain other divorce related debts like property settlement debts.
      • Debts for intentional or malicious injury to persons or property of another.
      • Debts for certain fines and penalties.
      • Student Loans unless a court finds an “undue hardship” (Currently a very difficult standard to prove).
      • Debts for personal injury or death caused by the debtor’s operation of a motor vehicle while intoxicated.
    • Where Is My Chapter 7 Case Filed?
      Bankruptcy Venue is in the district where the debtor has resided or maintained a principal place of business for the greatest portion of the last 180 days. The West Palm Beach division comprises Palm Beach County, Martin County, St. Lucie County, Indian River County, Highland County and Okeechobee County.
    • What Exemptions Will Apply to My Case?
      This is a great question.  In order to take advantage of Florida’s favorable property exemptions, you must have been a resident of Florida for the last two years.  If you have not lived in Florida for two years, the state you lived the majority of time in for the six month period preceding the previous two years, would be the applicable state exemptions.
    • What Is An Automatic Stay?
      Filing a bankruptcy case automatically stays (stops) virtually all collection and other legal proceedings pending against the debtor.  Any creditor who intentionally violates the automatic stay may be held in contempt of court and may be liable to the debtor in money damages. Criminal proceedings, actions to collect alimony, maintenance, or support or property acquired by the debtor after the Chapter 7 case was filed are not affected by the automatic stay. The automatic stay also does not protect co-signers and guarantors of the debtor.
    • I Am Currently In A Debt Consolidation Plan, Can I Still File Bankruptcy?
      Yes. We routinely file bankruptcies for clients currently in “debt-relief” consolidation plans.  Let us show you why Bankruptcy is better.
    • How Does Filing Under Chapter 7 Affect A Person's Credit Rating?
      First, if you are currently exploring the possibility of bankruptcy, the odds are pretty good that your credit score is already in the dumps or will be very shortly.  And in the immediate short-term, a bankruptcy filing will “usually” worsen it, if that is possible. HOWEVER,  the advantage to filing a bankruptcy is you are finally addressing the debt rather than the derogatory information just continue to sit there.  In other words, the bankruptcy will provide you with the proverbial “line in the sand” so you can start to effectively and quickly rebuild your credit.  If you do the right things post-bankruptcy, we routinely see our clients build up their credit into the 700’s and even qualify for mortgage loans.
    • Will My Friends and Neighbors Know That I Filed For Bankruptcy?
      Very unlikely.  Bankruptcy filings are public record just like any court filing; however, to see any information would require you to sign up for, pay for, and know how to use the court pacer system.  Some smaller papers still list said filings in the very small legal sections; but, with the collapse of print media, even that is very rare anymore.
    • What Is The Trustee In A Chapter 7 Case, And What Is There Role?
      A trustee is appointed to examine the debtor, collect nonexempt property (if any), and pay the expenses of the estate and the claims of creditors. They are also in charge of seeing to it that the debtor performs the required duties in the case.
    • Do I Have To Go To Court When I File A Chapter 7?
      No, it is very rare that you will have to go to court. Instead, all debtors are required to attend a hearing called the “341 meeting of the creditors.” This hearing usually takes place about a month after the case is filed. At this hearing the debtor is put under oath and questioned about his or her debts and assets by the hearing officer or trustee.  It is very short and usually informal.
    • What Happens To The Property That The Debtor Turns Over To The Trustee?
      It is usually converted to cash, which is used to pay the fees and expenses of the trustee and to pay the claims of unsecured creditors.  If you have priority creditors, like taxes and child support, all of the funds will go to satisfy them first!
    • What Happens To My "Secured" Debts When I File A Chapter 7 Case?
      The filing of a Chapter 7 really does not involve secured debts to a certain extent, unless you are choosing to surrender the property in which case the creditor will get to sell the asset and file an unsecured claim for any deficiency.  If you are filing a Chapter 7 and are not current with your car and/or house payments, the bankruptcy will “NOT” help you get caught up..you would have to ensure that you could quickly get caught up or work something out with the creditors on your own; otherwise, they will be permitted to foreclose or repossess the collateral.  If you are current on the debt than usually there is nothing to worry about, you simply continue to pay timely and you can even reaffirm the debt.
    • How Long Does It Take To Get My Discharge?
      You will attend your mandatory 341 Meeting around a month after we file your case.  60 days after that hearing is held, and assuming you have complied with all requirements and no creditors have filed an objection to the discharge of your debts, the court will issue the discharge order.  You will receive an electronic copy from us immediately and you will get a hard copy from the court as well. So, roughly it takes 90 days to complete a Chapter 7 and begin anew!
    • What If I Still Want To Pay A Debt That Has Been Discharged?
      There is nothing illegal about you voluntarily paying a debt that has been previously discharged; however, you control that process, the creditor cannot try to collect.  It may sound silly that you would want to pay a debt that has been discharged but it does happen, usually due some sense of moral obligation. Examples are debts owed to your personal doctor’s office because you want to be able to see him/her still or you have a co-signor still responsible on a debt that you want to ensure they don’t to pay.
  • Chapter 13

    • Do I Qualify For A Chapter 13 Plan?
      You don’t necessarily have to “qualify” for a Chapter 13 like you do in a Chapter 7; however, there are certain requirements and limitations to keep in mind.  First, you must be a “wage earner” which simply means you will be able to show the court that you have enough income every month to pay your necessary and reasonable living expenses and still have enough left over to pay the trustee what you propose to pay.  Second, there are “debt limits” in a Chapter 13.  This amount changes however, as of April 2019, the allowable amount of debt is $1,257,850 in secured debts and $419,275 in unsecured debts.  So if you exceed any of these number you will have to consider a Chapter 7 or Chapter 11 possibly.  Lastly, priority debts, such as taxes and child support arrearages MUST be fully paid through the Chapter 13 Plan.  So if you are unable to afford doing so in the maximum 5 years allowed, the Court will not confirm your Chapter 13 Plan.
    • How Is My Chapter 13 Payment Determined?
      As a general starting point, your chapter 13 payment is determined by subtracting all of your reasonable and necessary living expenses from your net income. In other words, it is based on what you can afford. But there are instances where the starting point is based on the amount of debt you have. For example, if you have $15,000 in tax debts that must be paid through the plan, then that amount at a minimum divided over 3-5 years must be paid which may be more or less than what you can afford. There are also times where you may be required to pay back 100% due to either a previous bankruptcy or you insist on paying for a luxury debt through the plan. Therefore it is important to speak with an experienced bankruptcy attorney who is skilled in finance to ensure you are getting the absolute most benefit from the Chapter 13 at the lowest monthly payment. This is precisely what separates the “good” attorneys from the “bad” ones. Nearly ½ of our Chapter 13 filings are either paying $0 to unsecured creditors or less than 50%.
    • How Is A Chapter 13 Case Different From A Private Debt Consolidation Service?
      Private debt consolidation services cannot provide the same kind of relief that bankruptcy court can. The court can forbid creditors from foreclosing the debtor’s property and can discharge some of that individual’s debt. Bankruptcy courts can also compel creditors to accept and observe the debtor’s new repayment plan. Furthermore, debt consolidation is not always successful and you may continue to owe creditors when you were told otherwise.  In a Chapter 13, you will resolve your debt if you complete the plan.  Lastly, many of these debt consolidation companies operate on the model of collecting your money to then offer a settlement to a creditor for pennies on the dollar.  You can do that yourself, you don’t need to pay their high fees to do that.  But more importantly, when they “settle” a debt, you will likely receive a 1099 at the end of the year to pay taxes upon as the IRS code considers “forgiven” debt as taxable income.
    • What Is A Chapter 13 Discharge?
      A chapter 13 discharge is no different from a Chapter 13 discharge in that it releases you from liability for paying them and requires creditors to cease attempts at collecting repayment. The only difference is that the creditors “may” have received a portion of the debt owed to them through the plan. Regardless, whatever is owed upon plan completion is discharged!
    • My Attorney Said That I Would Have To Payback 100% To My Creditors Through The Chapter 13 Plan. What Is The Benefit To Filing A
      We get this question a lot.  While it is certainly not very common, there are debtors that must pay back 100% to their creditors through the Chapter 13 Plan.  Similarly, some debtors will realize that the monthly trustee payment proposed to them is not cheaper than what they are currently paying outside of bankruptcy, so the logical question then is “why should I file a bankruptcy?”  The answer to both is YOU ABSOLUTELY STILL SHOULD FILE AND HERE IS WHY.  First off, you have to remember to compare apples to apples.  If you are paying $700 a month in minimum credit card payments, in 5 years you will have barely touched the principal balance if at all, as most of the minimum payment goes only to interest.  But if you are paying $700 a month in a Chapter 13, you will be DONE in a maximum of 5 years; thus, the bankruptcy is providing you with a path to actual debt freedom.  Second, it is common for Chapter 13 debtors to pay 0% in interest to the unsecured creditors along with reducing the interest to secured creditors.  Thirdly, you are provided with a singular monthly payment that won’t change.  Fourth, you’ll be free from the stress of creditor mail and phone calls as that will stop.  Lastly, creditors have 90 days to file claims with the court, evidencing how much is owed to them.  This is a strict deadline.  If the claim is not filed, they don’t get paid and it will be discharged.  So, it is actually quite common that we will propose a certain payment amount for clients over a 5 year period; however, due to some creditors not filing claims by the deadline, you then can choose to reduce your monthly payment to remain at 5 years or keep the payment the same and be done in a much shorter period of time.
    • How Are Secured Creditors Dealt With In Chapter 13 Cases?
      If you have a house payment and/or vehicle payments you can elect to continue to pay those directly outside of the Chapter 13 or we can include them into the plan.  We typically provide our clients with both scenarios and the resulting payments so that they can decide for themselves which route they want to go.
    • How Are Cosigned or Guaranteed Debts Handled In Chapter 13 Cases?
      If a co-signed debt is being paid in full under a chapter 13 plan, the creditor may not collect the debt from the co-signer or guarantor. However, if a consumer debt is not being paid in full under the plan, the creditor may collect the unpaid portion of the debt from the cosigner or guarantor. A consumer debt is a non-business debt. Creditors may collect business debts from co-signers or guarantors even if the debts are to be paid in full under the debtor’s plan.
    • What If I Lose My Job or Change Jobs During The Plan?

      This happens unfortunately as it simply a part of life regardless of the bankruptcy filing.  The key here is to communicate with your bankruptcy attorney at all time and ahead of time.  Often we can suspend payments or modify a plan to reflect the reduced income and save the plan from failing and being dismissed.  If you flat out lose your income and can no longer pay the trustee, then we may have to consider converting the case to a Chapter 7 to get a discharge of the debts.  However, it is important to discuss this in depth with your attorney to be aware of any ramifications as to assets.

      Yes. An existing chapter 7 case may be converted to a chapter 13 case at any time at the request of the debtor if the case has not previously been converted from chapter 13 to chapter 7.

    • How Does A Chapter 13 Case Affect Collection, Lawsuits And Foreclosures That Are Filed Against The Debtor?
      The filing of a chapter 13 case automatically stays (stops) all lawsuits, attachments, garnishments, foreclosures, and other actions by creditors against the debtor or the debtor’s property. This stay is called the automatic stay for a reason, it happens “automatically” by operation of law immediately upon filing.  It is very common for our office to file a bankruptcy hours or even minutes prior to a sheriff sale/foreclosure.
    • What Is A Priority Claim?
      A priority claim is an unsecured claim that is given priority of payment under the Bankruptcy Code. It is a claim that must be paid before other unsecured claims are paid. Examples of priority claims are tax claims, wage claims, and claims for alimony, maintenance or support. Claims for administrative fees, such as the chapter 13 trustee’s fee, the filing fee, and the fee of the debtor’s attorney, are also priority claims in chapter 13 cases.
    • When Do I Start Making Payments To The Trustee?
      Trustee payments are due timely every month on the same day and start 30 days after we file your case.  We will fully explain your options and procedures for making your trustee payments; however, the overwhelming majority of clients pay via automatic wage order to ensure timely payments are made without cost or worry.
  • Chapter 7 vs. Chapter 13

    • Why would someone choose to file Chapter 13?

      There are several reasons why individuals choose a Chapter 13 over a Chapter 7.  Here are some of the more common examples;

      1. To save a home and/or a vehicle – if you have fallen behind on your mortgage and/or vehicles, a Chapter 13 will stop the threat of foreclosure and repossession. It will stop the creditor harassment and late charges/fees and, more importantly, it will allow you a 3-5 year period with which to get caught up on the arrearages or completely restructure the loan payoff!  Either way, it provides immediate relief along with an affordable way to keep your property.
      2. To pay priority debts – remember that not all debts are dischargeable in bankruptcy, so if you have back tax issues and/or you’re behind on your child support/alimony, a Chapter 13 can structure an affordable payback of these debts while at the same time addressing all of your other debts as well. Again, it provides immediate relief from prosecution and an affordable way to be debt free in a maximum of 3-5 years.
      3. Costs– Chapter 7 fees must be paid in advance prior to filing and some clients simply don’t have the means to do so or they need protection before they can accumulate the needed funds to file. As a client of Southeast Bankruptcy, so long as you have a good paying steady job, our office routinely files Chapter 13 cases with no attorney fees up-front.  Chapter 13 attorney fees are set by the court so most all attorneys charge the same; however, we allow you to pay us through the Trustee payments
      4. Additional Benefits available in a Chapter 13 –.  Very common example that we see daily… Client is struggling to pay all their minimum payments and wants to keep a financed car (their only asset) which they pay directly every month at, let’s say, $600.00 per month.  Many times, a Chapter 13 can be structured to pay off the vehicle in full along with the fees to file bankruptcy resulting in a monthly payment of only  $450/month. A monthly savings of $150!  Because a Chapter 13 allows us to reduce the interest rate on the vehicle, spread out the balance of payment and, more importantly, Cram-down (discussed next below) we can actually reduce a clients monthly expenditures, discharge all their debt just as if they had filed a Chapter 7 and we can do so with no attorney fees up-front so they can get the protections and benefits of bankruptcy now!
      5. Cram-downs and Lien Strips – a Chapter 13 may allow certain debtors to keep their vehicles and pay only its current fair market value. It is not uncommon for our clients to owe $20k on a vehicle that is only worth $10k.  If certain conditions are met, we can propose to pay only the $10k allowing you to keep and fully payoff your vehicle. This is known as a cram-down.  This same concept applies to mobile homes and other purchase money security interests.  Another valuable tool in a Chapter 13 is a lien strip.  If your home is currently worth less than you owe on your first mortgage and you also have other subordinate liens such as second mortgages and line’s of credit (HELOCS), we may able to treat those second mortgages as unsecured creditors thereby discharging the debt and removing the lien in the public records!
      6. Not eligible for a Chapter 7 – it could be that you don’t have a choice but to file a Chapter 13 because you make too much money or it has not been 8 years since your last Chapter 7 filing, so you will have to propose to pay what you can every month in one consolidated payment. REMEMBER: the good news here is as long as its been 4 years since your previous Chapter 7 filing you are STILL ELIGIBLE FOR  A DISCHARGE OF YOUR UNSECURED DEBT!