Archive for November, 2015

Bankruptcy is an Option

Sunday, November 29th, 2015

We may be hearing more about bankruptcy these days, since the economy is improving. The unemployment rate is down, and lower gas prices are really helping. But some people are still struggling. Thousands of peoplein Florida are still buried under substantial debt. Bankruptcy isn’t for everyone who struggles with mounting debts, and in fact, bankruptcy is rarely your only or best solution. What’s right for you will hinge on your current and projected future income, the precise nature of your debts, and the properties and assets you already own. Before you take any legal action, consult first with an experienced  bankruptcy attorney.

If you are eligible for a debt consolidation loan, you may want to consider it as an alternative to filing for bankruptcy. You probably already know how debt consolidation works. Instead of paying a variety of creditors, you make one monthly payment to the debt consolidation lender, who in turn takes your payment and satisfies your creditors. Frankly, debt consolidation is rarely a good choice. Most debt consolidation lenders charge a fifteen percent up-front fee, and debt consolidation companies lack any legal authority to stop creditors from acting against you. You may still be harassed by collection agents, and you can still be sued by creditors. If you do opt for debt consolidation, do some investigating and make certain that you deal only with a reputable, legitimate lender.

A second mortgage is another option, but it’s not necessarily a good one, because if you fail to make the payments, the lender can seize your home. The advantage of a debt consolidation loan is that you escape the risks and complications of bankruptcy, and no bankruptcy will appear on your credit report. If you are sinking under mounting debts in the Tampa Bay  area, discuss debt consolidation, bankruptcy, and your other options with an experienced bankruptcy attorney. Your situation cannot improve until you take action, so make the call as quickly as possible.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.

Bankruptcy is Harder Than It Used To Be

Wednesday, November 25th, 2015

I know. It’s not what you wanted to hear. You’re going through a difficult time, and you have enough problems already. Now you’re hearing that than bankruptcy is more difficult than it used to be before they restructured the law.

bankruptcy sign

Bankruptcy provides a mechanism to discharge or even wipe out many (but not all) debts. The effect of a discharge is to preclude the creditor forever from attempting to collect on the debt and to give honest debtors a fresh start. Its purpose, according to the Supreme Court, is to provide the debtor with “a new opportunity in life and a clear field for future effort unhampered by the pressure and discouragement of pre-existing debt.”

But the comprehensive new Bankruptcy Reform Act means that bankruptcy no longer is as easy to use – or abuse. While the new law is viewed by some as harsher treatment of debtors and by others as leveling the playing field for creditors, the bankruptcy system certainly is more difficult and expensive.

In a common Chapter 7 bankruptcy, the debtor’s property (with certain exceptions) is turned over to a trustee and sold (“liquidated”), and creditors are paid from the proceeds. Creditors often are not re-paid in full; indeed, most debts – including most credit card debt – are canceled. Generally, an individual can file for Chapter 7 only every six years.

Before the new law took effect, bankruptcy judges enjoyed wide discretion in determining who may have been filing unfairly for Chapter 7. Under the new law, bankruptcy judges use a complicated means test to determine one’s eligibility. With this stricter threshold, many individuals may be required to file for bankruptcy through Chapter 13.

Under Chapter 13 bankruptcy, the debtor usually is allowed to keep property and pay debt according to a schedule spread over three to five years. While the debtor keeps more property in Chapter 13, the payment plan is much more difficult to complete.

In its simplest form, the debtor qualifies for Chapter 7 when earning less than the median household income in his or her respective state. If the debtor earns more than the median, then “responsible” monthly expenses (as determined by the Internal Revenue Service) are deducted from monthly income. If this total exceeds $100, then the debtor must file under Chapter 13 and is placed on a structured repayment plan.

Furthermore, the new bankruptcy bill requires debtors to complete a credit counseling program from a court-approved non-profit credit counseling agency within six months of filing for bankruptcy. Each of the country’s 90 bankruptcy courts will maintain a list of approved credit counseling agencies in their respective areas.

Certain assets, such as IRAs and 401(k)s, are exempt under the new bankruptcy law; a debtor no longer is required to use funds from these accounts to pay off creditors. College savings plans (529s) also are wholly exempt if held for at least two years and limited to $5,000 if held between one and two years.

While bankruptcy follows federal law, states are allowed to determine the assets an individual may shield from creditors. This is more commonly known as the “homestead exemption.” Some state jurisdictions may allow a debtor to keep large amounts of equity in the home, while others provide for little or no equity if the homeowner files under Chapter 7. Some states follow the federal law, which provides a $17,425 shelter of home equity.

The new bankruptcy law also includes a “look-back” provision to prevent people from buying expensive property at the last minute in states with larger homestead exemptions and then filing for bankruptcy with an even larger debt. In addition, the homestead exemption for anyone residing in a state fewer than 40 months is limited to $125,000, even if that state allows a larger exemption.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.