Common Bankruptcy Questions
Q: What is bankruptcy?
A: Bankruptcy is a system that allows consumers to protect themselves from creditors and discharge their debts, allowing them to get a fresh start financially.
Q: What kinds of bankruptcy are available?
A: There are two types of bankruptcy: Chapter 7 and Chapter 13. Each protects you from creditors in different ways. Chapter 7 is a liquidation bankruptcy, where your nonexempt assets can be sold to pay some portion of your debt. Chapter 13 is a payment plan bankruptcy, in which you make payments on some portion of your debt over time.
Q: Which kind of bankruptcy is for me?
A: This is a difficult question to answer without sitting down for a consultation. Generally, Chapter 7 is a better way to deal with only unsecured debt, or when you simply want to walk away from everything and start over. Chapter 13 is more expensive — you’ll have to make plan payments for up to five years — but Chapter 13 can allow you to save your home from foreclosure and protect your other existing assets.
Q: Do I qualify for Chapter 7?
A: Starting in 2005, consumers are required to pass the means test in order to file for Chapter 7 bankruptcy. In order to qualify, either your household income must be under the median for your household size, or you must go through the means test. The means test measures your ability to pay back a portion of your debt over time, and can require you to enter into Chapter 13 bankruptcy if your income is considered too high for Chapter 7.
Q: My house is being foreclosed. Can bankruptcy help me save it?
A: Chapter 13 bankruptcy can stop a foreclosure until the moment of sale at a public auction. The bankruptcy code allows debtors to reinstate their mortgage by resuming their regular monthly mortgage payments, and paying the arrearage in equal monthly payments throughout the entire length of the payment plan (36 to 60 months).
Q: My house is upside down, or my adjustable-rate mortgage is resetting and my payments have gone up. Can bankruptcy allow me to adjust my mortgage?
A: While in bankruptcy, you can negotiate with your bank to adjust your mortgage, just as you can outside of bankruptcy. However, judges cannot force mortgage lenders to adjust your mortgage, so at this time any adjustments must be done voluntarily by your lender.
Q: I am behind on my student loans/taxes/child support. Can I discharge them through bankruptcy?
A: No, generally speaking student loans, unpaid income taxes and child support are nondischargeable through bankruptcy.
Q: My wages are being garnished? Can a bankruptcy stop the garnishment?
Q: Debt collectors are calling my house. Can bankruptcy stop them?
A: Yes. Immediately upon filing your bankruptcy, the automatic stay goes into effect, which bars any attempt to collect a debt against you, including existing wage garnishments. The garnishment will be dissolved, and you will resume receiving your full pay. Collection calls will also stop very quickly.
Q: Will I get to keep my assets in a Chapter 7?
A: You will get to keep all of your exempt assets. Exemptions in Florida include your homestead, $1,000 of personal property and $1,000 of equity in any one vehicle. In addition, you can claim $4,000 of personal property if you do not claim a homestead. Other exemptions are available as well. Any asset whose value exceeds the exemption can be seized and sold for the benefit of your creditors.
Q: How does the court know what my assets are?
A: Upon filing, you will disclose to the court everything you own, without exception. This will be filed under oath, subject to prosecution for perjury if you attempt to hide any assets from the court.
Q: I want more information about filing for bankruptcy and getting a fresh start. How can I get started?
A: Call 407-287-5137 for a free consultation regarding bankruptcy. We would be happy to answer any questions you have.