Many companies claim to be "debt consolidation" specialists. BEWARE! They often promise to reduce your debt by 50% or more or promise to eliminate late fees and other charges while consolidating your payments into "one low monthly payment." They rarely deliver on these promises.
I have clients each day come to my office after having been ripped off by supposedly reputable companies claiming to be debt consolidation experts. In my experience - debt consolidation does not work.
Often clients begin paying the debt consolidation company a monthly fee to "service" the debt. This fee is in addition to the actual money paid to the company to pay down your debt. The rub? If you miss one payment you are right back where you started from in terms of interest and penalties and you are out the money paid to the debt consolidation company as well! Usually without any principal reduction.
Your credit score is not improved and your debt is not eliminated. You've simply thrown your needed cash to a company that you did not owe money to before.
There are other problems as well - debt consolidation companies often take a high percentage of your monthly payment as a servicing fee and only pay a very small amount to your creditor. Most clients actually would be better off paying the creditors a small amount without the "help" of the debt consolidation company.
The lesson? If you're in a position where you are considering attempting to consolidate debt you would likely benefit from a free bankruptcy consultation. You can be secure in knowing that if you call my office you will speak directly to me - a Florida licensed bankruptcy attorney - and that my advice to you will be in your best interest.
Only chapter 7 bankruptcy eliminates unsecured debt and ceases all collection efforts forever.
Showing posts with label Chapter 7. Show all posts
Showing posts with label Chapter 7. Show all posts
Miscellaneous personal property exemption
When a debtor files for Chapter 7 bankruptcy he or she is allowed an exemption of $1,000 dollars ($2,000 for joint filings) for miscellaneous personal items including: cash, household furniture, clothing, and jewelry among other items.
These items are valued based upon the resale value of the item rather than the original cost. In other words, a dining room table purchased for $500 in 1999 might only be worth $100 dollars today. The table would be valued at today's value.
In 2007 the Florida legislature introduced a new "wild card" personal property exemption for the benefit of those debtors who do not claim a Homestead exemption. This personal property exemption is quite large - $4,000 ($8,000 joint filing.)
The presence of these exemptions means that most debtors filing Chapter 7 bankruptcy cases are non-asset debtors who will owe little or nothing to the trustee at the end of the case.
These items are valued based upon the resale value of the item rather than the original cost. In other words, a dining room table purchased for $500 in 1999 might only be worth $100 dollars today. The table would be valued at today's value.
In 2007 the Florida legislature introduced a new "wild card" personal property exemption for the benefit of those debtors who do not claim a Homestead exemption. This personal property exemption is quite large - $4,000 ($8,000 joint filing.)
The presence of these exemptions means that most debtors filing Chapter 7 bankruptcy cases are non-asset debtors who will owe little or nothing to the trustee at the end of the case.
What happens to my car when I file bankruptcy?
I get asked this question pretty often: what happens to my car when I file for Chapter 7 bankruptcy? The answer is - it depends.
If you own the car outright then we must use the bankruptcy exemptions to protect as much of the value of the automobile as possible.
You are allowed a $1,000 equity exemption on one vehicle. If you are filing jointly then your spouse may add his or her exemption for a total of $2,000. Generally, the trustee of the bankruptcy court values automobiles based upon KBB or NADA values taking into account wear and tear on the car.
We can also utilize any unused personal property exemptions (up to $8,000 for a non-Homestead filing couple) to further protect the value of the automobile.
If you are making payments to a bank then the vehicle is secured property and is dealt with a bit differently. The amount of money owed on the vehicle is subtracted from the market value of the vehicle. If this is a negative number then there is no equity and you can choose to reaffirm the note and keep the vehicle - or simply give it back.
If there is equity then this amount can be exempted using the process described above.
If you own the car outright then we must use the bankruptcy exemptions to protect as much of the value of the automobile as possible.
You are allowed a $1,000 equity exemption on one vehicle. If you are filing jointly then your spouse may add his or her exemption for a total of $2,000. Generally, the trustee of the bankruptcy court values automobiles based upon KBB or NADA values taking into account wear and tear on the car.
We can also utilize any unused personal property exemptions (up to $8,000 for a non-Homestead filing couple) to further protect the value of the automobile.
If you are making payments to a bank then the vehicle is secured property and is dealt with a bit differently. The amount of money owed on the vehicle is subtracted from the market value of the vehicle. If this is a negative number then there is no equity and you can choose to reaffirm the note and keep the vehicle - or simply give it back.
If there is equity then this amount can be exempted using the process described above.
What do you get to keep after filing a Chapter 7?
Florida law determines that certain property is off limits to creditors after a debtor has filed bankruptcy. These items are known as "exempt" from the reach of creditors and cannot be touched.
A short list of these items include: the Florida Homestead exemption, which is unlimited if you have owned the home for 40 or more months; a 1,000 dollar auto equity exemption, a 1,000 dollar personal property exemption, and an exemption upon qualifying IRA savings accounts, 401k plans, social security and disability income, and health savings accounts.
In addition, for persons not claiming a Homestead exemption (usually renters) there is a 4,000 dollar "wild card" property exemption.
Importantly, when a married couple files jointly, all of these exemptions can be combined to double the amount of exempt property.
As you can see, with proper planning and guidance from a bankruptcy lawyer you can really keep a good deal of your non-secured assets even after filing bankruptcy.
A short list of these items include: the Florida Homestead exemption, which is unlimited if you have owned the home for 40 or more months; a 1,000 dollar auto equity exemption, a 1,000 dollar personal property exemption, and an exemption upon qualifying IRA savings accounts, 401k plans, social security and disability income, and health savings accounts.
In addition, for persons not claiming a Homestead exemption (usually renters) there is a 4,000 dollar "wild card" property exemption.
Importantly, when a married couple files jointly, all of these exemptions can be combined to double the amount of exempt property.
As you can see, with proper planning and guidance from a bankruptcy lawyer you can really keep a good deal of your non-secured assets even after filing bankruptcy.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy can most easily be described as "liquidation bankruptcy." In other words, many of your debts will be wiped out and non-exempt items in your estate might be sold off, or liquidated, to pay off your creditors.
Of course this is a very simple explanation of Chapter 7 and as with all things in the legal world the simple explanation only touches on part of the true definition.
In reality, most Chapter 7 bankruptcy cases are "non-asset" cases in which nothing is taken from the person filing bankruptcy and nothing is sold to pay off creditors. In the vast majority of Chapter 7 cases (some say as high as 95%) the person who files the petition does not actually lose any property at all.
A bankruptcy attorney can counsel you on when, where, and how to file a Chapter 7 case so that you can keep more of your stuff and get rid of most of your debt.
Timing can be very important when choosing to file a Chapter 7 case. If a person files at the wrong time he or she might have to turn over more property to the creditors in his or her case. This is why I sometimes counsel my clients to wait until a specific point in time prior to filing their bankruptcy cases. This is not always possible, especially when pending foreclosures or garnishments properly require an emergency filing.
Contact my office if you are considering filing bankruptcy and allow me to guide you and counsel you on the best strategies for building an effective Chapter 7 case.
Of course this is a very simple explanation of Chapter 7 and as with all things in the legal world the simple explanation only touches on part of the true definition.
In reality, most Chapter 7 bankruptcy cases are "non-asset" cases in which nothing is taken from the person filing bankruptcy and nothing is sold to pay off creditors. In the vast majority of Chapter 7 cases (some say as high as 95%) the person who files the petition does not actually lose any property at all.
A bankruptcy attorney can counsel you on when, where, and how to file a Chapter 7 case so that you can keep more of your stuff and get rid of most of your debt.
Timing can be very important when choosing to file a Chapter 7 case. If a person files at the wrong time he or she might have to turn over more property to the creditors in his or her case. This is why I sometimes counsel my clients to wait until a specific point in time prior to filing their bankruptcy cases. This is not always possible, especially when pending foreclosures or garnishments properly require an emergency filing.
Contact my office if you are considering filing bankruptcy and allow me to guide you and counsel you on the best strategies for building an effective Chapter 7 case.
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