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Bankruptcy Faqs

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Bankruptcy and Business Law
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Frequently Asked Questions - Call us at 954-356-0450

  1. What is Bankruptcy?
  2. What can bankruptcy do for you?
  3. How do I file for bankruptcy?
  4. Where can I find more information on filing bankruptcy?
  5. How do I know if I qualify?
  6. What are the differences between chapters 7, 11 and 13?
  7. How will filing bankruptcy affect my credit?
  8. Will my neighbors or co-workers be contacted?
  9. What will be required of me?

What is bankruptcy?

  • Bankruptcy is a legal procedure by which an individual or business can reorganize or discharge debts. It is an important legal right. The right to file bankruptcy was included by our Founding Fathers in reaction to the "debtor’s prisons" of colonial times, in which individuals could be imprisoned for their debts. Since the year 1800 this country has had formal bankruptcy laws for the benefit of U.S. residents. Read more on our Bankruptcy Facts page. Learn more from this video.
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What can bankruptcy do for you?

  • Bankruptcy can eliminate some or all of your debts and provide a fresh start. A bankruptcy filing will stop collection efforts including IRS levies. It can also provide time to reinstate a mortgage or other loan and may permit you to remove a second mortgage from your home. Learn more from this video.
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How do I file for bankruptcy?

  • A bankruptcy filing begins by filing a Petition, Schedules A through J, Statement of Financial Affairs and a few other documents with the Bankruptcy Court in your Federal District. You will be assigned a judge, and for Chapters 7 and 13, a trustee. For more information see our Bankruptcy Facts page. Our office can help you with this. Learn more on our YouTube Page.
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Where can I find more information on filing bankruptcy?

  • A good place to start is our Bankruptcy Facts page. For more on a Chapter 7 liquidation see our Chapter 7 page. For more on a Chapter 13 wage earner reorganization see our Chapter 13 page. For more on a Chapter 11 reorganization for individuals and small businesses see our Chapter 11 page. If you are a creditor in a bankruptcy see our Creditors page and Bankruptcy Facts page. Please call our office with any questions. We do not charge for the initial consultation. Learn more on our YouTube Page.
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How do I know if I qualify?

  • If you are in financial distress then you likely qualify for one of the available chapters in bankruptcy. Most people still qualify for Chapter 7. If you have significant income you may have to file under Chapter 13 in which you file a Plan and make payments for three to five years. If you have secured debt of over $1,000,000.00 or unsecured debt of over $360,000.00 you may only qualify for Chapter 11. There are some significant exceptions. Call us with your questions. Learn more on our YouTube Page.
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What are the differences between Chapters 7, 11 and 13?

  • The most commonly filed form of bankruptcy is Chapter 7. It is a simple liquidation and takes about four months. Chapters 11 and 13 both involve filing a plan and making payments for a number of years. Chapter 13 is much simpler but is limited to individuals with unsecured debt of no more than $360,475.00 and secured debt of no more than $1,081,400.00. Chapter 11 does not have these dollar limitations and is also available to business entities but is more complicated and expensive. Learn more on our YouTube Page.
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How will filing bankruptcy affect my credit?

  • A bankruptcy filing will damage your credit score. The amount of reduction depends on your current score. A high score will drop more than a low score. The bankruptcy discharge will remain on your credit report for ten years. However, most people can rebuild their credit score in about two years. See our discussion on rebuilding your credit after bankruptcy. We can help you with this. Learn more on our YouTube Page.
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Will my neighbors or co-workers be contacted?

  • No. A notice will be mailed by the Bankruptcy Court Clerk to your creditors and to parties to leases. In South Florida all legal proceedings are reported once in the Daily Business Review newspaper. It has been our experience that friends, family, neighbors and co-workers do not find out about a bankruptcy filing unless told by the debtor. Call us if we can help.
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What will be required of me?

  • Means testing - Section 707(b) of the Bankruptcy Code provides for dismissal of Chapter 7 cases or (with the debtor's consent) conversion to Chapter 13, upon a finding of abuse. Abuse is presumed if the debtor's current monthly income, excluding allowed deductions for expenses, permit the debtor to pay not less than (a) 25% of non priority unsecured debt over 60 months or $10,000.00. Debtors whose family income exceeds a national median for their size family will have to go through "means testing". Debtors with the ability to pay 25% or more of their unsecured debt will have to file a Plan under Chapter 13 and make payments for a minimum of 5 years. We will need your pay stubs or other proof of income for the six months prior to filing in order to complete your means test.
  • Credit Counseling - All debtors must undergo consumer credit counseling within 180 days of filing and may not obtain a discharge until they complete a personal financial management instructional course.
  • Additional Filing Requirements - Debtors will be required to provide copies of tax returns to the United States Trustee.

     

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