Here are some Bankruptcy FAQs
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WhatsNew:
Dealing With This Economy
December 3, 2011
We have been busy at the firm helping our clients deal with this difficult economy. We have had some success recently filing Chapter 11's for a few individuals with multiple properties. A recent court ruling from the Middle District of Florida eliminated a major challenge to this type of bankruptcy. We have seen a drop in the number of Chapter 7 cases compared to last year but have been advised by the foreclosure attorneys that the next waive of foreclosures in coming soon. We expect to see a corresponding increase in Chapter 7 filings. Let us know if we can help you with your financial issues.
CurrentNews:
American Airlines Files Chapter 11
December 2, 2011
The parent company of American Airlines filed for bankruptcy protection in late November, seeking relief from crushing debt caused by high fuel prices and expensive labor contracts that its competitors shed years ago. For most travelers, though, flights will operate normally and the airline will honor tickets and take reservations. American said its frequent-flier program would be unaffected.
Recent Events:
The Local Bankruptcy Scene
November 28, 2011
In the Southern District of Florida, our firm has seen an increase in the unwillingness of Chapter 7 trustees to forgo the collection of potential funds. In Florida, an individual's exemptions in bankruptcy are guided by reference to state-not federal-law. An individual is entitled to certain exemptions of personal and real property. Generally, if an individual was over their exemption limit, i.e. having certain property not entitled to exemption, trustees would generally forfeit their right as administrator of the bankruptcy estate to sell the non-exempt asset if the asset was of little value or considered "unsellable." However, our firm has observed a recent uptick in the willingness of the trustee to sell non-exempt assets worth little, seemingly because trustees do not want to lose out on the potential collection of funds. Often, the sale generates funds in an amount that does little more than pay for trustee and professional fees. If you are considering filing for bankruptcy protection, it is imperative to consult with a bankruptcy attorney who can explain your options and offer pre-bankruptcy planning to avoid these common pitfalls.
Frequently Asked Questions - Bankruptcy FAQs
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- How do I file for bankruptcy?
- Where can I find more information on filing bankruptcy?
- How do I know if I qualify?
- What are the differnces between the different chapters?
- How will filing bankruptcy affect my credit?
- Will my neighbors or co-workers be contacted?
- What will be required from me?
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.
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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.
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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 usecured debt of over $360,000.00 you may only qualify for Chapter 11. There are some significant exceptions. Call us with your questions.
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What are the differences between the different chapters?
- 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.
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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 rebuid their credit score in about two years. See our discussion on rebuilding your credit after bankruptcy. We can help you with this.
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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 from 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 nonpriority 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 paystubs or other proof of income for the six months prior to filing in order to complete your means test.
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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.
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Additional Filing Requirements - Debtors will be required to provide copies of tax returns to the United States Trustee.
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