General Bankruptcy Questions
- What types of bankruptcy are available in Florida?
- What is chapter 7 bankruptcy?
- What is chapter 13 bankruptcy?
- What is the difference between chapter 7 and chapter 13 bankruptcy?
- Should I file for bankruptcy?
- Should I file under chapter 7 or chapter 13?
- Is bankruptcy an option for everyone?
- Do I have to have an attorney to file bankruptcy?
- How does one convert a case from one chapter to another?
- What is the automatic stay in bankruptcy?
- What happens if a creditor violates the automatic stay?
- What is the difference between a secured creditor and an unsecured creditor?
- Can you keep your home if you file bankruptcy?
- Can you keep your car if you file for bankruptcy?
- Will a Florida bankruptcy affect my credit?
- How is IRS tax debt handled in bankruptcy?
Chapter 7 Bankruptcy Questions
- What is a chapter 7 bankruptcy?
- When should I file chapter 7 bankruptcy?
- What is the bankruptcy means test?
- Can a chapter 7 bankruptcy be converted to chapter 13?
- Will filing chapter 7 bankruptcy stop wage garnishment?
- What is the process for filing for chapter 7 bankruptcy with an attorney?
Chapter 13 Bankruptcy Questions
- What is a chapter 13 bankruptcy?
- What are the two key requirements of chapter 13?
- What are the advantages of chapter 13?
- What is the duration of a chapter 13 plan?
- How is a chapter 13 plan approved?
- What happens after the chapter 13 is approved?
- When do payments on a chapter 13 begin?
- What are the eligibility requirements to file a chapter 13?
- Can people file for chapter 13 jointly?
- How are joint or cosigned debts treated in chapter 13?
- Can I modify my mortgage in a chapter 13 bankruptcy?
- Can a self-employed person file for chapter 13?
- Must all debts be paid in full in chapter 13 bankruptcy?
- How do Florida exemptions apply to debtors in chapter 13?
- How are secured and unsecured creditors treated in chapter 13?
- What is the difference between an amended plan and a modified plan?
- Is chapter 13 bankruptcy right for me?
Bankruptcy And Your Home
- What are your options for resolving mortgage issues?
- What is lien stripping?
- What is the bankruptcy loan modification mediation program (LMM)?
- What is the history of loan modification?
- How was loan modification mediation reformed?
- What can you expect from loan modification mediation?
- LMM: Can it get me a principal reduction?
- LMM: What if I have already been denied a loan modification?
- LMM: What if my mortgage payment plan is already confirmed in chapter 13?
Bankruptcy is what's known as reorganization. That word by itself might be a little confusing in light of what people tend to think about what bankruptcy is and were going to take a brief moment to explain all of the chapters in bankruptcy so you understand a little bit better.
Most people think that there are only 1, 2 maybe 3 chapters in bankruptcy. In fact there are 6 chapters available to people who are considering bankruptcy as an option. It just happens to be that 3 of them are chapters that most people don't tend to participate in very often.
When looking at financial options many people have wondered what Chapter 7 bankruptcy is? Chapter 7 bankruptcy is a specific type of bankruptcy where you are able to discharge your debts, with a few exceptions. In this type of bankruptcy you nonexempt assets that you have will be sold to a trustee so that they can be used to pay some of your debt to some of your creditors. It's important that you remember that filing bankruptcy is serious, and that it is something you have to carefully consider before deciding to move forward.
A Chapter 13 bankruptcy is the chapter that we file for individuals who have income, but not enough money to pay all of their creditors back. So what we do is we look at your assets, we look at your budget, and we come up with a plan of reorganization, a plan of how much you will pay on a monthly basis and to which creditors. We do that together before filing it with the court, we propose it, we file it and you begin making payments a month after we file that case.
If you find yourself buried under an seemingly endless and constantly growing pile of bills, it can seem as if you will never be able to resurface. If this is the case then you have probably stopped to consider bankruptcy as an option. If you lack a lot of familiarity with bankruptcy law, then before deciding which type of bankruptcy to file for you should take the time to learn the major differences between Chapter 7 versus Chapter 13 bankruptcy. Both of these types of bankruptcy give you specific benefits that can help you with your unique financial difficulties.
- Chapter 7 Bankruptcy: Hiring a Chapter 7 bankruptcy attorney will usually result in what is called liquidation. This is a process where any assets that you own, that are not exempt, will be sold to help pay your creditors. When filing for Chapter 7 bankruptcy you immediately get a stay preventing creditors from contacting you, and it relieves you of most of your debts. When filing for Chapter 7 bankruptcy it's important that you remember that it will not erase any taxes that you owe or any student loans.
- Chapter 13 Bankruptcy: At the end of the Chapter 13 bankruptcy process most of your debts will be discharged much like they are when you file Chapter 7. However there are some key differences to keep in mind. The main difference is the way that your debt is reduced. In Chapter 13 your assets are not liquidated to help pay off your creditors. Instead Chapter 13 bankruptcy helps to consolidate your debt so that you will have a single, lower monthly payment.
When making decisions about what securing financial relief, it's important that you consider all of the differences between Chapter 7 vs Chapter 13 bankruptcy. By making the right decision you can help to get out of what may be an insurmountable amount of debt and move on with the rest of your life.
Unfortunately, without an expert attorney from Ozment Law, PA looking at your individual case, we can't be sure it is the best option for you. Since every situation differs, there is no guarantee that you will need it. However, 9 out of every 10 bankruptcy consultations we provide end in the advising of bankruptcy. This is solely because persons who are researching the topic have usually already tried everything else possible to better their situation without success. It is important to know that we do try to keep bankruptcy as a last result and would never advise it if there were other options available.
Following are the two options available to those who wish to file bankruptcy in Florida:
- Chapter 7 Bankruptcy: A number of people file for chapter 7 bankruptcy for various reasons. Chapter 7 bankruptcy pays of as much of your debt as possible by liquidating your assets and distributing the proceeds from your assets between your creditors such as banking institutions and credit card providers.
- Chapter 13 Bankruptcy: Chapter 13 bankruptcy is more suitable for people who want to keep their property. Chapter 13 bankruptcy is also called reorganization bankruptcy and it allows people some time to get rid of their debts which is generally a period of three to five years.
Some people may find it tough to accept the bitter fact that they need someone's assistance to pay off their debts. This is precisely the reason why government has provisioned for bankruptcy laws to protect creditors as well as you. It is in your best interest to resort to bankruptcy if you are overburdened with debt. Ignoring the ringing phone and turning a blind eye to the pile of unpaid bills will fetch no results.
Usually, yes. There are qualifications to file for bankruptcy, especially when it comes to Chapter 7. However, if you don't pass the Means Test that Chapter 7 requires, you can usually still benefit from other options like Chapter 13. Knowing your individual situation is key when it comes to deciding which option is best for you, and that is something that our bankruptcy attorneys fully understand and can help greatly with. They can quickly give you your options and explain why one choice is better than another based on your case.
Now, however bankruptcy is a complicated process that can result in the loss of many assets, including your home. Too many times have we seen people who have tried to file on their own and they lose things that have had a devastating effect on them. By doing this process on your own without fully understanding the details, you are taking a major risk with your things. Contacting anyone but an attorney for legal advice is illegal and probably not the best idea in bankruptcy cases. An attorney will know what it takes to keep your best interests in mind and create the perfect solution catered to your individual situation.
A client can convert their case from one chapter to another through either filing a simple notice of conversion from say a Chapter 13 to a Chapter 7 and the case will simply be converted, the court will issue and order and then you will, almost like starting a new case be in a Chapter 7 case. For converting a case from a 7 to a 13, back to a 7 you would file a motion to convert that case from one chapter to another, lay out the reasons why you're doing this or need to do this and it will get set for a hearing where all of your creditors would have an opportunity to be heard or object for whatever reasons they may have and the court will then enter an order granting your motion to convert or denying it if there are some unusual facts that would prevent you from converting your case. But generally conversions are allowed and the hearings are just a formality and you would convert your case rather easily.
The automatics stay is the most powerful thing involved with bankruptcy. By filing bankruptcy there is an automatics stay against all of your creditors suing you, mailing you, calling you, contacting you. By filing bankruptcy, the automatic stay goes in to effect the moment the case is filed and none of your creditors can bother you in any way what so ever unless the bankruptcy court gives them permission to do so.
So if a husband files bankruptcy and he's trying to stop a creditor harassing them, the husbands wife does not file bankruptcy and she's also on that car loan or obligated on that debt, then that creditor can still go after the wife if she doesn't file with him in a joint case. So the automatic stay of bankruptcy applies to the person who files bankruptcy or the couple who file bankruptcy together and we figure out in our consultation whether or not a husband and wife need to file jointly or not, and that's a really common question but we look to answer those questions right at the onset so we know whether were filing an individual or a joint case because we want the automatic stay in effect and to stop creditors from harassing our clients. Something that must be looked at right on the onset.
If a creditor continues to call you, or email you, or knock on your door to collect a bill after you've filed bankruptcy then they are in violation of the automatic stay of bankruptcy and they can be sanctioned for that. We'll file the appropriate motion and the court will give them the opportunity to explain why they violated the automatic stay and if there is not good reason then they will impose sanctions, award attorney's fees and any costs that are involved against that creditor for violating the automatic stay and this can run from the 100′s into 10,000′s of dollars so creditors are very leery typically about violating that automatic stay, however it does happen on a somewhat regular basis and we usually send them a letter before we go all out with filing sanctions against them but it is something we have to take a look at and deal with on a regular basis.
A secured creditor is a creditor who has a security interest in an asset. And the best example is that your home will typically have a mortgage, and the mortgage will be secured by your home, that will be the asset that secures the interest in the loan.
The second most common example is your car may have a car loan and the loan will be secured by the vehicle itself. If you don't make your mortgage payments and if you don't make your car payments then those lenders have the right to either repossess the vehicle or foreclose on your home.
So if you're going to keep those assets you've got to keep those payments current, either outside of the Chapter 13 plan or through your payments within the Chapter 13 plan to protect them.
Unsecured creditors are those that don't have security interests in assets that you own, and the best examples of those would be like credit cards, medical bills, old phone bills, and any of those pesky collection letters that you receive.
There are many areas of your life that are affected when you are bankrupt. Your home is one of these areas. Filing for bankruptcy does not necessarily mean you will automatically lose your home. In some cases, you can be allowed to keep your home especially if it meets the criteria needed to be exempted. There are several factors that will determine whether you keep your home or not. Knowing some of these factors can help you find out if your home will be taken away or if you will be allowed to keep it.
You are usually allowed to keep some property when you file for bankruptcy. The property you are allowed to keep is normally referred to as exempt property. Your home may be excluded especially if it is your only source of shelter. Exempt property is usually property that you need to have as shelter. As this is the case, you may lose other homes you use on a regular or rare basis. For example, if you live in the city and you have a house in the country, you may lose your country house as it will not be considered as exempt property.
Different areas will have different rules for property. For instance, Florida has a very generous home exemption for home owners. When a resident files for bankruptcy, they are allowed to keep all of the equity in their homes. If the home owner lives in a Florida municipality, they can keep up to 1/2 acre of land and the improvements and building on that land, and keep the value of up to 160 acres of land and the improvements and building on that land if they live outside a municipality. The homeowner can only retain the possession of their home if the pay off the mortgage according to the instructions that were provided by the judge.
When filing for Chapter 7, one of the many concerns filers have is: "What is going to happen to my car?" Your car is typically essential to your daily life; from driving to work, picking and dropping the kids off at school, or buying groceries and running errands. One of the benefits when filing for Chapter 7 is that if you have a modest car, it is likely that you can keep it.
One determining factor when filing for Chapter 7 is if you are current on payments. If you aren't current on payments, you can't make up arrears during bankruptcy, which is the case with Chapter 13. Further, the loan amount, and available exemptions which can be applied towards that loan, are also considered in determining whether or not you can keep your car.
In addition to the above factors, you can keep your car if you opt to use one of the options available for handling a secured debt, which requires redeeming the vehicle or reaffirming the loan. For those who aren't worried about the car, you also have the option to surrender it during the proceedings. For individuals who lease (rather than own), you have a couple options as well. You can either terminate the lease, or continue it, by assuming it in the bankruptcy. Both Chapter 13 and 7 will address what happens to the cars, the loans, and any vehicles you own debt free.
- An automatic stay prevents repossession, which typically goes in to effect upon filing.
- Under Chapter 7, provisions may protect your vehicle from an outright sale.
- And, under Chapter 13, the latest provisions provide you with the opportunity to repay the loan, at a lower interest rate, so that you do not have to worry about losing the car to debt collectors.
Most people think that if they file for bankruptcy, their credit rating will be affected for their entire life. There is a wrong perception on how bankruptcy affects one's credit score or credit rating. Your credit report will appear only for ten years as stipulated under Fair Credit Reporting Act. If any of your accounts are included in bankruptcy they will be listed as "Included in Bankruptcy" for a period of seven years. The effects of these items are not long lasting. These effects vanish with time and will not have any impact on your credit report thereafter. The effects will be heavily felt during the short run as it lowers your credit rating and you will not be able to get credit on favorable terms.
Great question. The internal revenue service, because it's the government, you understand when your filing a bankruptcy you're going to the United States government for bankruptcy protection so the reality is that the government wants to make sure that they get theirs as often as is possible and very often the way that works is that your internal revenue service debt is not going to be dischargeable. Now there are exceptions to this, and it's very interesting how those exceptions work.
First of all, in the context, you need to be very clear that if you file a case primarily to deal with the IRS, that case is not going to be confirmed. There is a specific code section that deals with what you need to do in order to be able to confirm a and one of the giant prohibitions is that case can't have been filed primarily to treat an internal revenue service problem.
Chapter 7 is liquidation and in the context of liquidation what we're talking about is a process that I'm going to explain briefly in a fashion that sounds very scary. And then I'm going to explain it in a slightly different fashion, just so that you understand how the various laws interact with one another. Chapter 7, the theory is, they take a snapshot of a day in your life. They take all of your finances, all of your assets, which are the things that you own, and all of your liabilities which are the things that you owe. You have to disclose all of these, and I need to be very very clear about this, people love to say, "Oh well I owe my Mom a couple of bucks." You've got to put her in, you have to include it, there is no skipping around with this type of thing, it's an all or nothing type of situation so all of the assets, all of your liabilities.
Now the theory, and its sounds scary, is to take all of the stuff you own and they sell it, and they use the proceeds from that sale to pay your creditors the best they can be paid. Anybody who doesn't get paid gets discharged, that's generally how the theory works. Now discharge, that's a word people don't use every day. What it really talks about, people think that is means that your debts have been erased. That's not legally accurate because they not going anywhere, but as far as your concerned, your liability to have to pay those debts has been abrogated so as a practical matter if you think about it as being erased that's not a bad way to consider it.
If you are in Florida, and you want to file Chapter 7 bankruptcy, there are a few steps you will need to take. You will need to take part in pre-filing counseling, and then determine which judicial district is the correct place for you to file. The exemption laws that you are subject to are determined by your state of residence.
You should file after you have completed the necessary steps to get you ready for the bankruptcy process. However if you are trying to file under Florida's laws then you will need to have lived in Florida for two years before you can do so. This residency requirement was put into place in order to keep people from taking advantage of the system by moving to states with more favorable exemption laws. In other words people would run up a lot of debt, then they would move to a state with more favorable exemption laws in an attempt to retain more of their possessions.
If you have recently relocated to Florida, your bankruptcy case will use the exemption laws from the state that you have spent the most time living in during the past 2 years. While there are some variances between states, since most bankruptcy laws are federally governed the process is usually very similar from state to state.
Despite the similarities you will need to be able to include some of the information specific to Florida in your bankruptcy forms. You will also need to know about Florida exemptions because federal exemptions will not be available to you. You should file chapter 7 after you have completed all of the necessary steps in order to ensure that you are properly prepared for the bankruptcy process.
Anyone looking to file for bankruptcy under Chapter 7 must undergo this test. This test is based on your income and has been designed with an aim of providing the benefits of Chapter 7 to people actually deserve them. This test reserves the powerful provisions of the chapter for are genuinely unable to clear their debts.
If you are in such a financial state where your disposable income of each month is insufficient to pay your bills, it is very likely that you will be able to file chapter 7 bankruptcy and get rid of your debts.
There is more than one way of filing bankruptcy in Florida and each of them comes with its own share of advantages and disadvantages. It is recommended that you resort to the services of a lawyer before deciding to proceed with filing bankruptcy so that you can do what best suits your present circumstances.
A Chapter 7 case can be converted to a 13 and likewise, a Chapter 13 can be converted to a 7. A 7 might be converted to a 13 because you have exceeded your exemption allowances or the chapter 7 trustee has demanded turnover of a vehicle or some asset that you wish to keep and we would move to convert your case to a Chapter 13 where again we would be putting a Chapter 13 plan together to pay your creditors based on those assets that you may have been under threat of losing under Chapter 7.
Now we may have a 13 case where we're paying for a vehicle which you decide you no longer wish to keep and you don't have any other asset issues with relation to your exemptions, your budget may be tight enough to allow us to move to convert your 13 to a Chapter 7 which we can do by a simple notice and you would not make any payments going forward and we would get you a discharge in a Chapter 7. So cases can convert from one chapter to another for a variety of reasons. Come see us and we will talk to you about the issues and let you know how and what your rights are wit relation to any conversion.
Are you in the situation where your wages are being garnished? You're probably wondering and asking yourself, "Will filing bankruptcy stop wage garnishment?" You will be glad to know that in most cases, wage garnishment can be stopped by filing for Chapter 7 bankruptcy. This is due to the fact that the automatic stay of bankruptcy forbids the majority of creditors from collecting the money that you owe them during the bankruptcy case.
Different processes of Chapter 7 bankruptcy may vary depending on the complexity of each case; however, many of them have more or less the same timelines. Compared to Chapter 13 bankruptcy, which may last for several years, Chapter 7 bankruptcy cases normally have very few complications and only take under a year to be completed. Essentially, it is a liquidation process where assets that are not protected by the applicable exemptions are liquidated in order to pay the creditors.
Before a debtor decides to file a bankruptcy case he/she first starts by gathering all the information that is required for their case. Typically, they will need: the tax returns that they have filed in the recent years, their paycheck for the past six months and any relevant information about their creditors. It is important to consult a bankruptcy attorney in order to get the complete list of all the requirements for filing a Chapter 7 Bankruptcy since different cases may vary from each other.
The next step involves the debtor's attorney drafting the necessary documents that are required when filing the case. Once the documents are ready, the debtor will go through them and sign them if they are satisfied. The attorney will then file them with the court. As soon as the Chapter 7 bankruptcy is filed, the creditors are automatically restrained from recovering anything from that particular debtor. Therefore, the creditor cannot sue, or even call the debtor.
The Meeting of Creditors is the next major step. Here, the appointed Trustee to the case will question the debtor to ensure that all that has been filed is correct and true. However, the questioning may vary depending on the case. Creditors normally do not turn up for this meeting; however, if they do show up, they will be given an opportunity to question the debtor. Once this is complete, the trustee will decide on the assets, if any, which are to be liquidated. The trustee will then decide on the ratio at which the creditors will be paid. However, the debtor's assets are normally protected by a number of exemptions hence there is usually no liquidation.
Once the meeting is complete, a two-month window to allow for any objection is opened. Objections are quite rare, however if they do arise they may result in complications in a Chapter 7 bankruptcy case. These should always be dealt with by a bankruptcy attorney. If there are no objections, the liquidation process is now complete. The debtor will be issued with the order discharging their debt and the case will then be closed.
A Chapter 13 bankruptcy is the chapter that we file for individuals who have income, but not enough money to pay all of their creditors back. So what we do is we look at your assets, we look at your budget, and we come up with a plan of reorganization, a plan of how much you will pay on a monthly basis and to which creditors. We do that together before filing it with the court, we propose it, we file it and you begin making payments a month after we file that case.
One of the big differences between 7 and 13 is that in 13, not only are you limited by the debt, but you're limited by the term of years within which you are allowed to be able to repay your debts. Typically a chapter 13 case goes for 60 months, that's a 5 year plan, there are circumstances where it can go as little as 3 but pretty much set your expectations for a 5 year plan. Now a lot of people say "great I don't want to be in bankruptcy one moment longer that I need to be," and quite frankly that's exactly right, but there are circumstances where you may need more time in order to be able to reorganize the debts that you have so that you can then go forward and be a productive member of society or perhaps, more importantly, if you're in a business, be able to save all of your employees jobs and to remain a viable entity.
In there is no technical limitation on the amount of time that you might be in a case or that you might make payments. There are a lot of interesting and technical deals with, but ultimately what you're talking about is, first of all, individuals can file.
The first one is that the payment must be made for five years, or the payment of the entire disposable family income of the person making the payment must be made through the bankruptcy plan to the unsecured creditors until the creditors have been fully paid, whichever comes first.
In the second requirement, the unsecured creditors must be paid at the very least an equivalent of what they would be given from the non-exempt property of the person making the payment if he or she filed for a Chapter 7 bankruptcy.
There are certain advantages that a Chapter 13 has over the Chapter 7 bankruptcy. For instance, Chapter 13 allows debtors to alter or eliminate some of the secured debts. It will also specifically put a stop to or prevent a foreclosure to enable the debtor to work towards catching up on any mortgage payments that were due in the past. Second mortgage liens that are unsecured can be eliminated successfully through Chapter 13. It also allows the discharge of some of the unsecured debts which in a Chapter 7 would not be dischargeable.
The debtors are allowed over time to make up their payments that are overdue, and to reestablish the initial agreement. In a case where the debtor has valuable non-exempt property which he or she desires to keep, then a this will be the preferred option. However, Chapter 7 offers debtors the most appealing choice, especially for most who would simply want to do away with their cumbersome debt burden without having to pay back any of it.
A Chapter 13 bankruptcy plan typically will last somewhere between 36 and 60 months. 60 is the maximum, that's 5 years, 36 is generally the minimum that a court requires you to devote a certain amount of your disposable income to make payment on for a certain period of time. 3 years being the minimum, 5 years being the maximum. We do have cases that are shorter where creditors are actually paid in a faster process, but generally plans are between 3 and 5 years.
After we file your Chapter 13 plan, you to attend a meeting of creditors with the trustee and any creditors that wish show up an ask a couple of questions about your plan, generally they don't even show up which is good, it makes it easier for you, the consumer, to go through your first meeting.
After your 341 meeting your plan is actually presented to the court at a subsequent hearing called a confirmation hearing and that is when your case will get an approval. It's generally three to four months after your case is filed.
Once your plan is approved by the bankruptcy court we call this a confirmation order, and this confirmation order gets sent to all of your creditors that are provided for in the plan and what it does is it actually binds them to the terms of that Chapter 13 plan as a contract with your creditors. You are bound to make the payments and they're bound to accept those payments and as long as you make your payments you will complete your plan, get your discharge, and you will have successfully reorganized under Chapter 13.
Payments begin in a Chapter 13 case within 30 days of the day you file your case. The court understands that you had to pay an attorney fees in order to get your case filed, therefore they give you 1 month before you have to make your first payment under the plan that your attorney draws up for you which you will see prior to filing the case and know 30 days in advance how much your payment is going to be so you'll have time to get that first payment together.
A person is eligible to file a Chapter 13 if they, 1, have income because you must have income in order to reorganize and pay your creditors some amount according to a plan we propose for you.
A limit to someone being eligible for Chapter 13 is you can't have over amount $390,000′s of unsecured creditors. Those credit cards, medical bills and other unsecured creditors, if you exceed that amount again you'll fall out of Chapter 13 eligibility and into eligibility which is another chapter of bankruptcy which we'll deal with on another interview.
People can file Chapter 13′s jointly. The bankruptcy law allows a debtor and their spouse to file a joint case that actually saves them money. They don't have to pay two lawyers for two bankruptcies and two filing fees. They can file one case together, it's a name, a social security number and a signature at no extra cost. We provide for all of the creditors for both parties in the Chapter 13 petition and provide for all of the payments in one fashion or another in the Chapter 13 plan. So people can file jointly and it actually saves them money.
Joint debts will have to be handled in every Chapter 13 case whether both of the debtors are filling together or if only one person is filing bankruptcy, we will stay have to provide for how that joint debt will be treated within a Chapter 13 plan. And we will have to provide for either paying the secured debt, even if its joint, surrendering the asset if we're going to give it back to the creditor, or if we're going to provide for some amount of creditor if there are unsecured.
The unusual thing about this is, if there's a non-filing joint debtor out there for these debts, they will remain liable for their signed obligation to pay those joint debts regardless of whether the person filing bankruptcy has discharged the debt in their plan or not.
A debtor can modify their mortgage with a Chapter 13. There is a mortgage mediation process which we will explain to you in our consultations, but it is essentially applying for a mortgage modification within bankruptcy, following bankruptcy guidelines, the court will appoint a certified bankruptcy mediator to mediate with you the owner, me as your attorney, the lender that you want to modify the mortgage with, and they will essentially get all the parties together, they will review all your documents, to try to see if your are eligible for a mortgage modification in bankruptcy. There are no guarantees but the latest statistics that are running around 80% successful which is what we believe far better than mortgage modifications outside bankruptcy which are at ridiculously low percentages, below 5% in most county's so you can modify your mortgage in bankruptcy, it's not a guarantee, it's a lot of work on your part as a borrower and in our part as your lawyer and we will just work to get the best offer from them that we can.
Self-employed people absolutely can file Chapter 13; they're one of our most common clients. It's about continuing to run their business, paying reasonable living expenses and coming up with a plan of reorganization just as we would for someone who's a regular employee for some other business that they don't own. And the same rules apply to their assets, their budget and coming up to a plan of reorganization that will ultimately get approved by the bankruptcy court.
In a Chapter 13 plan all debts do not have to be paid in full. We actually take a really in-depth look at the value of your assets, your budget and we determine how much of your unsecured creditors you actually have to repay. When it comes to your secured creditors like mortgages and cars, we actually look at those one by one to determine whether you want to keep that asset or surrender it back to the creditor and if we can eliminate any of that debt along the way we will certainly do that.
In the state of Florida we have exemptions and that really means things that you're entitled to keep in bankruptcy and what we do is we apply these exemptions to the things that you own to figure out as you go through bankruptcy how much of those assets you'll be entitled to keep in a Chapter 7 setting and how much you will have to pay back to your unsecured creditors in a Chapter 13 setting. It's almost a dollar for dollar situation.
For example, if you owe $10,000′s on a car but its worth $15,000, Florida's exemption for an individual is only $1,000′s, you would therefore exceed your limitation on the exemptions by $4,000′s and we would then pay all of your creditors a total of $4,000′s and they would each get a piece of that based on the size of their claim as an unsecured creditor. So we need to look at all of your assets, apply all of the state exemptions to the things that you own to determine how much you would have to pay back in a Chapter 13 case.
Secured creditors can be paid through the Chapter 13 plan, meaning you actually make the payment to the Chapter 13 trustee and he/she sends the payment to your secured creditors whether it be a mortgage or a car or something along those lines. You can also pay secured creditors outside of the plan, directly, you may be current with your mortgage payment or current with your car payment and your Chapter 13 reorganization is just to deal with other creditors that you have.
Now when you get to unsecured creditors you really have no choice with them. They must be paid through the plan and they have a lower priority than do mortgage and car payments. So after mortgage and car payments are dealt with, we will then deal with what are called the unsecured creditors, that are not secured by anything and you will pay them according to your assets, the exemptions that apply to your assets, and what your income and expense will allow you to pay them and we, as your attorneys, will draft plan payments and tell you how much of your unsecured creditors we think you'll have to pay through your plan and we'll talk about that prior to filing those plans or amending those plans or modifying those plans which will take us into another area of Chapter 13.
We typically will file a proposed Chapter 13 plan with your bankruptcy petition in Chapter 13. What often happens is the trustee or creditors may ask us to amend these plans for the right numbers amounts or account numbers and things of that nature and we will amend plans up until what we call you confirmation hearing where we get the actual final plan approved by the court. Now what happens is after your case is confirmed for whatever reason you may fall behind on your payment, you may miss a few payments, sometimes people change jobs and what the court allows is a modification process where we can actually go in, modify your plan and essentially bring you current with a new payment going forward. So we amend the plans up until there approved by the court, we modify them after they've been approved when we need to fix things or bring people current who fall behind after they've initially been accepted.
Chapter 13 bankruptcy is an extremely complicated process and one where the assistance of a fully qualified bankruptcy attorney such as Ozment Law, PA is necessary in order to ensure the procedure is handled correctly. Each chapter 13 bankruptcy case is individual, but all cases will follow the same general time scale of events. A chapter 13 bankruptcy differs in that the debt recognized is of a personal nature rather than a business one. The debtor in the bankruptcy case is required to make payments on a monthly basis to the Trustee, the amount of the payments being determined by the expenses and income of the debtor.
It can be assumed that all disposable income of the debtor will be paid monthly to the Trustee, and from here the money will be distributed amongst the creditors. The amount that each creditor will receive will depend on the amount owed as well as the priority of the claim made by the creditors. When the debtor manages to make all of the said payments to his Trustee under the Chapter 13 bankruptcy plan, any debt remaining at the end will be dissolved. There are many factors to take into consideration when choosing between chapter 7 and chapter 13 bankruptcies. The biggest factor that will most often sway a decision will be income. When the debtor has a sizable disposable income, he will often be forced into filing a chapter 13 bankruptcy as he will not qualify for a chapter 7. However, super discharges that are included in a chapter 13 bankruptcy plan will often encourage people to steer clear of chapter 7 plans. A Chapter 13 plan will allow the debtor to add taxes to the plan, and will also often result in a home being saved due to the removal of second mortgages and automatic stay which will protect the co-debtors.
A chapter 13 bankruptcy plan arranged by a reputable bankruptcy attorney such as Ozment Law, PA will put an automatic stop to calls from creditors and proceedings to sue, the automatic stay preventing any collection attempts from creditors. After this automatic stop is put in place, a meeting of Creditors will take place.
A confirmation hearing will take place, usually around three weeks after the Meeting of Creditors. At the aforementioned hearing, the Judge presiding over the case will hear of any possible disputes that may exist from both the Trustee as well as the debtors chosen bankruptcy attorney. In the case of outstanding unresolved issues, a hearing may be necessary in order to resolve them. It is more common however that the different parties will come to an agreement without the necessity for a further hearing. Once any objections are resolved, the Judge will sign the Chapter 13 bankruptcy plan and the debtor will then honor the payments to the Trustee laid out within the plan.
The lawyers at Ozment Law, PA realize that every situation is different. They want to make your financial life better, and are ready to provide a number of options in order to find what works best for you. The following list contains some of the possible options that are available.
- Bankruptcy Loan Modification Mediation – While people have the opportunity to modify their loan outside of bankruptcy court, the majority of these modification attempts are unsuccessful – typically because of delays, being denied, or because lenders offer poor terms. Bankruptcy Loan Modification Mediation is a new program operating within the bankruptcy court system, and it's a great idea for people who want to save their home and need better terms in order to do that. When you enroll in Bankruptcy LMM, your Ozment Law, PA lawyer will help you gather the documents you need, and represent your best interests in a mediation procedure that also includes your lender and a court-appointed mediator. Results vary and are decided on a case-by-case basis, but many people who have enrolled in Bankruptcy LMM have received a lower mortgage payment, a reduction in principal, or even both.
- Foreclosure Defense – Some people who are in foreclosure do not want to keep their home, but they do want to stay there as long as possible. For those people, Ozment Law, PA can help you create a stay-save-surrender plan. As you stay in your foreclosed home, you can save money and surrender the house when it's time. Often this means having enough money for security deposit, first and last month's rent – or even enough money to put down on a new property.
- Short Sale – A short sale is a good option for people who have already moved out of their home or who are planning on moving. If you don't want to keep your home, Ozment Law, PA will help you with a short sale that includes: listing the house on the open market, negotiating a short sale with the lender, and doing an in-house closing with no out of pocket cost to you. In a successful short sale, the lender will release your liability for the mortgage and you can leave foreclosure behind you.
- Deed in Lieu – In order to avoid a foreclosure all together, some lenders will agree to take the deed in lieu of foreclosing. Ozment Law, PA can help you with this procedure, and save you the humility and embarrassment of being foreclosed on.
Lien stripping is one of my favorite issues in bankruptcy court. I'm going to give you two examples of lean stripping. The first is with regard to a vehicle. If you owe $20,000′s on a vehicle and it's only worth $10,000′s, well you're only going to pay $10,000′s for that vehicle and were going to strip the remaining amount of debt off that loan and they will simply be treated like an unsecured creditor like your credit cards and medical bills.
The other example of lean stripping is if you have a second mortgage or even third mortgage on your house and there's no equity above your first mortgage balance, then we can remove or strip` those second and third liens on your house. They will no longer be mortgages. They will simply be unsecured creditors for the amount that you owed them. For example, if you owe $150,000 on your first mortgage and your house is only worth $125,000′s we can remove, we can strip any second or third mortgage that you have on your house over and above that first mortgage balance, and that is lien stripping.
Bankruptcy courts across the country have been more than willing to respond to foreclosure crisis by implementing loss mitigation programs. There is no denial that the state court mediation program in the state of Florida generally failed, however, there are a few bankruptcy courts that are claiming a high success rate.
The new mortgage mediation program by Bankruptcy Court for Southern District of Florida:
In order to settle mortgage issues on residential property, the Bankruptcy Court for Southern District of Florida began a new mortgage mediation program on April 1, 2013. The program can be used for both residential investment properties as well as owner occupied properties. This program is available throughout the Southern District of Florida which covers Broward, Palm Beach, Martin, Monroe, Okeechobee, Indian River and Highlands County.
This new mortgage mediation program is a voluntary program and is meant for debtors under Chapter 13 and 12 (family farmers). It is also available to debtors under Chapter 7 but only to a limited extent. It is applicable to cases of bankruptcy that have been filed before, on or after April 1, 2013. Cases that have concluded before April 1, 2013 can also be reopened to take part in the mediation program. It is expected that Chapter 13 bankruptcy will use the program the most.
The collaboration between Bankruptcy Court Judges, mortgage lenders with their counsels and Chapter 13 trustees resulted in this program in the Southern District. All these parties have shown a high level of commitment towards making this program a success. This program in the Southern District has been modeled after the successful program run by Middle District which has been in force for over a year now. If reports are to be believed, the Orlando division of the Middle District claims 85% success rate for mediation's held in the month of January 2013 alone and an overall success rate of 80%.
Not too long ago, the loan modification process was operating at a 95 percent failure rate. Although many people put in requests, most were denied, and many of those who were successful ended up agreeing to bad terms (such as 30, 40 or even 50 year repayment).
There were many reasons for this failure. Some had to do with documentation (like documents not getting to the lender in time or paystubs going stale) while other modification requests failed because the lender simply did not approve them, or offer good enough terms for the buyer to accept.
Then it happened: the real estate crash. It was a devastating series of events that put millions of families behind on their mortgage, in foreclosure, and living in properties that are under water. If anything positive came out of the tragedy, it's the fact that it brought about real reform in the loan modification process.
Florida bankruptcy courts recognized that the loan modification system was broken, and in mid-Florida (Tampa, Orlando, and Jacksonville areas) they decided to step in. They streamlined the process of submitting documents, allowed buyers to be represented by their bankruptcy lawyers, and they appointed a mediator to referee the proceedings, with the goal of helping the lender and buyer come to a mutual agreement.
From a 95 percent failure rate, mid-Florida began to see a 70-80 percent success rate for Bankruptcy Loan Modification Mediation. As a result, judges in the southern district of Florida (like Vero Beach, Port St. Lucie, West Palm Beach, and Key West) decided to adopt the same Bankruptcy Loan Modification Mediation (or LMM) program. With this program in place, the lawyers at Ozment Law, PA can assist you in mediating your mortgage to make the terms more affordable for you.
Ozment Law, PA has filed many cases under the new Bankruptcy LMM process, which was enacted on April 1, 2013. The process is more efficient and the presence of a mediator means improved communication and a better chance at coming to a resolution.
Here are the steps you can expect if you enroll in the Bankruptcy Loan Modification Mediation program:
- The lawyers at Ozment Law, PA will work with you to gather the necessary documents and files
- These documents are uploaded onto a safe internet portal. This makes your documents viewable to you, your lender, and the mediator, so everyone is on the same page
- When the lender confirms that they have all the documents they need, a mediation will be scheduled
- In the mediation process, the mediator will work as a go-between between you/your lawyer and the lender. Your Ozment Law, PA lawyer will fight to get the best terms for your situation, and the mediator will help the process by pushing for a resolution that is a balance between what you can afford and what your lender will accept
- When mediation is over, you will still have the option to accept or reject the terms
If you owe too much on your mortgage, you are probably looking for a reduction in your monthly payment in order to make owning your home – and paying for it – more affordable for you. While you can attempt a modification on your own, most loan modifications fail because of delays, denial, or because the lender offers poor terms.
An attractive alternative is the Bankruptcy Loan Modification Mediation (LMM) program. This program runs exclusively through the bankruptcy courts. It's a different route and with it you have better odds of getting improved mortgage terms than if you try to negotiate on your own.
One of the main goals of Bankruptcy Loan Modification is to get a lower mortgage payment, but you may also be wondering if the Bankruptcy LMM process can reduce the total principal you owe on your house? The answer is yes – Bankruptcy Loan Modification Mediation could possibly result in a reduced principal balance. There are, in fact, many cases where lenders agree to lower a home owner's principal as a result of the mediation process.
Of course not everyone will qualify for principal reduction, but Bankruptcy Loan Modification Mediation gives you the best chance of making it a reality.
The Bankruptcy LMM procedure began in mid-Florida before it was adopted in the southern areas. Statistics from Orlando in 2012 show that about 38 percent of mediations resulted in a principal reduction for the home owner. Bankruptcy Loan Modification Mediation continues to be popular in this area, and while there are no official statistics for 2013 yet, some speculate that the new figure may be as much as 50 percent.
This means that perhaps as many as one out of every two home owners who enter Bankruptcy LMM will leave with a lower principal on their mortgage.
Every Bankruptcy LMM is unique, and cases are decided based on your individual circumstances. The entire process takes under six months (typically 3-4 months), during which Ozment Law, PA will help you organize your paperwork, schedule a mediation, and strive to get you the best possible mortgage terms.
Loan modification is a process whereby the home owner is looking to alter the provisions of their mortgage. Typically the owner is looking for terms that better match their financial situation and make owning their home more affordable. Although a buyer can attempt to work out a new arrangement with their lender, it is a difficult process with not many buyers seeing positive results. In fact, the loan modification process typically operates at nearly a 95% failure rate.
If you have tried for a loan modification in the past but were denied, you're certainly not alone. Fortunately, there is now a great alternative to traditional loan modifications – the Bankruptcy Loan Modification Mediation (LMM) program. Bankruptcy LMM is overseen by the bankruptcy court and is a whole different procedure. This means you can work with your Ozment Law, PA lawyer to enroll in the program – even if you have previously been denied a modification request.
The best part is that you have a much greater chance of getting approved for a modification with Bankruptcy LMM than if you attempt a modification on your own. It's a different route to take, with drastically better odds.
There are many reasons why Bankruptcy Loan Modification Mediation is more successful than regular loan modification, but it all boils down to the bankruptcy courts having created an efficient, organized system that leads to better communication. This includes:
- A secure internet portal where documents are viewable to all parties (buyer, lawyer, lender, mediator)
- Timelines and deadlines that avoid paperwork going stale
- The bankruptcy court overseeing the process to make sure it runs smoothly
- An appointed mediator whose job it is to facilitate an agreement between you and your lender
- Your Ozment Law, PA lawyer, fighting to get you the best terms on your modified mortgage
People can attempt a loan modification on their own, but often times it doesn't work out. These modifications fail because of delays, because they are denied, and because the lender often offers poor terms.
The Bankruptcy Loan Modification Mediation process, or Bankruptcy LMM for short, is completely different. This is a special program that operates through the bankruptcy court and can help people lower their mortgage payment.
Many people wonder about eligibility requirements of Bankruptcy LMM, and one common question is whether individuals who are in a confirmed Chapter 13 can take advantage of this special mediation process? If you've ever wondered about this, we have good news for you.
The answer is a resounding YES.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code when necessary. WE WANT TO MAKE YOUR FINANCIAL LIFE BETTER.