Four Chapter 13 Bankruptcy Myths Debunked

The very word can cause anxiety and stress for many people. It, however, can help people who fall on hard times get fresh financial starts. In fact, in many cases, people who file for bankruptcy are immediately better off than they were before they filed.

Here are four myths that may hold you back from considering Chapter 13 bankruptcy. For more information, call Berkowitz & Myer to speak to an experienced St. Petersburg bankruptcy lawyer today.

Myth #1: Filing for Bankruptcy Will Ruin Your Credit

Many people in financial distress refuse to consider this option because they worry that it will ruin their credit. Two things are wrong with this line of thinking. First, simply ignoring bills that you cannot pay will certainly ruin your credit. Second, while it is certainly true that a Chapter 13 bankruptcy will appear on your credit report for seven years, it often has a less detrimental effect than accounts in collections, judgments, delinquencies, or other problems. In fact, in just a few months, many people who file have better credit than they did before filing.

Myth #2: Bankruptcy Is Always the Result of Financial Irresponsibility

You may believe that bankruptcy is a sign of financial irresponsibility and that filing would somehow constitute a personal failure. In reality, a significant number of bankruptcies are the result of circumstances completely out of a debtors control. Unexpected illnesses, job loss, poorly performing investments, variable interest rates, overuse of credit, or injury-causing accidents can result in unexpected expenses, an inability to work, or both.

Myth #3: Your Repayment Plan Will Create a Financial Burden

The court determines Chapter 13 payments by looking at a debtors debts, income, and allowable expenses, then sets an amount for you to pay each month that allows you to live, eat, get around, and pay other bills while making payments toward your debts. In addition, should your circumstances change in a way that makes the payment unaffordable, you could ask the court to modify your payment.

Myth #4: You Will Lose Your Home if You File for Chapter 13

Many people actually use Chapter 13 to keep their homes. In Chapter 13, you can take your past-due mortgage payments (often referred to as arrears) and pay them back during the course of your bankruptcy planwhich lasts anywhere from three to five years. As long as you can keep up your mortgage payments during your bankruptcy, you can keep your house. In some cases, filing for bankruptcy actually provides a good opportunity to renegotiate the terms of your mortgage with your lender to lower your payments.

Call the St. Petersburg Bankruptcy Lawyers of Berkowitz & Myer Today for a Free Consultation

You don’t need to be frightened to take this option. In fact, it can form the first step to a significantly brighter financial future. At Berkowitz & Myer, we will thoroughly review your financial situation during a free initial consultation and let you know whether we believe you could benefit from filing for bankruptcy. To schedule an appointment with a bankruptcy lawyer in St. Petersburg, contact us online or call our office today at 727-344-1023.

Is Chapter 13 Bankruptcy Right for You?

Bankruptcy Lawyer St. PetersburgMaybe you’ve lost your job, gone through a divorce, or experienced some other life-changing event that has left you struggling to stay on top of your finances. After exhausting every option, bankruptcy may feel like your last remaining option, but you don’t want to lose all of your possessions. You may want to consider filing for Chapter 13 bankruptcy—a type of bankruptcy that allows you to enter into a long-term payment plan that will allow you to pay your debts and retain your property.

However, Chapter 13 bankruptcy is not for everyone, depending on your financial situation and your goals. In addition, the law has certain requirements that you must meet to qualify for Chapter 13 bankruptcy.

The following questions will help you determine whether Chapter 13 bankruptcy is right for you.

Do you want to keep your property?

Chapter 13 is an attractive option for people who want to keep their homes. That includes their cars or any other property they’ve financed, even if they are behind on payments. Once you file for bankruptcy, the balance due on the loan eventually becomes a part of the repayment plan. That plan can be for as long as five years. Provided that you comply with the terms of the payment plan and any other requirements, you will get to keep your property.

On the other hand, maybe you don’t want to keep your property. For example, if you cannot afford your monthly mortgage payment. That also includes if you still owe money on a car that needs significant repairs. Do you owe a lot of money on property that you no longer want or need? Chapter 13 may not be the best choice for you.

Can you actually keep up with your bills?

In a Chapter 13 bankruptcy, you will enter into a payment plan for all of your debts that came due before you filed for bankruptcy. However, you will also need to continue paying your recurring monthly expenses as they come due. As a result, you will need to cover your monthly expenses, plus make payments toward your Chapter 13 payment plan.

Therefore, to answer this question you need to be brutally honest with yourself. Tally up your monthly household expenses—car payments, rent or mortgage payments, groceries, utilities, clothing, entertainment, etc. Then decide which of those expenses you could realistically do without for the foreseeable future. Compare your expenses against your current monthly income. If you can pay your expenses with money left over, then Chapter 13 bankruptcy may prove a viable option for you.

If you can’t pay your monthly expenses, you may not qualify for Chapter 13. With that the court won’t approve your payment plan. In these cases, you may still have Chapter 7 as a viable option.

Do you earn a regular income?

You have to earn regular income to fund a Chapter 13 payment plan, and the court will not approve your plan unless you have demonstrated an ability to make the payments. Obviously, a steady paycheck as an hourly or salaried employee is the easiest way to demonstrate your ability to make payments. That said, you may qualify even if you work on commission or by project, provided that you can submit documentation showing your average income during the last several months. If, however, you are unemployed, you may not file for Chapter 13 bankruptcy.

What kind of debts do you have?

Some debts are dischargeable in a Chapter 13 bankruptcy that are not dischargeable in Chapter 7. For example, marital debts arising from a divorce, debts from loans on a retirement plan, or debts incurred to pay a nondischargeable tax debt are all dischargeable in Chapter 13 bankruptcy. Unfortunately, student loan debt is almost impossible to discharge in either Chapter 7 or Chapter 13.

Contact a Saint Petersburg Bankruptcy Attorney to Discuss Whether Chapter 13 Bankruptcy Can Help You

The attorneys at Berkowitz & Myer focus on bankruptcy law and can help you decide how to proceed. Call us today at (727) 344-0123 or contact us via email to schedule your free consultation.

How Chapter 13 Bankruptcy Can Help Alleviate Financial Stress

Bankruptcy Lawyer St. PetersburgThe decision to file for bankruptcy can overwhelm anyone. Not only are you dealing with aggressive creditors and possible legal action, but you’re also trying to make the right financial decisions for you and your family’s future. In the thick of things, bankruptcy can feel like yet another impossible mountain to climb. However, Chapter 13 bankruptcy can actually help relieve your financial stress and reduce your anxiety.

Halt the Collection Process with Chapter 13 Bankruptcy

The biggest benefit of filing for bankruptcy is that your creditors are legally prohibited from pursuing you once you file, provided that you comply with the court’s requirements. This means that your creditors have to stop calling you and it puts any pending legal action (primarily lawsuits or garnishments) on hold.

Repay What You Owe 

Contrary to popular belief, most people who file for bankruptcy actually want to pay their debts. The problem is that they can’t, especially once the interest, late fees, and other penalties start to accrue. By filing for bankruptcy, you can stop those debts from growing, and work out a plan to repay your debts. Chapter 13 bankruptcy provides a viable, realistic plan for repaying your debts. Once they complete the payment plan, many people feel a deep sense of satisfaction. That’s from knowing that they have honored their obligations.

Reduce Your Payments

When you file for Chapter 13 bankruptcy, the court will want you to disclose all the debts you have, your monthly income, and any other financial obligations. Working with your attorney and the bankruptcy trustee, you will then propose a payment plan. Part of this process may include reducing your creditors’ claims against you. The ultimate objective of the plan is to repay your debts on terms that you can afford. You can take as long as five years to make payment in full. As a result, you will have much lower monthly payments than you have now.

Reduce the Number of People You Have to Pay

The Chapter 13 payment plan does not require you to negotiate with and then pay each of your creditors individually. Once the court approves the payment plan, you will then make your payments to the court. The court will then disburse payments to those creditors according to your payment plan. In the end, you wind up writing far fewer checks. That means that you don’t have to stay on top of multiple payment plans. As long as you stay current on your payments into the court.

Keep Your Property

Another benefit of Chapter 13 bankruptcy is that you may keep your property, such as your house and your car. You will need to keep up with your payments and comply with the court’s requirements. If you do, you won’t lose these assets to repossession or foreclosure.

Discharge

In addition to the Chapter 13 payment plan, the other objective of filing for bankruptcy is to obtain a discharge of your debts. If your creditors were properly notified of your bankruptcy, you are no longer personally liable for the debts that arose before you filed for bankruptcy.

Contact a St. Petersburg Bankruptcy Attorney to Discuss Your Options

If you are facing multiple collection actions and considering filing for bankruptcy, an experienced bankruptcy attorney can help you understand your options. To schedule a free consultation with one of the lawyers at Berkowitz & Myer, call us at (727) 344-0123 or send us an email through our online contact form.

Relevance of Exemptions in Chapter 13 Bankruptcy

Many Floridians have found that filing for bankruptcy can help address and overcome financial hardship. In fact, there were approximately 45,000 bankruptcy cases filed by Florida residents and businesses in 2017. Moreover, filing for chapter 13 bankruptcy can help people address their financial hardships without losing or relinquishing important property.

In a Chapter 7 Bankruptcy, a debtor’s nonexempt assets are liquidated, and the proceeds used to pay back creditors. In a Chapter 13 case, on the other hand, a debtor enters into a repayment plan that allows him or her to keep his or her property—so long as the debtor stays current on payments under the plan.

It may seem, therefore, that the exemptions are not relevant in Chapter 13—but this would be incorrect. The Chapter 13 “best interest of creditors” test requires that nonpriority unsecured creditors who are involved in a Chapter 13 case receive at least as much as they would have had the debtor filed for Chapter 7. When the test is applied, the bankruptcy trustee determines what property would have been available to pay creditors after the exemptions were applied if the debtor was filing under Chapter 7.

Debtors who file for chapter 13 bankruptcy in the State of Florida must use Florida’s bankruptcy exemptions. Only in limited circumstances will federal bankruptcy exemptions be used. Fortunately, Florida’s bankruptcy exemptions are very favorable to those residents filing for chapter 13 bankruptcy.

To use Florida exemptions, a debtor is required, by Florida bankruptcy law, to have resided in Florida for 730 days prior to having filed his or her petition. A debtor who fails to meet this requirement will not be allowed to use Florida’s bankruptcy exemptions.

Florida’s Homestead Exemption

Florida is, perhaps, best known for its homestead exemption. Often considered as one of the nation’s most generous bankruptcy exemptions, the homestead exemption allows Florida debtors to exempt an unlimited amount of value in their home. In order to benefit from this exemption, a Florida debtor must have owned the property for at least 1,215 days before the bankruptcy filing. Additionally, Florida law limits the size of the property. A debtor will not be able to take advantage of this highly-favorable exemption unless both requirements are met.

Other Bankruptcy Exemptions

Other favorable bankruptcy exemptions are available to Florida debtors. These exemptions may be a bit more nuanced, and it is, therefore, important to seek legal counsel to help you understand which exemptions you qualify for. Some other favorable exemptions that are commonly claimed by Florida debtors include:

  • Wage exemptions
  • Personal property exemption of up to $1,000
  • Motor vehicle exemption of up to $1,000
  • Tax credits and refunds.

Contact A St. Petersburg Bankruptcy Attorney

Florida bankruptcy exemptions play an important role for debtors filing a chapter 13 bankruptcy case. Debtors who take advantage of those exemptions available to them during a chapter 13 case may not only keep their property but also minimize the amount they will owe to creditors during repayment. Still, identifying and understanding what property qualifies for an exemption can be quite difficult and nuanced. Therefore, it is imperative that a debtor seek the advice of experienced legal counsel before filing a chapter 13 bankruptcy case.

Here, at Berkowitz & Myer, we are determined to help you in this difficult time. We will evaluate your property and help you prepare and execute the chapter 13 bankruptcy filing that best suits your situation. Schedule your initial consultation by calling our offices today, at (727) 344-0123.

Four Chapter 13 Myths Debunked

Chapter 13 Bankruptcy Attorney | St. Petersburg | Berkowitz & MyerMany people are under the mistaken impression that filing for any type of bankruptcy basically constitutes financial ruin. This is certainly NOT the case, and thousands of people file every year—and are often significantly better off than they were prior to filing. Here is the truth about 4 persistent myths about Chapter 13 bankruptcy.

Everyone Who Files for Chapter 13 Bankruptcy Is Financially Irresponsible

Sadly, many people think that people who file for bankruptcy have somehow been financially irresponsible. This could not be further from the truth. Individuals file for chapter 13 bankruptcy for a variety of different reasons. An individual’s debts can spiral out of control for many reasons. Unexpected medical expenses or sudden and drastic change income are some. Because chapter 13 bankruptcy is designed to organize one’s debts in a manner that facilitates repayment over time, this option could be considered much more financially responsible than trying to pay debts that you can’t afford!

Individuals filing for chapter 13 bankruptcy develop a repayment plan. This plan is developed as the parties calculate a number of regular payments. Accumulated over a period of three to five years, in which the debtor can repay his or her outstanding debts. Thus, a debtor takes control of his or her finances and makes regular payments in order to repay his or her debts.

Your Payment Will Be Financially Difficult

A repayment plan, under chapter 13 bankruptcy, is designed in a way so that a debtor can meet his or her repayment obligations taking his or her income into consideration. When preparing a repayment plan, the parties evaluate the debtor’s overall outstanding debts. Also evaluating his or her current and steady income, and the availability of exemptions to reduce overall debt obligations.

A change to a debtor’s financial situation is manageable. Although debtors have a legal obligation to make timely payments under their repayment plan, it is understood that one’s financial situation may change. Debtors may lose their jobs or suffer an emergency which impacts their finances. Should this occur, a debtor need not fear that his or her case will be dismissed. In fact, many courts and bankruptcy trustees recognize that these events do occur. In the event that a debtor’s financial situation changes, alternatives for repaying those obligations in arrears can be made available to financially-troubled debtors.

You Will Never Get Credit Again

Many individuals are worried that, should they file for bankruptcy, they will be unable to secure a line of credit in the future. This is simply not true. Yes, credit does impact an individual’s credit in the short term. Many people who file for bankruptcy are able to obtain credit within a few months or years of filing. Furthermore, notice of a bankruptcy will remain on one’s credit for a maximum of 10 years. After, the individual’s credit report will be wiped clean of any bankruptcy.

Filing Without a Lawyer Is Easy

Filing for bankruptcy without a lawyer is permitted. Filing without an attorney is known as filing pro se. However, while filing for bankruptcy without a lawyer is possible, it will not always be done well. Instead, a debtor may find it difficult to prepare all of the necessary documents, identify potential exemptions, or even understand whether or not he or she qualifies for certain bankruptcy exceptions.

Call Us Today to Speak to a St. Petersburg Bankruptcy Attorney

Here at Berkowitz & Myer, we are determined to help you in this difficult time. We will evaluate your property and help you prepare. Execute the chapter 13 bankruptcy filing that best suits your situation. Schedule your initial consultation by calling our office today at (727) 344-0123 or sending us an email through our online contact form.

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