How To File Chapter 13 Bankruptcy In Florida

If you are experiencing financial hardship, Chapter 13 bankruptcy may provide some much-needed relief. Chapter 13 is when a borrower consolidates their existing debts into one monthly payment. Unlike Chapter 7 bankruptcy, borrowers will not be required to sell their assets as a condition of the bankruptcy. Instead, Chapter 13 is considered a restructuring bankruptcy because the borrower continues to make payments according to a court-approved payment plan.

With Chapter 13 bankruptcy, you can lower payments, prevent foreclosure, eliminate debt, and stop car repossession. Chapter 13 is designed to help borrowers keep their assets and eliminate debt for a fresh start. There are many advantages to Chapter 13, but there may be some disadvantages as well. Therefore, you should consult with a Tampa bankruptcy law firm before filing.

Stop Foreclosures, Garnishments, and Lawsuits

When a borrower files for bankruptcy, an automatic stay is issued. The stay goes into effect immediately after a Chapter 13 bankruptcy is filed. The automatic stay will put an immediate end to all collection activities. Therefore, all foreclosures, garnishments, lawsuits, and phone calls will stop. The automatic stay will even cancel a foreclosure sale that has already been scheduled. For more information on the automatic stay, click here.

Mortgage Modification with Chapter 13 Bankruptcy

Chapter 13 allows homeowners to force the bank to accept a 5-year payment plan for the past due amount. The homeowner won’t have to pay the full mortgage in 5 years, only the amount that is past due. You don’t need to apply for a loan modification, and you can force the bank into the 5-year payment plan.

Additionally, you can apply for a traditional loan modification as part of the Chapter 13 case. These modification applications are usually much different than when a homeowner applies. In Chapter 13 mortgage modifications, the U.S. Trustee will oversee the application. Additionally, there can be a mediator appointed as well to help streamline the process. With much more oversight, the bank is less likely to cause unnecessary delays and wrongfully deny legitimate requests.

Requirements to File Chapter 13 Bankruptcy

Only individuals who are domiciled in the United States may qualify for Chapter 13. Therefore, businesses and corporations are not eligible. Further, there are income requirements to file Chapter 13 bankruptcy as well. To qualify for Chapter 13, you must receive a regular source of income. The borrower needs to prove they have a regular and stable income, which is sufficient to pay the proposed payment plan. See 11 U.S.C. 109.

In a jointly filed case, both spouses are eligible even if only one of the debtors receive regular income. A bankruptcy court will focus primarily on the existence and stability of the regular income, rather than the source of the income. See In re Baird. For instance, regular income derived from social security, alimony, pensions, and retirement plans may all be eligible sources. See In re Hanlin

Debt Limits for Chapter 13

There are debt requirements to file Chapter 13 bankruptcy in Florida. Unsecured debts must be less than $394,725, and secured debts must be less than $1,184,200. Secured debts are loans that have collateral, such as car loans and mortgages. On the other hand, unsecured debts have no collateral. Examples of unsecured debts are medical bills and credit cards.  The amount of debt allowed changes frequently. For information on future changes, click here.

Credit Counseling Requirements to File Chapter 13

Borrowers must also attend two credit counseling courses as requirements for Chapter 13. The first course must be completed within the 180 days immediately preceding the bankruptcy filing. The briefing can be done on an individual basis or conducted in a group setting. Moreover, the briefing can take place by telephone, internet, in person, or even in your attorney’s office with your bankruptcy lawyer present. Once the course is complete, the debtor will need to file a statement of compliance with the court. Additionally, a second class may be required after your case has been filed.

Chapter 13 Payment Plan

In a Chapter 13 bankruptcy, the borrower’s goal is to obtain court approval of their proposed payment plan. Borrowers will push for payment plans that pay creditors as little as possible. On the other hand, creditors will be seeking as much money as they can. Therefore, it is essential to hire an experienced bankruptcy law firm in Tampa to protect your rights. Creditors will likely have attorneys, and it can be challenging to battle them without an attorney on your side.

When to File the Chapter 13 Bankruptcy Payment Plan

The payment plan must be filed within 14 days of filing the case. Borrowers should seek the aid of an attorney when submitting the Chapter 13 payment plan. An unsatisfactory payment plan can cause delays and unwanted consequences. The borrower must classify all debts and provide for payment of the indebtedness per bankruptcy law. Once the court confirms the payment plan, it will bind both the borrower and creditors.

What Should be Included in the Bankruptcy Payment Plan

The payment plan should outline how the income the borrower receives will be used to pay the debts owed. The allocation of payments must be feasible for both the debtor and creditor. The plan must provide for secured claims to be paid the present value of the collateral it secures. However, exceptions can be made if the creditor agrees to accept a lower amount or the debtor surrenders the property.  On the other hand, unsecured claims only receive as much as they would have received if the debtor filed for Chapter 7.

Under Chapter 13 bankruptcy law, not all unsecured claims are treated the same. For instance, the Chapter 13 bankruptcy payment plan must provide for full payment of all unsecured priority claims. Examples of priority unsecured claims include but are not limited to the following:

  • Domestic support obligations – ex. Alimony, child support, etc.
  • Administrative expenses of the bankruptcy
  • Employee wages and benefits

How Long Chapter 13 Payments Last

The Chapter 13 repayment plan can last anywhere from three-to-five years.  If your income is less than the state average income, then you will be in a three-year repayment plan. However, it can be extended up to 5 years if you cannot afford three-year monthly payments.  See Bankruptcy Law 11 U.S.C. §§ 1322.  Extending to a five-year plan would not necessarily result in you paying more money to your creditors. Often, the five-year plan just stretches out the payments to make the monthly amount less.

If your income is more than the state average income, you must be in a five-year repayment plan. A bankruptcy lawyer can provide more information on which type of payment plan may be required in your case.

Creditors Rights in Chapter 13

Creditors will likely have attorneys fighting for as much money as possible. For instance, creditors have the right to object to a borrower’s proposed payment plan. However, if the plan allocates funds in accordance with bankruptcy law, the judge must approve it, despite the creditor’s objections. Your bankruptcy lawyer should be well versed in overcoming creditors’ objections, and it is a common practice in Chapter 13 cases.

Approval of a Chapter 13 Payment Plan

If the borrower makes all the payments and satisfies the other requirements, they will be entitled to a discharge. The discharge is a permanent court order releasing the borrower from personal liability on the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower. In most cases, obtaining a discharge will be the primary reason why a borrower files for bankruptcy. However, there are many nuances of bankruptcy law that can prevent a discharge of certain debts. Therefore, it is vital to seek the aid of an experienced Chapter 13 law firm.

Waiting Periods to Refile Chapter 13 Bankruptcy

If you previously filed Chapter 7, you must wait four years from the date you received your discharge before you can file Chapter 13.  See Bankruptcy law 11 U.S.C. § 1328.  If you previously filed Chapter 13, you must wait two years from the discharge for eligibility to refile Chapter 13.

If you previously filed Chapter 13 and now want to file Chapter 7, you must wait six years from the commencement date of your previous case.  See Bankruptcy Law 11.U.S.C. §727  The “Commencement Date” is the day you filed your bankruptcy petition with the court.

Bankruptcy Law Firm in Tampa

Bankruptcy law can be very confusing, especially when it involves a Chapter 13 bankruptcy payment plan. If you are considering bankruptcy, you contact an experienced Tampa bankruptcy lawyer at Florida Law Advisers, P.A.  We are a customer-service oriented firm with a strong reputation for providing personalized attention and dedicated legal counsel. For a free, confidential initial consultation, call us today at 800 990 7763.

How To Stop A Home Foreclosure In Florida

Florida is a judicial foreclosure state. Therefore, a bank or HOA seeking to foreclose a home must receive approval from a judge. The case must be filed in the circuit court where the property is located. Under Florida foreclosure law, all mortgage foreclosure cases are to be conducted in a court of equity. Courts of equity are authorized to apply principles of equity (fairness), as opposed to only legal defenses. Therefore, the judge can consider acts by the bank that would render the foreclosure unfair. 

During the court process, the homeowner will have an opportunity to raise defenses and challenge the foreclosure. If the foreclosure sale of your home has already been scheduled, you should contact a foreclosure defense attorney in Tampa. There may still be options to stop the foreclosure sale but time is running out.

Florida Foreclosure Trial

Foreclosure cases in Florida are conducted without a jury. Instead of a jury, the judge will decide the fate of the case. Homeowners will have to persuade the judge to rule in their favor. Judges are typically a lot less likely to be persuaded by principles of fairness than a jury would be. Therefore, you should consult with a foreclosure defense attorney to learn more about potential legal defenses. There may be a legal defense that would require the judge to deny the foreclosure.

Unclean Hands as a Florida Foreclosure Defense

One of the many potential ways to stop a foreclosure is the defense of unclean hands. Florida case law stands for the proposition that a foreclosure action must be denied if the bank has unclean hands. See Federal Savings and Loan v. Robert Smith. An example of unclean hands is tortuously interference by the bank. If there is evidence that establishes the bank tortuous interfered with enforcing the loan, the foreclosure should be denied.

Homeowners should be cautious when trying to prevent a foreclosure based on an unclean hands defense. Proving unclean hands can be difficult without the requisite legal training and experience. If you think your lender has unclean hands you should contact a foreclosure defense law firm in Tampa.

Proving Unclean Hands

To establish unclean hands, the homeowner must prove a fraudulent or illegal transaction. Alternatively, prove unrighteous, unconscious, or oppressive conduct by the mortgage company in regards to the loan. See Epstein v. Epstein. Moreover, for a defense of unclean hands, the homeowner must show a detriment to them by way of the lender. The improper conduct along is not enough, there must be evidence of harm. Additionally, the conduct in question must be connected with the failure to make mortgage payments. See Marin v. Seven of Five Ltd

Foreclosure Defense of Conditions Precedent

Another foreclosure defense is that the bank failed to fulfill all of the conditions precedents to foreclosure. A condition precedent is an event that must occur before performance under a contract becomes due. A common condition precedent in foreclosure cases is the bank’s requirement to send the homeowner notice of the default. Notice of default is just one example, there may be many other conditions precedent for the bank as well. For more information on the possible conditions precedent, your lender may be required to fulfill contact a foreclosure defense law firm in Tampa.

Lack of Notice of Default

Many mortgages include a requirement the bank notify homeowners the loan is in default before filing foreclosure. This condition is commonly found in the 22nd paragraph of the mortgage. The notice to the homeowner must indicate the action required to cure the default. Additionally, the notice must provide at least 30 days to cure the default before the bank can initiate foreclosure. Once the borrower raises this issue as an affirmative defense, the bank will have the burden of proving the notice was sent to the homeowner. The bank will have to prove they sent a notice that complied with all of the conditions outlined in the mortgage. See Wells Fargo v. Samaroo.

Common notice of default clause in a mortgage

Lender shall give notice to Borrower before acceleration following Borrower’s breach of any covenant or agreement in Security Instrument. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration. As well as the right to assert the non-existence of a default or any other defense of foreclosure. 

As like most mortgages, the sample notice of default clause above is from a mortgage that contains an acceleration clause. Acceleration refers to the bank demanding the full amount of the mortgage, not just the missed monthly payments. If the loan does not have an acceleration clause, the lender can only demand payment of the amounts past due. If there is no acceleration clause, the bank will be unable to demand the full loan amount.

Loan Modification with Chapter 13 Bankruptcy

Chapter 13 allows homeowners to force the bank to accept a 5-year payment plan for the past due amount. The homeowner won’t have to pay the full mortgage in 5 years, only the amount that is past due. You don’t need to apply for a loan modification, you can force the bank into the 5-year payment plan. See bankruptcy law 1322.

Additionally, you can apply for a traditional loan modification as part of the Chapter 13 case. These modification applications are usually much different than when a homeowner applies. In Chapter 13 mortgage modifications, the U.S. Trustee is there to oversee the bank. Additionally, there can be a mediator appointed as well to help streamline the process. With much more oversight the bank is less likely to cause unnecessary delays and wrongfully deny modification requests.

How to Cancel a Foreclosure Sale in Florida

Immediately after a homeowner files bankruptcy, an automatic stay will go into effect. See 11 USC 362. The stay requires all collection activity to stop immediately, including a scheduled foreclosure sale. Even if a bankruptcy is filed just one minute before the auction, the foreclosure will be stopped. The bank will not be able to resume a foreclosure until the stay has been lifted by the court.

How to Void a Foreclosure Sale in Florida 

If the sale already occurred, you will need to void the foreclosure. When foreclosing on a home, the bank must follow the strict procedures under Florida foreclosure law. See FL Statute 45.031. If the lender did not follow proper procedures in noticing the sale there may be grounds to cancel the sale. Additionally, even if the bank fully complied with all procedures the sale may be overturned if there was a material irregularity in the sale process. See UM Publishing v. Home News Publishing. Regardless, it is still recommended to try and cancel the sale before it occurs. If you wait until after the sale, you may lose options you would have otherwise had to keep the home.

Consult a Foreclosure Defense Law Firm in Tampa

If your mortgage company is threatening you with foreclosure call us to speak with a Tampa foreclosure defense lawyer. Homeowners have rights and we want to make sure our clients choose the best strategic plan for their family. Regardless if you want to prevent foreclosure or walk away without being responsible for the debt we can help. Our initial consultation is free and we offer flexible payment options to all of our clients. To speak with a foreclosure defense lawyer in Tampa call us today at 800 990 7763.

How To Keep Your Assets With Bankruptcy In Florida

In Chapter 13 bankruptcy, there should be no risk of being forced to liquidate assets. Chapter 13 is a reorganization bankruptcy where borrowers pay debts according to a court approved payment plan. On the other hand, Chapter 7 is a liquidation form of bankruptcy. Borrowers won’t have to pay their debts, but in exchange, the trustee for the case will seek to liquidate assets. Not all assets are eligible for liquidation. A bankruptcy law firm may help you keep all of your assets in Chapter 7. In most of our Chapter 7 cases, borrowers keep all of their assets and don’t have to liquidate anything.

In Chapter 7, there are generally four options on how to keep property in bankruptcy. The most often used tools to protect assets are exemptions. If the property has a loan/ lien, a statement of intention must be filed within 30 days of filing bankruptcy. See bankruptcy law  11 U.S.C. § 521. It is highly recommended to consult with a bankruptcy attorney prior to completing the statement of intentions. Without competent advice, you may accidentally limit the amount of relief bankruptcy can provide.

Reaffirmation of Debt

When a debt is reaffirmed, the borrower voluntarily agrees to pay all or a portion of the money owed. A borrower will usually reaffirm when the debt has collateral the borrower wants to keep. Common examples are cars and jewelry. Reaffirmation agreements are completely voluntary. The borrower in bankruptcy can never be compelled to reaffirm a debt. In addition, all reaffirmation agreements must be approved by the bankruptcy court before they can become binding. Normally, a court will only approve reaffirmation agreements if:

  • It is in the best interest of the borrower
  • It is entered into voluntarily
  • The borrower has the ability to repay the debt
  • The creditor gives something of value in return for the borrower signing the reaffirmation agreement
  • The debtor is given 60 days to rescind the reaffirmation

If for some reason you stop making payments on a car loan after entering into a reaffirmation agreement, the lender not only can repossess your vehicle, but you also become personally liable for that remaining debt. So, make sure you truly want to keep that vehicle (or home) before entering into a reaffirmation agreement.

Redemption of Property

Another option to avoid liquidation is to redeem the property. In a redemption, the borrower pays the loan in full with a lump sum. If you redeem the property you will own it free and clear of any liens.  However, careful planning should be done before redeeming property. Consult with a bankruptcy attorney to see if this option is right for you.

Surrender the Property in Bankruptcy

The third option is to surrender your property. If you surrender the property, you are walking away from it and forfeiting it to the Chapter 7 trustee. Further, you are not allowed to defend a foreclosure action against your home after you receive the discharge. See bankruptcy case Failla v. Citibank . When you choose to surrender real or personal property, you will no longer be personally liable for the debt connected to that piece of property. The surrender option exists to give you a “fresh start.” Therefore, a creditor cannot later come after you for the amount discharged from your decision to surrender.

Protect Assets with Exemptions

An exemption is special form of protection from liquidation in bankruptcy.  See 11 U.S.C. § 522.  The exemption removes an asset or part of an asset from the possibility of liquidation. There are both federal and state bankruptcy exemptions. The state exemptions will vary from state to state.  Most often, the difference in federal and state exemptions is the amount of coverage the exemption provides.

Florida or Federal Bankruptcy Exemptions

In order to determine which bankruptcy exemptions apply, first look at whether your state is an “opt-out” state.  “Opt-out” means that you are required to use your state’s exemption amounts, not federal.  Florida is an “opt-out” state.  So, if you file your case in Florida, you must use Florida’s exemptions for all of your property. Unlike an opt-in state, you do not get to pick and choose whether you use federal exemptions on some pieces of property. If you file the case in an opt-in state, you can choose either federal or state exemptions to protect your property.

Homestead Exemption

Typically, the most important exemption—especially in Florida is the “homestead exemption.”  The Florida homestead exemption is one of the strongest homestead exemptions in the nation. In Florida, homestead protects all of the equity in your home.  See Fla. Const. art. X, § 4. Some states will only protect a portion of the home’s equity. In Florida, there is no limit, your home can even be worth millions of dollars. To enjoy the homestead exemption, you must be domiciled in Florida for 730 days prior to filing your bankruptcy petition.  “Domicile” is your place of residence with the intent to remain there permanently.

Wildcard Exemption

If you are not claiming the homestead exemption, you can receive the “wildcard exemption.”  This provides you with $4,000 to apply to any piece of property you would like. For instance, wildcard can be used for a car, diamond ring, or your favorite china set.  Fla. Stat. § 222.25.  It exists to allow you to pick and choose what is protected in your bankruptcy because it is important to you. A bankruptcy attorney experienced in wildcard exemptions can assist with this.  Although Florida has one of the most generous homestead exemptions, it does have lower exemption amounts than some federal exemptions.  Just remember, you cannot choose to use some federal exemptions in Florida; you must use Florida’s exemptions in your bankruptcy case.

Other Bankruptcy Exemptions

There are other exemptions you can apply to a wide range of personal property as well.  Some examples are motor vehicles, boats, household furnishings, household goods and clothing. Additionally, appliances, musical instruments, tools of trade, health aids, life insurance policies, wages, and retirement accounts may also have exemptions.

The exemptions are categorical and cannot spill over to other items.  For example, each person who files bankruptcy in Florida is given $1,000 to protect his or her car.  If you and your spouse are filing jointly, you will be given $2,000 towards your cars.  For example, if you have a car worth only $750, you cannot apply the leftover $250 towards other assets. If you don’t use all of the exemption the remaining amount is lost.

Property of the Estate

Determining which assets are property of the estate in Chapter 7 or Chapter 13 requires careful consideration. It is highly recommended to consult with a bankruptcy lawyer in Tampa before taking action. Failure to properly plan for your bankruptcy may have devastating consequences. You may be forced to lose assets you acquired after the bankruptcy was filed. For instance, in Chapter 13 bankruptcy everything you purchase post-petition will be property of the estate. Additionally, if you inherit money within 6 months after filing that money usually becomes property of the estate.

There are several items that never become property of the bankruptcy estate. These items include funds in a retirement account, employee benefit plan, and health insurance plans. Additionally, any interest you may have as a lessee under a lease of nonresidential property is protected. Also, deferred compensation plans and tax-deferred annuities may be protected as well. Further, if you work and earn income post-petition, the income is not property of the estate.  See bankruptcy law 11 USC 541.

Hiding Assets in Bankruptcy

Hiding assets from the bankruptcy trustee is not something that should be done. The concealment is a violation of the bankruptcy code and may have criminal penalties. Still, one of the most common forms of fraud associated with bankruptcy is the concealment of assets. This includes transferring title of property and other assets to third parties. See Bankruptcy Law 11 USC 548.

The amount of time a court can look back at transferred property to consider such property for fraud during a bankruptcy case varies. This is one of the many reasons why it is important to consult with a lawyer if bankruptcy may be in your future. The best method for protecting assets in bankruptcy will vary from case-to-case. A bankruptcy lawyer in Tampa can help formulate a plan to protect your assets without engaging in unnecessary criminal activity.

Fraudulent Transfers

Fraudulent transfers occur when property is transferred to a third party with the intent to hinder, delay, or defraud creditors. Moreover, under bankruptcy law even innocent transfers without the intent to defraud creditors can be considered fraudulent. An example of fraudulent transfers without intent can be found in Jackson v. Jackson. Other common examples of fraudulent transfers can include changing title on a car from one spouse’s name to the other spouse or to their children.

The Trustee has the right to bring an action to prohibit the discharge of debts or avoid transfers that occurred prior to the bankruptcy filing. The law is very broad and includes many different types of transfers and debt obligations. Further, a transfer can be deemed fraudulent even if you have no intent to defraud the creditors.

Bankruptcy Law Firm in Tampa

If you are struggling with debt Florida law advisers may be able to help get a fresh start. Regardless if you need help with Chapter 13 or Chapter 7, we provide legal advice you can trust. We are dedicated to providing effective representation, individualized attention, and affordable fees to our clients. All of our initial consultations are free and convenient payment plans are always available. Call us now at 800 990 7763 to speak with a Tampa bankruptcy lawyer.

Mortgages, Bankruptcy & Foreclosure In Florida

Bankruptcy is a powerful tool that can clear debt or prevent a foreclosure. Buying a home is an important rite of passage for many Americans. Declaring bankruptcy does not automatically prevent you from buying a home. Chapter 7 and Chapter 13 are the most common types of bankruptcy filed in America. Both types of cases provide borrowers with the possibility of getting a mortgage after bankruptcy. In Chapter 13 cases, the debtor may even be able to get a mortgage while the case is still open.

If you already own a home and file bankruptcy there are generally two few options, keep the home or get rid of the debt. There are advantages and disadvantages to each option. You should consult with a bankruptcy law firm in Tampa to learn more. Each case is different, and you should have a plan based on your specific goals.

FHA and VA Mortgage with Bankruptcy

The FHA and Veteran’s Association allow a debtor to qualify for a mortgage in just 2 years after the discharge. See FHA Regulation 4155.4 The discharge is a court order that releases the borrower from liability to the bank. As with most legal issues, the outcome will depend on the specific circumstances of each case. Thus, you should speak a bankruptcy attorney to learn more about your case.

Fannie Mae Mortgage after Bankruptcy

Borrowers can become eligible for a mortgage with Fannie Mae in as little as two years after the bankruptcy discharge. Moreover, if a debtor makes twelve consecutive Chapter 13 payments they may have permission to increase their debt. The increase in debt may even include obtaining a new mortgage. For Chapter 7 cases, Fannie Mae will require borrowers to wait at least 2 years to qualify for a mortgage.

Difference Between Chapter 7 & Chapter 13 Bankruptcy

Chapter 7 is intended to be a liquidation bankruptcy. In Chapter 7 cases, the borrower may be required to liquidate non-exempt assets as a condition of the case. On the other hand, Chapter 13 is a reorganization bankruptcy. In Chapter 13 cases, the debtor consolidates their debts into one monthly bill that is paid to the bankruptcy trustee.

Unlike Chapter 7, borrowers are not required to sell their assets in a Chapter 13 case. Chapter 13 is considered a restructuring bankruptcy. In these cases, the borrower continues to make payments according to the Chapter 13 plan. Due to this difference, many creditors view Chapter 13 more favorably than Chapter 7 when evaluating borrowers for new loans. Both Chapter 7 and Chapter 13 have their unique advantages and disadvantages. If you are considering bankruptcy, speak with a Tampa bankruptcy attorney for advice on your specific needs.

Remove 2nd Mortgage from Home in Bankruptcy

Lien stripping can allow homeowners to remove the 2nd mortgage from their home. Lien stripping is a process that removes junior loans and changes the debt from a secured loan to unsecured. See Bankruptcy law 11 US 506. Unsecured debt has no collateral, like most credit cards and medical bills.

If the lien is stripped down to the market value, the remaining loan balance is treated as unsecured debt. For example, if you owe $12,000 on your car but the vehicle is only worth $5,000 then $5,000 is secured debt and the remaining $7,000 is unsecured. Stripped liens will receive the same treatment as all your other unsecured debts. Common examples of unsecured debt are credit cards and medical bills. Unsecured claims usually receive nothing or only a small amount of the balance owed.

Surrender Home in Bankruptcy

Some homeowners who file Chapter 7 choose to surrender their homes because they can no longer afford the home. In Chapter 7 cases, the borrower must file a “Statement of Intention.” The Statement of Intention is necessary to tell the bankruptcy court how you intend to handle the home. Some of the options include: reaffirm, modify a loan, or surrender your home. See bankruptcy law 11 U.S.C. § 521(a)(2)(A).

If you choose to surrender, you can escape personal liability on your mortgage. If you surrender the property, you are walking away from it and forfeiting it to the Chapter 7 trustee. You are not allowed to defend a foreclosure action against your home after you receive a discharge. See bankruptcy case Failla v. Citibank. When you surrender the property, you will no longer be personally liable for the debt connected to the property.  The surrender option exists to give you a “fresh start.” A creditor can no longer seek collection if the debt was discharged.

Loan Modification with Chapter 13 Bankruptcy

Chapter 13 allows homeowners to force the bank to accept a 5-year payment plan for the past due amount. The homeowner won’t have to pay the full mortgage in 5 years, only the amount that is past due. You don’t need to apply for a loan modification, you can force the bank into the 5-year payment plan. See bankruptcy law 1322.

Additionally, you can apply for a traditional loan modification as part of the Chapter 13 case. These modification applications are usually much different than when a homeowner applies. In Chapter 13 mortgage modifications, the U.S. Trustee is there to oversee the bank. Additionally, there can be a mediator appointed as well to help streamline the process. With much more oversight the bank is less likely to cause unnecessary delays and wrongfully deny modification requests.

What is Mortgage Deficiency?

A mortgage deficiency occurs when the foreclosure auction does not yield enough money to pay the loan in full. For example, if a bank foreclosed on a home due to a $150,000 debt, but the home only sells for $1000,000, the bank is still owed $50,000. Therefore, there would be a deficiency of $50,000 still owed to the bank. The lender can then sue the borrower for the deficiency. If they get a judgment, the bank can garnish your wages and place liens on other property you own. See Florida Statute 702.06.

How to Stop a Mortgage Deficiency

For some homeowners, bankruptcy is the best solution to stop a mortgage deficiency. Under Bankruptcy law, a discharge will void a judgment, “to the extent that it is a determination of the personal liability of the debtor. If a debt is discharged in bankruptcy the borrower, will be released from personal liability on the debt. The discharge is a permanent court order releasing the borrower from the responsibility of having to pay the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower. Therefore, the discharge will prevent and stop a mortgage deficiency in Florida.

Bankruptcy law 11 U.S.C. 524(a) precludes creditors from trying to hold the debtor personally liable for a discharged debt. For instance, threatening to garnish wages or sue the debtor can be a violation of debt collection laws. A willful violation of the ban on collection activity can lead to sanctions being imposed on the creditor. These sanctions can include an injunction, monetary sanctions, reimbursement of funds paid by the debtor, and even punitive damages. Additionally, the creditor may be responsible for reimbursing a debtor for the money spent on an attorney to stop the collection action. See bankruptcy case In Re All Media Properties.

Consult a Bankruptcy Attorney in Tampa

If you are having a difficult time meeting your financial obligations, Florida Law Advisers may be able to help. Our bankruptcy attorneys in Tampa have years of experience helping people solve their financial problems. We understand these are very difficult times and we are here to help. In some cases, filing for bankruptcy may be a good solution, however, it is often not the only choice available. The right course of action will depend on the unique circumstances of each case. To see which options may be available to you, contact us to schedule a free consultation.

How Does Florida Bankruptcy Impact Credit Reports & Scores?

If you are overwhelmed with debt, filing for bankruptcy may bring some needed relief. Bankruptcy is intended to discharge debt and give people a fresh start. In many cases, bankruptcy will help improve a borrower’s credit score. By discharging bad debts, cleaning up your credit report, and getting a fresh start, you may see a significant increase in your credit score. For more information on how bankruptcy affects credit scores, contact a Tampa bankruptcy lawyer.

There are many different types of bankruptcy filings, each with its own set of advantages and disadvantages. If you are considering bankruptcy you should first consult with a bankruptcy attorney in your area.

How Long Does Bankruptcy Stay on My Credit Report?

The bankruptcy filing may last on your credit report for a few years. If you completed a Chapter 13 bankruptcy, the filing may remain on your credit report for seven years. On the other hand, Chapter 7 bankruptcy will stay on your credit report for up to 10 years. See MyFico.com.

If bankruptcy is on your credit it does not mean you will be prevented from acquiring new debt. For instance, the waiting period for a mortgage may be a lot sooner. The FHA and Veteran’s Association allows borrowers to qualify for a mortgage in just two years after the discharge. See FHA Regulation 4155.4. As with most legal issues, the outcome will depend on the specific circumstances of each case. Therefore, you should consult with a bankruptcy attorney for information about your specific case.

 

How Will Bankruptcy Effect My Credit Score?

It is difficult to say with certainty how bankruptcy affects credit scores because credit scores are based on a multitude of factors. One of the factors that determine the credit score is the amount of debt a person has. Bankruptcy can assist with this factor by discharging debt a borrower may otherwise be obligated to pay. Another factor is open credit accounts with late payments, these accounts can significantly reduce your credit score. Fortunately, bankruptcy can assist with this aspect as well. If the debt is discharged in bankruptcy the account should no longer be reported as an open delinquent account.

Getting New Loans After Bankruptcy

You should be able to apply for credit cards immediately after you receive your discharge in bankruptcy. Some lenders will have no waiting period at all, you may be eligible for a loan the very next day. A great place to start rebuilding your credit is with a secured credit card. This is a credit card where you make a deposit into a savings account and then you receive a line of credit for that amount. For example, if you make a deposit of $800 into the savings account and you have a secured credit card that has a $40 annual fee, your line of credit will be $760.

Retail credit cards, such as department store cards are also a great way to start rebuilding your credit. Often, it is much easier to obtain a credit card from a retail store than it is from a bank. Retail stores like gas stations and department stores are primarily in business to sell their products, not issue credit. With a credit card, they can sell you more of their products. Therefore, many of their credit cards will have fewer restrictions than other types of credit cards.

Impact of Chapter 7 & Chapter 13 Bankruptcy on Credit Scores

Chapter 13 is considered a restructuring bankruptcy because the borrower continues to make payments to their creditors according to a court approved payment plan. Unlike Chapter 13 bankruptcy, Chapter 7 does not involve a payment plan. Instead, the bankruptcy trustee will liquidate a debtor’s assets and use the proceeds of the sale to pay creditors.  Fortunately, not all of a debtor’s assets will be subjected to liquidation by the bankruptcy trustee. For example, homes, retirement accounts, and cars may be exempt from liquidation.

 

Many creditors will view Chapter 7 less favorably than Chapter 13. It is not uncommon for banks to have longer wait periods to receive a loan after Chapter 7 than Chapter 13 bankruptcy.

 

Review Your Credit Report

It is also important that you review your credit report on a semi-annual basis. The Fair Credit Reporting Act allows every person to receive one free credit report every 12 months at www.annualcreditreport.com. See 15 U.S.C. § 1681. Be careful of using another website, as it most likely will require a fee or come with hidden conditions.

When reviewing your credit report, there are two types of errors that you could come across. First, information was added to your report that does not belong to you. Secondly, an agency sent the report of a different person, even though the information is accurate. If you see a bankruptcy on your credit report that you did not file, you should file a dispute.  You must do this by initiating a dispute with the consumer reporting agency and directly with the creditor.

Bankruptcy Law Firm

At Florida Law Advisers, P.A., we understand that filing for bankruptcy can be a very confusing and intimidating process.  That is why we work so hard to make the process as easy as possible for our clients. With Florida Law Advisers, P.A., you get an experienced bankruptcy attorney in Tampa by your side throughout the case. We will help ensure your rights are protected and that you receive the utmost relief bankruptcy can offer. To schedule, a free consultation with a bankruptcy lawyer in Tampa call us at 800 990 7763.