What is bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
Do I need to hire an attorney to file for bankruptcy?
The short answer is no. You are free to file for bankruptcy yourself as a matter of right, however, I would strongly caution you to consider the following before deciding to file your own case:
See what the Florida Middle District Bankruptcy Court has to say about representing yourself in bankruptcy
The National Consumer Law Center (NCLC) is one of the preeminent consumer advocacy organizations in the United States and provides a wealth of information for consumers surrounding the issues of consumer finance, debt, and bankruptcy including advice on the hiring of an attorney to represent you in bankruptcy.
With that being said, I wouldn't recommend that an individual attempt to file for bankruptcy without at least first consulting with an attorney. Whether it's a chapter 7 or a chapter 13, the same bankruptcy code and rules of procedure apply whether you have an attorney representing you or not. Bankruptcy is a legal proceeding in federal court. Without professional legal representation you are literally taking your case in your own hands. It only takes a slight oversight or mistake to do significant harm to your case, even if you later hire an attorney to try to help you.
Will I lose my property?
It depends. It depends on a great many specifics of your situation. I offer a free in person consultation to review your financial situation with you and I can provide you with specific legal advice applicable to your case during this consultation. Rest assured that Florida law provides generous exemptions for property in bankruptcy proceedings and we will work together to determine the best application of those exemptions to protect what is most important to you.
Can I modify my mortgage, make it more affordable, or get rid of second and third mortgages?
Potentially yes to all 3 of these questions. This will depend on the type of bankruptcy you file (if you file at all), your economic situation and a few other factors. Again, this is a discussion that is easier and more appropriate to have with a client in a consultation. If you own a home, we will discuss at length all options available to you as well as likely outcomes of various courses of action regarding your home.
Can I own anything after bankruptcy?
Yes. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.
How can bankruptcy help me?
Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house or manufactured home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
- Prevent repossession of your car or other property, or force the creditor to return property even after it has been repossessed.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
What can bankruptcy not do?
Bankruptcy cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of “secured” creditors. A creditor is “secured” if it has taken a mortgage or other lien on property as collateral for a loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money on the debt if you decide to give back the property. But you generally cannot keep secured property unless you continue to pay the debt.
- Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes.
- Discharge debts that arise after bankruptcy has been filed.
- Protect cosigners on your debts. When a relative or friend has cosigned a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan. Cosigners on some debts can be protected, however, if a chapter 13 bankruptcy is filed.
What must I do before filing bankruptcy?
You must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filed. Different agencies provide the counseling in-person, by telephone, or over the Internet. If you decide to file bankruptcy, you must have a certificate from the agency showing that you received the counseling before your bankruptcy case was filed. There is an exception to this rule for emergency filers, however, there is almost never a legitimate reason to not simply complete the counseling before filing.
What else must I do to complete my case?
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Many of the course providers give you a choice to take the course in-person at a designated location, over the Internet (usually by watching a video), or over the telephone. A certification from the course provider that you completed the course must be filed with the bankruptcy court. If it is not filed, you will not receive a discharge of your debts.
Will bankruptcy affect my credit?
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you've filed a bankruptcy can appear on your credit record for ten years from the date your case was filed. But because bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit. This is something that I discuss in depth with each of my clients before they make the final decision to file for bankruptcy.
The Law Office of Alex McClure provides services in Lake Mary, Sanford, Longwood, Deltona, Deland and all of Seminole, Volusia, Orange, Brevard and Lake Counties.