When you file bankruptcy you’re required to provide a list of everyone to whom you owe money. Those people and businesses are your creditors. There are separate sections in your bankruptcy petition for creditors that are secured and unsecured.
A secured debt is one that is backed by collateral. This means that if you don’t pay the debt, the creditor can repossess something, typically a car or house, to help pay what is owed. If the collateral is sold for less than what is owed, the debtor must pay the difference. This is called a deficiency.
Unsecured debt doesn’t have collateral like secured debt. It’s security is the creditor’s ability to damage the debtor’s credit. This includes items like, medical bills, signature loans and most credit cards. Occasionally, a credit card will attempt to collateralize the item purchased using the card, such as furniture or jewelry.
Car payments seem to be unavoidable. Unless you’re one of the rare people who have the luxury of being able to ride a bicycle to work, you must have a car. Everyone knows that the value of a car drops as soon as you drive it off the lot and as a result, many people who drive financed vehicles owe more to the lender than the asset is worth. Wouldn’t you love to be able to pay what you vehicle is worth right now, rather than what you owe on it? You can, and here’s how:
11 USC 722 allows a bankruptcy debtor to pay the secured portion of the debt owed on the car to satisfy the lien. “Security” for a loan the physical asset which can be exchanged to satisfy a lien. A typical security is a house or car. If you stop paying on the lien, the lender can take the house or car to satisfy the lien amount. Any value in the house or car above and beyond what is required to satisfy the lien (and associated fees) is returned to the borrower. A “Deficiency” occurs when the house or car sell for less than the lien amount. Deficiencies are unsecured debts for which a lender may sue. Deficiencies are very typical in the housing market these days.
When a debtor elects to use 11 USC 722, the court bifurcates the lender’s single claim into two claims, one secured which is equal to the fair market value of the car and one unsecured which represents the remainder. This way the borrower can discharge the unsecured portion, pay the secured portion and keep the vehicle. This is relatively easy in a Chapter 13 because the debtor can re-amortize the secured debt to be paid over the length of the Chapter 13 repayment plan, typically over five years. However, in Chapter 7 the payoff must occur immediately which is often impossible for people who’re already bankrupt.
These days, debts are bought and sold like stocks. By the time a debt collector files suit against you, they may be the third or fourth agency to hold your debt. Generally, this is a good thing because Debt collectors assume that they will be able to win by default in nearly all of their cases. As a result, these collectors rarely keep proper documentation (or don’t even get it in the first place).
Adopted by nearly every state, the Uniform Commercial Code sets forth requirements that must be met by a secured creditor before they can assess a deficiency against a debtor. There are varieties of other provisions that can be used to protect consumers: the Fair Debt Collection Practices Act, the Federal Truth in Lending Act, etc. One of the most powerful protections a consumer has is the Florida Rules of Civil Procedure. When one knows how to get evidence and how to present pleadings properly, the strength of a case is greatly amplified.
When a collector files a complaint with the court, they must have the debtor served at their last known address. There are a variety of defenses that can be used: Perhaps the collector hasn’t properly shown that they are owed the debt, perhaps the debt amount has been improperly calculated, perhaps the debtor isn’t even the right person -the list goes on and on. What is important to keep in mind is that a lack of action on the part of the defense means that they consent to the facts alleged. This is called a default judgment. Default judgments are difficult, though not always impossible to “re-open” and work out properly. It’s far easier to defend such a case if counsel is sought prior to a judgment being obtained, preferably before the initial twenty days after service of process has occurred. By getting into a case early, a lawyer will almost invariably have a better chance at defeating the complaint and may be able to get attorneys fees or file a counter-claim for damages (suing the person who is suing you).
If you want to reaffirm a debt after filing for bankruptcy, your must executed a new agreement with your creditor. This reaffirmation agreement must be written and must be signed by both you and the creditor. Should you sign this reaffirmation agreement? Here are some pros and cons.
First, if you want to keep the property, you must sign the reaffirmation agreement. Also, if you do sign, you will be certain what your payments will be, what your interest rate is, etc. Signing a reaffirmation agreement may also help rebuild your credit, since you are taking responsibility for a pre-filing debt and are making regular payments on a debt.
As is most legal processes, bankruptcy can be a difficult thing to maneuver. There is a lot of misinformation out there, you need to be careful to get your information from a trusted source. Here are some myths regarding bankruptcy:
Myth 1: If I file for bankruptcy, everyone will know.
Like most legal proceedings, most bankruptcy documents are public record. Since I work at a law firm in the bankruptcy department, I search these records all the time. I even have a special username and password that allows me access online. However, how many times do you think your friends, family, or co-workers search through federal court records? The truth is that while your bankruptcy documents will be public information, it is unlikely that those you know would search to find them.
Upon filing for bankruptcy protection, an automatic stay is put in place. This means that creditors can not try and collect from you. So a creditor cannot call you to request payment, send bills to you, garnish your wages anymore, or repossess your car without court permission. If there is a foreclosure suit against you, that suit must also stop immediately. If your home is sold and you filed prior to the sale, that sale can be vacated. Obviously, this is a powerful tool bankruptcy. Many people file to stop creditors from taking actions against them or their property.
The automatic stay will remain in effect until one of the following things occurs:
1. A creditor petitions the court for relief from automatic stay and the court enters an order granting it;
Two bankruptcy petition preparers in Wisconsin are in big trouble with the Court, facing possible criminal charges. Jennifer Abbott, who is a disbarred attorney, was cited with contempt by a bankruptcy judge. The Court said that she has violated bankruptcy Court Orders repeatedly and she refused to obey a subpoena issued by the U.S. Trustee’s office. Abbot has also been convicted of felony theft for stealing from a client.
The second bankruptcy petition preparer, Gaynor Morrison, is in trouble for failing to appear in bankruptcy Court when ordered to do so. Also, he was alleged to have been overcharging clients and failed to return fees to clients after being ordered to by the Court.
Bankruptcy petition preparers are non-attorneys who help people file for bankruptcy. Courts and trustees often comment that the petitions or other required documents are flawed when drafted by a bankruptcy petition preparer. If this happens and the case gets dismissed without discharge, people could lose valuable assets or have to pay additional filing fees. Not all bankruptcy petition preparers are unprofessional, but it is best to have a licensed attorney with knowledge of the complexities of the Bankruptcy Code prepare your bankruptcy documents. To contact a Jacksonville Bankruptcy Attorney today, call 904-685-1200.
Yes, you can still file for bankruptcy. However, a very important part of every bankruptcy case is your exemptions. Exemptions allow you to keep your real and personal property. There are federal exemptions, but most states have adopted their own exemption laws. To use Florida exemptions in your bankruptcy, there are residency requirements. If you have lived in Florida for the 730 days prior to your filing, you can use Florida’s exemptions. If you have not lived here for that long, then your exemptions will be those of the state in which you resided for during the 180 days prior to your filing or the federal exemptions, whichever your prior state’s law indicates.
Florida is often seen as having a liberal homestead exemption, as it allows you to keep your home despite unsecured creditors. However, to use the Florida homestead exemption, you must have owned the home for 1215 days, otherwise you can only protect up to $125,000 in equity. Since nearly half the homes in Florida are underwater on their mortgage, it is a rare circumstance that anyone has more equity that the federal system allows. If you are unclear what exemptions you are allowed to use, contact a Jacksonville Bankruptcy Attorney today to discuss your specific case and what exemptions would be best for you.
The U.S. House of Representatives introduced a new bill, the Mobile Informational Call Act of 2011, that would allow businesses to dial consumers’ cell phones using an automatic dialing system. This practice is oftentimes called “robo-calling”. This means that the operator does not have to manually dial each number. Rather, the computer system can dial the numbers and play a prerecorded message on many phones at once. The current law is that operators have to manually dial the numbers (unless the customer consents to robo-calling), which is not very profitable for many collection agencies.
The down side to this bill would obviously be that creditors would be able to start robo-calling your cellphone. This does not sit well with many consumers. But some creditors say that the current regulations have not kept up with the technology of today, and that a lot of people do not have home phone lines anymore. Creditors are wanting robo-calling access to cell phones.
The upside to the bill, however, is that an airline company could robo-call passengers if a flight was cancelled or is running late. Or your credit card company could set up a system to automatically call you if they think someone is fraudulently using your card. Or your bank could robo-call with a message that someone changed the address or PIN number on your account.