What Not To Do Before Filing Bankruptcy
If you have made the decision to file Florida bankruptcy, it is a sure bet your decision was not an easy one. Having made this difficult decision, it is crucial you avoid specific mistakes and actions both prior to filing bankruptcy as well as during and after the bankruptcy filing. A considerable amount of preparation is required for your Florida bankruptcy, not including the level of paperwork necessary. The truth is, many things you door dont doprior to bankruptcy can have a serious effect on the success of the bankruptcy, and certain actions or financial transactions can result in an irreversible impact on your bankruptcy. Some of the more common actions and mistakes made prior to filing bankruptcy include the following:
- Keeping your checking and/or savings account at the same bank you have a personal loan with. Even if you have not filed for bankruptcy, the bank may take money from your accounts to cover your loan if you are behind on the payments. This is known as the right of setoff, and no notice is required.
- Choosing a filing date for your bankruptcy on which your bank account is artificially high. On some dates your bank account may look pretty healthy, even though you know there are a slew of automatic deductions and checks on their way in. Once you file bankruptcy, you must list your exact bank account balance, applying your Florida exemptions to protect these funds. Wait until all the monthly bills go through before filing for bankruptcy.
Receiving Another Bankruptcy Discharge
You’ll qualify for another discharge if you meet the waiting period rules. Here’s how it works.
Chapter 7 to Chapter 7. If you received a Chapter 7 discharge previously, eight years must elapse between the old and new filing dates.
Chapter 13 to Chapter 13. Two years must elapse between the two filing dates to receive a discharge in Chapter 13. Because a Chapter 13 repayment plan usually takes three to five years to complete, you’ll likely be eligible for a second discharge after finishing the first case.
Chapter 7 to Chapter 13. Four years must elapse between the Chapter 7 and Chapter 13 filing dates. Chapter 13 has its benefits even if you don’t receive a discharge, however. For instance, you can pay off priority debts, such as newly-incurred taxes or domestic support arrearages. Or, you can catch up on missed mortgage or vehicle loan payments and keep a house or car. Filing for Chapter 13 immediately after receiving a Chapter 7 discharge is commonly referred to as a Chapter 20 bankruptcy.
Chapter 13 to Chapter 7. If you received a Chapter 13 discharge and you’d like to receive a Chapter 7 discharge, you’ll have to wait six years between filing dates. But there is an exception to this rule. The six-year rule won’t apply if, in the previous Chapter 13, you paid back:
- all of your unsecured debts, or
- at least 70% of your unsecured debts in a plan proposed in good faith and implemented through your best efforts.
Pro: Chapter 7 Frees You From Future Obligations
When your assets have been liquidated, and you have a steady financial foothold, your debtors are not allowed to take your income or ask you for more money. The money you start earning after your case is over remains with you; it does not go toward any unpaid debts.
To consult with an experienced bankruptcy lawyer today, call
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What Is The Main Reason That People File For Bankruptcy In The United States
Broadly speaking, the number one reason that people file bankruptcy in the United States is because their debt has exceeded their ability to pay it. There can be many reasons why people find themselves in this situation. Oftentimes, consumers will have faced unexpected health issues, a divorce or a separation; they may have had a long or short-term change in their employment situation, they may have retired, or they have gone through a long-term adjustment to a fixed income.
Waiting Periods To Refinance
You cant refinance until your bankruptcy waiting period is over. Both types of bankruptcy have a specific time frame during which you cannot get a mortgage loan or refinance.
- Chapter 7: You must wait at least 2 years after the discharge or dismissal date before you can refinance your loan. The 2-year standard only applies to government-backed loans like FHA loans and VA loans. Most lenders require that you wait 4 years after your discharge date for a conventional loan. The waiting period on jumbo loans is 7 years. Remember not to confuse your discharge date with the date you filed for bankruptcy.
- Chapter 13: You can qualify for a refinance as little as a day after the discharge date of your Chapter 13 bankruptcy if you have a government-backed FHA or VA loan. The waiting period is 2 years after discharge if you have a conventional loan, but the bankruptcy must have been filed more than 4 years from the time your credit is pulled. Alternatively, it can be dismissed more than 4 years ago. The waiting period for jumbo loans is still 7 years.
You may also need additional documentation that will vary depending on the loan program youre applying for. Finally, you’ll need to meet the individual standards of the lender youre working with to qualify for a refinance.
Read Also: Can You File Bankruptcy On Debt Consolidation
What Happens When You File A Bankruptcy In Florida
There are a few things that kick off when you declare bankruptcy:
- Bankruptcy Automatic Stay: The automatic stay is effective upon the filing of a bankruptcy petition. It allows relief from your creditors to stop contacting you.
- Debtor Education Course: You are required to attend two courses for your bankruptcy filing.
- Attend the Meeting of Creditors: You are required to attend the meeting of creditors. Often this is just a meeting between the trustee, your attorney, and you with various questions.
Please see our article covering what happens when you declare bankruptcy for more detailed information.
Attend Your 341 Meeting
Your 341 meeting, sometimes called the creditorsâ meeting or meeting of creditors will take place about a month or two after your bankruptcy filing. Even though itâs called a creditorsâ meeting, donât expect to see your creditors – they rarely show up for these meetings.Â;
For people with a simple Chapter 7 with where all personal property is protected by an exemption, these meetings usually take less than 10 minutes. As long as you are honest when completing your bankruptcy forms, you have nothing to worry about. We have a video to prepare you for your 341 meeting, which runs through the general script of the questions that the bankruptcy trustee will ask.
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Coronavirus And Bankruptcy: Everything You Need To Know
The novel coronavirus is impacting all aspects of our daily lives, from social distancing to unemployment, as people around the world try to figure out their new normal and their finances along with it. In the midst of financial uncertainty due to COVID-19, you may be considering filing for bankruptcy.
From June 30, 2018 to June 30, 2019, there were nearly 500,000 Chapter 7 bankruptcy filings in America, which was significantly less following the Great Recession. From 2009-2012, there were over 1 million Chapter 7 filings.
Rohan Pavuluri, CEO and co-founder of Upsolve, said filings have declined extensively since the market crash of 2008, but he expects them to increase due to pandemic-driven unemployment. And he would know Upsolve is an online platform that helps people navigate the intricacies of bankruptcy paperwork for free, similar to TurboTax but for bankruptcy filings.
Since Upsolve launched its COVID-19 and bankruptcy FAQ page on March 18, it has seen an uptick in traffic and page views. He said Upsolves coronavirus page is responsible for 20% of their online traffic and is the companys most popular web page at the moment.
Do I Have To Go To Court
Yes, when a debtor files bankruptcy, they will be required to attend a meeting of the creditors. The meeting of creditors is commonly referred to as the 341 meeting because the meeting is required under section 341 of the bankruptcy code. Failure to attend the meeting can result in your case being dismissed.Â; See In Re Lewis. Debtors are allowed to have their bankruptcy lawyer present with them at the meeting. If you filed for bankruptcy, it is strongly recommended to have your bankruptcy attorney present with you.
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Northern District Of Florida Requirements
The Northern District of Florida provides detailed instructions on how to prepare the creditor matrix that has to be submitted along with the other bankruptcy forms. If you donât have any paycheck stubs for the 60 days before filing your case, the Northern District requires you to file this form with your bankruptcy petition. You can file your case in the Northern District at the bankruptcy courts in Tallahassee and Pensacola, depending on the county you live in.
The Northern District of Florida has no special forms.
Other Details
- Expect to keep copies of your documents.
- You will need one copy of your forms.
- Expect to file your paystubs.
Bankruptcy In Florida: The Comprehensive Guide
If you are struggling to keep up with your debt, bankruptcy may be the solution. Bankruptcy allows borrowers to stop all collection efforts and get a fresh start immediately. Phone calls, wage garnishments, foreclosure sales, and collections notices all must stop immediately after a bankruptcy is filed. Bankruptcy also provides for a discharge of debt to give people the fresh start they need to rebuild. Bankruptcy has a lot of benefits, but it is not right for every situation. If you are considering bankruptcy, contact a bankruptcy lawyer in Tampa to schedule a consultation.
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Chapter 7 Vs Chapter 13 Bankrutpcy In Florida
Before we jump into state-specific information, I would like to provide a little information about Chapter 13 bankruptcy and a few of the key differences to Chapter 7 Bankruptcy Florida.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy is also known as the wage earners bankruptcy. It is a voluntary reorganization of debts by the individuals according to the IRS. In this chapter, debtors propose an installment repayment plan over three to five years. Many people do a Chapter 13 because they make too much money to file a Chapter 7, they have assets that are valuable, or they just prefer to do a Chapter 13. In Chapter 13, you will have a plan payment every month. ;To be eligible, you need to have regular income and not have over a certain amount of debt according to the bankruptcy code.
Chapter 7 Bankruptcy: A chapter 7 bankruptcy is also known as a liquidation bankruptcy. In this chapter, a debtor is often unable to pay his/her debts, so they enter this bankruptcy to attempt to discharge the debts. You must qualify for a Chapter 7 as it can be completed in as little as 120 days and its also generally less expensive. To qualify, you often have to be under the income limit for Chapter 7 bankruptcy. Our calculator below can help you estimate your Chapter 13 plan payment and also estimate whether you qualify for a Chapter 7. ;
Now that you have an understanding of the differences, lets get into Chapter 13 Bankruptcy in Florida.;
Florida Bankruptcy Exemption Rules
Some states allow debtors to choose between the state exemption system and a set of federal bankruptcy exemptions but Florida is not one of them. In Florida, you must use the state exemptions below. In addition to this list, you can also use the federal nonbankruptcy exemptions.
Unless noted otherwise, if a couple is married and filing jointly in Florida, each spouse may claim the full amount of each exemption .
To learn more about bankruptcy exemptions, including how they work, which state exemption system you should use, and special rules for the homestead exemption, see Bankruptcy Exemptions What Can I Keep When I File for Bankruptcy?
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Multiple Bankruptcies On Your Credit Report
You may need to consider a court date in between filing for multiple bankruptcies. In some cases, an automatic stay can expire before your next bankruptcy discharge is filed. You need to make sure the discharge happens before the automatic stay expires.
Your credit report may have language such as:
- Bankruptcy Chapter 13 – discharged
- Filing date: 01/01/2013Status date: 01/01/2014
It could also say “there is a bankruptcy on your credit report” or “you have recently filed for bankruptcy” without listing specific details.
Having multiple bankruptcies on your credit history usually means you will have a hard time finding lenders and low interest rates, and you will have a poor credit score for a year or more.
Southern District Of Florida Requirements
The Southern District of Florida also provides extensive instructions for filing on its website.
If you plan on paying your court filing fee in installments, note that this districts requires the use of Local Form LF-03 for this purpose. All filers seeking to pay their court filing fee in installments has to pay no less than half of the $338at the time of filing.
The Court includes the nine counties of Broward, Highlands, Indian River, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Lucie. The district includes Miami, Fort Lauderdale, and West Palm Beach. It comprises 15,197 square miles and about 6.3 million people.
In addition to the national bankruptcy forms described above, the Southern District of Florida Bankruptcy Court requires you to file your pay stubs for the 60-day period before filing. If you donât have pay stubs for that period, you must file a local Florida called the Declaration Regarding Payment Advices. On this local form, you explain the reason you donât have pay stubs, such as âI was unemployedâ or âI am self-employed and donât receive pay stubs.â
Other Details
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You Want To File Chapter 13
- If your prior case was one of the following, you’ll have to wait:
- Chapter 7: 4 years
- Chapter 12: 4 years
- Chapter 13: 2 years
There is one more thing to consider in your second case and that is the effect of the prior case on the automatic stay in the new case. This comes up only where the prior case was dismissed, but the dismissal for purposes of the automatic stay can be a dismissal for any reason, not just the once listed at the top of this article.
Debtcom Howard Dvorkin Responds
Your story is complicated, Jo, but its not unusual. For two decades, Ive seen Americans sink slowly into debt as if it were quicksand. They grab at anything they think will save them.; That does slow down the inevitable; but it doesnt stop it.
I can give you some information that will make it easier to understand all the factors at play here. However, I recommend that you get in touch with someone that can help you understand how all of this applies in your specific financial situation.
#1: The credit report notation for your first bankruptcy should have fallen off years ago.
If you filed for bankruptcy in 2006, then the latest that penalty should have remained on your report is 2016. Even if you filed for Chapter 7, the public record notation should only remain for 10 years.
So, at a minimum, you should contact the credit bureaus to dispute why the item is still showing up on your reports. I recommend going to annualcreditreport.com to check your reports with all three bureaus .
If you dont know how to make a dispute, Debt.com offers a free guide to help you along.
#2: Enough time has passed that you can legally file bankruptcy again
The maximum amount of time that needs to pass between filings is 8 years. That means youre well past the point of time required between your first and second discharge. You should be able to file for Chapter 7 or Chapter 13 without the time limit between your filings being an issue.
The bottom line
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Check Your Credit Scores
If you haven’t done so already, sign up for a service, such as the one from Experian, that lets you check your credit scores for free. Your scores may not paint a pretty picture, but depending on how recently you filed your bankruptcy plan, they may not yet be at their lowest point: Your scores will decline significantly when you file bankruptcy, and if you file Chapter 7, they may dip further once the court has discharged your casea process that can take several months . A Chapter 13 bankruptcy isn’t considered discharged until the end of the court-approved repayment period.
If overdue or defaulted credit accounts significantly hurt your credit scores before you turned to bankruptcya situation common to many filersyou may find that filing for bankruptcy has less impact on your scores than you might have imagined, if only because your scores had already fallen about as far as they could. Some individuals with heavily damaged scores even see small score increases after filing Chapter 13 bankruptcybut their scores are still likely to be in poor territory. That can be a hard fact to face, but facing it is exactly how to begin your credit recovery plan.
