Miami Florida Bankruptcy Blog

Posts Tagged ‘Chapter 7 Bankruptcy’

Florida residents have three  main options when it comes to filing for bankruptcy: Chapter 7 Bankruptcy, Chapter 13  Bankruptcy and Chapter 12 Bankruptcy. Chapter 7 bankruptcy is also referred to as “straight” or “clean slate” bankruptcy. This option wipes out all applicable debt immediately.

Chapter 13 bankruptcy allows the individual to create a payment plan to wipe out debt over several years of payment.  With the change in Bankruptcy Laws in 2005 many people who do not qualify for a Chapter 7 Bankruptcy utilize a Chapter 13 Bankruptcy to regain control of their financial situation and get back on the road to prosperity.

Chapter 12 bankruptcy is a special process only available for family farmers and fishermen and follows slightly different procedures than the more common Chapter 7 and Chapter 13 proceedings.

Additionally, an individual may in some rare circumstances file for a Personal Chapter 11 Bankruptcy. Chapter 11 Bankruptcy is typically reserved for businesses. Depending upon your situation, a Personal Chapter 11 Bankruptcy may be the best option.

No matter which option you choose in Bankruptcy, it is important to be well informed and find a law firm you are comfortable working with. A Bankruptcy is a very personal situation that requires a close relationship with the law firm that you choose to hire. It is important that you feel that you are being treated as an individual and not as a number. This is important because, no matter which option you choose, if you are not treated with dignity the process will not be pleasant and no matter what the outcome is you will not be satisfied.

Matthew E. Mazur, Jr. Esq., is the managing shareholder of Matthew Mazur, P.A., a Coral Gables, Florida based law firm that represents clients in Bankrutpcy matters. For more information please visit www.coralgablesbankruptcyattorney.com.

A lot of people have the misunderstanding that they will never be able to buy a home again if they file a Chapter 7 Bankruptcy. Well, that was true way back when, but not today. There are thousands of FHA and VA assumable loans. You will have to save up some cash, but you will be able to buy property again.

You may also have had the understanding that you won’t be able to buy a car after fling a Chapter 7 Bankruptcy. Again, not true. When you file a Chapter 7 Bankruptcy, you get rid of all of your debts. You are a good risk to a car dealer. The car dealer will look at dealing with you as an opportunity to maybe charge you a little bit more interest and ask you for a little bit more money as a down payment. The car dealer knows you are not going to do a bankruptcy again any time soon and that you are trying to rebuild your credit.

You may also have a misunderstanding about Credit Cards after a Chapter 7 Bankruptcy. You may believe that you will never be able to get another credit card again if you file a Chapter 7 Bankruptcy. Again, this is just not true. There are banks that will allow you to have a credit card (Visa or Mastercard) if you open a savings account with them and use the savings account as collateral. We will give you a list of these banks when your case is discharged and you are ready to start rebuilding your credit. This is known as a secured credit card, meaning your credit limit will be dictated by the amount of money you maintain in your savings account. It is a good start to rebuilding your credit.

If you buy a car after your Chapter 7 and establish a secured credit card account, you are well on your way to rebuilding your credit history. You are now making payments on your car. You are now making payments to your secured credit card. You are now able to cash checks. After a year or two of re-establishing your credit, conventional lenders, such as banks and savings and loans, will consider you for a house loan. After four years, the Federal Housing Administration will consider you for a low interest home loan. In a nutshell you will have cleaned your financial slate and built up a credit history that will enable you to do the things you want to do.

Now, there are probably some of you out there wondering about the impact of a Chapter 7 Bankruptcy on your credit report. Well, it is more likely than not that your credit report already does not look so good. The Chapter 7 Bankruptcy will stop the aging process of the debts reported on your credit report. Simply put, debts that are two, three or four or more months behind will never get any older than that. That will look good for you on your credit report. If your debts are very old, then you might as well get rid of them and start over with a clean slate through a Chapter 7 Bankruptcy, if you can. It is important to remember that by stopping the aging process, the worst your credit report will ever look is the day your petition is filed.

In Chapter 7, all of the debtor’s assets, other than those types of assets specifically exempt from liquidation by statute, are turned over to a bankruptcy trustee for sale. Sale proceeds, if any, are distributed among the creditors. Most Florida Chapter 7 debtors have little non-exempt personal property because of Florida’s liberal exemption laws. Chapter 7 bankruptcy is used to eliminate, or discharge, primarily unsecured debts such as credit cards or medical bills. Chapter 7 does not eliminate secured debts, such as vehicles (unless the secured item is surrendered). Chapter 7 will not save a house from foreclosure nor a car from repossession if you are delinquent on payments.

Matthew E. Mazur, Jr. Esq., is the managing shareholder of Matthew Mazur, P.A., a Coral Gables, Florida based law firm that represents clients in Bankrutpcy matters. For more information please visit www.coralgablesbankruptcyattorney.com.