Debt Solutions
Here is some helpful information about bankruptcy and debt.
Settlement
Debt settlement allows for less than full payment of a balance owed. Once an agreement is reached, the creditor agrees to a payment amount along with a concession that the debt is fully satisfied. There are numerous types of debts that can be settled such as credit cards, medical bills and service bills just to list a few.
Debt Collection Practices/ Fair Credit Reporting Act
If a Collector violates a provision of the Federal Debt Collection Practices Act (FDCPA), the company may be liable for damages of $1,000.00 for each violation, along with actual damages and attorney fees. Although the FDCPA applies to third party debt collectors, some States have laws that protect you against the original Creditors who hire third party debt collectors..
Acts that violate the FDCPA include: – calling a home phone or personal cell phone before 8:00 a.m. or after 9:00 p.m.
– calling continuously with the intent to harass
– calling an employer after being advised that such calls are not acceptable
– calling a relative or a neighbor
– threatening arrest
– using profane language in an attempt to collect a debt
– calling the debtor after being told the debtor is represented by an attorney
– making misrepresentations that collector is calling from a law office or law enforcement
office/ agency.
Chapter 7 Bankruptcy
A Chapter 7 Bankruptcy is also known as a liquidation bankruptcy. The debtor seeks to discharge or eliminate all dis-chargeable debts. These debts usually include credit cards, medical bills, signature loans, repossessions, household bills, and other unsecured debts. A Means Test is used to determine if the debtor is eligible to file Chapter 7.
For the debtor to file a Chapter 7 bankruptcy, his household income must be below a certain income level. The household income level is set by the federal government and normally is adjusted yearly. If a debtor exceeds the allowable income for his family size, as determined by the Means Test, he may not qualify for a Chapter 7 Bankruptcy. A Chapter 13 Bankruptcy may an option if a debtor is not eligible to file Chapter 7.
Debtors are allowed to keep “exempt” assets in their bankruptcies. Exempt assets are usually determined by the state you reside in. Florida is a leader in homestead property rights. If a debtor owns homestead property in Florida, he may retain the homestead property and all the equity in that property. If the debtor retains the homestead property in Florida, his exempt assets may also include $1,000.00 in personal property as well as $1,000.00 equity in a vehicle. The debtor would need, however, to make the monthly mortgage payments, if any, on the homestead property to keep it.
If a debtor decides to surrender assets such as a home or a vehicle, he may do so in full satisfaction of the loans held against those assets through the Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy is also known as a repayment plan as a portion of the debts owed is repaid to the creditors.
A Chapter 13 bankruptcy may be filed when the debtor’s income exceeds predetermined family income level and/ or if the value of the debtor’s assets exceed a predetermined asset exemption level. The means test budget helps determine the amount to be paid. If a debtor owns homestead property in Florida, he may retain his homestead property and all the equity in that property; however, he would need to continue to pay his mortgage payments and property taxes.
In a Chapter 13 case, a monthly payment is made to the Bankruptcy Trustee. When the final payment is paid, the debtor receives a discharge of all his dis-chargeable debts. Dis-chargeable debts usually include credit cards, medical bills, signature loans, deficiency claims resulting from repossessions, household bills, and other unsecured debts.
FAQ
Your home is under water
The mortgage exceeds the current value of your home.
What is a short sale?
The contract price on your house is less than the balance (s) owed on the mortgages held against the house.
Can a bankruptcy protect me from foreclosure?
You must make your mortgage payments on your house in order to keep it. Sometimes, however, you may “cure” or catch up back payments that you are behind on in a Chapter 13 bankruptcy.
What does stripping a mortgage mean?
Sometimes a second mortgage or equity line of credit may be “stripped” or removed from your homestead property. If so, then the second mortgage may be discharged in a bankruptcy as an unsecured debt.
Are there debts that a bankruptcy will not discharge?
Student loans, alimony, child support, most taxes, court fines and restitution are non-dischargeable as well as debts that are obtained through fraud or deception or debts incurred as the result of driving under the influence of drugs or alcohol.
Can a discharge be denied if you filed bankruptcy?
A discharge may be denied if you conceal assets or make a false oath.
If my credit report states an account is charged off is the debt forgiven?
No, the debt may still be owed to the creditor. If the debt is written off, the creditor may still send it to a collection agency. If the debt is forgiven, however, the creditor may issue an IRS 1099 form. You may then owe taxes on the balance forgiven.
Can filing bankruptcy stop a garnishment?
Yes. When you file bankruptcy an “Automatic Stay” takes effect, stopping collection actions such as garnishments.
Resources
Preparing for Initial Consultation Student Loan Resources
U.S. Trustee Information Sheet Federal Student
Obtaining Real Property Values
Pasco County Property Appraiser
Pasco County Tax Collector Mortgage Assistance Programs
Pinellas County Property Appraiser
Pinellas County Tax Collector Florida’s Hardest Hit
Hernando County Property Appraiser Home Affordable Refinance (HARP)
Elderly Mortgage Assistance (ELMORE)
Pasco County Community Redevelopment
Hillsborough County Property Appraiser
Hillsborough County Tax Collector NCLC
Property Appraisals
Obtaining dockets on pending State Court Lawsuits You can receive a free credit
Pasco County Clerk of Court report each year from the 3
Pinellas County Clerk of Court credit reporting agencies.
Hillsborough County Clerk of Court
Hernando County Clerk of Court
Vehicle Values
Bankruptcy Notes
In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act. The law allowed homeowners to sell their primary residences in “short sales”, or homeowners in foreclosure, to avoid adverse tax consequences as a result of their houses being underwater. Unfortunately, the Law expired on December 31, 2014. There is still hope that Congress may extend the law retroactively, but for the moment it appears that there could be adverse consequences to homeowners who short sell or lose their houses in foreclosure in 2015 or later. If you are in default on a mortgage on your primary residence and you are “underwater” on the loan, you should obtain tax advice from a knowledgeable CPA or Tax Lawyer. You also may want to seek bankruptcy advice. There would not be a taxable event to a homeowner who files a timely bankruptcy and discharges his or her obligation on the note which is secured by a mortgage. Your bankruptcy lawyer needs to discuss with you the deadlines to file a bankruptcy in order to discharge the note and avoid any taxable event.
According to the Federal Reserve Bank of New York, U.S. households increased what they owed by 1.1% in the last quarter of 2013. “The figures are scary because they show people are taking on more debt at a time when jobs are still uncertain,” said Linda Sherry of the advocacy group Consumer Action.
IRAs are normally exempt from creditors’ claims. Therefore, debtors in bankruptcy normally can keep their IRAs. However, if the owner of an IRA engages in any transaction prohibited under Sec 4975, the IRA may then lose its special tax benefits and the IRA may be subject to attachment. Thus, an improperly funded IRA may be taken from a debtor in bankruptcy. Section 4975 defines “prohibited transaction” to mean, among other things, any direct or indirect sale or exchange, or leasing, of any property between a plan and a disqualified person; lending of money or extension of credit between a plan and a disqualified person; furnishing of goods, services, or facilities between a plan and a disqualified person; Transfer to, or use by or for the benefit of, a disqualified person of the income or the assets of a plan; an act by a disqualified person who is a fiduciary who deals with the income or assets of a plan in his or her own account. Also , inherited IRAs may not be exempt.
Often, people filing bankruptcy in the Middle District of Florida have “sink hole” claims pending on their homestead properties at the time that they file their bankruptcies. Several cases have been decided on whether debtors in bankruptcy are entitled to keep–or exempt– their rights to any future recovery of insurance proceeds under their homeowners policies. Generally, if the rights to future payments under a sink hole policy are limited to the repair costs to the debtors’ homestead property, then the rights to future proceeds are exempt from creditors.