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Fort Lauderdale Bankruptcy Law Blog

What is the role of the Chapter 13 trustee?

Making the decision to file for bankruptcy when facing financial challenges can be very difficult for Florida residents. One challenge is to determine which type of bankruptcy is right for a particular situation. For those people who choose to file for a Chapter 13 bankruptcy, it can be important to understand how the plan trustee is involved and what they can expect along the way.

As indicated by the United States Court website, a United States Trustee will appoint a Chapter 13 trustee to a single Chapter 13 bankruptcy case. This person will play a primary role in overseeing all aspects of the plan for the duration of the repayment terms. One of the first things that the trustee will do is to organize a meeting with all creditors as well as the debtor or debtors if a case is being filed jointly by spouses. It is here that some of the terms of the repayment plan can be identified giving first consideration to those debts deemed to be priority such as costs associated with the bankruptcy. Other secured and unsecured debts will be factored in to the repayment plan based upon the guidelines of the law.

Do I qualify for Chapter 13 bankruptcy?

Before you can move forward with the personal bankruptcy process, you must first decide whether you should file for Chapter 7 or Chapter 13 bankruptcy. In order to qualify for Chapter 13 debt relief, you must meet several requirements. Provided below are some of the most common factors that are taken into consideration when determining if Chapter 13 is the right form of debt relief for you.

According to the United States Courts, there are a number of initial requirements that you must meet before you can be considered eligible to file for Chapter 13 bankruptcy. For instance, you cannot file for Chapter 13 if the amount of unsecured debts that you have accumulated exceeds $383,175. Similarly, your secured debts must not be over $1,149,525. You have to have also participated in credit counseling within 180 days of submitting a bankruptcy petition.

Bankruptcy-related tax considerations

Given that filing for personal bankruptcy can be a rather involved process, the attorneys at Nowack &Olson, P.L.L.C., understand why so many Florida residents are concerned about how bankruptcy could affect their taxes. If you have already or intend to file for bankruptcy, it may be helpful to keep a few key points in mind before you file your returns this tax season.

Discussing when and how personal bankruptcy proceedings can impact tax preparations, and vice versa, TurboTax explains that the type of income tax return that you file can depend upon the form of bankruptcy that you choose. For instance, you may not be required to submit additional income tax forms if you file for Chapter 13 bankruptcy. If you file for Chapter 7, however, your bankruptcy trustee would be obligated to file Form 1041 to account for your bankruptcy estate.

What is the Florida bankruptcy means test?

Florida residents who decide that filing for bankruptcy is in they and their family's best interest still have a number of factors to take into consideration. For one thing, you must know whether it is more appropriate to file for Chapter 7 or Chapter 13 bankruptcy. The bankruptcy means test is used in the state of Florida to determine if your household's median income qualifies you for Chapter 7 bankruptcy.

Among other things, the Florida bankruptcy means test is used in cases involving higher income bankruptcy filers. As is explained on, if you pass the means test it typically means that your income is lower than the state median and that you qualify to file for Chapter 7 bankruptcy. Your median income can be calculated by determining your average monthly income over a six-month period. All of your sources of income should be accounted for when figuring your overall income level, and that number should be compared to the state average.

Common bankruptcy questions and misconceptions

If you and your family are facing serious financial challenges, you have probably talked to family and friends about potential debt relief options. And while filing for personal bankruptcy may have come up in those conversations, you may not have received the most accurate information possible. Knowing some basic facts about bankruptcy, and how the process relieves large amounts of personal debt, can go a long way to help you decide whether or not filing for bankruptcy is right for you.

You, like so many people across the country, may have serious questions and/or concerns over what kinds of debts can be addressed through bankruptcy. It may be reassuring to know, then, that many people who file for bankruptcy are not forced to give up their vehicle or home. It is also important to keep in mind, however, that some forms of debts and financial obligations are not discharged through bankruptcy proceedings. You will still be held liable for alimony and/or child support payments no matter if you file for Chapter 7 or Chapter 13 bankruptcy. Similarly, any taxes that you owe will not be eliminated.

Should I file for divorce or bankruptcy first?

Among all of the many difficulties that accompany the prospect of divorce, concerns over personal finances are often at the forefront of people's minds. If you are currently considering ending your marriage, and you and/or your spouse have a considerable amount of financial debt, it can be incredibly helpful to know how filing for personal bankruptcy early could affect your divorce case.

Your Divorce 101 discusses the pros and cons of filing for bankruptcyprior to divorce, and explains that there are several benefits to pursuing debt relief early. For one thing, filing for bankruptcy as a couple is cheaper than filing individually, and doing so ensures that you are not held liable for any of your spouse's outstanding debts once your divorce is finalized. If you and your husband or wife incurred a significant amount of credit card debt during your marriage, for instance, the credit lender could pursue you to pay the balance even if your divorce settlement specifies otherwise.

An introduction to the CARD Act

No matter their credit history or limit, credit card customers across the state of Florida and the entire nation have rights as consumers. Unfortunately, however, many people are not familiar with federal guidelines mandating credit card practices and consumer protections. Learning a little bit about the Credit CARD Act can go a long way to ensure that one's rights as a consumer and borrower of credit are legally safeguarded at all times.

The Consumer Financial Protection Bureau explained that the Credit Cardholders Bill of Rights, otherwise known as the Credit CARD Act, was enacted by President Obama in 2009. The federal legislation features two primary objectives: transparency and fairness. The primary provisions of the law mandate that credit card fees and rates be easily accessible to consumers. They also prohibit exploitative or biased practices on the part of credit lenders. Abusive practices could include but are not limited to imposing over-limit penalties on accounts or dramatically increasing the interest rate on a credit balance.

Protecting yourself from creditors through bankruptcy

It's possible that you have been suffering through an endless barrage of creditor harassment and that you know very well just how difficult it can be to live your life when you have to sift through hundreds of threatening phone calls and letters. Here at Nowack & Olson, we understand that you would like to escape this cycle and can provide you information that you could use to help yourself out of the harassment zone through bankruptcy.

The first hurdle that you may face is the idea of bankruptcy and how scary it may seem. However, it is a helpful option both in stopping creditor harassment and in providing you with a smoother road to financial recovery. You may find that your fears are unfounded anyway. For example, while property loss is a high concern for many, there are actually very few cases in which a person loses all of their property. While the majority of loss is dictated by whether you file for Chapter 13 or Chapter 7, neither tends to be particularly damaging.

Two Florida cases prompt Supreme Court consideration

Florida residents continue to be confronted by serious financial challenges, despite the fact that there is evidence to suggest that the nation's economy is beginning to recover from the recession. As a result, foreclosure and Chapter 7 bankruptcy are a very real prospect for many. And given that the state's real estate market has not yet fully stabilized, many homeowners and lenders alike have major concerns about how to address underwater mortgages.

According to one source, Florida has the second-highest rate of underwater mortgages in the nation, equaling more than one quarter of all mortgages in the state. That is why Bank of America is hoping that the U. S. Supreme Court will offer clarity and consistency to how to address underwater second mortgages in chapter 7 bankruptcy cases.

The apparent lack of clarity over whether or not second mortgages should become void in bankruptcy was caused, according to Bank of America, by a ruling issued by the 11th U. S. Court of Appeals in response to two Florida cases. The court ruled to nullify the underwater second mortgages in both cases, and is accused by Bank of America of setting an inappropriate precedent in the process. Representatives for the homeowners in those cases claim, however, that the issue of underwater second mortgages is unique.

The role of the bankruptcy trustee

We here at Nowack & Olson, P.L.L.C., understand that many people are discouraged from filing for Chapter 7 bankruptcy because they are uncomfortable with having their personal finances and financial difficulties scrutinized. You, like countless other Florida residents, may not be familiar with the role and/or duties of a Chapter 7 panel trustee. That is why it can be helpful to learn more about who Chapter 7 trustees are and what they do before moving forward with bankruptcy proceedings.

The National Association of Bankruptcy Trustees explains that a Chapter 7 panel trustee is a private citizen randomly chosen and appointed by the U. S. Trustee division of the U. S. Department of Justice to handle Chapter 7 bankruptcy cases. It is estimated that around one million Chapter 7 bankruptcies are administered annually by the some 1,000 active panel trustees across the country, and that one trustee is capable of administering hundreds of cases each year.

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