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Fort Lauderdale Bankruptcy Law Blog

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 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.

Will I lose my home in bankruptcy?

Once Miami, Florida, residents are at the point of considering filing for personal bankruptcy they are often already facing the prospect of losing their home to unmanageable debt. If you are a homeowner who is currently weighing your debt relief options, it can be helpful to know what may happen to your house in bankruptcy proceedings.

In order to understand how real estate property is addressed through personal bankruptcy, it’s important to recognize how Chapter 7 and Chapter 13 bankruptcy differ. The Nest explains that filing for Chapter 13 bankruptcy does not involve the liquidation of assets in order to pay creditors. As a result, the equity of your home would not be a factor in your case if you were to file under Chapter 13.

Personal bankruptcy and credit card debt

Credit card debt is a major issue for countless people across the state of Florida and the entire country. And while filing for personal bankruptcy is one option that people often turn to for effective debt relief, it’s important that they understand if and how bankruptcy will address their credit card-related debts and difficulties.

The Nest explains that filing for Chapter 13 or Chapter 7 bankruptcy can affect the way that credit card debt is discharged. For instance, people who file for Chapter 13 may still be required to pay a portion of the credit card debt that they owe, while those who file for Chapter 7 may not be held liable for repaying any of the amount due. Similarly, the effectiveness of bankruptcy in eliminating credit card debt can depend largely on whether or not that debt is considered dischargeable at all.

Are debt collectors really allowed to do that?

Being contacted by a debt collector can be an extremely disturbing experience, as it is often a sign that you are facing serious financial challenges. And while having any kind of contact with collection agencies can be uncomfortable, you as a consumer can actually find yourself subject to illegal collections practices. That is why it is so important to be able to recognize improper debt collector conduct when it occurs.

Chapter 13 bankruptcy considerations

Having served the residents of Florida for more than 15 years, we here at Nowack & Olson PLLC understand how difficult it can be to choose the most appropriate form of debt relief for your unique situation. Chapter 13 bankruptcy is known to be one effective personal bankruptcy option, and is distinguished from Chapter 7 bankruptcy by several key factors.

Both Chapter 7 and Chapter 13 bankruptcy are capable of discharging unsecured debts, such as credit card debt and other personal loans. However, filing for Chapter 13 can allow you to maintain ownership of certain kinds of property, while still lowering the amount that you owe on those loans. For instance, you may be able to keep your car and/or house once those loans are adjusted through bankruptcy to lower your monthly payments.

Personal bankruptcy case results in accusations of fraud

The vast majority of people that consider filing for bankruptcy in Florida take the decision very seriously and only file after they have exhausted other options. Unfortunately, however, there are instances where people attempt to take advantage of the debt relief system. Bankruptcy fraud is a major offense that can result in serious legal penalties.

One woman was recently charged with two offenses relating to bankruptcy fraud. She was accused of third-degree theft for failing to properly declare funds in her bankruptcy filing, which could result in a monetary fine of $150,000 and a prison sentence of up to five years. The other charge is fraud in insolvency in the second degree. That conviction could be accompanied by similar monetary penalties and a prison sentence of 10 years.

The warning signs of unmanageable credit card debt

Countless people across the state of Florida and the entire country live paycheck to paycheck, unable to accumulate savings or fully establish their financial security. And while using credit cards allows many people to pay for necessities, relying primarily on personal lines of credit to cover monthly expenses can quickly result in serious financial difficulties. Provided below are several warning signs of excessive consumer debt.

While financial advisors recommend that people put 10 percent of their income into savings, the U. S. Bureau of Economic Analysis recently estimated that most people only save a little over 5 percent. If people are not contributing to their savings, and are instead primarily maintaining their lifestyle by relying on credit cards, they may be contributing to an unstable financial situation. Instead, the goal should be to invest one’s energy and money into lowering credit card debt.

Rebuilding credit after Chapter 7 bankruptcy

Many people who have completed the Chapter 7 bankruptcy process understand that it is an effective form of debt relief. That being said, eliminating one’s financial history means that a person has to reestablish his or her credit rating and confidence in the eyes of lenders. There are several things that people can do as they begin the process of reestablishing their financial footing following personal bankruptcy to help ensure they get the most out of the experience.

Bankrate explains that filing for Chapter 7 bankruptcy can actually improve the borrowing status of a person. Despite the fact that bankruptcy initially has a negative impact on a filer’s credit rating, it also often drastically improves a person’s debt-to-income ratio. That alone can contribute to the rebounding of a credit rating, and lenders may also be encouraged by the fact that recent filers cannot pursue bankruptcy again for years to come. Therefore, recent filers should be encouraged to begin reinventing their credit history.

Older Florida residents burdened by student loans

Just as countless families across the state of Florida are well acquainted with the difficulties associated with incurring a substantial amount of student loan debt, economists and legislators alike are showing increasing concerns over the impact such debts are having on Americans of all ages. Recent findings suggest that one specific demographic of Americans is taking on significant amounts of student loan debt is especially troubling to many, particularly because debt relief options like personal bankruptcy cannot currently help the situation.

The Department of Education estimates that the average annual cost of higher education is up to almost $24,000, and has increased by more than 20 percent in the past 10 years alone. It’s also estimated that over $1 trillion in student loan debt is owed by around 40 million people in the U. S. The huge amount of student loans carried by Americans is having a significant impact on people’s lifestyles and standard of living, affecting everything from the age at which people retire to the amount of savings people have when they retire.

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