Frequently Asked Questions
What Must I Do Before Filing Bankruptcy?
You must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filed. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet. If you decide to file bankruptcy, you must have a certificate from the agency showing that you received the counseling before your bankruptcy case was filed.
What Does Credit Counseling Cost?
Most approved agencies charge between $40 – $50 for the pre-filing counseling. However, the law requires approved agencies to provide bankruptcy counseling and the necessary certificates without considering an individual’s ability to pay. If you can not afford the fee, you should ask the agency to provide the counseling free of charge or at a reduced fee.
It is usually a good idea for you to meet with one of our bankruptcy attorneys in Cape Coral, Fort Myers or Naples before you receive the required credit counseling. Unlike a credit counselor, who can not give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, our bankruptcy attorneys can offer a range of other suggestions. We can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office.
What Property Can I Keep?
In a Chapter 7 case, you can keep all property that the law says is “exempt” from creditors’ claims. You also have the option to repurchase your “non-exempt” property. If you moved to Florida from a different state within two years before your bankruptcy filing, you may be required to use federal exemptions or the exemptions from the state where you lived just before the two-year period.
Will I Have to Go to Court?
In most bankruptcy cases, you have to go to a “meeting of creditors.” One of our bankruptcy attorneys will attend this meeting with you, so don’t worry, you won’t be alone! This meeting is a short and simple procedure. You will be asked a few questions about your bankruptcy forms and your financial situation. If married and filing bankruptcy jointly, both you and your spouse must appear. For bankruptcy clients in Fort Myers, Cape Coral, or Naples, you will need to go to the Federal Courthouse in Fort Myers, Florida. The Federal Courthouse is located at 2110 First Street, Fort Myers, Florida. The meeting of creditors takes place on the second floor of the Federal Courthouse.
What if There’s a Dispute?
Occasionally, if complications arise, you may have to appear at a hearing. In a Chapter 13 case, you may also appear at a hearing to approve your plan. If you need to go to court, you will receive notice from your attorney.
Can I Own Anything After Bankruptcy?
Yes! You can keep your exempt property, and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors. This is a fact-sensitive question, and you should consult with one of our bankruptcy attorneys for a better explanation.
Will Bankruptcy Affect My Credit?
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be affected.
Bankruptcy wipes out your old debts. You are likely to be in a better position to pay your current bills. You may be able to build new credit. In most cases, your credit score will also begin to improve once you receive your bankruptcy discharge.
What Will Happen to My Home and Car?
In most cases, you will not lose your home or car during your bankruptcy case. Provided your equity in the car is fully exempt. Even if your car is not fully exempt, you will be able to keep it. You will just need to pay its non-exempt value to creditors in Chapter 13.
How does Bankruptcy Affect Your Secured Creditors?
Some of your creditors may have a “security interest” in your home, automobile, or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property during or after the bankruptcy case.
Can I Keep Secured Property in Bankruptcy?
In Chapter 13, you may be able to keep certain secured property. This happens by paying the creditor the value of the property rather than the full amount owed on the debt. Or you can use Chapter 13 to catch up on back payments and get current on the loan. You can also pursue a court-ordered mediation to try to modify your mortgage so that the lender would no longer consider you to be in default.
Can I Keep Secured Property in a Chapter 7 Bankruptcy?
There are also several ways that you can keep collateral or mortgaged property after you file a Chapter 7 bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
What Else Must I Do to Complete My Case?
You must complete an approved course in personal finances after your case is filed. This course will take approximately two hours to complete. Our Cape Coral bankruptcy attorneys can explain to you how to enroll in this course properly. Many of the course providers give you a choice to take the course in person at a designated location. You can also take the course over the Internet or over the telephone. You’ll find on this website a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office. In a Chapter 7 case, you should sign up for the course soon after your case is filed. If you file a Chapter 13 case, you should ask your attorney when you should take the course.
What Can Bankruptcy Do For Me?
- Bankruptcy May Discharge Your Consumer Debts: Discharge means eliminating your legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start. In our opinion, a discharge of consumer debt is the primary reason our clients contact us; they want to be debt free!
- Bankruptcy May Stop a Foreclosure: By filing for bankruptcy protection, the bankruptcy court ordered an automatic stay. This temporarily stops any legal foreclosure lawsuits against you on your house or mobile home. In a Chapter 13 bankruptcy, you may have the opportunity to catch up on missed payments and renegotiate certain aspects of your loan and mortgage. However, it is important to understand that bankruptcy does not automatically eliminate mortgages and other liens on your property without payment. In Chapter 13 Bankruptcy, you may be able to remove or “strip off” Junior Mortgages and Home Equity Lines of Credit.
- Bankruptcy May Stop a Repossession of Your Car or Other Property: As discussed above, the automatic stay ordered by the bankruptcy judge stops all collection activities against you. This works to prevent the immediate repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
- Bankruptcy May Stop the Calls, Garnishments, and Harassment: Another powerful benefit of the automatic stay in bankruptcy court is that it can stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt. In some cases, bankruptcy can force the creditor to return funds taken prior to filing the case.
- Bankruptcy May Discharge Some of Your Taxes: In some instances, taxes owed to the IRS may be dischargeable. There is a limitation on this, and it is very fact-specific.
Bankruptcy May Help Get Your License Back: In bankruptcy, you may be able to restore a suspended license due to unpaid insurance claims.
- Bankruptcy May Help You Keep Your Creditors Honest: In a bankruptcy action, you may be able to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe. We believe that one of the benefits of participating in the bankruptcy process is the oversight provided by our local Federal Bankruptcy Judges and the U.S. Trustee Program, a component of the Department of Justice. The USTP’s mission is to promote the bankruptcy system’s efficiency and integrity, a mission that we believe beneficially serves our clients.
What Bankruptcy Cannot Do
Bankruptcy can not, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of “secured” creditors: A creditor is “secured” if it has taken a mortgage or other lien on the property as collateral for a loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process, and bankruptcy can eliminate your obligation to pay any additional money on the debt if you decide to give back the property. But you generally can not keep secured property unless you continue to pay the debt.
- Discharge types of debts for special treatment: The bankruptcy law singles out some debts for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes.
- Protect cosigners on your debts: When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
- Discharge debts that arise after bankruptcy has been filed