Bankruptcy FAQ

Answers from a St. Petersburg Bankruptcy Lawyer

Bankruptcy can be an overwhelming and stressful time for an individual and/or family. The most important thing when going through a bankruptcy is to be aware of all options and how the process works. Teaming up with a St. Petersburg bankruptcy attorney is important to ensure that you have experienced legal guidance assisting you in making decisions. Some of the most frequently asked questions by people going through or considering of filing for bankruptcy include:

What is bankruptcy?

Bankruptcy is a way for individuals to have some sort of relief from their debts. A person going through a bankruptcy is termed the debtor and bankruptcy is a way for a debtor to work out a new plan to repay or wipe out debts. There are other types of debt relief that can be sought after but there is a different type of protection when going through a bankruptcy. After filing all creditors must stop any collection efforts and if they don't they can be penalized for creditor harassment.

How can I stop creditor harassment?

Creditors tend to consistently try to contact people who owe them money as an effort to collect. When going through a bankruptcy you have the ability to make them stop. The court orders an automatic stay when a debtor files for bankruptcy and this makes it illegal for the creditors to continue any type of collection effort. If they continue to attempt collection from you, the Fair Debt Collection Practices Act (FDCPA) protects you and you may be able to receive statutory damages of up to $1,000.

What is automatic stay?

Automatic stay is an order that stops collection efforts from all creditors and collectors when a debtor is going through a bankruptcy. This is done so that the debtor has time and privacy to regroup and make a new financial plan. Automatic stay is temporary and only protects the debtor from collection actions, this does not include third parties. If a creditor violates the automatic stay order there are monetary penalties that can be rewarded to the debtor.

What is a Chapter 7 bankruptcy?

Chapter 7 bankruptcy is meant for people who are unable to repay any part of their debts. This is known as a "liquidation" of debts and most or all of a person's unsecured debts are eliminated. Any assets that the person has that are not exempt can be liquidated to pay off creditors. Oftentimes a person's assets are all exempt so the selling of their assets does not occur. A person has to qualify for this type of bankruptcy by showing that their income is not substantial enough to repay debts. This is done by using a Chapter 7 means test.

What is a chapter 7 means test?

This means test is the way to determine if a debtor qualifies for a Chapter 7 bankruptcy. The formula uses a person's income and then their "disposable income." The means test considers a debtor's current monthly income which is found by averaging their income over the past six months. Then the person's monthly expenses are deducted from the monthly income which will give their disposable income. If their disposable income is low enough then they may qualify for a Chapter 7 bankruptcy and if not they may be able to file for a Chapter 13 bankruptcy.

What is a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy involves a partial or full repayment of debts. If a debtor chooses to file for this type of bankruptcy they can create a plan to repay debts. This bankruptcy generally involves a three to five year repayment plan that is reasonable for the debtor to complete. When the repayment plan comes to an end, if the debtor successfully completed all payments, some dischargeable debts can be wiped out. With a Chapter 13, the debtor will most likely be able to keep their property and assets because liquidation will not have to take place. That is if they continue to make their payments, if they do not then problems can arise.

Do you need a lawyer for your bankruptcy in St. Petersburg, FL?

If you are going through a bankruptcy it is important to have a skilled bankruptcy lawyer on your side. If you have any other questions do not hesitate to contact LeavenLaw today! We offer a free case evaluation so you can call and discuss your unique financial situation with us at no cost!