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. You may feel uncertain about bankruptcy because of myths or existing prejudices that you have been taught.
At LeavenLaw, we have learned that the main reason for hesitation in regards to bankruptcy arises from a lack of knowledge or understanding. We have personally seen the ways that bankruptcy can provide hope and relief for clients from all walks of life, and we are here to provide you with the information you need to make an educated decision. Don’t hesitate to speak to a member of our experienced legal team about your ideas about bankruptcy, and please review the questions and answers included on this page.
Take a look at some of the most commonly asked questions below:
- What is bankruptcy?
- Will I have to give up my home or my car?
- After bankruptcy is my credit ruined for life?
- How can I stop creditor harassment?
- What is automatic stay?
- What is a Chapter 7 bankruptcy?
- What is a chapter 7 means test?
- What is a Chapter 13 bankruptcy?
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.
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.
Bankruptcy does not mean you have to give up your home or car. There are several types of bankruptcy available today that make it possible for consumers to have some choice regarding their assets. In a Chapter 13 bankruptcy, you will be able to keep your assets while you pay a small percentage of your debts, interest free, for a period of three to five years.
Bankruptcy will not ruin your credit for the rest of your life. Once you have filed for bankruptcy, your credit score will undoubtedly take a dip. However, by practicing better spending habits and using credit cautiously and paying on time, you will slowly regain your standing in the credit world.
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.
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.
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.
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.
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.