Don’t Let Financial Worries Overshadow Your Life

Life can throw you a curveball when you least expect it. Job layoffs, pay cuts, illness, and other setbacks can send even the most financially responsible person spiraling into debt. We understand that, and we’re here to help.

At Rodriguez Law, P.L., we have helped many people get a fresh financial start while preserving their assets and their dignity. It is our goal to help you start improving your financial situation and rebuilding your credit sooner rather than later. Contact us or call 305-262-8226 for a free initial consultation. We will help you, from beginning to end.

To learn more about our Bankruptcy services, click the headlines below:

Chapter 7 Bankruptcy

Also known as the “fresh start” bankruptcy, Chapter 7 discharges unsecured debts such as:

  • Credit card bills
  • Cell phone accounts
  • Medical bills
  • Payday loans

Chapter 7 is the most commonly filed form of bankruptcy because it is over relatively quickly, with most cases being concluded within three to six months. You emerge debt-free except for certain exempt obligations such as child support, student loans, and secured loans you may elect to continue paying.

A common assumption is that when you file for Chapter 7, you “lose everything.” This is not true. While nonexempt property may have to be surrendered to the United States trustee and sold, you may keep exempt assets such as household goods, public benefits, and certain retirement accounts. You may even keep your home, thanks to a homestead exemption. There are other generous bankruptcy exemptions that may cover all your assets, so you may not have to surrender anything.

There is no limit to the amount of debt that may be discharged in a Chapter 7 bankruptcy, but if your income exceeds the median income for Florida, you will be subjected to a means test to determine if your debts can be partially repaid through a Chapter 13 filing instead. We can help you decide if this option is right for you and get you through it, as well as help you determine if you pass the means test.

Chapter 13 Bankruptcy

Unlike Chapter 7, Chapter 13 allows a person or married couple to propose a payment plan to pay all or part of their debts. You are given the opportunity to propose a repayment plan to pay creditors in installments over a three to five year period. The misconception with Chapter 13 bankruptcy is that you will be required to pay all of your debts, but typically, that is not the case. It’s not uncommon for an individual or married couple in Chapter 13 bankruptcy to pay a fraction of what they owe. When you file for Chapter 13, you are not required to surrender any property to repay creditors, and you may come to a more comfortable arrangement for repaying non-dischargeable debt, such as back taxes and child support. If you are delinquent on payments, you may keep your home via one of the following arrangements available to Chapter 13 filers:

  • Mortgage Curing: Repay past due amounts in installments while simultaneously making future mortgage payments. This same approach can be used to “cure” secured loans such as a car loan.
  • Mortgage Modification Mediation (MMM): Work with your lender to possibly modify your mortgage via a mediation process supervised by the bankruptcy court.
  • Lien Stripping: Potentially eliminate unsecured liens on your home, such as second or third mortgages. If you owe more on your first mortgage than your home’s fair market value, subsequent mortgages may be stripped through a Chapter 13 bankruptcy.

Another advantage of Chapter 13 is that the automatic stay may also apply to co-debtors. A creditor may not act to collect a debt from any individual that is also liable on the debt along with the original debtor, unless the Bankruptcy Court authorizes differently. In other words, if you have a credit card and your brother is also liable for the card, Chapter 13 may protect him from any creditor actions on consumer debts.

Chapter 13 is the preferred bankruptcy solution for those who make too much money to qualify for Chapter 7. Let us help you determine if this option is right for you and guide you through the process. If you carry too much debt, you may have to consider filing Chapter 11.

Chapter 11 Bankruptcy

Although the common assumption is that only financially distressed companies file Chapter 11, the option is also open to individuals who have a higher income and exceed the Chapter 13 debt limits for secured and/or unsecured debt. Other advantages of a Chapter 11 include:

  • Extending the Mortgage Repayment Period: While Chapter 13 allows most debtors to catch up on their mortgage payments, this must be accomplished within a five-year period. If you are significantly in arrears, it can be difficult to maintain your current monthly payment in addition to the arrears amounts. With a Chapter 11 bankruptcy, you can stretch out the cure period for longer than five years.
  • Reducing Value of a “910” Vehicle: Bankruptcy can reduce a creditor’s lien to the fair market value of the property, but there are limits—such as Chapter 13’s “hanging paragraph,” which states that any car financed within 910 days of the bankruptcy petition date cannot be reduced in this manner. This particular limitation does NOT exist in Chapter 11.
  • Recent Chapter 7 or 13 Discharge: If you received a Chapter 7 discharge within four years or a Chapter 13 discharge within two years of your petition date, you cannot receive another one. This is a restriction that does NOT apply to Chapter 11.

For businesses of all sizes, from large companies to small business debtors, Chapter 11 is the preferred debt relief option. These companies may reduce their obligations and modify their repayment terms, allowing them to remain in business and eventually regain their profitability. They can also sell assets and downsize to pay down debt.

During the course of a Chapter 11 bankruptcy, certain business decisions, such as those below, will require court permission prior to being carried out:

  • Beginning or ending a rental agreement
  • Growing the business or closing it down
  • Entering into vendor contracts
  • Selling any assets other than inventory

If you run a smaller business, (which the Bankruptcy Code defines as a business that owes no more than $2,566,050 or less) special provisions are available to make the Chapter 11 process faster and less expensive. They include:

  • Bypassing the requirements to have a creditors committee that will review what assets you have, and to have a disclosure statement that informs creditors how you plan to get out of your debt
  • A period to propose a plan on how to get out of debt

Is Chapter 11 for you? Let us help you determine if it is, and guide you through the process. If you own a family farm or fishery, you have an additional debt relief option: Chapter 12 bankruptcy.

Chapter 12 Bankruptcy
Chapter 12 is only available to family farmers or fishermen. It was created to address financial challenges experienced by these parties during the 1980s and enables them to structure their repayments using a schedule that is compatible with the seasonal nature of their work. Like Chapter 13, the repayment period is three to five years, and co-debtors may be protected by the automatic stay from collection efforts for consumer debt.

To qualify, the individual debtor must:

  • Owe no more than $4,153,150 for a family farmer, with at least half the debt being connected to their livelihood. (These amounts are subject to change yearly)
  • Owe no more than $1,924,550 for a family fisherman, with at least 80% of the debts attributable to the fishing operation. (These amounts are subject to change yearly)
  • Receive more than 50% of their gross income from the farming or fishing operation in the previous tax year.

Partnerships and corporations may only file Chapter 12 if a single family owns more than 50% of their equity interests or stock.

One major advantage of Chapter 12 is that you are permitted “cram down” secured debt, like the mortgage on your farm or the loan you took out for your fishing boat. This means that any balance owed in excess of the collateral value is treated as unsecured debt and may be written off. Let us help you determine whether you are eligible for Chapter 12 and get you through the process.

Discharging Federal Taxes

It is possible to discharge tax debt in a Florida bankruptcy, but as the saying goes, timing is everything. Whether or not you can be relieved of your tax obligation depends on factors like the following:

  • When the taxes were assessed and/or due
  • When the return was filed and/or due
  • Whether you were accused of fraud
  • Whether a tax lien was filed
  • Whether the debt is for interest and/or penalties

To discharge income taxes, you must meet certain requirements. They include:

  • The Three-Year Rule: To be dischargeable, the debt must result from a tax return that was due a minimum of three years before your bankruptcy.
  • The Two-Year Rule: The tax return must have been filed a minimum of two years prior to your bankruptcy case.
  • The 240-Day Rule: Your tax must have been assessed a minimum of 240 days prior to your filing. If your taxes have not been assessed as of your filing date, they cannot be discharged.

These discharge rules also generally apply to interest and penalties as well.

You may NOT receive a discharge on your income taxes if:

  • They do not meet the Three-Year, Two-Year, or 240-Day Rules
  • You were found guilty of tax evasion
  • It was determined that you filed a fraudulent return

One potential issue, even if your taxes pass the time-related rules, is tax liens. If a taxing authority files a lien against your property before your bankruptcy filing, an unsecured debt essentially becomes a secured debt and is subject to seizure by the IRS. A bankruptcy attorney like Attorney Ricardo Rodriguez can advise you how to proceed in this instance.

The Automatic Stay

After you file for bankruptcy, the court may issue an automatic stay that protects you from further creditor actions. In most cases, bank accounts may potentially be unfrozen and wage garnishments, lawsuits, and collection actions may stop as well as debt collector calls. You have the resources and breathing room you need to move forward.

That’s why it’s so important to have an experienced Florida bankruptcy attorney that can practice in federal and state courts. Let us guide you through the bankruptcy process and get you back on your feet again. Contact Rodriguez Law, P.L. today!