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Bankruptcy F.A.Q.

Filing bankruptcy under Chapter 7 of the Bankruptcy Code can discharge, or eliminate, your debts. With some exceptions, you no longer have to repay them. You can just walk away.  A common misunderstanding about Chapter 7 bankruptcy is that you must lose or surrender assets. This is simply not true. The purpose of a Chapter 7 bankruptcy is to help individuals get a fresh start.

Q: How much does it cost to file bankruptcy?
A:  Those considering Chapter 7 bankruptcy would be most interested in a recent Memorandum Opinion issued by a bankruptcy judge in the Orlando Division which order  presents an accurate overview of the bankruptcy fee market in central Florida. (Case No. 6: 10-bk-12174). The court found that most bankruptcy attorneys charge in the range of $1,500 to $2,500 for a typical chapter 7 case plus filing fees and other costs. For these fees, the court noted, bankruptcy attorneys will spend some time with the client but the bankruptcy attorney delegates to their paralegal most of the client contact, pleadings, and detailed follow-up work. The court stated that an experienced and well-trained bankruptcy paralegal is capable of handling the much of the work involved in a standard chapter 7 case.

Some attorneys provide a more personalized service for higher fees. The bankruptcy judge stated that bankruptcy attorneys providing a “luxury” bankruptcy service do most of the work themselves and more available to “hold the hand” of their clients throughout the process. The court found that $3,600 was a reasonable fee  for the luxury service provided in this particular case, although the reasonableness of luxury fees depends on each attorney-client relationship.

We are among the lowest priced law firms in Central Florida and look forward to demonstrating our affordability. 

Q: Do I have to take a credit counseling course before I can file?
A: The new bankruptcy law requires all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course after the filing date.  Failure to complete either of these courses and file the appropriate certificates with the court will prevent a successful bankruptcy.  All bankruptcy education courses are available in person, by phone, or over the internet and are approved for the district in which you are filing. Most courses take less than one hour to complete and costs less than $50.   You may get additional information about the costs and availability of debtor education at one or more of the following agencies approved for the Middle District of Florida:  In Charge Education Foundation, Inc.; GreenPath Debt Solutions; BE Adviser; Telephonic Money Management International, Inc.; Novadebt.

Q: What is a Chapter 7 bankruptcy?
A: Chapter 7 bankruptcy is the most common type of bankruptcy and is often referred to as a "liquidation bankruptcy."  In Chapter 7, all of the debtor's assets, other than those  assets specifically exempt from liquidation by law, are turned over to a bankruptcy trustee for sale.  Sale proceeds, if any, are distributed among the creditors.  Most Florida Chapter 7 debtors have little non-exempt personal property because of Florida's liberal exemption laws.  Chapter 7 bankruptcy is used to eliminate, or discharge, primarily unsecured debts such as credit cards or medical bills.  Chapter 7 does not eliminate secured debts, such as vehicles and real property (unless the secured item is surrendered).  Chapter 7 will not save a house from foreclosure nor a car from repossession if you are behind in your payments.  Under the new bankruptcy law, only people who pass the "means test" may file a Chapter 7 bankruptcy. People who fail the means test have to file Chapter 13 bankruptcy provided you are under Chapter 13 debt ceilings. Your bankruptcy attorney can run a means test for you after he collects the necessary information.

Q: What is Chapter 13 bankruptcy?
A: Chapter 13 bankruptcy is a payment plan bankruptcy which allows you to repay all or part of your debt over a long period of time, most usually five years. Chapter 13 is used most often to save a house from a foreclosure sale. You can use Chapter 13 to "strip" or eliminate a second mortgage from your home under certain circumstances. Chapter 13 is also useful to eliminate some IRS debt and to establish an affordable plan to pay IRS debt that cannot be eliminated. Chapter 13 bankruptcy is available to debtors with regular income. A business cannot file Chapter 13. In addition, there are limits on the amount of the individual's secured and unsecured debts in Chapter 13 bankruptcy.
Q: Who can file bankruptcy in the Middle District - Orlando Division?
A: The Orlando Division accepts bankruptcy filings from individuals who reside in one of several central Florida counties including Orange County, Seminole County, Volusia County, Lake County, and Osceola county. Residents of Polk County file in the Middle District - Tampa Division, and will attend their 341 meeting in Tampa. Residents of Sumter County file in the Northern District - Jacksonville Division, and will attend their 341 meeting in Ocala. Any Florida resident can file bankruptcy in Florida.

Q: Will I ever be able to get credit again?
A: It will not be long before you are getting credit card offers again. They will just be from lenders that may charge high interest rates. However, if you are planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get, and the higher interest rate on such a large purchase would make a significant impact on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you do not have to list it as a creditor since you do not owe any money on it. That means you might be able to keep that card even after bankruptcy, depending on the creditor.

Q: I want to keep one of my credit cards...is that possible?
A: Bankruptcy is an all-or-nothing deal, so you have to include all your creditors in the petition. If it is important to you to pay them back someday, you always have that opportunity. If your conscience will not let you sleep nights because you did not pay your debts, there is nothing in the bankruptcy code that prevents you from doing that once you are back on your feet.  You are no longer obligated to repay them, but you certainly may do so.

Q: Do the newspapers report bankruptcy filings?
A: Unless you are a prominent person or major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. 

Q: If I have filed Chapter 7 bankruptcy before, how long must I wait before I file again?
A: If your debts were discharged in a prior Chapter 7 bankruptcy, you must wait 8 years from the prior discharge date.
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