Miami Bankruptcy Attorney Blog

There are many commercials on TV today paid for by debt settlement companies offering to settle all of your debts and keep you out of bankruptcy.  These commercials sound too good to be true and often times they are.  They are promising to settle or consolidate all your debts for you, and only require you to make one easy payment a month.  Here is what these companies are not telling you:

1. The fees they charge you are steep.  Debt settlement companies usually have you provide them a monthly fee to “work on your file” and a portion of that monthly fee will put into an escrow account to use to negotiate with your creditors.  A recent client of mine was paying $700 a month to a debt settlement company and only $350 was put into his escrow account the rest was the debt settlement companies monthly fee.
2. Not all of your creditors will settle with the debt settlement companies.  The debt settlement company can’t force any creditor to take their offer (especially when they are offering pennies on the dollar).
3. Debt settlement companies ask you to STOP paying all of your debts, and by doing so the chance of you being sued will be more likely.  Once you are sued and a judgment is obtained against you the creditor can freeze your bank account, wage garnish you, or even take and sell some of your assets.  However if you file for bankruptcy you will be able to eliminate your debts as well as prevent any type of lawsuits to be filed against you.
4. There will be tax implications!!!  Debt settlement companies tend to forget to tell you that any amount that the creditor chooses to forgive in the settlement will be taxed as ordinary income by the IRS.   Here is an example, say you owed $25,000 on a visa card and your debt settlement company negotiates a settlement for $10,000.  At the end of the year the credit card company will send you a 1099 form for the amount of $15,000 and you will be responsible for paying the taxes of the $15,000 at the end of the year.  However if you filed for bankruptcy, any debt that gets discharged will not be subject to taxation.
5. You will need to have money to use a debt settlement company.  The commercials tell you these debt settlement companies can settle your debt for pennies on the dollar, but what they don’t tell you is that you need to have the money ready to go and make one lump payment.

Bankruptcy can usually offer better results and provide an economically better solution than a debt settlement company.  If you would like to find out more about bankruptcy and would like to schedule an appointment with Shmucher Law, PL at one of our five office locations (Boca Raton, Fort Lauderdale, Miami, Plantation or Sunrise) then give us at call at 954.309.5559.

A question I hear all the time, from potential clients, is will I lose the money I have in a 401k or an IRA account if I have to file for bankruptcy in Florida?  The answer is NO.  Florida has created numerous laws called exemptions which allow the debtor to exempt , or prevent the court from taking some of their assets.   Under Florida law any IRA or 401k that a debtor has will be fully exempted if they file for bankruptcy.  However there are a few minor exceptions to this law.

Therefore clients who are thinking of filing for bankruptcy but continually push it off and take money out of their 401k to pay off credit cards or other unsecured creditors are doing themselves a disservice.  They are using up assets that are fully exempt to pay off debts that will be discharged in the bankruptcy.

If you are thinking of filing for bankruptcy and have money in an IRA or a 401k more likely than not your retirement accounts will be exempted or safe from creditors.  Shmucher Law, PL is a bankruptcy law firm with offices in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

With the divorce rate in America at an all-time high, we can assume that part of the problems in the marriage involves the marital debts.  Some of these couples will eventually need to file for bankruptcy, but the big question is should they file for bankruptcy BEFORE their divorce is complete or wait till the divorce is over and then file?

The following are some reasons that a debtor should consider filing for bankruptcy BEFORE the divorce is complete.  (these factors suggest that the debtors will file a joint bankruptcy).

1. The filing of a joint bankruptcy prior to filing for divorce will allow each debtor to have a fresh start post bankruptcy, which basically means that they will have all of their unsecured debt eliminated, giving each debtor a clean slate.
2. Some of your post bankruptcy debts are NON-DISCHARGEABLE.  Non-dischargeable refers to debts that survive the bankruptcy.  With regard to a divorce, any alimony debt/payment is non-dischargeable.
3. If the debtors complete the divorce and then one spouse files for bankruptcy they leave the other spouse on the hook for the debt.  Example X and Y get divorced.  Y files for bankruptcy and discharges unsecured debt that Y and X were co-debtors on.  Once Y files for bankruptcy on that debt then the creditor will pursue X for the payment of the debt.
4. It’s CHEAPER!!  When debtors are married they are allowed to file a joint petition which allows two debtors to file together for ONE price.   However once the divorce is complete each debtor must file their own bankruptcy forcing them to pay twice (one for each debtor).

If you are thinking of filing for bankruptcy and would like to schedule a free bankruptcy consultation in one of our five Florida offices in Boca Raton, Fort Lauderdale, Miami, Plantation, or Sunrise Florida then please give Shmucher Law, PL a call at 954.309.5559 or 305.741.5553.

I have a lot of people that come to my office who are leasing or making payments on a car.  These clients signed the lease or payment plan at a time when they were making fairly good money and could easily afford the payments on the vehicle.  However due to drastic changes in the economy, employment, and other relevant factors my clients can no longer afford to make payments on their vehicles.

Another situation I see a lot is clients that are current on their vehicles but their car is completely upside down (the value of the loan exceeds the value of the car significantly) or their interest payments on their car is high (10% or greater).

In both of the situations listed above, if the debtor files for bankruptcy, they have the right to keep (reaffirm) or surrender their vehicles.   If the debtor selects to surrender the vehicle they have the option to surrender it to the nearest dealership or they can schedule a pickup by the lender at a time agreeable by both parties.   If the debtor surrenders the vehicle in the bankruptcy they are no longer responsible for any of the remaining payments on the vehicle, or with any other debts on that vehicle.

If you are thinking of filing for bankruptcy in Boca Raton, Fort Lauderdale, Miami, Plantation or Sunrise and would like a free consultation  then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.

Over the past few weeks I have seen several clients who come to my office because they have a wage garnishment against them.  A wage garnishment occurs after a creditor obtains a judgment against you and then files and obtains a wage garnishment through your employer.  If a creditor obtains a wage garnishment against you, they are able to collect up to TWENTY FIVE (25) percent of your wages, before taxes.  There is one viable defense to the wage garnishment and that is the head of household defense which prohibits a creditor from garnishing your wages if you are the primary wage earner and you have minor children.  If the debtor doesn’t claim this defense when they answer the request of the creditor then the creditor can continue to wage garnish.  The garnishment will last until the entire debt plus attorneys fees are paid.

HOWEVER if the debtor files for bankruptcy the wage garnishment is frozen on the spot and the creditor is NOT allowed to garnish from the moment the bankruptcy is filed.  Also if the creditor continues to garnish after your bankruptcy is filed, they are in violation of the automatic stay and anything that they have garnished will be returned to the debtor.    In a recent case of mine a creditor continued to garnish after my client filed for bankruptcy, but they returned all the monies to my client shortly after being put on notice.

If your wages are currently being garnished then you need to consider if it is worth allowing the wage garnishment to continue until the debt is entirely paid off or if bankruptcy could be an option for you then give Shmucher Law, PL a call.  We offer free consultations in any of our five conveniently located bankruptcy offices in Boca Raton, Fort Lauderdale, Miami, Plantation, or Sunrise.

There are lots of advertisements on TV, radio, and the internet telling people who are severely in debt to “consolidate” their debt rather than file for bankruptcy.  However these companies don’t tell you that filing for chapter 13 bankruptcy in Florida might actually be the BEST means of consolidating your debt.  Here are some of the reasons that filing for  chapter 13 bankruptcy in Florida might be the best bet”

1. Your payment plan will be limited to 3 to 5 years.  Anything that is not paid after 5 years will be discharged (wiped out)
2. Your payment plan is INTEREST free.
3. The only fee that you will have to pay is a small attorney fee and a small fee to the bankruptcy trustee.
4. You get the benefit of the automatic stay which includes the immediate stoppage of all debt collector phone calls.
5. Any current legal lawsuits are automatically stopped.
6. All current wage garnishments are stopped.
7. If you own a home and you have more than one mortgage then there is a chance that a second mortgage or a home equity line can be wiped out.
8. If you are making payments on a car you can reduce the interest rate on your payment.
9. If you are making payments on a car then you can potentially reduce your amount owed to the true value of the vehicle rather than what you owe.
10. If you owe any money in taxes then you can pay it off over five (5) years.

Shmucher Law, PL is a bankruptcy law firm in South Florida that handles Chapter 7, 11, and 13 bankruptcies for individuals and businesses.  If you would like to contact Shmucher Law to make an appointment in one of our many offices located throughout South Florida (Boca Raton, Fort Lauderdale, Miami, Plantation, Sunrise) then please give our office a call at 954.309.5559.

If a debtor chooses to file a Chapter 7 bankruptcy in Florida they must list all their assets and debts on their bankruptcy petition.  Assets include real estate, cars, and personal property.  Jewelry falls under personal property.  If a debtor is filing for bankruptcy in south Florida (Miami, Fort Lauderdale, or West Palm Beach) and they don’t own a home then they can exempt $5,000 worth of personal property (clothes, bank accounts, furniture, jewelry).  If a debtor owns a home, and intend to keep it) they can only exempt $1,000 worth of personal property.  So if a debtor owns jewelry the first thing they should do is go get it appraised to find out what the going rate for that jewelry is.  Then they must list it on their schedules (when they file).  If the debtor’s jewelry value exceeds the exemption amount then the debtor can come up with a payment plan with the trustee to keep the jewelry, however if they cannot come up with a payment plan then the debtor will likely have to surrender the jewelry.

Example:

Debtor who doesn’t own a home

Assets

Bank: $3,000

Furniture: $1,500

Jewelry: $2,500

In this situation the debtor is OVER his exemptions by $2,000 and the trustee will likely force the debtor to surrender the jewelry or come up with the $2,000 over the next few months.

Same situation where a debtor owns the home and wants to keep it:

In this situation the debtor can only exempt $1,000 worth of personal property and the debtor has $7,000 worth of personal property so the debtor would need to come up with $6,000 to keep the other personal property or he would likely have to surrender the property to the trustee.

In the second situation the debtor would probably have been better off if they filed a chapter 13 bankruptcy in South Florida.

An ideal candidate for chapter 13 bankruptcy is a debtor who has regular income, has assets that exceed their exemptions, and has more than one mortgage on their property.

Shmucher Law, PL is a bankruptcy law firm with offices located in Fort Lauderdale, Plantation, Sunrise, Boca Raton, and Miami Florida.  They handle consumer and business Chapter 7 bankruptcies as well as individual Chapter 13 bankruptcies.

One of the most common questions my clients ask me, when they come to one of our bankruptcy law offices in Southern Florida, is what will happen to my student loans once I file for bankruptcy. My answer to them, 99 percent of the time is that you cannot get rid of your student loan debt if you chose to file for bankruptcy. Student loans are considered “non-dischargeable” debt, which means that the debt amount will remain after your bankruptcy. Furthermore continuing to pay your student loan debt after bankruptcy will help rebuild your credit faster.

However, there is a minor exception to discharge student loans in the bankruptcy. In order to discharge your student loans in a bankruptcy you must meet the following three requirements:
1. That in your current situation you can’t maintain a minimum standard of living and repay your loans
2. Your bad financial situation is likely to continue
3. You have made an honest effort to pay off your loans The debtor must file a separate action in the bankruptcy and a judge will make the determination as to whether the elements have been met and this is almost impossible to do.

We can expect major changes with regard to student loans, once the Private Student Loan Fairness Act of 2010 gets approved and made into law. Under the Private Student Loan Fairness Act of 2010 debtors will be able to discharge PRIVATE student loan debt in their bankruptcy. Student loans that are backed by the government will remain non-dischargeable but those backed by private institutions will. While this doesn’t provide 100 percent relief for those debtors who have ample student loan debt, it does provide then with limited relief as to their private student loan debt. Shmucher Law, PL is a bankruptcy law firm located in South Florida. They maintain offices throughout the Broward (Fort Lauderdale), Dade (Miami), and Palm Beach Counties (Boca Raton). If you would like to schedule a free initial consultation to determine if bankruptcy is right for you then please call Shmucher Law, PL at 954.309.5559 or 305.741.5553.

Some of the clients that come into my Miami or Fort Lauderdale office, looking to file bankruptcy, are  unemployed and actively seeking employment.  Their main concern is that if they choose to file bankruptcy in Florida, the bankruptcy filing will have a negative impact on their ability to obtain employment.

Government employment:

Under Bankruptcy Code section 525(a) a Government unit “may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor” under the Bankruptcy Act or who was insolvent before or during such a case.   What that translates to is that a government unit cannot be denied a job to an applicant solely on the basis that the applicant has filed for bankruptcy.

Private employment:

Under Bankruptcy Code section 525(b) state that “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associate with such debtor or bankrupt.”  What that translates to is that a private employer cannot decline a job application or terminate you from their organization solely due you filing for bankruptcy.

If you are thinking about filing for bankruptcy and would like to speak with a bankruptcy attorney in Miami, Fort Lauderdale or Boca Raton then please contact Ofer Shmucher at Shmucher Law, PL to schedule your free initial consultation in any of our five office locations.

A lot of clients that I see in my Miami or Fort Lauderdale office are not US Citizens but rather aliens, here on a work visa, or permanent residents.  Those clients always ask the same question how will filing for bankruptcy in Florida affect my immigration status.   The filing of a Chapter 7 or a Chapter 13 bankruptcy in Florida will not have any impact on your immigration status.   Immigrants seeking permanent residence or citizenship cannot be discriminated against for filing bankruptcy.   Another question my immigrant clients ask me is if they are even eligible to file for bankruptcy, and the answer is generally yes.  Immigrant clients seeking to file bankruptcy will still be afforded all the rights as any other person looking to file bankruptcy and will likely to be able to discharge any credit card debt, medical bills, wage garnishments, judgments, or deficiency judgments they have against them.

If you are thinking about filing for bankruptcy and would like to speak with a bankruptcy attorney in Miami, Fort Lauderdale or Boca Raton then please contact Ofer Shmucher at Shmucher Law, PL to schedule your free initial consultation in any of our five office locations.