Miami Bankruptcy Attorney Blog

Another common question I receive from clients is if I am married does my spouse in Florida  have to file too?  The answer to that question, like most other legal questions, is that it depends on your current situation.  The simple answer is no, married couples are not required to file together and a spouse could choose not to file.  However sometimes it might be wise for married couples to file together, it all comes down to whose debt is it.

If all the debt is in one spouses name alone and the other spouse is not liable for any of that debt then it would be wise that only the person who has all the debt file.  For example if a client’s home, in say Miami or Fort Lauderdale, was recently foreclosed and only his name was on the mortgage then there is no need for the client’s spouse to file because his or her name is not on the mortgage debt.

However more likely than not both spouses are responsible for the debt.  When you get your credit card statement and both names are on the outside then both spouses are responsible for the debt, same goes for mortgages, medical bills judgments, etc.

What if only one spouse files for Chapter 7 or 13 Bankruptcy and the debt is in both names?   Example husband and wife have a credit card in both their names with an outstanding debt of $50,000.  In this case only the husband files for bankruptcy.  By filing for bankruptcy the husband eliminates his liability towards that debt but the wife is now 100% responsible for the debt amount.

Sometimes debtors have to decide whether or not to file jointly.  If you are unsure whether or not to file bankruptcy jointly and would like to speak to managing partner Ofer Shmucher of Shmucher Law, PL, then contact us to schedule your free consultation in one of our five conveniently  located offices throughout the greater Miami and Fort Lauderdale areas in Florida.

Often times I get clients that come into my office that are planning on filing for bankruptcy but are just not at the point to do so right away.  So the first question these clients ask me is if I am planning on filing bankruptcy can I stop making payments to my creditors?  The answer to that question is, it depends.

House – If you are planning on keeping your home, then you should continue to make payment on that home.

Vehicles – If you are keeping your vehicles that you lease or financed then yes continue to make payments on those vehicles or else they will likely be repossessed prior to your bankruptcy filings.

Utility Bills – Any bill that you are currently using and will continue to use post bankruptcy you should continue to pay.

Credit Cards – If you are planning on filing bankruptcy then there is no need to continue to pay for your credit cards because you are just throwing away money.  When you file bankruptcy your credit cards debts will be discharged so there is no reason to continue to pay them if you are 100% sure that you will be filing.   It is also a wise idea to stop using your credit card before you file bankruptcy as there could be severe negative consequences if you use your credit card excessively prior to filing bankruptcy.

Before you decide to stop paying your bills make sure that bankruptcy is right for you.  Feel free to contact the Miami Bankruptcy Attorneys at Shmucher Law, PL to schedule your free consultation, with managing partner Ofer Shmucher, in one of our five conveniently located offices throughout the greater Miami or Fort Lauderdale area.

Sometimes I meet with clients who are looking to file for bankruptcy in the greater Miami or Fort Lauderdale area, and my clients are either over their exemptions or have non-exempt assets but would still like to file for a Chapter 7 bankruptcy.   They can, but they risk the chance of losing their non-exempt assets or having to buy-back the portion that they are over on their current assets.  Here is how the process works.  If a debtor files for bankruptcy and has a car worth $4,000, under Florida law they can only exempt $1,000 leaving them approximately $3,000 over in exemptions, the trustee can do one of three things:

1. The trustee will give the debtor the option to buy-back the non-exempted portion of the asset.  This can happen in either a lump sum payment or a payment plan setup with the trustee.  In our example above the trustee can suggest the following:  A. Pay me a lump-sum amount to keep the asset.  If the debtor agrees to a lump-sum amount they can expect to receive a little discount over the $3,000 amount.  The lump-sum would likely be due within 10 days.  B.  Pay me $3,000 over several months to keep the asset.  Typically the payment plan will not exceed four months.
2. If the debtor cannot come up with the money to keep either the non-exempt asset or cannot pay for the overage of the exempted asset, then the trustee is entitled to take the asset and sell it to pay creditors.

If you are unsure whether or not you have assets that may be exempted or not then contact Shmucher Law, PL to schedule a free consultation with managing partner Ofer Shmucher in one of our five conveniently located offices throughout the greater Miami or Fort Lauderdale area.

Approximately 30 days after a debtor files for bankruptcy in the greater Miami or Fort Lauderdale area they are required to appear at meeting of the creditors (the “341 meeting”).  The 341 meeting is a scheduled court appearance in Florida where the debtor will be asked questions regarding his or her assets and debts.  Typically the only person that will ask the debtor questions about their case are the Bankruptcy Trustees but in rare occasions creditors will show up to ask questions.  Here are examples of typical questions that a debtor will be asked in the 341 meeting:

1. Did you review your bankruptcy petition with your attorney?
2. Do you remember signing your bankruptcy petition?
3. Is your bankruptcy petition correct with regards to your assets?
4. Do you owe any alimony or child support?
5. Have you given or transferred any assets in the last year?
6. Do you owe anyone money that you didn’t list on your bankruptcy petition?
7. Specific questions regarding your assets including
   1. When you purchased your home
   2. How long you have lived in your home
   3. If you own your own business – what the business does, and if it owns any assets?

Typically it is best for a debtor to answer every question with a simple yes or no and only supply additional information when the trustee requests.  The trustee’s questions are not intended to trick or deceive the debtor but rather they are questions that the debtor should be able to easily answer.  If the debtor doesn’t know the answer to a question it is ok.

If you are considering bankruptcy, contact Shmucher Law, Pl to schedule a free consultation.  Managing attorney Ofer Shmucher will personally meet with you in a confidential setting and help determine if bankruptcy is the right option for you.

One of the first questions clients ask me when they come into my office is what will happen to my stuff if I file for bankruptcy?  More specifically what will happen to my car.  Under Florida law when a debtor files for bankruptcy he or she is entitled to exempt $1,000 worth of equity in a vehicle, and an additional exemption if they don’t own a vehicle.    What does that really mean?  It depends on three different situations, whether you 1. Own your car outright, 2. Make monthly payments on your car, or 3. Lease your vehicle.  Let’s start with the easiest one first:

Lease a vehicle – if you lease a vehicle you are basically renting a car, and in this case you have no equity in your car.  So in a bankruptcy you can keep your leased car no questions asked.  However if you file bankruptcy and you have a leased car that you don’t want to keep, you can surrender the vehicle in the bankruptcy and all the outstanding debt will be discharged.  Additionally if you have more than one leased vehicle you are entitled to keep them in a bankruptcy if you want.

Finance a car – Typically when I meet clients in Miami that have financed a car they are upside down on the loan.  Upside down means that the loan value exceeds the car value ie. Owe $14,000 on a car that is worth $9,000.  If a client is upside on a vehicle they have no equity in a vehicle and thus they can keep it if they want.  Again the client is able to return the vehicle in the bankruptcy if they wish.

Own a car outright – If a debtor owns a car outright, we first must determine what the vehicle is worth.  To do this we take the make, model, mileage, and condition of the vehicle and we look up the value of the car on Kelly Blue Book.  When looking at the Kelly blue book we average the trade-in value with the private party value to determine the value of the car.  Under Florida bankruptcy law a debtor can only deduct $1,000 in a vehicle, so if the debtor’s car is worth $5,000 the debtor can only exempt $1,000 and will be liable for the additional $4,000.  If the debtor cannot pay the additional $4,000 value of the vehicle the bankruptcy trustee is entitled to take the vehicle and sell it, return $1,000 to the debtor and use the rest of the funds to pay creditors.  However if the debtor does not own a home or is surrendering their home in a bankruptcy they are entitled to an additional $4,000 in any goods.  So in the case of a $5,000 car the debtor can use the $1,000 along with the $4,000 to fully exempt their vehicle in a bankruptcy.

A client from Miami came into my office this week and explained to me his situation.  His mother-in-law has been paying the first mortgage on her house but has failed to pay her 2^nd mortgage for a considerable period of time.  Her loan modification attorney told her to modify the first mortgage and worry about the second later.   Bad advice.

Traditionally if a homeowner failed to pay his or her mortgage the mortgagor, such as Florida Bank, would just foreclose on the home and take it back, however due to the drastic decreases in home prices in South Florida, some mortgagors are getting creative.  Rather than foreclosure on the property the 2^nd mortgagors sue on the note, obtain a judgment and then wage garnish the note holder.  Here is an example:

Client owns a home in Naples, Florida:

1^st mortgage $250,000

2^nd mortgage $30,000

Current home value $175,000

In this case if a debtor fails to pay the 2^nd mortgage, then the 2^nd mortgage can foreclose on the property, but economically speaking it would do them no good.  If the house is sold at auction the monies received wouldn’t even cover the 1^st mortgage, leaving the 2^nd mortgage with zero.  By suing on the note, rather than on the property, the 2^nd mortgagor can wage garnish the debt holder, up to 31% of their gross wages, until the debt is paid off.

A great way to stop a wage garnishment is to file bankruptcy.  Upon the filing of a bankruptcy the wage garnishment is immediately frozen and the debt will likely be discharged in a Florida Bankruptcy Court.  Alternatively the filing of a Chapter 13 bankruptcy could wipe out a 2^nd mortgage and or home equity line in your home.  If you live in the greater Miami or Fort Lauderdale area and would like to discuss your situation with a bankruptcy attorney feel free to give our office a call: 954-309-5559