Miami Bankruptcy Attorney Blog

If you are in a situation where you are looking to file for bankruptcy then you probably were going through some difficult times when you needed money.  The first place any person looks to get money is from family members.  Debtors routinely borrow money from family members to stay afloat in an attempt to avoid bankruptcy.   Sometime in the future the debtor may come across some money (tax return, bonus at work, etc) and the first thing they want to do with the money is payback the family members who lent them money.  This may seem to be the most rational way of thinking, in the bankruptcy world this is a bad idea.

The bankruptcy code attempts to treat all creditors on the same level, which basically means the money you borrowed from your aunt is treated the same as the money you owe on your credit card.  When you choose to pay your aunt back the money you owe her, but not to pay the credit card you owe you are PREFERING your aunt over your other debts.

So what happens if you file for bankruptcy and you paid a family member back money?  The bankrupt cy court can look back 12 months to see how much money you paid your family members.  The court will then likely sue the family member for the amount of money they received because it was considered a PREFERENCE.

Example:  If you paid your aunt $2,000 a few months before you filed for bankruptcy then she will likely be sued to return the $2,000 prior to the bankruptcy.

Don’t let the fact that there may be a preference suit prevent you from filing for bankruptcy, if you or a relative has to return a few thousand dollars in exchange for discharging tens of thousands or hundreds of thousands of dollars in debt may be a trade that a debtor is willing to make.

Make sure to inform your bankruptcy attorney of ANY PAYMENTS YOU MADE TO FAMILY members during your initial consultation.  If you haven’t made any payments to family members then don’t pay them until after your bankruptcy case is over.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a local bankruptcy attorney then please contact Shmucher Law, PL by calling 305.741.5553 or 954.309.5559.  We offer free consultations in any of our office locations, including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

Clients come see me on a regular basis and I tend to ask them a lot of questions regarding their assets, debts, and regular income.  Every once in a while I come across a client that I would consider to be borderline, and by that I mean they have either the option to file for bankruptcy or because their debts aren’t too high when compared to their income, there may be an alternative means to resolve their problem.  Here is an example:

If someone came to see me who has 20k in credit card debt but makes 50k a year and has the ability to save money and settle the debts then I would likely have them speak to a debt negotiator to see if settlement is the best option for them.  For debt settlement the debtor will need to pay about 30-50% of the debt they owe, either in a few payments or as one lump settlement.

If we use the same example above but the person had no job, no source of income, then ideally I would file their bankruptcy no questions asked.

Here are your options if you are in the gray area

Debt Settlement -  In the debt settlement world the client will likely not be able to negotiate with the credit card company if they are current on their debts.  Instead the client needs to be between three to four months delinquent before credit card companies will be interested in a settlement.   These type of settlement will be between 30-50% of the debt owed in either a lump sum payment of a few months worth of payments.  Be careful of companies that you use to settle your debts for you.  Many companies put you on a monthly payment plan where they front load their fees.  I.E. a monthly payment plan of $500 a month where $475 is their fee and $25 goes into an escrow account.

Debt Consolidation – Consumer credit counseling companies put you into a monthly repayment plan where you pay 100% of your debts back, but in a longer period of time.  They also tack on an additional 10-20% for their fees.  You don’t really save anything by choosing this option.

If your debt isn’t too great then perhaps it would be wise to consider non-bankruptcy alternatives in Florida.  However if you feel that you can’t afford to pay back the debt then maybe bankruptcy would be the best option for you.

If you are thinking of filing for bankruptcy or would like options about bankruptcy alternatives then contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free consultations in any of our office locations including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

Are you being routinely harassed by creditors calling you at all times throughout the day, including early in the morning and late at night?  Have you come to the point where you either just shut your phone off or ignore every call that is coming in?  The filing of a bankruptcy can help by preventing creditors from calling you again.

As a bankruptcy attorney I often ask my clients how often they are being harassed from their creditors.  I have heard of stories where the creditors call the client’s work, the client’s relatives or even in some cases they will call the client’s neighbors to try to get information about them.  Basically if you are in debt your creditors likely are causing you, your family members, your work, and even your neighbors a headache!

Here is how bankruptcy can help:

Hire a bankruptcy attorney (prior to filing):  Once you hire a bankruptcy attorney you can tell all of your creditors that you are represented by counsel, provide them the phone number, and they will not call you anymore.

File for bankruptcy – Upon the filing of the bankruptcy every creditor will get notified that you have filed for bankruptcy and the law prevents them from contacting you.  Within a day or two after filing you will be able to enjoy your life again because no creditor will be calling you.  If by any chance a creditor does call you, then you need to give them your bankruptcy case number and they will cease calling you.

If you are being harassed by your creditors and you would like to see if bankruptcy is right for you then please contact Shmucher Law, PL to schedule a free consultation.  We offer consultations in our Miami office or in any of our satellite locations (by appointment) including Boca Raton, Fort Lauderdale, Plantation and Sunrise Florida.  You may contact us by calling 954.309.5559 or 305.741.5553.

It seems that most Americans rely on their credit cards on a regular basis and people would find it very difficult to do their day to day operations without one.  One of the questions I hear all the time is once I file for bankruptcy will I ever be able to get a credit card again?   The answer to that question is absolutely yes.

A bankruptcy will be listed on your credit report for ten years but that doesn’t mean your credit score will be poor during that time.  More likely than not your credit score will actually INCREASE approximately 12 months after your bankruptcy case is over.

As for a credit card, debtors are usually offered credit cards approximately three to six months after their bankruptcy has been discharged.  However, debtors should be weary because these credit cards tend to have significantly high interest rates (20-30%).   Furthermore if a debtor again gets into trouble with these credit cards and cannot pay them, then they will not be able to file for bankruptcy again for another eight years.    By obtaining a credit card post bankruptcy the debtor will likely help increase his or her credit score on a faster basis as the credit card companies will report that the debtor is paying the debts.

An alternative for a standard credit card is to obtain a secured credit card.  A secured credit card is similar to a debt card because you pay in advance and then are able to use the card.  Example,  you sign up with Orchard Bank for one of their secured credit cards.  You pay in advance for the card for the amount you want to use ($500.00).  You then use the card and pay on it with the $500 you put down.  Every time you pay on the card the bank will report you to the credit bureaus.

If you are thinking about filing for bankruptcy and would like to discuss the consequences of doing so please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free consultations in our offices located in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

Usually when I meet clients either the first thing they ask me or the last thing they ask me is the following:  “how much is the consultation fee?”    If you schedule an appointment with Shmucher Law, PL you will NEVER pay a consultation fee.    However I have heard from many clients that they have had to pay consultation fees with other attorneys.

The initial consultation lasts between 30 minutes to one hour and it typically begins with the attorney asking the client certain questions regarding their assets and debts.  Then the lawyer will likely explain to you the different bankruptcy options , the length of each option and the pros/cons for selecting that bankruptcy option.  Finally the debtor will ask the attorney any questions they have regarding the information they just received.

If you are looking to file for bankruptcy and would like to schedule a free consultation with a bankruptcy lawyer then please contact Shmucher Law, PL.  Consultations are offered at any of the following office locations: Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

I hear stories from my clients telling me that one day they had $2,000 in their bank account and the next day it was all gone.  They always ask me if it is legal for the bank to do this, and most of the time the answer is yes.  If you owe the bank some money (i.e .you had a credit card with chase bank) and you bank with Chase, then Chase can exercise their rights to a setoff.

Once you are in default on any loan/credit card that you have with the bank, the bank will not be required to sue you or give you advance notice, rather they can just take the money in your account.

If you have credit cards or loans that have gone into default then it may be time to see your bankruptcy attorney.  The filing of the bankruptcy can prevent the creditor from taking your money in the account, and with the proper bankruptcy exemptions you may be able to keep the money in your account after bankruptcy.  If you would like to schedule a free consultation with a Miami / Fort Lauderdale bankruptcy lawyer then give Ofer Shmucher, at Shmucher Law, PL a call at 954.309.5559 or 305.741.5553.

Routinely I get asked questions regarding medical bills, especially if they can be included in the filing of a bankruptcy in Florida.  The answer is ABSOLUTELY, when you file for bankruptcy you want to be able to have a fresh start, i.e.  have no debts left when your bankruptcy is over.  The only way to have a fresh start is to list all of your debt on your bankruptcy petition.  When preparing to file your bankruptcy your bankruptcy lawyer, Ofer Shmucher, will run your credit using all three credit bureaus.  The credit report data will be automatically imported into your bankruptcy schedules (the paperwork you file with the court).  However sometimes your credit report will not provide a 100% accurate display of all your debts, especially medical bills.  Therefore it is useful for you to provide copies of all your medical bills to your bankruptcy lawyer so that we can include all your debts in your bankruptcy petition.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a Miami bankruptcy lawyer then please give Ofer Shmucher at Shmucher Law, PL a call at 954.309.5559.  We offer free initial consultations in any of our five offices in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

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.

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.

Once in a while a client will come to my office and ask me the following question, if I am going to file for bankruptcy can I just go max out all my credit cards and then file, or can I take out cash advances?  The answer to that question is No, No, No, and I would be weary of representing a client like that in Florida.  Why should a debtor do this?  Under the bankruptcy code a creditor can sue the debtor for any monies spent within the 90 days before filing bankruptcy if the items purchased are deemed to be a luxury good and have an aggregate value of $500 or more.  Ok so what does that mean to a regular person?  It means that if you used your credit card within the 90 days before filing and you purchased airplane tickets, electronics, fancy dinners, sporting equipment, jewelry, or anything that would be considered a luxury good then be prepared to be sued by that creditor.  Creditors who sue the debtor, in the instance above, will be able to win a judgment against the debtor and the judgment debt will be non0dischargeable (i.e. survive the bankruptcy).  Debtors will then continue to be liable for those debts even after their other debts have been wiped out in the bankruptcy.

As for cash advances, any cash advances, obtained by the debtor, within 70 days prior to filing for bankruptcy will be deemed non-dischargeable and thus the debtor will continue to be liable for the debt even after their other debts have been discharged.

If you are thinking of filing bankruptcy and have used your credit card in the 90 days before filing then it would be a good idea to bring those credit card statements to your attorney for him to review to determine the best approach to filing your bankruptcy.  Debtors in the greater Miami or Fort Lauderdale in been of credit counseling and who would like to schedule a free consultation, to review their bankruptcy options, should contact Ofer Shmucher at Shmucher Law, PL.