Miami Bankruptcy Attorney Blog

A few years ago when people purchased homes and those homes increased in values the banks offered the homeowners an equity line of credit, which was a way to borrow against the home.  These equity lines of credit ranged from just a few thousand to several hundreds of thousands, depending on the valuation of the home.   When the homeowners obtained an equity line of credit they are basically obtaining another mortgage on the home and they must continue to pay on the equity mortgage.  So a question I receive is what happens when a homeowner, who has an equity line of credit, files for bankruptcy.  Here are a few scenarios:

Filing Chapter 7 and surrendering the home:

If a debtor is filing for chapter 7 bankruptcy in Florida and is surrendering the home then the debt of the mortgage, including the debt of the home equity line of credit will be discharged in the bankruptcy.  HOWEVER if the debtor took out a significant amount of money with the home equity line, the bankruptcy trustee will question the debtor to determine what the debtor did with the funds.

Filing a Chapter 7 and retaining the home:

If the debtor chooses to file a chapter 7 bankruptcy and is retaining the home, then there is nothing that can be done with the equity line of credit.  The equity line of credit will not be dischargeable and the debtor must continue to pay on the equity line of credit or they could potentially be foreclosed on.

In Florida a debtor is not allowed to strip off a second mortgage or an equity line of credit in a chapter 7 bankruptcy filing.

Filing a Chapter 13 bankruptcy and retaining the home:

If a debtor chooses to file a chapter 13 bankruptcy in Florida then he or she has the ability to strip off or wipeout the second mortgage and or home equity line of credit on their residence.  In order for a debtor to strip off the second mortgage he or she must show that the value of the first mortgage exceeds the value of the home.  Example:

House 1 – value $240,000

First Mortgage – $300,000

Equity line of Credit – $100,000

In the case above the debtor would be able to strip off the equity line of credit because the value of the first mortgage exceeds the value of the home.

House 2 – value $240,000

First Mortgage – $200,000

Equity line of Credit – $100,000

In the case above the debtor would not be able to strip off the equity line of credit because the value of the home exceeds the value of the first mortgage.

Filing a Chapter 13 and surrendering the home:

If a debtor is filing for chapter 13 bankruptcy in Florida and is surrendering the home then the debt of the mortgage, including the debt of the home equity line of credit will be discharged in the bankruptcy.

If you have a home equity line of credit and are thinking of filing for bankruptcy and would like to schedule a free consultation with a local bankruptcy lawyer 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.

When you file for bankruptcy you need to list all of your debts and all of your assets.  Your debts will include mortgages, car notes, credit cards, medical bills, etc.  A question that I routinely get is whether or not a debtor can include debt from a repossessed car in their bankruptcy petition.

The answer is YES – a debtor should include any debt he or she owes on a repossessed car in their bankruptcy.  Once a car has been repossessed the creditor will likely sell that car at auction and then come after the debtor for any difference they owe.  At times this could be a fairly large number and the car creditors tend to sue fairly fast in an attempt to collect their debts.

If you are thinking of filing for bankruptcy in Florida and would like to speak with a bankruptcy attorney regarding your bankruptcy options then please call Shmucher Law, PL at 305.741.5553 or 954.309.5559.  Shmucher Law, PL offers free consultations in any of our bankruptcy office locations including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

I tend to meet clients who have visited other bankruptcy attorneys so I typically ask them what they thought of the previous attorney.  I was shocked to learn what some of my clients told me.  So here is a compiled list of things to be on the lookout out for when meeting a bankruptcy attorney:

Your consultation is with the paralegal or law clerk and not the attorney

This has to be one of the worst things I hear from clients who met other attorneys.  I’ll ask them what they thought of the previous attorney and they tell me that they never met the attorney, instead they had a consultation with the paralegal.  If that doesn’t scare you, it SHOULD.  Paralegals cannot give you legal advice and more likely than not what they tell you is incorrect.  If the attorney isn’t even willing to meet with you then how do you know they will even review your case before it is filed?

When you call the schedule a consultation they tell you there is a fee

A consultation fee, while allowed, is probably a good reason to walk away from the potential bankruptcy attorney .  Bankruptcy attorneys in particular must consider their clients circumstances, limited funds, and thus should always offer individual debtors

The attorney only does Chapter 7 bankruptcy

If you meet an attorney and they tell you that they only handle Chapter 7 cases it may not be in your best interest to stay there.  They may try to push you into filing a Chapter 7 and you may have to give up certain assets to do so.  However sometimes Chapter 7 isn’t the best fit for a client, sometimes a Chapter 13 bankruptcy is useful because the client can wipe out the 2^nd mortgage on a home or decrease the loan amount on a vehicle.

The attorney only looks at your paystubs and tells you that you can’t file for Chapter 7 bankruptcy

The easiest way to determine if someone can qualify for Chapter 7 bankruptcy is to look at their paystubs and see if they fit under the median income.  HOWEVER, even if a debtor doesn’t fit under the median income does not prevent them from filing a Chapter 7 bankruptcy, it just requires the attorney to do more work and to compare the debtor’s income to his or her expenses.

If you are looking for a bankruptcy attorney in South Florida then please consider calling Shmucher Law, PL at 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.

Shmucher Law, PL is a Florida bankruptcy law firm that handles individual and business bankruptcies.  For immediate assistance or to schedule a free consultation please contact our office at 305-741-5553 or 954-309-5559.

Over the last few months I have met numerous clients who have had the following happen to them:   The clients at one point owned a home that had more than one mortgage (either a 1^st and a 2^nd or a 1^st and a home equity line) on it.  The client loses the house to foreclosure and they think nothing of it, unfortunately sometime in the future the second mortgage (or home equity line) creditor decide to take action against the debtor.  The action usually involves suing on the promissory note of the mortgage or the home equity line.  The lawsuit is for the amount owed on the second mortgage, so you can imagine getting sued for 30, 50 or even one hundred thousand dollars.  Once a judgment is entered against the debtor, by the mortgage holder, they can begin to attempt to collect either by freezing a bank account, levying personal property, or garnishing wages.

So then next question would be what can you do if you get sued by a second mortgage or a home equity line creditor on a home that was already fore closured.   There are two options that a debtor can pursue:

Settlement – The debtor can attempt to negotiate a settlement with creditor.  This option may be tough because the creditor would probably only be willing to settle if the debtor can provide a payment of between 30-50% of the debt payable in one shot.  Not many debtors will be able to come up with that much money.

Bankruptcy – The more feasible option for a debtor would be to file either a Chapter 7 or a Chapter 13 bankruptcy.    When the debtor files for bankruptcy he or she will include the amount owed to the judgment creditor as a debt owed and that debt will be discharged in the bankruptcy.  If the debtor is eligible and files a chapter 7 bankruptcy then the debtor will likely not have to pay anything back on the owed amount.  If the debtor doesn’t qualify for chapter 7 and is required to file a chapter 13 bankruptcy then he or she will likely have to make a monthly payment (pennies on the dollar) for the amounts of debts owed.  Furthermore the filing of a bankruptcy will also prevent a future deficiency judgment by the original mortgage.

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

When a debtor files for Chapter 7 bankruptcy in Florida they are allowed to exempt certain assets.  Exemptions are protections used on assets,  that  protect/prohibit the bankruptcy court from taking away the assets from you.  Here is a quick breakdown on exemptions in Florida:

Own a Home:

$1,000 in anything you own

$1,000 in a vehicle

Don’t own a Home:

$5,000 in anything you own

$1,000 in a car

So say for example you qualify and want to file for Chapter 7 bankruptcy but your assets exceed the exempted amounts.  Here is an illustration.

No home:

Vehicle worth $10,000, all other goods worth $1,000.

In this case when you use your exemptions you can exempt the following:

Goods: $1,000

Vehicle: $1,000 (vehicle exemption)  plus ($4,000 left over) for a total of $5,000.

In this case if the debtor chooses to file Chapter 7 bankruptcy then their car will be OVER the exemption limit by $5,000.   So here is what they can do if they file for Chapter 7 bankruptcy.

Buy back the asset:

If the debtor is over exemptions then the trustee will give the debtor to buy back the asset in two different fashions.

One Time Payment:

First the debtor can make a one-time payment to keep the asset.  This usually requires the debtor to have a friend or family member be willing to contribute the required amount to purchase the asset.   Usually if the debtor agrees to a one-time payment , then the trustee will probably give a 10% discount on the amount to be paid.  In the case above the trustee will likely allow the debtor to keep the vehicle with a one-time payment of $4,500, usually due 10 days after the meeting of the creditors.

Monthly-Repayment:

A debtor who cannot provide for a one-time payment may be able to setup a monthly repayment plan with the trustee.  There is no guarantee that a trustee would be willing to do a monthly repayment plan (be warned), however if the trustee agrees to a monthly repayment plan it will likely not exceed three to six months.

Therefore if you are contemplating filing for Chapter 7 bankruptcy and your assets exceed the allowed exemptions then don’t think that Chapter 13 bankruptcy is the only option for you.  If you are able to come up with the money that you are over exemptions then you may be able to file a Chapter 7 bankruptcy and keep your assets.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a Florida bankruptcy lawyer then please 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.

When you file for bankruptcy in Florida you need to list all of your debts and all of your assets.  The jewelry you own is considered an asset and in some instances could have significant value.  I often get asked how much jewelry can I exempt in Florida or what are the Florida exemptions specific to jewelry.

Value your Jewelry

If you own any jewelry the first thing you want to do is to go get it valued.  To value jewelry the best thing to do is to first itemize what you own and then take it to your local pawnshop/jeweler.  Have them tell you how much one they would give you for each item.  This will give you an idea of how much to list on your bankruptcy schedules.

Exempting you Jewelry

Florida unlike most states has no specific  exemption  for jewelry.  Instead Florida has a bankruptcy exemption of $1,000 for personal propert/;y.  Personal property includes bank accounts, clothes, cash, investment accounts,  and jewelry.    If it is a joint filing then the number is doubled to $2,000.  As you can see Florida’s personal property exemption is not very debtor friendly.

Surrendering a home

If you don’t own a home or are surrendering your home in a bankruptcy then Florida allows you to use an additional $4,000 wildcard exemption which can be applied to anything including jewelry.   Again if it a joint filing (husband and wife) you get double the wildcard or $8,000.

As you can see Florida doesn’t provide too many exemptions for debtors assets.  If a debtor has numerous assets worth significant value then it may be in the debtors best interest to file a chapter 13 bankruptcy whereby the debtor would be able to keep all their assets so long as they create a payment plan for either three or five years.

If you are thinking about filing for bankruptcy and would like to speak to a bankruptcy attorney please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free consultations in any of our offices included Boca Raton, Fort Lauderdale, Miami, Plantation and Sunrise Florida.

When many people purchased a home in Florida they obtained two mortgages (an 80/20 split).   A great number of other people obtained home equity lines of credit on their homes as well.  Did you know that by filing for bankruptcy in Florida it is possible to wipeout or discharge a 2^nd 3^rd or even home equity line on your primary residence?

If you file for a Chapter 13 bankruptcy in Florida you may be eligible to wipe out a 2^nd, 3^rd, home equity line of credit on your home, allowing you to keep your home with only one mortgage.  Here is a simple breakdown of how it works.

First – Determine the value of your home.

We first must determine the value of your residence.  For court purposes we use the Broward, or Miami-Dade property appraiser websites found here:

For Broward – http://www.bcpa.net/search.asp

For Dade –  http://www.miamidade.gov/pa/property_search.asp

For Palm – http://www.pbcgov.com/papa/aspx/GeneralSearch/GeneralSearch.aspx

Look at the “Market Value” that is given by the property appraiser.

Second – Determine the value owed on your first mortgage

You next need to determine the value owed on your first mortgage.  This can be done either by looking at your last statement or by calling your mortgage company.

Third – Compare the market value of your home to the amount owed on the first mortgage

Compare the market value of your home (from the property appraiser website) to the amount owed on your first mortgage.  If the value of the first mortgage exceeds the market value of your home then a chapter 13 bankruptcy will be able to help you remove, wipeout, or discharge any 2^nd, 3^rd, or home equity line of credit on the residence.  Here is an illustration:

Home Value (per property appraiser) = $200,000

First Mortgage = $280,000

Second Mortgage = $50,000

Home Equity Line = $45,000

In this example the first mortgage greatly exceeds the value of the home.  A filing of a chapter 13 bankruptcy could wipe out BOTH the second mortgage and the home equity line of credit, leaving you owing only $280,000 on the home.

Home Value (per property appraiser) = $300,000

First Mortgage = $280,000

Second Mortgage = $50,000

Home Equity Line = $45,000

In this example the value of the home exceeds the first mortgage.  Unfortunately when the value of the home exceeds the first mortgage there is nothing that can be done to remove the second mortgage or the home equity line.  If you purchased your home in the last seven years this  example will most likely not be the case.

If you would like to sit down and discuss your home situation with a bankruptcy lawyer then contact Ofer Shmucher at Shmucher Law, PL. We offer free consultations in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

The filing of a Chapter 13 bankruptcy, in Florida, requires the debtor(s) to create a three to five year repayment plan to pay off a portion of their debts.  You may wonder, why would I want to do a chapter 13 bankruptcy and make monthly payments when I can just file for a chapter 7 bankruptcy and not make any monthly repayments.  Well, there are certain benefits to chapter 13 bankruptcy that are not obtainable in a chapter 7.  Examples of chapter 13 benefits include:

1. Stripping or wiping out a second, third, forth, etc. mortgage or home equity line on your house.
2. Helping the debtor keep their house by allowing them to play catch up on their missed mortgage or vehicle payments.
3. Allowing the debtor to keep all their assets (unexempted).
4. Allowing the debtor to create a repayment plan with backed owed taxes or support obligations.
5. Allowing the debtor to strip down the car loan to the true value of the car and not what the debtor owes.

Furthermore some debtors don’t qualify for Chapter 7 bankruptcy and thus are required to file a Chapter 13.

So if you have decided that a chapter 13 bankruptcy is right for you then you will need to prepare to supply documents, more documents than you have EVER supplied in your life.  A chapter 13 bankruptcy trustee can and will ask you to provide proof of everything and anything.  Here is a great way to get started.

1. Bank Statements
   1. Get copies of the last six months worth of bank statements and all canceled checks.
   2. Pay stubs
      1. Six months worth of paystubs in order to determine the debtor’s income.
      2. Tax returns
         1. Two years worth of tax returns
         2. Retirement/Investment Accounts
            1. Copies of the most recent statement for your retirement, IRA, or 401k institution.
            2. Bills (VERY IMPORTANT) The trustee wants proof of your monthly payments therefore obtain copies of the last six months of all of your household bills:
               1. Power bill
               2. Water/Sewer bill
               3. Home phone
               4. Cell phone
               5. Internet
               6. Cable
               7. Alarm
               8. Landscaping
               9. HOA/ Monthly maintenance bills
               10. Car insurance
               11. Life Insurance
               12. Car payment
               13. Secured debt payments (i.e. furniture, or electronics paid for on a store credit card)

Having these documents ready and in hand when you meet your bankruptcy attorney will allow the chapter 13 bankruptcy process to go faster and smoother.  Delaying or failure to provide these documents could have a substantial impact on your case including increases in your monthly payments due to incorrect amounts used.

Remember Chapter 13 bankruptcy is a process that takes time and requires meticulous attention to each bill or expense of the debtor.  Your bankruptcy attorney can only use the numbers based on the documents you provide them, so make sure to provide everything any anything you can, and then expect the bankruptcy trustee to ask you for EVEN MORE documents.

If you are thinking of filing for Chapter 13 bankruptcy in Florida and would like to schedule a free consultation with a bankruptcy lawyer then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free consultations in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

The majority of the homes, condominiums (condos), or townhomes in Florida have Home Owner Association (HOA) fees that are usually paid either monthly or quarterly.  A very common question that I receive is what happens to my owed HOA fees when I am filing for bankruptcy, or are my HOA fees discharged (wiped out)  in the bankruptcy?    If the debtor is filing for Chapter 7 bankruptcy in Florida then the answer to those questions depends on whether the debtor is surrendering or keeping their home.

HOA’s in Florida have a great deal of power and can even foreclose on your property for failure to pay dues.   If a debtor, who owns real estate, is filing for bankruptcy then they must inform the bankruptcy court what their intentions are with the property.

Surrender the Property:

If you choose to surrender the property in your Florida bankruptcy filing then it is very important that you list the monies you owe to your HOA on your bankruptcy petition so that you will be able to discharge that debt in the bankruptcy.  Failure to list the debt in your bankruptcy petition could cause the debt to survive bankruptcy.  If you are surrendering the home and you list your HOA dues on your petition then your HOA dues are FULLY dischargeable in your bankruptcy filing.

HOWEVER – one precaution, any HOA dues that are accrued after filing, IE from the time you file your case until the bank takes possession of the home, are technically post-petition charges and the creditor could come after you for those fees.  However it is highly unlikely that they do, as the HOA usually gets their fees paid by the bank upon the bank taking possession of the home.

Retaining the Property:

If you are filing for bankruptcy in Florida and you wish to retain your home then the unpaid HOA dues are non-dischargeable in bankruptcy.  That means you will need to pay the owed HOA dues or there is a chance that the HOA will foreclose on your property.

If you are thinking of filing for bankruptcy and would like to speak with a Florida bankruptcy attorney then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free consultations in any of our Florida offices (Boca Raton, Fort Lauderdale, Miami, Plantation and Sunrise).

If you are considering filing for bankruptcy in Florida and at the same time trying or are in the process of a mortgage modification there are certain things that you should know BEFORE you file for bankruptcy.

Trial Period – If you file for bankruptcy while you are in a trial period with your mortgage company then there is a good likelihood that your mortgage would revert back to its original terms.   What this means is that you will basically start over with a trial period.   The bankruptcy won’t preclude you from reapplying for a new modification with the bank.  Therefore if you are more than a few months into a trial period and believe that the modification is about to become permanent then it might be a good idea to wait until the modification becomes permanent before filing for bankruptcy.

Permanent Modification – If you file for bankruptcy after obtaining a permanent modification then your mortgage will remain exactly the same.  The bankruptcy will not affect the permanent modification and the modification will continue to be permanent as long as you continue to make payments on your mortgage.

Permanent Modification but behind on payments – If you have obtained a permanent modification but again fall behind on payments then you may be able to file a Chapter 13 bankruptcy to play catch up on the delinquent payments.  A Chapter 13 bankruptcy will allow you create a repayment plan that can payback your delinquencies over time and allow you to keep your home.   Keep in mind that a Chapter 13 bankruptcy will only work if the debtor has disposable income (income at the end of the month) that will allow him/her to use to payback delinquencies on their mortgage debts.

File Bankruptcy first then modify – A debtor can file for a mortgage modification after/while the debtor is in bankruptcy.  A modification can be negotiated at the same time the debtor is in bankruptcy.

In conclusion it is vital for the debtor to know whether or not they are in a trial period or a permanent period of their mortgage modification, in order to determine when to file for bankruptcy.  If you are thinking of getting modification or are currently in a modification and would like to discuss your bankruptcy options with a Miami bankruptcy attorney then please contact Shmucher Law, PL at 305.741.5553 or 943.309.5559.  We offer free consultations at the following office locations:  Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.