Miami Bankruptcy Attorney Blog

Some of my clients have recently asked me if they can include their 401k loans into the bankruptcy. Typically clients dip into their 401k as a last resort, in an attempt to pay off debts they owe, but they fail to realize the consequences of doing so. Unfortunately the filing of a bankruptcy, whether chapter 7 or chapter 13, in Florida will have no affect on your 401k loan and you will still be required to pay for them.

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

When my clients come see me, the first thing they ask is what is the timeline if I file for Chapter 7 bankruptcy in Florida.  Below is a rough timeline for individuals who file for Chapter 7 bankruptcy using my firms services.

1.         Schedule an appointment with my office.  This can be done by calling 954.309.5559 or 305.741.5553.  We offer FREE consultations and can meet you in several offices located throughout South Florida.  Our appointment availabilities range from M-F between 8am-7pm, and weekend appointments on a case by case basis.

2.         Prepare documentation and all the questions you may have prior to your initial consultation.  Documentation should include paystubs, tax returns, bank statements, asset information, vehicle information, and or copies of debts.  Write down your current monthly expenses (rent, food, insurance, gas, medicine, cell phones, etc.).   Write down any questions you want to ask during the free consultation.

3.         Come in for your free consultation and sit down with me to review your needs.  If we determine that you are a good candidate for Chapter 7 bankruptcy then we will begin by reviewing your monthly expenses and inputting them into your bankruptcy schedules.  We will also run your credit report and answer all questions you may have.

4.         After leaving the office you will need to review your credit report and your monthly expenses and let me know if there are any changes that need to be made.  If not, wait until I call you to come in and review your bankruptcy petition.

5.         Take the Pre-Filing bankruptcy Course found at www.startfresh.com (use attorney code OS6220).

6.         Come back into my office to review your bankruptcy petition, make any necessary changes, pay for the legal services, and FILE YOUR CASE.  We will file your case right on the spot, give you your case number, as well as the date for the meeting of the creditors.

7.         Once you are a debtor all harassing phone calls will cease and now you will wait for your meeting of the creditors.  If you receive any creditor phone calls, pick up the phone and give them your case number.

8.         Provide my office with any additional documents  that are required for the meeting of the creditors.

9.         A day or so before the meeting of the creditors I will either ask you to come into the office or schedule a phone conversation with you.  During this consultation I will prepare you for the meeting of the creditors.

10.       Attend the first meeting of the creditors and be prepared to spend three to five minutes answering questions regarding your bankruptcy petition, assets, and debts.  Make sure to bring a VALID DRIVERS LICENSE as well as a SOCIAL SECURITY card to the meeting of the creditors or your case will get rescheduled.  Complete your meeting of the creditors and walk away.

11.       Wait, you must now wait for an additional 60 days, hoping that no creditor will file any action in your case (not likely).

12.       Once the 60 day period is over you should be receiving a telephone call from me telling you that you got your bankruptcy discharge and that you should expect it in the mail within a few days.

13.       Your bankruptcy case should automatically close about two weeks after you get your discharge.

14.       Live happily ever after.

If you are thinking of filing for bankruptcy in South Florida and would like to be represented by a local bankruptcy attorney then please contact Ofer Shmucher at 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, and Plantation Florida.

I see many clients who have attempted to stay afloat by taking out loans against their 401k retirement plans.  Basically the clients have X saved in a work retirement plan and they have borrowed against it, usually to receive a lump sum payment, and then the client is required to make monthly repayments back on the loan.  These clients typically ask me the following “what happens to my 401k loan if I choose to file for bankruptcy.”  The answer is NOTHING.

If you file for bankruptcy in Florida and you have a 401k loan the loan will not be affected in bankruptcy and the debtor will need to continue to pay the 401k loan.  The 401k loan cannot be discharged or wiped out in a bankruptcy.

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

When you file for bankruptcy you automatically get appointed a trustee in your case.  You also automatically have a court date scheduled for a meeting of the creditors (341 meeting).  At the meeting of the creditors your appointed trustee will be asking you certain questions about your bankruptcy petition in order to determine whether or not you have committed fraud or have attempted to hide assets prior to your bankruptcy filing.   Prior to your meeting your attorney will have to send the trustees office certain documents (including bank statements, tax returns, inventory lists, investment statements, car titles, etc.) for the trustee to review prior to your hearing.

So what is the purpose of the trustee asking you for your bank statements?  The trustee will look at your bank statements to determine whether or not you have depleted your assets prior to your bankruptcy filing.  Did you withdraw large sums of money over the last year?  Did you transfer monies to your friends or relatives account?  Did you transfer lots of money into your 401k or your IRA?  Did you intentionally state your income as X when really your income was Y based on your bank statements.  Things like these put your bankruptcy in serious jeopardy and will likely lead to adversary proceedings (which are lawsuits within a bankruptcy case).

If you are thinking of filing for bankruptcy and would like to speak 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.

When you file for bankruptcy in South Florida you must list all or your assets and all of your debts on your bankruptcy petition.  The petition is the paperwork that actually gets filed with the court, and it also includes the list of all your creditors(debts), your income and your expenses.   Any retirement account such as a 401k, an IRA or a pension plan is considered an asset so you must list it.

Furthermore you need to protect these assets, from your creditors, by exempting them on your bankruptcy schedules.  Exemptions prevent the court from taking your assets and using the monies from them to pay off your creditors.   Under Florida law you can usually exempt any monies you have in a 401k, IRA or a pension savings plan.  However there are some circumstances that will not all you to exempt your entire 401k or IRA plan.

The main example of where you entire 401k may not be protected is the following:

You have $10,000 in the bank (non exempted or partially exempted) and $1,000 in your 401k (fully exempted) .  Right before you file for bankruptcy you move the money in your bank account (non-exempted) into your 401k (exempted) in hopes of exempting the whole amount.  This would be considered a fraudulent transfer.

If you have a 401k or a retirement plan and you are considering filing for bankruptcy then please contact Shmucher law to schedule a free consultation.  We offer consultations in offices throughout South Florida, including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

When you file for bankruptcy you need to list all of your assets and their values.  For some assets it’s fairly simple to determine their worth however it gets difficult for others.  Here are the most common assets and means to determine their worth:

Home – For your home you should use the current year property appraiser valuation for the home.

Vehicle – For vehicles you should use KBB.com private party sales to determine the value of vehicles.  If you lease your car this is not necessary.

Bank Accounts – Use the amount in the bank account on the date of filing.

Investment Accounts – Use the amount in the investment accounts on the date of filing.

Furniture – Use garage sale or craigslist.org values.

Jewelry – Use what pawnshops would give you for the pieces of jewelry you own.

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.