Miami Bankruptcy Attorney Blog

If you have already met a bankruptcy attorney or are planning on meeting one you can expect the attorney to use the word equity multiple times during your consultation.  Unfortunately most bankruptcy lawyers assume that you already know what the term means and how it applies, this is probably not the case.

Equity is one of the most important factors that a debtor must consider if they are thinking of filing for bankruptcy.  If you have too much equity then you may lose your probably or have to pay back the equity amount to keep your property.  So what does equity really mean?

Equity is basically a math formula, it is the difference between what the market value is (on the current item) and how much is owed (on the same item).    Market value is how much you could get for it if you sold it.  For vehicles market value is easy to determine because you just look at NADA Values, Blue Book values or Black Book values.    Here is an example of equity in a vehicle:

Market Value = $14,000

Outstanding Loan amount  = $7,000

Equity = Market Value ($14,000) minus Owed Amount ($7,000)

Equity = $7,000

The same formula would be applied to houses, transportation, land or anything of value.

Here is another example where there is NO EQUITY in a vehicle:

Market Value = $14,000

Outstanding Loan amount = $17,000

Equity = Market Value ($14,000) minus Owed Amount ($17,000)

Equity = -$7,000  (negative)

If you have an asset that has zero or negative equity then it is worthless in the bankruptcy world.

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

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.

If you are thinking of filing for bankruptcy in Florida and you own real estate then you will need to know the value of the real estate to determine what, if any, equity you have in your properties.  The easiest way to determine the value of your home is to look at the property appraiser website for the county you live in.  Each year your home is appraised for tax purposes by the property appraiser, so when you go to the website, look for the corresponding year and valuation for the property.  Alternatively you could go www.zillow.com and type in your address for another valuation based on comparable real estate sales in your area.  Finally, and probably the most effective way to value real estate is to get a true appraisal of the property by hiring a licensed appraiser to come out to your property to review it and value it accordingly.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a local bankruptcy lawyer, then please contact Ofer Shmucher at Shmucher Law, PL by calling 305-741-5553 or 954-309-5559.  We offer free consultations in our main office in Miami or in any of our satellite offices (by appointment) including Boca Raton, Fort Lauderdale, Plantation, and Sunrise Florida.

Many clients that I see in Florida aren’t originally from the United States, and these clients may or may not have foreign assets in their home country.  One of the questions I get asked a lot is whether or not a debtor needs to list any of their assets they own, that are NOT in the United States.  This could include foreign bank accounts, foreign businesses or even foreign real estate holdings.   The answer to that question is YES, a debtor must list all their assets whether or not they are owned within the United States or not.  When a debtor files for bankruptcy they sign under oath that the information in the bankruptcy petition is true and correct and lists all the debtor’s assets.  If a debtor fails to list an asset and the bankruptcy trustee finds out about it then 1) the debtor could lose their bankruptcy discharge or 2) the debtor could be sent to jail for attempting to commit bankruptcy fraud.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a local Florida bankruptcy attorney then please contact Ofer Shmucher at Shmucher Law, PL.  We offer free consultations in our main Miami office as well as any of our satellite offices (by appointment) including Boca Raton, Fort Lauderdale, 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.

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 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.

After filing numerous Chapter 7 bankruptcy petitions in the State of Florida I have come up with a mini-guide on how to painlessly and successfully file for bankruptcy.  The following are tips that any debtor should follow:

Tip 1:  Find a Bankruptcy Attorney

First and foremost if you are looking for a smooth and painless bankruptcy filing then find a bankruptcy lawyer in your area.   When you meet your lawyer ask them how many cases they have filed in the last year.  Remember just because the attorney looks old or has 30 plus years experience it doesn’t mean he or she has ANY experience in bankruptcy.  It may be the case that the attorney’s true field of practice has yielded no business and the attorney now is attempting to obtain new business by marketing him or herself as a bankruptcy attorney.

Tip 2:  Disclose Everything to your Attorney

When you have your first bankruptcy consultation with an attorney make sure to answer all his or her questions TRUTHFULLY.  Failure to answer questions truthfully or with incorrect information could have severe consequences in your case, including lawsuits against family members or friends, loss of assets, or denial of discharge.  If your attorney isn’t asking you LOTS of questions about your situation then you need to find a different attorney.  Expect your attorney to ask you specific questions going back up to two years before your bankruptcy filing.

Tip 3:  Come Prepared to your Consultation

Debtors need to come prepared to their consultation meetings. Prepared involves the gathering of certain documents including bank statements, tax returns, paystubs, valuations on real estate, vehicles, or any other assets.  Again if your bankruptcy attorney doesn’t ask you to provide these documents then you need to go find another bankruptcy attorney.

Tip 4:  Review and sign your bankruptcy petition before it’s filed

When your bankruptcy attorney puts your information into the computer he or she will generate a bankruptcy petition (what gets filed with the court).  You need to review and sign the petition before it gets filed with the court.  Do NOT let an attorney file a bankruptcy petition that you haven’t reviewed.

Tip 5:  Prepare for and Attend the Meeting of Creditors (341 meeting)

Yes, the dreaded meeting of creditors (341 meeting).  Surprisingly this should be the easiest and quickest part of the whole bankruptcy process.  Speak to your attorney a few days before the 341 meeting so they can prepare you on how to answer questions.   Hopefully you have an attorney who will show up to the 341 meeting with you, rather than send you an associate that you have never met before.

Tip 6:  Complete Post-Petition Bankruptcy Course

In order to obtain your bankruptcy discharge you must complete the debtor’s education course.  This course is usually done on the computer and takes two hours to complete.  Failure to complete this course will close your case without giving you a bankruptcy discharge.  Why complete 99% of the work and not obtain a discharge.  Call your bankruptcy attorney and he or she will tell you where to take the class.

That’s it!  Hire the correct bankruptcy attorney and follow those steps to have a successful and painless bankruptcy filing in Florida.

If you are thinking of filing for bankruptcy 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.