Florida Bankruptcy

With the state of the national economy suffering such dramatic tidings of late, the number of borrowers in Florida who’ve come to the realization that they need assistance eliminating their collected loans has steadily increased over the past year. Unfortunately, too many proud Floridians are still wrapped up in unnecessary guilt about the supposed embarrassments of bankruptcy and all forms of debt relief. For generations, bankruptcy protection had been considered a disgrace to the borrower’s family that spoke of financial collapse and carefree spending. Indeed, for a Florida debtor to even think about bankruptcy was tantamount to an admission of weakness that would linger for decades and prevent the household from ever again enjoying the opportunities of more theoretically upstanding Americans. However, alongside the spiraling popularity of credit cards and new availability of accounts for prospective Florida borrowers who had not demonstrated any ability to repay such loans nor any recognition of the consequences as to defaulting, the conception of bankruptcy in Florida and the nation at large has changed as well. Almost every Florida resident knows at least one friend or family member who has successfully undergone Chapter 7 or Chapter 13 protection, and there should be utterly no embarrassment about investigating the process. Certainly, for a select group of Florida consumers, Chapter 7 debt elimination bankruptcy may be the preeminent solution to their economic dilemmas – however dear the deprivations and harsh the penalties – and, despite the recent alterations to the federal bankruptcy code which greatly increased the complexity (and, alas, cost) of the program, it’s still a relatively swift and easy process should things go well. In this essay, your authors merely wish to provide a cursory explanation of what bankruptcy protection shall mean for the Florida borrower this day and age and, as well, to list some of the popular alternatives that many debtors may find better suiting their household’s specific needs

Remember, whether the Floridian consumer chooses bankruptcy or another form of debt relief, there should be no worries about ethics. These are legal programs to protect citizens of Florida against the manipulations of mercenary conglomerates whose sole purpose has been to attract unknowing consumers with the promise of unlimited credit and little warning about the repercussions should household calamities (or, as the current economic climate has shown, a sudden and devastating recession) prevent easy payments each month not to mention the effects of compound interest upon balances when debts are left to fester. While bankruptcy may no longer be the fresh start once promised by the United States government, there’s still a very good reason that the program was originally implemented, and, much as the bankruptcy statutes have been weakened in recent years, the new debt relief alternatives so many Floridian consumers find so successful were initiated with exactly the same motivation in mind. Do not confuse protection with welfare. The point of bankruptcy or similar debt relief motions has always been and remains the rehabilitation of honest Americans who’ve simply fallen into trouble with over sized obligations, and any reputable counselor or bankruptcy attorney will do everything that it takes to help the borrowers regain household stability and get back on their feet. By removing the associated stresses that helpless submission to debts indulges, the borrowers will only be more productive members of society and – with the added ability to save and invest – genuinely better able to help the economy of Florida in the years to come.

Chapter 7 debt elimination bankruptcy is, by far, the most prominent form of bankruptcy. Indeed, most people may not even be aware there are other Chapters available (in reality, there’s a number of different bankruptcy types ranging in subject from businesses to family farmers to municipalities). Within Chapter 7 protection, all applicable debts are completely and forever eliminated. There’s also a somewhat lesser known sort of bankruptcy called Chapter 13 that forces the consumers to repay the majority of these debts under the guidance of a trustee selected arbitrarily by the Florida courts. In almost every case, Florida borrowers only intend to enter a Chapter 13 bankruptcy when they are threatened with foreclosure proceedings for their residence. Considering that, once again, debts must actually be paid back while the filers face all of the negative credit repercussions of bankruptcy plus the potentially life changing (negatively, of course) budgetary restraints imposed by the Florida trustee under the laughable low cost of living expenses as calculated by the Internal Revenue Service, there’s really no reason for Florida consumers to even contemplate the Chapter 13 program unless they have missed a succession of payments and are worried that their home may be taken away. If nothing else, Chapter 13 bankruptcies will automatically stave off foreclosure and allow the home owners to make up the lapsed payments, but the drawbacks are severe.

However, should the home mortgage be in good standing without danger of foreclosure, Floridians will almost certainly – and for very good reason – opt for the Chapter 7 mortgage plan. If successfully petitioned (and this is by no means a guarantee), the Chapter 7 debt elimination program will eliminate all of the borrowers’ unsecured debts, but this forgiveness comes at a price. Any assets not explicitly protected by the federal exemptions or those provided by the state of Florida will be seized by the courts for eventual sale. Florida residents are significantly more fortunate than other citizens across the country. The state exemptions are not only far more indulgent as regards personal possessions, but the filers’ primary residences will be absolutely guaranteed under the homestead exemption no matter how much equity they have stocked away in past years. Statutes in the Florida constitution provide any number of similar exemptions that greatly outweigh anything that the federal government vouchsafes. Automobiles, provided there’s no more than a thousand dollars of value (which, given vehicle depreciation, shouldn’t be much of an issue), are exempt, and Florida further allows each filer for bankruptcy a thousand dollars worth of personal possessions. As well, borrowers who have permanent residency in Florida and are considering bankruptcy should not worry about any pensions, 401k plans, Individual Retirement Accounts, or other retirement plans that the Internal Revenue Service deems acceptable. Also, any funds earned but not collected from wages or commissions alongside all public benefits (veterans, social security, Medicare, and so on) are protected under Florida law.

While, as we have earlier written, the bankruptcy exemptions guaranteed by the state of Florida are considerably more lenient than the national alternative, borrowers should still think about just how far a thousand dollars will stretch when concerning personal property. Things are a bit different as regards secured assets (meaning those assets that still have loans attached to them), and borrowers shall have another decision to make. Vehicles, houses, home furnishings and entertainment systems, even jewelry – so long as they are still under contract or mortgage – could be protected as long as the loan is reaffirmed within forty five days from the filing of bankruptcy. The reaffirmation is essentially a formality, no lender wants to go through the hassle of repossession or foreclosure or reclamation of property, but, nevertheless, Florida borrowers have to ensure that they meet the requirement else the bankruptcy proceedings could be halted and the borrowers penalized. Conversely, for borrowers who are not quite as interested in ensuring that these debts be maintained, under Florida bankruptcy statutes it would be possible to surrender the secured assets along side the related debts through Chapter 7 protection. Even if there’s been a depreciation or some other loss of value in the property, the Florida bankruptcy statutes will render such disputes null and void, and the borrower will not be liable for any damages regardless of actual costs. In fact, within bankruptcy protection it is even possible for those filing to reaffirm their obligations to credit card accounts so long as the lenders agree, and, since the borrowers are agreeing the bills owed will be repaid, there’s absolutely no reason that they would not agree. Some Florida borrowers, worried about their eventual credit ratings or simply wanting to ensure that they’ll have credit opportunities after the bankruptcy discharge, think reaffirming these unsecured debts would help their future, but there are better ways to improve credit reports that do not feature a maintenance of loans that would otherwise be eliminated.

We do not wish to downplay the damage that bankruptcy will do to the borrowers’ credit ratings. The notation of bankruptcy will remain on the credit reports maintained by the three primary credit bureaus (Equifax, TRW, and TransUnion) for seven to ten years and FICO scores (the mysterious calculation upon which each bureau rates an individual’s payment history and credit availability) shall suffer a drastic and immediate fall. However, counter intuitive as it may seem, many Florida borrowers have reported a steady and substantial increase in their scores and credit opportunities within just a year or two following bankruptcy discharge provided they take the necessary steps and treat the process with all due diligence. Seems hard to believe, but, even after the credit card companies have had their previously owed funds liquidated by Chapter 7 bankruptcy debt elimination, they are more willing than ever to offer fresh credit accounts to the newly bankrupt. This may be difficult to understand, but, remember, once borrowers petition for bankruptcy protection they are legally prevented (in Florida and across the nation) from filing again for another seven years. If anything, the dangers presented by the recently bankrupt are less than those offered by normal consumers. After filing for bankruptcy, credit card companies can freely harass the new clients and – though the current backlog in Florida courts rather disable legal procedures – the lenders can freely pursue judgments that would result in seizure of property or even garnishment of wages

If bankruptcy’s no longer an option, there’s nothing that the borrowers could do in return to stop such actions: programs such as debt settlement, without the threat of bankruptcy behind them, are equally toothless. For these reasons, consumers are deluged with credit card applications even before their bankruptcy is discharged. Now, in order to repair credit ratings and raise FICO scores, obviously the borrowers must take out a card or two, borrow small amounts, and repay the balances on time each month. However, this should only be done in the interest of bringing up credit scores to a decent amount – above seven hundred and fifty, say – and consumers must remember that they cannot fall back into their old spending habits else they find the same problems of accumulated debt loads will soon reassert themselves. Much as it is important to maintain a small number of credit accounts, whether for emergencies (though, ideally, families will put savings aside to take care of unforeseen events) or simply to heighten credit scores (for home loans or employment opportunities) or to take advantage of the necessities that credit cards represent (airplane reservations or vehicle rentals are virtually impossible without such), borrowers should still take every pain to minimize the balances and prevent credit card obligations from becoming a problem in the future. Many debtors, even after they have successfully eliminated their unsecured debts through Chapter 7 bankruptcies, helplessly surrender to their own purchasing instincts and recreate the prison of financial burdens anew.

This is, to be sure, one of the greatest tribulations of bankruptcy protection facing Florida families. Should Chapter 7 bankruptcy debt elimination be entered into without due sacrifice, too many households find themselves repeating poor behaviors. Chapter 13 protection, on the other hand, much as it may indeed save the borrowers’ homes and prevent foreclosure, has its own problems. As with Chapter 7 protection, simply sending the petition (alongside the three hundred dollar money order) does forbid any representatives of the lender or even the collection agencies supping upon the lender’s spillage from communication with the borrowers through phone or mail. Much as your authors recognize the importance of this sort of endeavor, there’s still more to consider. Once the trustee chosen by the Florida courts places a borrower within the Chapter 13 program, the borrower’s forced by penalty of law to pay a certain amount each month for a period no longer than five years in order to repay the assembled debtors and clear up all arrears. The amount of money to be paid each month and the length of time in which borrowers shall be at the mercy of the Florida courts depends entirely upon the budget worked out with the trustee and the household affected. Obviously, much of this depends upon the whim of the individual official handling the case (and, once again, the Internal Revenue Service estimates of Floridians’ cost of living) as well as the gross income shown from a previously determined period of the filer’s earnings, and, as a result, the amount of money that the trustee calculates the debtor could spend through their bankruptcy may be far different than the reality of their situation. Because of this, unlucky borrowers may have to actually move to a less expensive part of Florida in order to comply with the IRS guided expenses.

As you can see, while no borrower should genuinely feel embarrassed about filing for bankruptcy, the process may still not necessarily be in their best interest of every Florida household. Considering the potential loss of possessions that Chapter 7 engenders and the severe restrictions of lifestyle effectively forced by the Chapter 13 protection – and, all of this is without even mentioning the incredible costs charged by ever more necessary bankruptcy attorneys – it should come as no surprise that many borrowers have started to examine the other potential debt relief solutions around Florida. While the Consumer Credit Counseling program isn’t far different from Chapter 13 bankruptcies (plus, believe it or not, CCC can be even worse for your credit) and debt consolidation loans should be thought of as especially dangerous these times of falling interest rates, the relatively new debt settlement alternative has garnered rave reviews from all of the Florida residents that have implemented the program. Within debt settlement negotiation, counselors talk to credit card representatives and convince them to offer significant – by as much as sixty percent! – reductions in their clients’ balances. Of course, this will only work with the unsecured lenders who have true reason to fear that the Florida borrowers may indeed risk Chapter 7 bankruptcy protection (student loans, tax debts, mortgages and vehicle loans remain unaffected), but, since studies have shown that the average Floridian considering bankruptcy does so primarily to erase their credit card accounts, this should have an obvious appeal for any resident that does not want their possessions or household budgets threatened. Better yet, unlike the services of any reputable bankruptcy law firm, most of the certified debt settlement counselors are more than willing to provide initial consultations free of charge, and, if there isn’t one nearby your part of Florida, there’s a number of debt settlement companies operating primarily from websites available over the internet which have demonstrated the same level of success. There will be a cost, of course, and not every applicant will be approved for the process, but, given the potential drawbacks of modern bankruptcy, we do encourage every Florida resident to at least talk to a debt settlement professional and determine for themselves.