Help! My Car Is Being Repossessed!

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Without your car, how would you get to work? How would you get your children to school? If you fall behind on your car payments, you may have the repo man at your door.  You can give in and let him take it or you can protect yourself.  A bankruptcy protection plan can help you keep your car and get your payments back on track.  It can also keep the repo man away from taking your vehicle!

When you file for bankruptcy protection, you receive what is called an “automatic stay” on collection of your debts.  While the stay is in effect, your car cannot be repossessed. 

Here is how bankruptcy has more protection for you if you decide to file a Chapter 13.

• You can your reorganize your payments and spread them out over the course of your payment plan.  This can give you 30 to 60 more months to pay for your vehicle and you get to keep the car as long as the bankruptcy payments are being made to the trustee.
• If you are upside down on your loan or you owe more than the vehicle is worth, you may be able to pay less than you owe.  For example, let’s say you owe $10,000 on your car but your car is worth $7,000.  You may be able to reduce the amount you owe in your reorganization plan.
• If you think your vehicle is not worth keeping, you can include the amount you owe in your reorganization plan and walk away.

Here is something you should never do---let the bank repossess your car and think you are no longer responsible for the debt.  When banks repossess vehicles, they usually sell them at car auctions.  If they get less than you promised to pay for the car, the bank may come after you again for the rest of the money.  You may face a garnishment or a lawsuit for the amount still owed on the vehicle, even though it was repossessed by the bank.

Most people who are having trouble making their car payments are also having trouble paying their other bills.  Filing for bankruptcy can help you keep your car and begin to reestablish your financial future.  But if you wait, you could end up with judgments and garnishments.  We are here to help you consider your options and protect your assets, including your vehicle.  

Common Questions About Bankruptcy

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Bankruptcy is the last option for some people and many have questions about what will happen to them.  Here are some of the most common questions we hear:

Will I lose my home/car?

That is a question that has to be answered individually.  Florida has some of the most lenient exemptions laws when it comes to your home.  In a Chapter 13 Bankruptcy you can even wipe out a second mortgage or home equity loan.  When it comes to your vehicle, you can also exempt $1, 000 of equity in your car.  You may also choose not to include your car in your bankruptcy and continue making the payments on your own.  There are exceptions and the answer also depends on whether you file a Chapter 7 or a Chapter 13. 

How long does it take to file bankruptcy and wipe out my debts?

The length of time it takes to file largely depends on you.  If you come to us on a Monday, in some cases we can file by Friday.  You may want to talk to us and think it over before filing.  Some clients wait a long period of time before actually filing a bankruptcy.  This can hurt you in the long run because interest and fees are accruing on your debts.  As to the time it takes to wipe out your debts, if you file a Chapter 7 bankruptcy, it usually takes three months for the debts to disappear.  Chapter 13 is a repayment plan that takes three to five years on average. 

I am embarrassed by my financial situation.  Will my neighbors/friends/coworkers find out I have filed bankruptcy?

Bankruptcy records are public and anyone can go online or down to the federal courthouse and see if you have filed for bankruptcy.  Unless you are a celebrity or applying for a high profile job that requires a credit check, it is unlikely if anyone will know if you filed bankruptcy unless you tell them.  However, some publications do run bankruptcy filings and someone may recognize your name.

Can my creditors still call me after I have filed bankruptcy?

NO! Once you have filed for bankruptcy protection, they must stop all collection proceedings until the case is settled.

Every situation is different and the only way to get an answer that will ease your mind is to talk to us about your situation.  We have helped hundreds of clients protect their assets and financial future. 

Can Bankruptcy Help My Tax Debts?

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While some people who file bankruptcy are burdened with credit card debt, some are burdened with debt to Uncle Sam for past due income taxes.  Tax debt can be included in a bankruptcy, but there are rules and in most cases, you will have to pay your taxes.  To understand the difference in the way tax debt can be discharged, you have to understand two most common types of bankruptcies.  Chapter 7 wipes away all of your debt and you are no longer obligated to pay it.  Chapter 13 reorganizes your debt and puts you on a plan to repay your debts.  If income tax debt is included in a Chapter 13 payment plan, it is considered a priority debt and must be paid before other debts. 

Some people have misconceptions about tax debt and bankruptcy.  Here are three common myths.

1. Myth: Income tax debt is never discharged.  Fact: If you file a Chapter 7 and you have tax debt that is more than three years old and your taxes were filed on time, in some cases that debt can be discharged. 
2. Myth: Interest and penalties will continue to accrue if I put my income tax debt in a Chapter 13 payment plan.  Fact: You will have to pay all of the interest and penalties up until the time you filed your Chapter 13 but you will not be assessed any additional fees after you file.  The accrued interest and penalties will be included in your bankruptcy. 
3. Myth: Filing bankruptcy will wipe out any liens from the IRS.  Fact: If the tax lien is not secured, it will become a priority debt and it must be paid in a Chapter 13.  It is not dischargeable in a Chapter 7.  If the IRS has filed a secured claim, it cannot be discharged.

Most other types of taxes do not qualify for discharge if you file bankruptcy.  These include estate taxes, gift taxes, sales taxes or fuel taxes. 

Tax law is very complicated and sometimes there are exceptions to what can be discharged that are unique to the client.  Even if you cannot include you tax debt in your bankruptcy plan, getting relief from your other debts will help you pay your taxes.  You will not know what you can do about your tax debt until you consult with a bankruptcy attorney.  We have helped hundreds of clients determine how they can handle their tax debt.  

Life After Wage Garnishment: Can You Live on Less?

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Some people are living paycheck to paycheck with no savings to rely on if there is a crisis.  Those people may also be behind on their bills and are facing judgments from their creditors.  In some cases, that person may be unaware that a creditor has gained a judgment to garnish their wages until they see less money in their paycheck.  If this happens to you, can you live with up to 25 percent less of your paycheck? What bills will not get paid if this happens to you? How will your family survive?

You can protect yourself and your wages from garnishments.  Filing bankruptcy can keep creditors from getting your money and help you get back on your feet.  You may also be able to keep many of your assets.  You have two bankruptcy options:

• Chapter 7:  This will wipe out your debts.  If you are worried about keeping your house or car, you can file to keep them by asking for an exemption.  This is called the “fresh start” bankruptcy because you are no longer responsible for paying the debts included in the bankruptcy. 
• Chapter 13: This is like a debt reorganization that protects you from your creditors.  Basically, you will be able to pay off your debts, often at a reduced interest rate and keep your property.  If you are a homeowner, there is a program that can eliminate your second mortgage or home equity loan and just pay off your first mortgage.  In a Chapter 13, you will be making a monthly payment to a bankruptcy trustee for three to five years. 

What happens if you wait too late to file for bankruptcy protection? Garnishments can proceed and you could be forced to live on less.  That could cause you to get behind in your other bills like your mortgage or car payment.  A bankruptcy protection plan keeps your assets and money safe from creditors. 

Deciding to file bankruptcy is a decision that should be well-thought out and discussed with your family.  It is not an easy process and it’s not an option for everyone.  Our firm has helped hundreds of South Florida families avoid wage garnishment.  But you must not wait until the wolves are at the door before you protect your assets.  

You Can Get Relief From Your Second Mortgage

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Homes need maintenance and often homeowners don’t have the money to do expensive upgrades like adding a new cooling system or fixing a leaky roof.  Home maintenance can be costly and taxing.  You have to hire a contractor, check on permits and then live through the hassle of living in a home that is under repair.  Many will be forced to take out a second mortgage or get a home equity line of credit to meet their financial needs. 

Sadly, some homeowners not only face a home that needs repairs (and the headaches that go with it) but they also owe more on the home than it is worth.  Loan modifications may be out of the homeowner’s reach due to their credit problems.  Short sales can take months and leave the homeowner searching for a new place to live.  Many homeowners don’t want to leave and invest in the repairs in anticipation of living in their homes for the rest of their lives.  But circumstances such as a lost job, health crisis, divorce or other crisis may have impacted their ability to pay their bills. 

A faster option than a short sale or lengthy bank negotiation for a loan modification is available to homeowners that may seem like a miracle.  A homeowner can get out of the second mortgage or home equity line of credit and still keep their home.  It’s called “stripping the lien” and it’s one of the benefits of a Chapter 13 Bankruptcy that may be possible for your situation. 

Here’s how it works: Once you file a Chapter 13 Bankruptcy, the trustee overseeing the plan can eliminate the second mortgage or home equity line of credit if your home is worth less than your first mortgage.  But that’s not the only benefit.  If you are behind on your first mortgage, the bankruptcy trustee can give you up to 60 months to catch up on your payments—without paying any interest!  Here’s another benefit—this can also apply to third mortgages.  However, it does not apply to first mortgages.

In addition, a Chapter 13 Bankruptcy can eliminate other debts you may owe such as credit cards.  This will give you additional money to help catch up your mortgage payments.

You don’t have to lose your home because of a crisis or credit problems.  Our firm has helped hundreds of clients work through their financial challenges and keep their home with options that are right for them.