Bankruptcy Attorney Jacksonville - Affinity Law Firm

Jacksonville Bankruptcy Basics - Chapter 11

2010-01-26T09:42:00.000-08:00

Chapter 11: Reorganization

The most common form of bankruptcy for businesses who wish to remain operative while they restructure their current debts, Chapter 11 bankruptcies are a useful tool to remain afloat during times of business duress.

This type of bankruptcy is available to any person and any business to include railroads; but is not available to stockbrokers, commodity brokers, insurance companies, and banking institutions (except an uninsured state member bank).

Chapter 11 is primarily used by businesses (e.g. partnerships, corporations, LLC’s, etc.) because it is a system setup to accommodate individuals with highly complex affairs, large debts, armies of creditors, employees, and shareholders. In most cases, Chapter 11 should only be used by “real people” when they don’t qualify under Chapter 13 because they’ve exceed the statutory debt limit.

Chapter 11 is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A corporation exists separate and apart from its owners, the stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company's stock. A sole proprietorship (owner as debtor), on the other hand, does not have an identity separate and distinct from its owner(s). Accordingly, a bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors. Like a corporation, a partnership exists separate and apart from its partners. In a partnership bankruptcy case (partnership as debtor), however, the partners' personal assets may, in some cases, be used to pay creditors in the bankruptcy case or the partners, themselves, may be forced to file for bankruptcy protection.

If you think that Chapter 11 bankruptcy is an option for you, contact Affinity Law Firm for a consultation.

Jacksonville Bankruptcy Basics - Chapter 13

2010-01-26T09:19:00.000-08:00

Chapter 13: Adjustment of Debts of an Individual with Regular Income

This type of bankruptcy is only available for individuals (“real people”) with regular income whose debt falls within a certain limit set by Federal Statute. Chapter 13 is also available to an individual who owns a business as a sole proprietor. A chapter 13 bankruptcy is a sort of restructuring of individual debts.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

Chapter 13 is designed to allow the individual filing to keep all or most of their property and to use part of future income over a period of years to pay creditors as much or more as they would have received if the liquidation of assets had occurred. The typical payment plan commits disposable income for a period of 3 to 5 years to settle all or a portion of the debts.

If you think a Chapter 13 may be the right course of action, contact a bankruptcy lawyer at Affinity Law Firm and set up a free consultation today.

Jacksonville Bankruptcy Basics - Chapter 7 (liquidation)

2010-01-26T08:18:00.000-08:00

Chapter 7: Liquidation

The roots of Chapter 7 bankruptcy are actually biblical and found in Dueteronomy Chapter 15. Before bankruptcy, people were put into debtors prisons until their family or loved ones could come up with enough money to pay their debts! A lot of clients who come in to speak with us are worried about filing for Chapter 7, because they are good people and want to pay their debts, and some of them find comfort in knowing that the system was put in place for a reason.

When a person files for bankruptcy under Chapter 7 they agree to have all of their possessions at the time of filing, taken by a court-appointed trustee and sold. The proceeds from the sale are then used to pay creditors. The result is a “fresh start” and all debts are discharged.

However, by law not everything you own can be taken and sold. Each state has different rules on what qualifies as being exempt from sale by the court-appointed trustee. In Florida some (not all) examples of the things you get to keep are:

Your home (homestead)
Insurance benefits you receive, retirement and pension funds (Ex: 401(k), IRAs, teachers, fire fighters, police, etc.)
Any alimony or child support you receive
Personal property up to $1,000 (husband & wife may double)
Certain Portions of Tax Refund
Vehicle (up to $1,000)

Contact the Affinity Law Firm today to set up a free consultation for Chapter 7 bankruptcy.

Bankruptcy Basics - The Automatic Stay

2010-01-26T07:43:00.000-08:00

What is a “stay” or “automatic stay” and what does it do?

A “stay” is a legal restriction on creditors which imposes a wide range of prohibitions on their attempts to foreclose, repossess, collect and/or harass you. The purpose of the stay is to ensure a fresh start for the person filing for bankruptcy and ensure an evenhanded management of the creditors involved.

The stay is often referred to as “automatic” because the act of filing a bankruptcy petition is all that is needed to bring it in to effect. No extra paper work is required and no court action is required. However, there are some actions are not stayed.

The automatic stay is governed by the language of 11 U.S.C. 362 (link may be outdated)

What is stayed?

Foreclosure
Garnishment
Wage Garnishment
Ongoing Litigation (Lawsuits and Court based collections)
Debt Collection Attempts (Creditor calls, etc.)
Any New Litigation to Collect

Well then what is not stayed?

Typically, things that are NOT stayed are:

Actions of creditors against co-debtors under Chapters 7 and 11
Criminal actions
Collection of alimony, maintenance, and support from property not part of estate
Proceedings that seeks establishment of paternity
Certain governmental actions or proceedings
Acts of creditors to maintain or continue perfection of an interest in property

People overwhelmed and being suffocated by creditors are allowed to breathe from the automatic stay. It is important to contact a bankruptcy attorney to properly file all the necessary documents and ensure that your bankruptcy is a success.

Florida Supreme Court Mandates Mediation for Foreclosures!

2010-01-21T12:17:00.000-08:00

At the end of 2009 The Florida Supreme Court adopted recommendations by the Task Force on Residential Mortgage Foreclosure Cases that will refer all foreclosure cases currently in the courts and involving residential homesteaded property to certified circuit civil mediators. The goal of this is to give lenders and home owners a chance to work out agreements to avoid the foreclosure and keep families in their homes. It's too early to tell if this will result in more loans being modified, but it is certainly a step in the right direction.

New Florida Law Requires Loan Modifiers to be Licensed

2010-01-21T10:29:00.000-08:00

As of January 1, 2010 Florida began requiring companies to be licensed in order to do home loan modifications. The only exemption to this is Florida licensed attorney does not need the additional license to represent Florida based client in home loan modification. This law is directed at the dozens, if not hundreds of loan modification shops that have sprung up in recent times that do little more than take the clients money and say "sorry we tried." In 2009 the Attorney General of Florida filed 17 civil lawsuits on behalf of consumers for loan modification fraud! As attorney's we are held to higher standard of ethics and professionalism than private individuals or companies. In addition we have the ability to offer clients many more options through the legal system than non-attorney's do. For example, Attorney's can offer foreclosure defense, consumer bankruptcy, and other options designed to protect the homestead.

Jacksonville Bankruptcy Attorney - Bankruptcy Myths

2010-01-20T17:31:00.000-08:00

Bankruptcy Myths

1. You will lose your home

2. You will lose your car

3. It affects your credit more than anything.

4. The new law prevents most people from being able to file bankruptcy.

First, you may keep your bigger assets such as your home and your car. In fact you may also “redeem” other assets as long as you can afford them.

Second, having many hits on your credit report over years will prevent you from buying a house or getting a reasonable car loan. Most people who file for bankruptcy can re-establish enough credit to buy a home within two years!

Bankruptcy can be a final option for people who cannot afford their bills. Although the rules for bankruptcy have been made stricter, it can be a very successful method of handling your bills.