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Bankruptcy Answers

Bankruptcy vs Minimum Monthly Payments

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Bankruptcy May Be A Better Option vs Minimum Monthly Payments

The premise behind this post will most likely cause a little controversy. Many families are struggling maintaining their minimum monthly payments to credit cards. They make their monthly payments, yet they barely make a dent in the overall balance owed. Basically they are treading water.  If you have 5-6 credit cards with balances, you could easily end up making minimum monthly payments in the neighborhood of $1,500.00 to 2,000.00 a month!  That is a lot of money spent each month to tread water financially.

Something to think about

Lets say for example you had approximately $60,000.00 in credit card debt and your minimum monthly payments were around $1,300.00 a month. How long will it take you to pay off that debt just paying minimum monthly payments? The answer is easy to find, just look at your next credit card statement, usually towards the end of it is an analysis that tells you how long it will take to pay off that credit card just paying minimum monthly payments. The ones that I have reviewed recently with clients usually range from 18 to 34 years! That assumes that you are not continuing to make charges on the account! That is no way to live.

Chapter 13 Bankruptcy May Offer A Better Option

There is another option, you may be able to file a chapter 13 bankruptcy and get rid of your debt within 60 months! The Chapter 13 Bankruptcy would typically freeze the balance owed on the subject accounts to the amount that was owed at the time the bankruptcy was filed. That means no continuing interest, no more treading water. I filed a case for a client where she was paying approximately $1,300.00 a month in minimum monthly payments and going nowhere in reducing the balances. We designed a chapter 13 bankruptcy plan that was confirmed by the court that lowered her payment $958.98 a month! This changed her life.

Her case and outcome are specific to her situation and your situation may be different, but isn’t it worth exploring an alternative to being tapped in the minimum monthly payment cycle? Think about it, if you are only paying minimum monthly payments, who are you working for? Yourself and your family or for your creditors?

Are you considering filing for bankruptcy?

If you are considering filing for bankruptcy, it is important that you speak with a bankruptcy attorney who can help you evaluate your potential homestead exemption and issues that may impact your exemption status in bankruptcy. Every bankruptcy case is different, so what has worked for one debtor may not necessarily work for another. If you are in Miami-Dade County or Broward County, Florida, please feel free to contact us to set up a FREE consultation to discuss your specific situation.

This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the current state of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.

Means Testing – Median Income for Florida Changing on November 1st

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Median Income for Florida Changing on November 1st

In order to file for bankruptcy you must under go a “Means Test” analysis to determine if you qualify for filing a Chapter 7 Bankruptcy. The Means Test is a two part test, the first part of the test analyzes your income vs. the “Median Income” for the state you live in. For purposes of this blog post, I will be focusing on the State of Florida. If you are at or below the Median Income for a household/family size of “X” you pass the first part of the means test and do not have to under go further analysis under the second part of the Means Test. It is possible to fail the first part of the Means Test (Median Income) and still pass the second part of the means test and qualify to file for a Chapter 7 Bankruptcy. Discussions regarding the second part of the Means Test will be left to another day. We will keep our focus on Median Income.

The data used by the Department of Justice to determine the Median Income for Florida is obtained from the Census Bureau. This data is typically adjusted twice a year. The Median Income for Florida currently and up to October 31, 2015 is as follows:

 

FLORIDA

Household of one (1) 

$42,718

Household of two (2)

$52,421

Household of Three (3)

$57,977

Household of four (4)

$67,539

For each additional household/family member above four (4) an additional $8,100.00 is added to the Median Income. So for a household/family of six (6) the Median Income would be $75,639.00.

As of November 1, 2015 the Median Income for Florida will be:

 

FLORIDA

Household of one (1) 

$43,085

Household of two (2)

$53,590

Household of Three (3)

$57,012

Household of four (4)

$66,509

For each additional household/family member above four (4) an additional $8,100.00 is added to the Median Income. So for a household/family of six (6) the Median Income would be $74,609.00.

What does this mean for you?

For most people this change will not mean much, but for some folks it could mean the difference between qualifying for a Chapter 7 Bankruptcy and not qualifying for a Chapter 7 Bankruptcy. That is why it is important to know where you stand with the Means Test and which type of bankruptcy you qualify for. A Bankruptcy Attorney will help you perform the necessary analysis so that you can make an informed decision about when and if to file for bankruptcy. For more information on the Department of Justice Means Testing click here to go to Department of Justice website.

Are you considering filing for bankruptcy?

If you are considering filing for bankruptcy, it is important that you speak with a bankruptcy attorney who can help you evaluate your potential homestead exemption and issues that may impact your exemption status in bankruptcy. Every bankruptcy case is different, so what has worked for one debtor may not necessarily work for another. If you are in Miami-Dade County or Broward County, Florida, please feel free to contact us to set up a FREE consultation to discuss your specific situation.

This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the current state of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.

Bankruptcy Question – Do Both Spouses Have to File for Bankruptcy?

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Do Both Spouses Have to File for Bankruptcy?

This question comes up a lot when I meet with married couples who are going through issues with debts and considering bankruptcy to resolve those issues. The quick answer is maybe. It will depend on whether or not each spouse has debts in common. For example if you are both on the mortgage and note for your house and you are behind and you want to keep your house, it is best for both spouses to file together. There may be some strategic reasons for not filing together but that is something that needs to be analyzed and decided on a case by case basis. There are many scenarios where only one spouse needs to file for bankruptcy and the other does not. However, it is important to remember for the purposes of the means test, that the non-filing spouse’s income and expenses will be taken into consideration for qualifying for bankruptcy.

The question of whether to file a joint bankruptcy or to file an individual bankruptcy can be a complex one that requires some detailed analysis by you and your bankruptcy attorney to make sure that you make the best decision for your specific situation. It is important that when you meet with any bankruptcy attorney that you take the time before the meeting to gather any documentation you have on your debts, credit card statements, mortgage documents, your credit report, etc. so that you know exactly what debts you have, whose name they are in. This will help you to ask the right questions during your consultation, so as to limit surprises once you start the bankruptcy process. Remember Bankruptcy is a team effort between you and your bankruptcy attorney.

 

Are you considering filing for bankruptcy?

If you are considering filing for bankruptcy, it is important that you speak with a bankruptcy attorney who can help you evaluate your potential homestead exemption and issues that may impact your exemption status in bankruptcy. Every bankruptcy case is different, so what has worked for one debtor may not necessarily work for another. If you are in Miami-Dade County or Broward County, Florida, please feel free to contact us to set up a FREE consultation to discuss your specific situation.

This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the current state of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.