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Orlando Bankruptcy Law Blog

How are Veterans disability benefits handled on the means test?

Coming to the conclusion that debts have reached an unmanageable peak is devastating for the average Florida resident. Realizing that bankruptcy is necessary when that person is a veteran might be doubly so. Unlike certain benefits, veterans disability benefits are considered income in the means test, which can affect a veteran's ability to seek Chapter 7 bankruptcy protection.

Although both Chapter 7 and Chapter 13 bankruptcy are effective approaches to handling debt, some filers benefit more from the former. Chapter 13 sets individuals on a three to five year repayment plan before remaining unsecured debts are discharged, while Chapter 7 provides more immediate debt relief. However, those seeking this type of financial reboot must pass a means test. This test evaluates a person's average income against the state's average and also takes the filer's amount of debt into consideration.

Rapper Lil' Kim seeks Chapter 13 bankruptcy protection

Regardless of income, assets or career, virtually anyone can find themselves drowning under debt. For some people in Florida this may be difficult to believe, but whether its through the slow accumulation of smaller debts or a massive financial disaster, anyone can find themselves with more debt than they can repay. Popular rapper Lil' Kim recently made this point clear when she filed for Chapter 13 bankruptcy.

Born as Kimberly Jones, Lil' Kim filed for bankruptcy three days after her $2.3 million home was foreclosed on, stating that she was more than $664,400 behind on her mortgage. In her filing she also cited more than $4 million of debt that she cannot repay, which apparently includes the $1.5 million that the IRS claims she owes in back taxes. She also owes approximately $200,000 for unspecified legal fees.

Women with student loans may struggle with debt relief

Some people in Florida accumulate debt through unexpected bills, emergencies or even through careless financial planning. Others, however, find themselves saddled with debt from the pursuit of a better life. Student loans recently reached a new high, and some experts believe that women may be most in need of debt relief.

The Federal Reserve recently released data that showed student loan debt hit $1.5 trillion. This is higher than the nation's current $977 billion in credit card debt and $1.1 trillion in auto loans. Although some students owe significantly more or less, the average public college graduate owes approximately $28,400. In 2001, the average student graduated owing only $22,100. Neither of those figures include student loans taken out for for-profit colleges.

Do I still have to repay my debt in Chapter 13 bankruptcy?

No one in Florida goes into debt with the intention of taking on more than they can handle, but the future is unpredictable. Jobs do not last forever, medical emergencies can drain savings accounts and emergencies can take both a financial and emotional toll on debtors. Chapter 13 bankruptcy provides a path of partial debt repayment that also creates the opportunity for better financial footing.

Unlike Chapter 7 bankruptcy -- which liquidates a person's assets to repay debts -- Chapter 13 repays creditors using a debtor's income. As such, only individuals with sufficient and regular income qualify for this type of bankruptcy. The income requirement is essential to the repayment plan, which is the main feature of Chapter 13 filings.

Can I use a mortgage modification to avoid foreclosure?

A home is more than just a building -- it is a place where Florida families make memories, put up decorations to make their own and lay down roots for the future. Unfortunately, financial changes of any kind can threaten one's ability to keep a home. Mortgage modification may be an option for some homeowners struggling to keep up with their monthly payments.

Whether due to illness, job loss or another unexpected financial hurdle, many people feel a great sense of devastation and shame at the thought of foreclosure. However, it is possible to keep people in their homes while also satisfying the bank. The mortgage modification process gives individuals the ability to modify parts of their contract, leading to more manageable payments. Lenders also benefit from this process, as it makes it more likely that they will recover the money they are owed.

How Chapter 7 bankruptcy influences student loans

It is widely understood that among the assets not eligible for discharge in a bankruptcy filing, student loans are among the most cumbersome. Many Florida students will enter the work force with considerable debt after several years of post-secondary education, but many in dire straits forgo the option of Chapter 7 bankruptcy because they believe they cannot expunge their student loan in this way. That is not entirely true in every case; in some situations, student loan can be discharged through the bankruptcy process. 

The key to this is for students to prove the loan is causing them "undue hardships." This essentially means they are unable to maintain a reasonable standard of living based on their income and expenditures because of the loan payments. While difficult to prove, this is not impossible. The student must meet three criteria: that minimal standard of living is unsustainable, that the financial situation is unlikely to change during the term of the loan, and that good faith effort has been made to repay it. 

Attorney will explain Chapter 13 and Chapter 7 bankruptcy

In Florida as elsewhere, federal bankruptcy law ultimately governs the matter through the Bankruptcy Code contained under Title 11 of the United States Code. Federal law provides for the various remedies. For consumers, the choice is basically between filing a Chapter 7 bankruptcy or a Chapter 13. One area where Florida law applies is in the providing of specified exemptions that allow the bankruptcy filer to keep assets under the stated maximum allowance.

A twist of Florida exemption law is that it provides a homestead exemption whose value is unlimited, making it reasonable to expect that homeowners filing a bankruptcy in Florida will have a reasonable chance of keeping their home. However, the Florida exemptions are somewhat complicated and contain qualifications and exceptions. It is highly recommended that one consult with an experienced consumer bankruptcy attorney prior to making any presumptions about options or strategy. One important preliminary issue to discuss with the bankruptcy attorney is whether to file a Chapter 13 or a Chapter 7.

Tips for paying off credit card debt

Many Florida residents and other consumers around the country frequently use credit cards for purchases. Some use them only for big ticket items so that they may earn points or rewards, while others must use them for everyday or unexpected expenses. Regardless of how they use them, cardholders have now amassed over $1 trillion in credit card debt, according to the latest reports. Experts at an online consumer financial website have offered several ways to reduce that debt.

One recommendation is to view the amount of credit card debt in parts, rather than the whole. If someone looks at the total amount owed, he or she may be overwhelmed. Experts suggest working on repaying the debt in more manageable amounts. Certainly, this does not reduce the total that must be repaid. However, this approach can make the task ahead less daunting.

As interest rates climb, credit card debt may skyrocket

Credit cards are an unavoidable part of life for many in Florida. Whether used to build credit or bridge the gap between paychecks, these tiny rectangles have undoubtedly become part of everyday life. Unfortunately, so is credit card debt, and for some people it could be getting worse.

In March 2018, the interest rate for credit cards reached its highest pinnacle in at 18 years. Averaging out to 15.32 percent, this could leave some consumers with more debt than they are able to repay. This high average interest likely affects struggling consumers the most, as they are more likely to have higher overall interest rates than those who can afford to pay their bills in a timely manner.

4 mistakes to avoid during the bankruptcy process

Filing for bankruptcy may be a scary process for you. It is understandable that all the legal formalities and meetings may be intimidating. Because you may feel somewhat nervous about the bankruptcy process, you may make some mistakes.

While you may not be perfect, it is crucial to be as accurate and careful as possible through every step of the process. Below are some damaging mistakes you should avoid when filing bankruptcy.

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