A means test must be done to decide if an individual is eligible for Chapter 7 whereby debts will be forgiven, or Chapter 13 whereby debts are paid off monthly for a period of up to five years.
Common events that push individuals to the brink of bankruptcy include the loss of a job, a divorce, a death in the family, a medical emergency, or some type of catastrophic event that diminishes the financial security of a person, or external events, including market down turns that can damage a business/corporation.
The services of bankruptcy attorneys in Florida can be quite helpful during these uncertain economic times in the United States. Bankruptcy is not always a negative occurrence and can save individuals from becoming homeless and losing their financial resources if they are filed correctly in accordance with Federal Bankruptcy laws. Florida bankruptcy lawyers have impressive impacts when they are contacted early on regarding financial struggles that could lead to harassment from bill collectors and other debtors.
Bankruptcy
Bankruptcy proceedings are legal actions involving a person, or business entity that is unable to repay outstanding debts and are managed by federal courts that follow the rules of U.S. Bankruptcy Code. The bankruptcy process begins with the debtor, or a representative of creditors filing a petition with bankruptcy court. All bankruptcy cases in the United States are managed through federal courts and decisions are made by bankruptcy judges who determines debtor eligibility and debt discharges.
Common types of bankruptcy
The common types of bankruptcy actions include Chapter 7, Chapter 11, and Chapter 13. These bankruptcy proceedings may help individuals, but it is wise to contact a bankruptcy attorney to determine if there are other ways to resolve overwhelming debt. The most common advantage to filing a bankruptcy petition is that debt collectors will have to stop harassing debtors with phone calls, letters, and potential lawsuits. This action is an automatic stay, and creditors must cease actions for repossession, wage garnishment, foreclosure, and bank levies.
Means test
A means test must be done to decide if an individual is eligible for Chapter 7 whereby debts will be forgiven, or Chapter 13 whereby debts are paid off monthly for a period of up to five years, if individuals fall under the median income for certain family sizes, and are not abusing the bankruptcy system. If individual income is higher than the state mandated median, a person may have to file a Chapter 13 bankruptcy action, because there is an ability to pay off incurred debt.
Preparation
The steps debtors should take as they prepare for bankruptcy include:
- constructing a master list of all individual debts and assets to assist a debtor and a knowledgeable bankruptcy attorney to make a determination of which debts an individual wants discharged, and what assets should be maintained to protect a person’s future livelihood, such as a house, or vehicle,
- avoiding application for additional lines of credit, or maximized spending on current open cards,
- limiting draws on retirement accounts as safeguarded during settlement discharges and individuals may need that protected funding later, and
- transferring assets close to the time of filing a petition because the court may discern this as an attempt to hide them.
Seek legal counsel
Individuals should consult with The Law Offices of Carol A. Lawson for questions regarding
bankruptcy law to make certain they understand bankruptcy law protections for: 1) homestead; 2) insurances; 3) pensions; and 4) public benefits such as disability.
Sources:
- https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics
- https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics
- https://www.justice.gov/ust/means-testing
- https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
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