Is Bankruptcy for you?

You may find yourself in a difficult financial position during these uncertain economic times. Perhaps you have a steady job, but you are living paycheck to paycheck. Often two paychecks are needed to pay for the house, two cars, monthly living expenses, and of course, to support the minimum payments due to the many credit cards.

Then, the unexpected happens. Job loss, sickness, or an extended illness that causes you to lose your job. You may be recently divorced, or have had a business failure. Any of these setbacks can interrupt cash flow. Many people are just a paycheck away from Bankruptcy!

Before you know it, you are late on your car or house notes, and the pressure from creditors becomes unbearable. The fear of losing your car or house can be overwhelming. People who never ever thought they would be in this position, are often embarrassed and disappointed in themselves.

Bankruptcy is one way to relieve yourself of the burden of over extension of credit and harassment from creditors and collection agencies. Bankruptcy can help you repay your debts over time, or wipe out most of the debt completely, as the case may be.

However, Bankruptcy is not necessary or advisable for everyone. Sometimes credit counseling through a reputable non-profit agency or negotiating with creditors works. Unfortunately, more often than not, it is so difficult to have all of your creditors agree on lower payments, lower interest rates, or a settlement. As crazy as it sounds, some creditors would rather be paid nothing than accept a partial payment. Sometimes a collector receives full credit from his company on an account when the customer files Bankruptcy and the account is written off.

When creditors won’t work with you, or you are too far gone financially, Bankruptcy may be the best option available.

DON'T BEAT YOURSELF UP

"I'm a terrible person."

"How could I have been so foolish?"

“I should have known he’d never pay me back!”

“What was I thinking?!”

“I had no idea how bad off I was because I just couldn’t face it.”

All of this negative talk is unhelpful. Sure, you made some bad choices, or unexpected things happened, or you were naïve about debt. But, the good thing is that you now realize you have a problem. And more importantly, you are now seeking help. That’s why you’re reading this blog.

Don’t beat yourself up. You aren’t the only person who has ever had financial problems, and you won’t be the last.

The good news is there are different things you can do to change your future. You don’t have to stay living paycheck to paycheck. You can chose to do things differently once you know what your options are.

I love to guide people and help them make positive choices for themselves and their family. Good possibilities make all the difference. And you’ve made the first step towards a better future.

Call our office now so we can help you see a clearer path to a brighter future.

THE THING THAT MATTERS MOST

Recently, my 83 year-old mother went in the hospital for a heart ablation and pacemaker. It was supposed to be a routine surgery where she would just be spending one night in the hospital. I arranged my work schedule to be off the day of the surgery to wait with my 86 year-old father in the hospital. It was a long procedure but we were told she was fine. I had planned to spend the night with her in the hospital, and although I knew I wouldn’t get much sleep, it was only one night. Dad returned in the morning, and I left to drive to a hearing out of town.

By the time I returned back to town that day, Mom had already been discharged from the hospital. Unfortunately, she wasn’t ready to go home. I received a few panicked phone calls from Dad about how Mom didn’t feel well and couldn’t catch her breath. My husband and I went over to visit and bring dinner. As my husband ran into the store for something, I decided to call my cousin, a doctor in Tampa. She’s a psychiatrist and not a heart doctor, but she went through heart problems with her mom (my aunt) for a while until she died two years ago. She said, “Anne-Marie, she could be in heart failure. Take her to the Emergency Room.” When I got to Mom and Dad’s house a few minutes later, I took one look at my parents and could see that we needed to go back to the hospital. When I suggested it, they didn’t disagree as I was afraid they would.

We went to the E.R., waited hours, and found out it was a good thing we came back as tests showed she was in heart failure. She was suffering from CHF, which is fluid in the lungs because the heart wasn’t pumping enough.

Before, during, and after Mom’s heart procedure, my sisters and family constantly checked up and offered to come help. We kept saying, no we’re OK, you don’t need to come. Well, by the third night, I was completely out of energy. I’m just not as young as I once was and I couldn’t survive for long on only a few hours of sleep over three days. I asked my husband to stay the next night with Mom in the hospital and he readily agreed. The fourth day, my sister and brother-in-law from Atlanta came and helped. We thought she would be out of the hospital and it would be good for them to provide support once Mom got home.

What a relief when they arrived. Just to have someone else to share the burden felt like a ton of bricks was lifted off my shoulders. We have a lot of family who stayed in touch by phone or text. My phone kept beeping every few minutes as I was trying to work because I have a lot of clients who depend on me. I had scheduled off what should have been enough time but wasn’t.

When all is said and done, it’s family that matters most. Not things, but people. When the chips are down and you don’t know what else to do, don’t wait as long as I did to call for help. Call in the reinforcements, call in the cavalry. And if you don’t have a bankruptcy lawyer in the family, find a good one that can help you with your financial problems. You’ll be relieved you did.

CAN I KEEP MY TAX REFUND IN CHAPTER 7 BANKRUPTCY?

It depends... If you have filed Chapter 7 Bankruptcy or plan to file Chapter 7, NO, unless one of the following applies: you have Earned Income Credit, you have exemptions available to claim, or if you already got and spent the tax refund before filing Bankruptcy.  

Here's a little more detail.

(1) Earned Income Credit: If your tax refund is for Earned Income Credit, then the Chapter 7 Trustee will not take it.  EIC is designated on the 1040 Tax Return and is usually awarded to low income people with children.

(2) Exemptions: If you have exemptions available to claim all or part of your refund, you can keep the exempt portion.  An "exemption" is a law that says you get to keep certain property and your creditors can't take the property from you. For example, in Florida, we have $1,000 personal property exemption. If you only own $700 worth of property and your tax refund is $200, you could claim it as exempt. Or, if you do not own a home, we have a Wild Card Exemption which is a statute that lets you exempt $4,000 worth of personal property. So, you could shield and keep potentially up to $4,000 of a tax refund, depending on your other assets.

(3) Received & Spent: If you have already received your tax refund this year and spent it before filing your Bankruptcy petition, then a Trustee can't take away from you what you don't have. Just be sure not to spend the refund to repay loans to friends and/or family which is a "no-no" in Bankruptcy court.

You can always pay your attorney's fees with a tax refund!

Bottom line: talk to an attorney about keeping your tax refund before you spend it!

In my next blog post, I'll discuss tax refunds in Chapter 13 Bankruptcies.

CAN I KEEP MY TAX REFUND IN CHAPTER 13 BANKRUPTCY?

If you are filing a Chapter 13 Bankruptcy, usually you cannot keep your tax refund. But It depends.

If you have not yet filed your Chapter 13 Bankruptcy and you have already spent it before filing Bankruptcy, then the Trustee can't take what you don't have. This is how a lot of clients pay attorney's fees the first part of the year.

If you have a necessity, such as medical bills incurred after you file Bankruptcy, or a car or home repair, usually you can keep the tax refund. However, and here is the big catch, we have a new procedure in the Middle District of Florida and now we have to get a court order to keep the tax refund. It used to be that 99% of the time you could ask the Ch. 13 Trustee and she decided. That is no longer the case. We now have to go to the Judge with each request.

So, before you ask to keep the tax refund, check with your attorney about what your "necessity" is. Do you really want to stand before the Judge to explain why you need your $2,000 refund to send your 5 year old to modeling camp this summer?

On the other hand, if that same child had an emergency surgery to remove his appendix and you unexpectedly received hospital bills, of course you should be able to keep the refund to help with these unexpected medical bills.

Bottom line: talk to an attorney about keeping your tax refund before you spend it!

Is there a fee?

Is there a fee for the initial consultation with the Attorney?

Yes.

The consultation fee varies based on the complexity on your situation. For a consultation involving a basic personal Bankruptcy there is a fee of $100.00 for 30 minutes; however, should your situation be more complex, the consultation fee is $250.00. Complex matters include, but are not limited to: involvement in/ownership of a business (whether incorporated, an LLC, self-employment, sole proprietorship, or "side" work); involvement in any lawsuit (including, but not limited to, foreclosures, money due for loans or credit cards, etc.); and/or, ownership of investment/rental properties. In these circumstances you should expect to pay $250.00. Your initial consultation fee will be credited toward the full attorney's fees due in the event you file Bankruptcy with our office within the following six months. Please call our office at (407) 228-1300 to schedule your appointment and obtain a consultation fee quote over the phone which applies to your specific situation.

WHAT NOT TO DO WHEN YOU LOSE A JOB

A recent article in the Orlando Sentinel, "Hyatt takes over Peabody, Lays off 68 staff," reminds us that people are continuing to lose jobs. If you lose your job, are laid off, or have your hours cut at work, there are obvious things you should do such as update your resume, reach out to contacts, and look for a new job. But there are also things you shoud NOT do after you're in this difficult situation.

First and formost, do NOT cash in your 401(k) or other retirement savings. Money in these types of vehicles is protected from your creditors. That means they can't touch it or make you cash it in to pay money you owe to them. Also, this retirement money you have saved up over time is for your retirement and not for your current living expenses. If you spend it now, you can never get back that time you had to save it and let it grow so that it can help with your needs after you retire.

Second, do NOT tap into a Home Equity Line of Credit (HELOC). A HELOC is actually a mortgage lien on your home. If you borrow on the HELOC to pay every day living expenses while you are out of work and you later run out of money, your default on the HELOC second mortgage can cause you to lose your home, even though you stay curent in your mortgage payments on your first mortgage. It's better to borrow with loans that are unsecured so that you don't lose the collateral (in this case, your home) in case you are unable to repay the loan in the long run.

Third, do NOT delay seeking help. Many people are shocked, depressed, angry, even ashamed when they lose a job, even thougth it may be no fault of their own. Reach out for help early and often. Of course, seek comfort from family and friends. Apply for Unemployment Compensation which is now called Reemployment Assistance. Most importantly, contact a professional to help you navigate through these murky waters.

An experienced Bankruptcy Attorney can go over all your financial options and help you plan the best way to handle things in case of long term financial setbacks. Find out what property you can keep and what is at risk. Find out if there are ways to shelter some money legally. Learn about reducing expenses immediately and discerning "needs" versus "wants." Let someone obectively help you figure out how to prioritize your finances when there isn't enough money to go around to satisfy everyone.

Over the last few years I've seen people run out of unemployment benefits, even when the state and federal benefits lasted for nearly two years (99 weeks). No one wants to think they'll be out of work for that long, but it happens sometimes. Also, when people find a new job, it is often at a lower salary or pay rate than what they were used to making.

What you don't want to do is use up all your resources (i.e. spend all your savings and retirement money, sell things you shouldn't have, and max out your credit cards) and then seek professional help. Find out what's what and what you should and should not do before you are out of options.

Finally, do NOT take legal advice from someone who is not a lawyer. Even though your friend or sister-in-law may have filed Bankruptcy in the past or gotten around creditors in some clever way, that doesn't mean they have specialized knowledge to analyze the nuances in your specific situation.

Hopefully, with good legal advice and planning, you can make the best of a bad situation and help to secure your future for yourself and your family.

FORECLOSURES DECREASE ACROSS THE U.S. ...BUT NOT IN ORLANDO

RealtyTrac recently released its U.S. Foreclosure Market Report for February 2014 ( www.realtytrac.com/content/foreclosure-market-report/realtytrac-february-2014-US- ). RealtyTrac, which compiles data from all over the country related to foreclosures, has reported that the most recent foreclosure activity has dropped to the lowest level since December 2006. They define foreclosure filings as default notices which include notices of Lis Pendens (that's when the bank first files the foreclosure law suit), scheduled auctions, and bank repossessions.

Although foreclosures across the country are at an eight year low, Florida has the nation's highest foreclosure activity. Nine of the top ten cities are located in Florida, with Palm Bay-Melbourne-Titusville coming in at number 1 and Orlando at number 6. In Orlando, one in every 370 homes are in foreclosure. That's a lot!

It's easy to understand why people in Brevard county are suffering from such high foreclosure rates with the closing of the space station. And in Orlando, people are still hurting from unemployment, under-employment, and lack of equity in their homes making it impossible to sell when the market is still down and they can't afford their increased mortgage, insurance, and tax payments.

What we are seeing now is that foreclosures which have been pending for a long time (read that pending for years!), are still moving fairly slowly through the court system, although they are moving. However, for foreclosure cases filed in the last six months or so, the banks are really starting to fast track the cases and move them quickly to completion. This is getting back to the way foreclosures used to work before the housing bubble burst and there were thousands and thousands of homes that went into foreclosure at the same time. That really clogged up the system. But now the banks are moving cases at a rapid pace. I think part of that has to do with the Court taking some heat from the Legislature to clear out its dockets or risk losing funding.

When someone is at risk of falling behind in their mortgage payments, the best thing to do is seek the guidance of professionals in the early stages. Find out the best way to get through the problem early on to seek the best outcome in a bad situation.