My name is Logan Sliva and I am an attorney with the Sliva Law Firm, LLC in downtown Pensacola, FL. It is a privilege to be able to help shed some light on some of the common misconceptions and myths pertaining to filing for bankruptcy. Today I wanted to take some time to address some of the more common concerns we often hear from prospective clients who come into our office for a free consultation to discuss filing for relief under the bankruptcy code.
Myth #1: I will not be able to keep my house or my car in bankruptcy.
This is totally false. In fact, a Chapter 13 bankruptcy is an effective tool to keep you in your home and many mortgage companies do not want you to know about it. If you are behind on your house payments and meet the requirements to file a Chapter 13 bankruptcy, we can force the mortgage company to let you start making your normal payments again! We simply come up with a plan to pay the arrearage (the portion you are behind at the date of filing) over the life of the plan (typically 36-60 months). The mortgage company has little to no say in the matter, and we can do this even after they have refused to take payments or work with you!
Florida has some of the most generous homestead exemptions in the country. Allowing those who file for bankruptcy relief to keep unlimited equity in their primary homestead under most circumstances.
Likewise, if you are current on your vehicle payments you have nothing to worry about, as most creditors will allow individuals who file bankruptcy to reaffirm their auto loan by signing what is called a "reaffirmation agreement". This agreement allows people to continue to make payments on their vehicle and can even be used as a means of re-establishing good credit after the bankruptcy.
Myth #2: I will not be able to get a mortgage or auto loan after filing for bankruptcy.
False. While bankruptcy does stay on your credit report 7 years for a Chapter 13 and 10 years for a Chapter 7. Most individuals have improved credit as soon as 1-2 years after filing. Most individuals have no problem getting a mortgage loan 2-3 years following the bankruptcy discharge. Individual’s can get an auto loan at a decent interest rate sooner than that in most instances. When you call our office and schedule your free initial consultation, I will discuss the various ways to help re-establish credit after the bankruptcy discharge.
Myth #3: Everyone will know I have filed bankruptcy.
False. While it is true that we must notify your creditors that you have filed so that those debts can be discharged. It is not true that family, friends, and co-workers will find out about your bankruptcy filing (unless you tell them) or unless they are joint on a debt you are including in the bankruptcy. The bankruptcy filing does not get published in the local newspaper or any other publication or social media accounts. You can also be confident that our office will always maintain strict attorney-client confidentiality.
Myth #4: I will lose my personal property and all my possessions if I file bankruptcy.
False. When an individual or married couple files a Chapter 7 bankruptcy they will be entitled to claim personal property exemptions to exempt most of, or all of their personal belongings. Under Florida law money held in a valid retirement account is exempt. So too are life insurance policies in the filing parties’ names. Also exempt is social security income, retirement income, and workers comp claims. As well as a portion of a debtors car equity (although I will stress that typically vehicles that are newer have very little if any equity, because they depreciate as soon as they are driven off the lot, and almost always have an auto loan or lien attached to them). We have already touched on Florida’s generous homestead exemptions, but also in Florida if you do not have a home that you are claiming as exempt, the court rewards you with an additional personal property exemption of up to $4,000.00/person in addition to the $1,000.00/person they already give you. This additional exemption is known as the “wildcard” exemption and can allow married couples filing together to exempt or keep up to $10,000.00 worth of personal property.
Myth #5: I have filed before; I probably cannot file again. Or, wont it look bad if I file again?
Not true. The bankruptcy code says individuals can file once every 8 years for a Chapter 7 and receive a discharge for their debts. You must wait 2 years between filings to be eligible for an additional discharge if both filings were a Chapter 13. You must wait 4 years after a Chapter 7 filing to file a Chapter 13 and receive a discharge, and 6 years after filing a Chapter 13 to file a Chapter 7 and get another discharge. These rules can be confusing, so please reach out if you have any questions pertaining to when you would be eligible to file again. The court cannot discriminate on you for filing again, so long as you wait the statutory length of time between filings. Sometimes a bankruptcy filing does not work out for whatever reason, particularly for a Chapter 13 case, if this is your situation, these timelines may not apply to you. So please feel free to give our office a call to discuss your re-filing options.
Myth #6: I will not be able to discharge my particular debts.
Probably False. Bankruptcy is designed to help a wide range of folks with a wide range of debts. While it is true some debts cannot be wiped out in a bankruptcy, such as student loans, criminal restitution, child support and alimony and debts in the nature of child support or alimony. Most debts can be included, such as credit cards and credit card judgments, auto loan deficiencies and auto loans individuals may just want to get out of, perhaps due to high payments or high interest rates (think of this as a get out of a bad deal free card), utility bills, medical bills, loans, payday loans, collection agency debts, broken lease agreements, even some taxes, and a whole lot more. if you are questioning whether or not your debt can be discharged in a bankruptcy i encourage you to give our office a call.
Myth #7: I am a bad person if I file bankruptcy.
Absolutely False. People often come into our office and tell us that they feel bad about having to file. Often time they have tried hard to pay the debt back, but due to various circumstances out of their control they feel like they are out of options. Often the debt is not their fault, it may be medical bills for an unexpected illness, or an unlucky auto accident where they were deemed at fault. Often a loss of income, loss of job, or even a divorce can lead to getting behind on one’s obligations. These are the exact reasons why the bankruptcy code was enacted, to help people get a fresh start, especially when life unexpectedly happens through little or no fault of their own. We are a judgment free zone at the Sliva Law Firm, we understand your struggles because we see it daily. If you are at the point where your stress level is maxed out due to debts or rude debt collectors, or you are sending everything you have left at the end of the month to creditors and it is barely making a dent, please give us a call to discuss if bankruptcy may be right for you and your family. You do not have to live like this anymore and we can help you get the fresh start you deserve.
I hope this post was informative, obviously there are many topics I could not get to here and I encourage anyone who may have questions to contact us on our website or give our office a call at (850) 438-6603.