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Miami Bankruptcy Law Blog

Understanding credit counseling

Residents in Florida who are experiencing debt challenges may often not know where to turn. Some people immediately think bankruptcy is their only option while others may even be too afraid to seek any type of help at all. While bankruptcy may be the right option for some people, it does not mean that it is the only solution to debt problems. Consumers may find that working with a credit counselor can offer the assistance they need.

As explained by the Consumer Finance Protection Bureau, a credit counselor can help consumers develop and manage a budget, obtain and review their credit scores and make a plan for their repaying debt.

Filing taxes after filing for Chapter 7 bankruptcy

In order to achieve a fresh start after filing for Chapter 7 bankruptcy, it is important for people in Florida to stay current with their financial obligations, during and after their cases. This includes filing their taxes on time and paying any applicable liabilities. Failing to do so could have serious implications on their cases, as well as on their financial futures.

According to the Internal Revenue Service, once their Chapter 7 bankruptcy cases have commenced, people are required to file their tax returns or get an extension before they come due. If they do not, their cases may be dismissed. Consequently, they would resume liability for their debts and any stayed collection efforts could begin again.

Navigating complicated bankruptcy rules

When you are saddled with debt, it may not seem like you have a lot of good options. Here at Kingcade & Garcia, P.A., we recognize that people are often under a great deal of stress by the time they come to our Florida offices looking for bankruptcy advice.

This distress is one of the reasons we attempt to approach every new case with compassion and detail-oriented attention. Part of this initial work often involves us attempting to dispel some common myths about bankruptcy. Here is one especially popular misconception.

Could bankruptcy save a house?

You are not alone if you have some concerns about bankruptcy. Many people in Florida worry about the process before they begin. More often than not, they are unsure of what they might lose.

Bankruptcy is a serious debt relief option that could have some negative sides, depending on your situation. However, it is also a system with the sole purpose of helping you get your life back on track after unmanageable debt. Therefore, you could be able to keep certain essential assets if you file for Chapter 7.

Possible alternatives to filing for bankruptcy

As someone who lives in Florida and has a financial situation that has become too much to handle, you may be working through your options and trying to decide whether filing for bankruptcy might help you get the fresh financial start you need. While, for some people, filing for bankruptcy can be a great first step toward rebuilding your finances, the process is not necessarily for everyone, and it may serve you well to explore other options before making your decision. At Kingcade Garcia McMaken, we are well-versed in both the bankruptcy process and bankruptcy alternatives, and we have helped many people figure out what option might best fit their needs.

According to CreditCards.com, one avenue you may want to consider taking as an alternative to filing for bankruptcy involves trying to negotiate with your creditors in an attempt to make your debt more manageable. You may be able to contact your creditors directly to negotiate a lower payoff amount than you owe, or you may be able to work with a debt settlement agency to have representatives from it advocate on your behalf.

How much of your wages get garnished for unpaid credit card debt?

As one of many Floridians who are currently facing monumental credit card debt, you may have concerns about whether your creditors can garnish your wages at work until they get everything you owe them. Wage garnishment often occurs when you have unpaid credit cards, child support or student loan payments, and it can prove embarrassing and problematic.

So, how does wage garnishment work, and how much of your paycheck can you lose to it? According to Nerdwallet, creditors can typically garnish a predetermined portion of your wages if they sue you in court for unpaid debts and win. Once your creditors receive word they can move forward with garnishing your wages, you can expect the process to begin quickly, and typically within five to 30 days.

Do you qualify for a short sale?

If you are struggling to make your mortgage payments, you may have considered filing for foreclosure. There are, however, several options that may leave your credit in better health. A short sale allows you to sale your home for an amount less than what you owe on your mortgage. This means that the lender will be short the amount between what was owed on the mortgage and the amount the home sold for. Although the lender is losing money on the home, a short sale may be a better option when compared to a foreclosure. In a foreclosure, the lender would lose the entire balance of the mortgage; however, a short sale would allow the lender to keep a portion of the money owed.

Not everyone may qualify for a short sale. There are certain requirements of extenuating circumstances that would allow a lender to consider going this route. Your home could be in default or nearing default status. If you simply cannot make your mortgage payments, the lender may not wait until you are three mortgage payments behind to take action. If you have fallen on an unexpected hardship, such as a job loss, unforeseen medical illness, bankruptcy, divorce or a death in the family, you may be able to file for a short sale. In this situation, the homeowner would write a letter of hardship, which the lender would review and make a final decision based on the situation.

What happens to credit card debt when you divorce?

If you are like many people across Florida who are going through a divorce, you may be looking forward to making a clean break from your former partner and getting a fresh start. Doing so can prove more complicated, however, if the two of you share considerable credit card debt, which is common among many American couples. So, what, exactly, happens to that credit card debt when you and your one-time partner split?

According to Money Management International, unless you and your spouse kept your finances separate and failed to include one another's names on your credit cards, you are probably both responsible for paying off your credit card debt when you divorce. As for who is responsible for what amount, you typically have several options. If possible, you may find it faster and easier to work out an agreement with your former partner to, say, split the debt evenly.

Credit counseling required before filing for bankruptcy

As a Florida resident who is grappling with increasingly overwhelming debt, you may be working through your options and trying to figure out whether filing for bankruptcy may help you get your finances back in order. Before you do so, however, you will need to participate in credit counseling at some point during the 180 days leading up to your filing. At the office of Kingcade Garcia McMaken, we have a firm understanding of the various steps you must take ahead of a bankruptcy filing, and we have helped many clients facing similar circumstances take care of these and similar matters.

According to the Federal Trade Commission, anyone who files for bankruptcy will need to take an approved credit counseling course before filing. The U.S. Department of Justice's U.S. Trustee Program maintains a list of available approved programs, and you will need to furnish proof of completing such a program before you can move forward with your bankruptcy case.

What is an automatic stay?

If you are struggling with debt, you may know what it is like to be contacted by collection agencies at different times of the day or night. Did you know that by filing for bankruptcy, you may be able to put an end to harassing creditor calls? It is referred to as an automatic stay, and it goes into effect when you submit your bankruptcy documents into the court. Under the automatic stay, creditors and collection agencies are no longer able to contact you regarding your debt. They are also unable to garnish your wages, make demanding telephone calls and initiate or continue lawsuits that were filed because of your late or delinquent payments.

Collectors are restricted on what actions they can take to collect past debt under the Fair Debt Collection Practices Act. This legislation prohibits creditors from calling at all hours of the day and night, using profanities, threatening to arrest clients, inflating a debt or threatening to have clients thrown in jail if they do not make payments. In some cases, collectors have told clients that they will have their children or pets taken away if they do not make payment arrangements.

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