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Miami Bankruptcy Law Blog

Tips for those struggling with debt

Most Florida beachcombers do not plan to get covered up under a mountain of debt. Instead, the problem starts slowly. One of your credit cards becomes the fallback plan for emergencies, and little by little, a small, unpaid balance becomes a bigger one.

Before long, your first credit card is maxed out, and the bank offers a special transfer line-of-credit just in time to save the day. The only trouble is instead of transferring the balance and cutting up the old card, you keep the old account as the fallback emergency plan, and next thing you know, you are staring at the possibility of Chapter 7 bankruptcy. 

Stop creditor harassment now

At Kingcade Garcia McMaken, we know that plenty of law-abiding Florida residents are the targets of ruthless-- and sometimes illegal-- harangues on the part of people to whom they owe money. There are even professional debt collection companies that make a sport and a business of hassling our neighbors.

While we do not begrudge anyone a living, even debt collectors, there are certain times when enough is enough-- and some companies go too far. If you have ever been contacted by debt collection agencies, then you know that the first call is often ominous, followed by communications that occasionally devolve into little more than threats. You might even see creditor harassment begin all over again if you regain debt after a bankruptcy. Overall, we find that the best way to scare these harassers away is to arm yourself with as much knowledge as possible.

Understanding the bankruptcy means test

If you count yourself among the many people across Florida who are struggling with mounting debt, you may be giving some thought to the possibility of filing for bankruptcy in an attempt to make your finances more manageable. While you may know that there are different types of bankruptcy proceedings, among them a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, you may know less about the distinctions between the two types, and whether one type may better suit your needs. At Kingcade Garcia McMaken, we understand the differences between varying types of bankruptcy proceedings, and we have helped many Floridians facing overwhelming debt identify the best course of action for their circumstances.

If you believe a Chapter 7 bankruptcy may be in your best interest, the first step, per Nerdwallet, is determining whether you can qualify for this type of debt relief. To determine eligibility, you must undergo what is known as the bankruptcy means test. At its core, the means test clarifies whether you can pursue a Chapter 7 bankruptcy, or whether you are ineligible for a Chapter 7 filing and should instead consider a Chapter 13 bankruptcy.

Dealing with debt after a divorce

The last thing that Florida residents want is to add more problems to their divorce process. Unfortunately, since the state's divorce courts divide debt in a similar manner to assets, financial stress is sometimes unavoidable. While no debt relief strategy is perfect, there are ways to minimize the impact of post-divorce debt.

Time magazine published a useful list of ways to manage debt after an unfavorable divorce agreement. One important point to consider is that divorce is a period of immense change. That change typically affects every aspect of a person's life, including their lifestyle. While some view this as an opportunity to embrace a fun single life, it is often more financially beneficial to think realistically about creating a new sustainable standard of living. 

Escape debt settlement scams: know when to run

Debt relief scams are not all that uncommon in Florida. A phone call promising to get rid of overwhelming debt may at first seem like an answer to prayer, but last year, the Federal Trade Commission warned against such imposters.

The promises had seemed too good to be true, the FTC says. The callers claimed their agencies could "pay, settle, or get rid of" mountains of debt entirely. Rather than freedom from their indebtedness, however, families discovered they had actually fallen deeper into a black hole of bad credit and defaulted accounts. 

Ways to rebuild your credit after bankruptcy

Florida residents who have completed bankruptcy proceedings may wonder if the hard part is just ahead, namely rebuilding their credit score. To many people, bankruptcy feels like a scarlet letter, a sign of massive financial failure that is hard to ever recover from. However, according to Forbes, there are ways to rebuild a credit score following bankruptcy and to restore one's financial reputation.

First, credit reports should be carefully checked for errors. Mistakes on your record, if not challenged, will be taken as fact by any financial entity that reads them, which can be especially harmful if your expenses are inflated, harming your credit score. The Forbes piece recommends you scan your record yourself or enlist the help of credit counselors to help. However, be on alert for scammers who claim they can bounce your credit score. Be sure that your rights are fully explained to you before you commit to a counseling service.  

Making your taxes a priority

Anywhere you are in the nation, Florida included, tax season always springs up at the same time of year. In the current atmosphere of economic change, you might be tempted to neglect giving your business's taxes the full attention they deserve. That neglect is even more likely if you have accrued other debts you believe should take priority. At Kingcade & Garcia, P.A., we often help clients with tax issues during debt relief and bankruptcy processes, but we are only empowered to do so if our clients have stayed diligent in their past filings.

Federal tax debt is likely one of the most persistent financial liabilities you have acquired, but that does not mean it has to follow you forever. Chapter 7 bankruptcy might provide an opportunity to free yourself of these debts. There is one major caveat, however: Only income tax is eligible for the process. 

Debt relief: what to do when the bills pile up

Florida residents who have run into a streak of bad luck and find medical bills piling up may find themselves tempted to file for bankruptcy. According to USA Today, Americans choose bankruptcy most often as a result of outstanding healthcare expenses. When emergency surgeries or other unexpected crises impact financial well-being, what should families do?

The Federal Trade Commission offers some advice, encouraging individuals to be proactive about money matters. Being up front with creditors is the first step. While some may not be able to negotiate new payment arrangements, others likely can, so it is a good idea to let them know the moment bills begin to feel overwhelming.

What has and has not worked in bankruptcy reform?

It has been a while since bankruptcy laws have been reformed. This has provided enough time to analyze how the changes in the laws have worked out. Before filing for bankruptcy in Florida, you may want to look at what has worked and what has not worked with these new bankruptcy laws.

According to American Banker, the last main bankruptcy reform occurred in 2005. The main goal was to reduce the number of bankruptcies being filed and make it easier for people to find alternative options. The good news is the number of bankruptcies has went down, so the law worked in reaching its overall goal.

What is the bankruptcy counseling requirement?

If you are planning to file bankruptcy in Florida, it is essential to understand the federal bankruptcy laws that you must abide by. One of those rules is that you must complete credit counseling before you file and then after you file.

According to the Federal Trade Commission, the pre-filing counseling must be completed some time within the 180 days prior to filing your bankruptcy with the court. The program needs to include three main points. It should teach you about alternatives to bankruptcy, help you create a personal budget and evaluate your personal finances. It can be done in person, online or over the phone. 

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