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Miami Bankruptcy Law Blog

What to do with debt during a divorce

Florida couples share everything from big-ticket homes and cars to practical every-day items like towels and toothpaste. When things are going well, they may not mind making purchasing choices together and feeling equally responsible for any debt they incur.

When they choose to end their relationship, however, they may not be all that excited to learn that opting to split their possessions also means dividing their debt. 

Bankruptcy reform and venue shopping

If a business owner has to file bankruptcy, he or she would likely prefer to go to court in a venue friendly to the industry and to companies in financial trouble. Florida entrepreneurs have not had to worry too much about this in recent years because Congress has, since 1987, allowed them to file bankruptcy where they first incorporated their businesses. 

That means, even if a company currently only has offices in Florida but originally incorporated in New York, executives could file their case in New York rather than Florida. While this practice has appealed to many corporations, local communities have not been as happy with the arrangement.

Understanding the differences between Chapter 7 and Chapter 13

At Kingcade Garcia McMaken in Florida, we understand that bankruptcy can seem like a confusing undertaking for you. You have at least two types of bankruptcy from which to choose - Chapter 7 and Chapter 13 - and each has its own advantages and disadvantages.

As FindLaw explains, Chapter 7 is the simplest and quickest type of bankruptcy and accounts for almost 71 percent of the bankruptcies filed. Nevertheless, it may or may not be your best choice depending on your circumstances and what you wish to accomplish by filing bankruptcy.

Can you get out of debt without filing bankruptcy?

If you are like most Floridians, you have a substantial amount of debt, a lot of it having to do with credit cards. While you would like to reduce that debt, so far you have been unsuccessful in accomplishing your goal. Your credit card balances seem to rise faster than you can pay them down, and every time you see the amount of interest you pay each month, you feel like just giving up.

Before your financial situation gets so out of control that you must file bankruptcy, CreditSesame.com explains that you have some other options

Use caution when getting subprime credit cards

Many people in Florida and across the country sigh a breath of relief once their bankruptcy is discharged. With a clean slate, they are finally able to rebuild their credit and create a new financial identity. Hopefully, this new financial start is not marred by overwhelming credit card bills and overdue expenses. One common path people take on their way to rebuilding their credit is applying for a credit card, with the intentions of paying off the balance every month. Although this can be a great way to increase one's credit score, people should take extreme caution when getting another credit card after filing for bankruptcy.

Credit cards that are given to people who have credit scores below 600 are referred to as subprime. Since those with lower credit scores show creditors that they have had trouble with debt in the past, the subprime specialist issuers who distribute the subprime credit cards attach higher interest rates and often times, high fees. Some people may have trouble repaying credit card loans, and the interest rates continue to pile on. Subprime credit cards can take up to 70 percent longer to repay. In some cases, these high interest rates and fees can cause people to seep back into financial debt.

Is Chapter 7 bankruptcy right for you?

If you are one of the many Americans that feel buried by extensive credit card expenses, medical bills, mortgages, you may have considered filing for bankruptcy. With several types of bankruptcy available, however, you may wonder what type is right for your particular situation. Chapter 7, otherwise known as liquidation bankruptcy, can be beneficial for people who wish to eliminate their debt and begin again with a clean financial slate. There are some things that you should keep in mind, however, before you file for this type of financial relief.

Before filing for Chapter 7, you should make sure you qualify. You must be able to pass a state means test, which compares your income and family size to the state median level. Once you qualify, you may want to decide whether you wish to keep your property, including your home, vehicles and furniture. Under liquidation bankruptcy, the trustee appointed to the case may repossess some of the property listed under your bankruptcy application. There are ways, however, that you can retain ownership of property, such as your home or car. You may be able to resign these loans with the bank, and in some cases, the financial institution will make arrangements to lower your monthly payments and interest rate.

Stay away from debt settlement scams

Florida residents who find themselves trying to climb out from under a pile of debt may panic and rush into a debt settlement program just to find some relief. The Federal Trade Commission warns the indebted to be very cautious, though, about which programs they seek out. 

In spite of the goodwill of many reputable agencies, some are not so esteemed because they attempt to take advantage of desperate individuals in dire circumstances. These disreputable companies will do anything to make a buck, even if that means scamming people who are just trying to get ahead.

Only the best credit counseling services provide free resources

When bills keep piling up, you may feel overwhelmed and wonder how to survive today when you cannot seem to get past yesterday. Some Florida beachcombers who find themselves under a growing pile of debt can only blame their personal spending habits and uncontrollable use of credit cards.

But this is not you. You have managed a budget since you got money for chores as a five-year-old. Your spouse's unexpected layoff from the job plus the medical bills from last year's surgery have simply proven too much. What can you do?

Have you heard about HARP?

If you are a Florida homeowner facing debts that your income does not cover, you may think that bankruptcy is your only way out. Depending on your exact situation, you may be right. However, if your home is your largest asset and your mortgage payment is one of the biggest you make every month, you should check out HARP as a possible alternative to bankruptcy.

Mortgage Reports explains that the Home Affordable Refinance Program is a federal program established in 2009 to help homeowners such as you. In the past nine years, HARP has allowed over 3.3 million Americans to refinance their homes and reduce their mortgage payments, often by as much as 30 percent.

Florida payday loans may allow borrowers more cash, but at a cost

Payday lenders are a common sight in Florida, with a loan office seemingly at every other corner. Many residents take advantage of these fast, easy ways to get money when they are strapped for cash. However, borrowing from payday lenders might create more problems in the long run, for numerous reasons.

The Tampa Bay Times reports that a bill was approved at the start of the year, which if passed would allow Florida payday lending companies greater freedoms. Currently, residents can borrow up to $500 and are expected to repay the loan within 31 days. The new law would raise potential loans to $1,000 and give borrowers up to 90 days to pay them back. While those in support of the law say that payday loans are a good resource for people who have no other borrowing options, consumer protection groups claim the high interest rates and fees associated with payday loans are predatory and harmful.

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