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Miami Bankruptcy Law Blog

Common bankruptcy myths, debunked

If you are considering filing for bankruptcy in Florida, you may have a lot of questions about how the process works, what types of debts you might be able to eliminate and how it might affect your credit, among related concerns. When it comes to bankruptcy, however, there is a lot of misinformation out there, and learning how to separate fact from fiction can help you decide whether filing is the right choice for you. At Kingcade Garcia McMaken, we have a firm understanding of how bankruptcy works, and we have helped countless clients navigate through the process and regain control over their finances.

A common misconception about filing for bankruptcy, per Time, is that there is a certain stigma associated with doing so, or that by doing so, you are admitting to not being able to effectively manage your finances on your own. If you feel this way, remind yourself that bankruptcy exists for a reason, and that many people from all walks of life rely on it at some point. Furthermore, you may count yourself among the large percentage of people who file because of mounting medical bills, which is something you might have little, if any, control over.

What you need to know about 0-interest credit cards

If you are like many Floridians, you have probably received an offer in the mail for a 0-interest credit card, and you may have found that offer appealing. Before you sign on the dotted line, however, keep in mind that credit card companies are there to make a buck, and they rarely act in a customer's best interest. At the law office of Kingcade Garcia McMaken, we have a firm understanding of how credit card companies operate, and we have assisted many clients who have fallen behind on their credit card payments or otherwise found themselves facing seemingly insurmountable debt.

Essentially, per Nerd Wallet, 0-interest credit cards allow you to make purchases without paying interest on them, but there are several catches. First, the 0-interest period does not last forever. Once it ends, you can expect to have to pay interest on the entire balance you have accrued, so ultimately, the decision of whether getting one is in your best interest (no pun intended) depends on your spending habits.

Chapter 7 advantages for small businesses

Florida small business owners struggling with overwhelming debt may find that a Chapter 7 bankruptcy, also known as a straight bankruptcy, is a good option. This is especially true when personal assets are tied to a business. As Fox Business explains, Chapter 7 is particularly appropriate for sole proprietorships since the sole proprietor and the business are one and the same. However, Chapter 7 also is appropriate for any business if there is no hope that it can be reorganized and its debts paid over time.

Simply put, the Chapter 7 procedure is that a trustee is appointed to sell all of the assets of the business at a liquidation sale. The sale proceeds are used to pay the outstanding business debts. If the sale results in insufficient money to pay all the outstanding debts, those remaining are discharged by the Bankruptcy Court. The business no longer exists and its former owner walks away free and clear of debt.

How can you stop creditors from harassing you?

Florida residents struggling with debt will also commonly find themselves struggling against the harsh and unrelenting harassment of creditors. Unfortunately, the threats that collection agencies make toward you can be endless and frightening, especially since they can easily carry said threats out. Here at Kingcade & Garcia, PA, we want to provide you with all the information possible so that you can stop this harassment in its tracks.

There are a number of different ways to get creditors to leave you alone. However, one of the quickest and most sure-fire ways is to file for either Chapter 13 or Chapter 7 bankruptcy. This immediately results in an automatic stay which prevents collection agencies and creditors from:

  • Taking foreclosure actions
  • Taking collection actions
  • Sending you threatening phone calls, emails, letters, or contacting you in any way

Can a Chapter 7 debtor discharge recent credit card debts?

If you are a Florida resident considering filing bankruptcy as a way to discharge your debts, you likely have substantial credit card debt that is contributing to your problem. Credit card debt usually is discharged in a Chapter 7 bankruptcy. However, Bloomberg recently reported that under Section 523(a)(2)(C)(I) of the Bankruptcy Code, there is a presumption against discharge of any debt you owe to a single credit card company that was used to purchase consumer goods exceeding $675 or if you made these charges within 90 days of filing bankruptcy.

The issue in the case before the Bankruptcy Court for the Northern District of West Virginia was that of a debtor who had gotten a cash advance of nearly $8,000 on one of her bank credit cards about two months before filing for bankruptcy under Chapter 7. The bank argued that this debt could not be wiped out by bankruptcy due to the presumption.

What is debt negotiation?

If you are a Florida resident dealing with overwhelming debt, you may be looking for alternatives to filing for bankruptcy. You have likely received solicitations in the mail to sign up for a debt management plan that guarantees to consolidate your debts, lower your overall monthly payments, preserve your credit rating and provide you with some debt relief. As FindLaw.com warns, however, many advertised debt negotiation programs, credit repair companies and credit counselors actually are scams.

A legitimate debt management organization may be able to help you renegotiate the terms and/or interest rates of the debts you owe to your various creditors and may be able to provide you with other benefits as well. Illegitimate ones, on the other hand, often charge up-front fees, high monthly fees and/or a percentage of the debt savings you supposedly will receive. They also make promises that sound too good to be true and usually are. In addition, they can cause long term harm to your credit rating. At the very least, check out any company that solicits you with your local Better Business Bureau.

Should you use debt settlement companies?

If you are having trouble with debt, you may consider using a debt settlement company in Florida. If you do your homework, though, you will see they can be a pretty dangerous choice. At Kingcade & Garcia PA, we want you to explore your options, but debt settlement companies are almost always a bad idea.

It may be appealing to settle your debt instead of filing for bankruptcy, but it is not usually the best answer simply due to how these debt settlement companies work. They usually will give you some bad advice along with charging you fees that add to your debt. It is not a real money-saving tactic that will get you debt free. In fact, 96 percent of the time, these tactics fail.

What credit card options are available to college students?

It may seem hard to believe, but over the next month, parents with college-aged children will soon be seeing them packing up their rooms, loading their cars and heading back to campus for the start of the fall semester. This means that the weeks ahead will be filled with seemingly innumerable shopping trips and other preparations designed to facilitate both a comfortable existence and, more significantly, academic success.  

To that end, one issue that parents and their college students alike might like to visit prior to their imminent departure is the possibility of securing a credit card. While this might seem like a questionable idea to some, the reality is that a credit card for an 18-22 year old can help cover more than just frivolous expenses, including books, lab fees, membership dues and even emergencies.  

Why missing paperwork may eliminate billions in private student loans

Looking back, one of the more shocking aspects of the not-so-distant subprime mortgage crisis was that billions of dollars in loans were ultimately thrown out by courts in collection actions owing to the fact that lenders simply couldn't provide the necessary documentation.

While you would naturally think something like this would prove to be a historical anomaly, recent reports indicate that it's actually happening all over again. This time, however, it does not relate to mortgage debt, but rather private student loan debt.

Does the Servicemembers' Civil Relief Act extend to bankruptcy proceedings?

As a nation, we are eternally grateful for the bravery shown and the sacrifices made by the men and women serving in our armed forces. While we can never truly repay them for their efforts and their commitment, we nevertheless try our best through the provision of healthcare, education, employment and other benefits.

Indeed, another way in which the nation, or more specifically Congress, has expressed its gratitude to our armed forces personnel is through the passage of the Servicemembers' Civil Relief Act or the SCRA.     

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