Frequently Asked Questions
Knowledgeable Bankruptcy Guidance in St. Petersburg and Pinellas County
If you are in a position where you are considering filing for bankruptcy, you likely have questions and concerns. You may be wondering if you are eligible, how it works, what relief it can provide, if you will get to keep your property, and how it might impact your financial future.
At Charles G. Moore PA, we are prepared to answer all of these questions and more. Our attorney has over 30 years of legal experience and has filed thousands of bankruptcy cases. We can assess your unique circumstances, determine if bankruptcy is right for you, and help you understand how the process works. We are determined to secure relief for our Florida clients and are happy to provide the guidance you need to make an informed decision.
Will Filing for Bankruptcy Hurt My Credit?
Many people mistakenly believe that filing for bankruptcy will ruin their credit and that they will be blacklisted from borrowing for many years. Our personal experience tells us this is simply not true: Filing for bankruptcy will inevitably lower your credit score, but the damage will not necessarily be permanent. You should not consider filing for bankruptcy the “end of the road,” because it is actually a new beginning.
In most cases, people seeking bankruptcy relief have already damaged their credit rating or have managed to remain in good standing with their creditors by using one credit card to pay another. If your credit is already in rough shape, it will only get worse as your debts mount. Taking steps to address your financial difficulties can often help you improve your credit in the long run.
Most people can re-establish their credit after bankruptcy by maintaining employment and making prompt payments on accounts they elect to keep, including car payments, mortgage payments, rent, insurance payments, and utility payments. Federal law also prohibits discrimination against people who have filed for bankruptcy.
If you have additional questions about bankruptcy that are not answered here, we encourage you to schedule a free initial consultation by calling (727) 353-0054 or contacting us online.
How Can I Resolve Tax Debt That I Cannot Eliminate?
It is important to understand that you can in some circumstances discharge certain types of tax debt, including income tax debt that is more than 3 years old. Doing so will not eliminate federal tax liens placed on your property.
You may understandably be wondering what you can do if you are weighed down by income tax debt that cannot be immediately discharged. In most cases, you will need to negotiate directly with the Internal Revenue Service (IRS). Depending on your situation, you may be able to secure a hardship extension, an installment agreement, or an Offer in Compromise. A Chapter 13 bankruptcy filing will stop IRS collection actions and allow you to pay non-dischargeable liability over the life of the Plan.
Can Bankruptcy Help Me Eliminate a Second Mortgage?
Yes. You may be able to eliminate a second mortgage through a Chapter 13 bankruptcy if your home is currently worth less than what you owe to the first mortgage holder.
Can Filing for Bankruptcy Save My Car?
Yes. The bankruptcy’s automatic stay will freeze all pending collection actions, including auto repossessions. You may even be able to recover your vehicle if it has only recently been repossessed.
To keep your car, you will need to catch up on missed payments before your bankruptcy case is over. In a Chapter 13 bankruptcy, you will have as many as 5 years to accomplish this. Missed vehicle payments can be paid over the life of your Chapter 13 plan.
Can Filing for Bankruptcy Save My Home?
Yes. Filing for bankruptcy immediately stops foreclosure proceedings thanks to the automatic stay, a court order that halts nearly all collection efforts. However, you must file before your home has been sold.
If you hope to keep your home, Chapter 13 bankruptcy can provide you the time and relief you need to catch up on payments. Your repayment plan must prioritize mortgage arrears over unsecured debts, so you will be able to devote more of your disposable income to bring your mortgage current. You will also usually be able to eliminate unsecured debts once you have made all plan payments, which can give you the additional financial flexibility you need to stay on top of your mortgage in the future.
Will I Lose All of My Assets If I File for Bankruptcy?
No. There is a pervasive myth that you will be left with nothing if you file for bankruptcy. Though Chapter 7 bankruptcy does involve a liquidation process, only non-exempt assets will be sold to compensate creditors. You get to keep any exempt assets, and the state of Florida allows you to protect the equity in your home, a certain amount of equity in your vehicle, most of your personal property, and other essential assets. Strategic use of exemptions can result in your losing little to nothing.
Chapter 13 bankruptcy involves no liquidation process whatsoever. Within certain guidelines, you will be able to keep all of your property. This type of bankruptcy can be a great choice for filers with non-exempt assets they wish to keep.
What Types of Debts Can I Wipe Out through Bankruptcy?
Completing a Chapter 7 or Chapter 13 generally allows filers to discharge nearly all of their unsecured debts without penalty. Unsecured debts are issued based on your creditworthiness and do not have collateral backing.
Bankruptcy can typically eliminate:
- Credit card debt
- Medical debt
- Gambling debt
- Signature loans
- Mortgage deficiencies
- Certain types of tax debt
You cannot discharge all types of debt through bankruptcy. While you may be able to discharge secured debts, which are backed by collateral, you will likely lose secured assets in the process. In other words, while you may theoretically be able to discharge a mortgage, for example, doing so will result in you losing your home. Additionally, you cannot discharge newer income tax debt, student loan debt, child support, or spousal support.
Which Type of Bankruptcy Is Right for Me?
There are two major types of consumer bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 is intended for people with limited income, while Chapter 13 is meant for people with regular income but are unable to meet their current obligations.
To determine your eligibility, you will need to complete the Means Test. Compare your current monthly income to Florida’s average median income for your household size. If your income is less than the state average, you “pass” the Means Test and qualify for Chapter 7 bankruptcy. If your income is greater than the state average, you will likely need to file for Chapter 13 bankruptcy if you have considerable disposable income each month.
We also recognize that bankruptcy is not necessarily right for everyone. It is important to have a full understanding of what property you can expect to keep, what debts can be discharged, and any other potential impacts and consequences that might result from your filing. Our lawyer will thoroughly review your situation and give you straightforward advice.