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Financial issues that can be resolved with filing for bankruptcy

There are so many reasons why people need to file for bankruptcy.  The most common issues are credit card debt, medical bills, mortgage foreclosure, IRS debt and the inability to make car payments.  Bankruptcy in Miami or Ft. Lauderdale can deal with each and every one of these issues.  There are two types of bankruptcy in Miami or Ft. Lauderdale that an individual can file.  A chapter 7 bankruptcy or a Chapter 13 bankruptcy.  A chapter 7 bankruptcy is a liquidation, which means that the court will look at your assets and give you your exemptions, and then take any additional assets which are not exempt, and sell them to pay your creditors.  Most people who file a Chapter 7 bankruptcy in Miami or Ft. Lauderdale does not have assets in excess of their allowed exemptions. Therefore, they will get a discharge in the Chapter 7 bankruptcy in Miami or Ft. Lauderdale without having to pay anything to the Chapter 7 trustee.  They will get a discharge, and can start to rebuild their credit.  A Chapter 13 bankruptcy gives you the chance to keep all of your assets and pay back the assets you want to keep.  If you are behind on your mortgage, a Chapter 13 bankruptcy in Miami or Ft. Lauderdale will allow you to catch up on the amount you are behind.  Even if you are in foreclosure, the filing of bankruptcy in most cases will immediately stop the foreclosure from going forward to the sale.  If you are behind or are about to be behind on your car payments, the filing of a Chapter 13 bankruptcy in Miami or Ft. Lauderdale will prevent repossession.  You will have a chance after filing for Chapter 13 bankruptcy in Miami or Ft. Lauderdale to either pay off your car through a Chapter 13 repayment plan or repay only the value of the car over a period of three to five years.  In a Chapter 13 bankruptcy, the IRS will file a proof of claim explaining what is dischargable and what is not.  There are three types of IRS debt.  Secured IRS debt, which means the IRS has filed a lien and you have assets which are collateral for that lien.  You would have to repay the secured IRS debt back through the Chapter 13 repayment plan with interest which is not at 4%.  Priority IRS debt, which is a debt which must be paid back through the Chapter 13 plan with no interest or penalties.  Any penalties which have accrued would be wiped out.  Finally, there can be unsecured IRS debt.  That is debt which has three requirements.  The first is the tax must be at least three years old.  So, if you are trying to wipe out a 2019 tax liability through bankruptcy in Miami or Ft. Lauderdale, you have to wait three years from the date the return was required to be filed.  Normally, that would be April 16, 2020.  If you filed an extension for that year, you would have to wait until October 16, 2020 for the three years to begin.  The second requirement is that the return must have been filed at least two years prior to the filing of the bankruptcy.  However, if the IRS files a return for you because you did not file your return timely, it is not possible for you to file a return and that tax will never be dischargeable.  The final requirement is that the tax return be assessed more than 240 days prior to the filing of the bankruptcy.  The IRS  debt for 2019 we are using in our example would first be dischargeable on April 16, 2023 or October 16, 2023 if you filed an extension for 2019.  For a determination to be made prior to determining whether your IRS debt is dischargeable prior to filing the bankruptcy, you must obtain a coded transcript from the IRS.  You can reach them by calling 1-800-829-1040.  The IRS will either fax you a copy of this coded transcript or it can be mailed which takes a while.  A coded transcript is a transcript which the IRS shows the dates which they did something on your file.  It would show the date you filed your return.  It would show if you filed an extension.  It would also show the date of the IRS assessment.  Once we have that information, we can make a determination of how much, if anything, you would have to pay in the Chapter 13 bankruptcy in Miami or Ft. Lauderdale.  All of the above is true for a Chapter 7 bankruptcy filing in Miami or Ft. Lauderdale.  However, a lawsuit would have to be filed against the IRS to make the determination that the debt has met all of the factors of dischargeability.  

In a Chapter 13 bankruptcy in Miami or Ft. Lauderdale, you would still have to pay unsecured creditors, like credit cards and medical bills, but the amount you pay will depend on your assets.  In Florida, if you own a homestead, you are allowed exemptions of $1,000.00 of equity in assets.  That includes things like cash on hand, money in bank accounts, security deposits, the value of your clothing, jewelry, furniture, your tax refund not including earned income credit for children (that’s fully exempt), if you can sue someone or if someone has left you an inheritance (This can include if you are entitled to and inheritance within six months after the filing of the bankruptcy).  Your homestead and IRS qualified retirement plans are also fully exempt.  There are more exemptions, but these are the main ones.  If you don’t own a homestead, you get an additional $4,000.00 in exemptions.  Whether you own a homestead or not you also get to exempt $1,000 in equity in a vehicle.  In a Chapter 7 bankruptcy in Miami or Ft. Lauderdale, you would have to turn over the additional assets to the Chapter 7 Trustee.  In a Chapter 13 bankruptcy in Miami or Ft. Lauderdale, you keep the assets, but you would have to pay the Chapter 13 Trustee the same amount the Chapter 7 Trustee would get if you filed a bankruptcy under that chapter.  That is called the Chapter 7 test.  The main purpose of filing a Chapter 13 bankruptcy is to save the assets you want to protect.  You will have between three to five years to make payments to the Chapter 13 bankruptcy Trustee to fix all of your problems.  At the end of the case, you will have no unsecured debt (credit cards or medical bills), you will be current with your mortgage, your car will be paid in full and your prior IRS debt will be discharged.  There are very few downsides to filing for bankruptcy.  The only thing for most people is that their credit may take a hit, but usually, if you are in the position to file for bankruptcy, you can’t get additional credit anyway.  I will tell you how to rebuild your credit after the bankruptcy has been filed.  We try to make this stressful situation as stress free as possible.

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