Frequently Asked Questions (FAQs)
Florida bankruptcy attorney Verna Popo provides answers to some of the questions she encounters most frequently when advising people in Miami-Dade, Broward and Palm Beach counties about their options in bankruptcy or receiving social security disability benefits. We hope the following information provides answers to some of your initial questions. If you have other questions or need help in filing for bankruptcy or applying for social security benefits, please contact the Law Office of Verna Popo for assistance.
What is the “automatic stay?”
When you file for bankruptcy, the court issues an automatic stay, which puts an immediate stop to all attempts by creditors to collect their debts while the bankruptcy is pending. This includes phone calls and visits from bill collectors as well as attempts to foreclose on your house, repossess your car or personal belongings, or garnish your wages. Creditors must apply to the court for relief from the stay in order to resume any collection efforts. You can also refer creditors to your bankruptcy attorney to put an immediate stop to harassing and annoying phone calls.
What is the “means test?”
If your household income is above the median income in Florida, a means test will be used to determine if you are eligible to file for Chapter 7 or how much monthly disposable income you have to commit to a Chapter 13 plan. If your income is below the state median, you may be automatically eligible for Chapter 7 without having to perform the means test.
Which is better – Chapter 7 or Chapter 13?
Generally speaking, Chapter 7 is more attractive to people with high amounts of unsecured debt, such as unpaid credit card bills or medical expenses, while Chapter 13 is preferred by homeowners facing foreclosure who want to save their home or other valuable possessions. There are different rules to qualify for Chapter 7 or Chapter 13, but both types of bankruptcy offer significant protection and debt relief.
Will a bankruptcy wreck my credit?
A bankruptcy will appear on your credit report for seven years if you file Chapter 13 and ten years for Chapter 7. While you may have to pay higher interest initially if you seek a car loan or home mortgage, you are also likely to be flooded with offers of credit after your bankruptcy, because the credit card companies know that you are now free from debt. You can start rebuilding your credit immediately after a bankruptcy, and you may be able to obtain credit and improve your credit rating within months after a bankruptcy.
What kinds of tax debt are dischargeable in bankruptcy?
Federal income tax debt is dischargeable if it relates to a tax return that was filed at least two years ago and whose filing deadline was more than three years ago (including extensions). The tax assessment has to be at least 240 days old, and the tax return may not be fraudulent or involve tax evasion. If the IRS has already recorded a tax lien against your property, the debt may not be dischargeable, but there are steps you can take to have the debt reduced or paid off over time.