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Today is the day that the Affordable Care Act (“Obamacare”) is one step closer to becoming a reality.  The Health Insurance Exchanges, which are mandated by Obamacare will be going online today.  The Health Insurance Exchanges help uninsured consumers gain access to health insurance.  Like it or not, Obamacare hopes to allow access to affordable healthcare for consumers who can not afford traditional health insurance.

What does this mean to the bankruptcy industry?  Well, it is a long known fact that one of the top reasons consumers fall into bankruptcy is because of medical bills. In fact, the House of Representatives Subcommittee on Commercial and Administrative Law stated that more than 50% of all bankruptcy filers stated that medical bills are a substantial part of their debt.  In addition, a study conducted by Nerdwallet states that over 56 million Americans under the age of 65 will have trouble paying medical bills.

It would seem, in theory that these statistics would call for a decline in bankruptcies.  In reality, who knows, but hopefully it’s a step in the right direction.


-JT Singh

 
 
Last year alone, nearly 1.2 million people filed bankruptcy. This figure is predicted to stay steady because the economy continues to struggle. The reason for such a high number is simply the stresses of daily living. In actuality, job loss, reduction in income, and unforeseen medical expenses are the most common reasons for bankruptcy filings, not reckless spending (as most people believe). If you have had to liquidate assets (Chapter 7 bankruptcy) or reorganize debt (Chapter 13 bankruptcy), you’ll be questioning whether or not you'll ever be able to recover financially. These tips can help get you back on the right track.

1.         ADDRESS THE REASON FOR THE BANKRUPTCY. Everybody who files for bankruptcy must undergo credit counseling and complete a debtor education program. These financial sessions will help you learn to develop a budget, manage cash flow, and use credit with wisdom. Use this information to deal with the problem that landed you in bankruptcy court in the first place. As an example, an emergency savings fund will help you weather sudden monetary hardships like a job loss or medical expenses. If you emptied your emergency fund before filing for bankruptcy, or you never had one, now could be the time to start saving. The goal is to have enough put aside to handle basic living expenses (rent/mortgage, car payment, utilities, groceries, etc.) for a minimum of 6 months. You should set up automatic transfers to your emergency fund, even if its merely $50 per week.

2.         MAKE A CREDIT PROFILE. Having a history of financial troubles will make it tougher to get credit. However, it's not impossible. You may qualify for secured credit cards. These cards operate a lot of like debit cards therefore you need to deposit cash into an account to use as collateral for the credit card. In order for the card to assist your credit profile, however, the credit bureaus should record your use. Bear in mind that not all secured cards report payment histories to credit bureaus. Make sure the card you choose does.

3.         PAY ON-TIME. Bill-paying habits have a substantial impact on your credit profile. It's vital to make on-time payments for rent, utilities, automobile loans and alternative expenses even during bankruptcy, regardless of which sort of filing you create. Customers who file for debt reorganization through Chapter 13 bankruptcy ought to create regular payments to repay debt and strictly follow the plan that the court has ordered. These plans can take up to 5 years to complete.

4.         CHECK YOUR CREDIT REPORTS. It should take a few months once a bankruptcy is finalized for changes to show up on your credit report. Mark your calendar so you keep in mind to request your credit report. Check to make sure debts have been discharged and accounts have been properly closed. Law firms, such as the Law Offices of Manny Singh (www.mannysingh.com), can assist in helping to remove any discharged debts that are improperly showing up on your credit report. You'll get one free report each year from each of the main credit-reporting bureaus (Experian, TransUnion and Equifax). You can request your reports at www.annualcreditreport.com.

5.         SET YOURSELF UP FOR FUTURE LOANS. You'll be eligible for an FHA-insured loan as early as 2 years after filing bankruptcy. If you're interested about getting a home, begin saving for a down payment now. Also, you'll be eligible for a personal loan sooner, although the rates could be high. 

6.      BEWARE OF CREDIT-REPAIR SCAMS. It's not uncommon for companies to approach recent bankruptcy filers, promising to assist fix their credit score for a fee. Many times, these companies either practice unethically or illegally, especially if they ask for fees in advance.  They could be in violation of the Credit Repairs Organization Act (http://www.ftc.gov/os/statutes/croa/croa.shtm). Remember, if something sounds too good to be true, it is. Focus on paying bills on time and work toward using credit responsibly. Report suspicious credit repair agencies to your state’s attorney general’s office.  There are law firms, such as the Law Offices of Manny Singh (www.mannysingh.com), that do specialize in assisting to properly and legally remove improper credit report entries.

A bankruptcy filing will stay on your credit report for up to ten years. Creditors will gauge whether or not you're a risk, by how well you handle your post-bankruptcy finances. It will take years of responsible spending habits to nurse your credit profile back to good health. Don't get discouraged. Instead, keep focused on all of the advantages you'll reap after you regain your financial footing.

-JT Singh
 
 
 
 
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Florida is a Tenancy by the Entirety (T-by-E) state.  T-by-E means that husband and wife own an undivided share in a property with the right of survivorship.  Undivided share, meaning that both husband and wife have the ability to fully occupy the property and do with it what they please (almost as if they are simply one entity owning the whole property). The right of survivorship provides for that the death of one spouse, the other spouse takes sole title and possession of the entire property.

In order to validly create a T-by-E, four prerequisites must be satisfied:
(1) the interest of each tenant must vest (come about) at the same time,
(2) each spouse must attain title of the property through the same legal document,
(3) the right of survivorship must exist, and
(4) a valid marriage must be in place at the time of attaining the property.

The beauty of T-by-E is that a creditor of one single spouse may not attach a claim to a T-by-E property.  In theory, this would be depriving an outside person from enjoying the use of his/her property.  T-by-E can be claimed as an exemption under bankruptcy law as well.

Only four instances can break the T-by-E status on property:
(1) death of a spouse,
(2) divorce,
(3) mutual agreement between husband and wife, or
(4) execution of a claim by a joint creditor.

For more questions on how T-by-E can protect your property under Florida law, contact us at (954) 586-6000 for a free consultation.

JT Singh

 
 
Has the lack of a driver's license created a hardship in your life, whether it be in regards to work or falling behind on other obligations?  Well, if you find yourself in a situation where you can't afford to have your driver's license reinstated, filing for a bankruptcy may be the way to go.  However, I wouldn't recommend this unless you were already thinking about filing in order to resolve some of your financial troubles.

The United States Supreme Court, in 1971, held in Perez v. Campbell that, if the debt related to the financial responsibility, the debt can be discharged in bankruptcy, therefore the license CAN be reinstated. Chapter 13 Debtors (please refer to the earlier post regarding the differences between a Chapter 7 and a Chapter 13) can get their driver’s license reinstated through the bankruptcy court during the life of their bankruptcy plan.  This same principle can be applied to traffic or parking violations, so long as it is not classified as a crime under state law.  

Bankruptcy documentation from the U.S. Bankruptcy Court can even release an uninsured motorist from liability as well as clear the suspension (not accepted in alcohol-related cases, per the U.S. Bankruptcy Code 11 USC 523, item 9).

I grew up around bankruptcy, my father has been a bankruptcy attorney for longer than I have been alive and I have always heard him tell his clients that bankruptcy truly is a global solution, albeit a last resort solution, but nevertheless a global solution.  This helps illustrate how bankruptcy truly can be a global solution.

Therefore, if you are facing a suspended driver's license and need it reinstated, please call our office for a no cost bankruptcy consultation.

Onwards and upwards,
JT Singh, Esq.
 
 
Chapter 7

Basic Operation
Obtain mandatory credit counseling within 180 days before filing bankruptcy petition. File bankruptcy petition with court. Trustee appointed to administer bankruptcy. All non-exempt assets surrendered for liquidation and distribution. Debtor retains only exempt assets. Money from liquidation is split among creditors, according to priority established by the Bankruptcy Code.

Limitations
Debtor must pass the “means test” which determines eligibility for Chapter 7. People with incomes higher than state median income will have difficulty being eligible for Chapter 7. Discharge not available if debtor was discharged in Chapter 7 bankruptcy within past eight years.

Frequency
Can be used effectively only if not used to completion during previous eight years. New law may make it harder to file Chapter 7 for many people.

Effect on Debts
With exceptions noted in text (e.g., student loans, support obligations, taxes), most pre-petition debts are discharged (extinguished) upon conclusion of bankruptcy. Liability to creditors ends with court- entered discharge order.

Effect on Home
In all cases, you must keep up with mortgage payments to preserve your home. If you do, home may be preserved under homestead exemption if there is not substantial non-exempt equity. Marital ownership law may also preserve home. 

Effect on Vehicles
Vehicle might be taken by creditors (unless necessary for work or arrangements are made to pay off lien by redemption or reaffirmation).

Effect on Nonexempt Assets
All non-exempt assets must be surrendered for distribution.

Time to Repay
Not applicable.

Payments
Most forms of debt discharged; however other debts, such as taxes, student loans, and child support, will have to be paid.

Portion of Debt Repaid
Will depend on the value of non-exempt assets surrendered to pay off debts.

Result at the Conclusion of the Bankruptcy
Bankruptcy court enters a discharge order, ending enforceability of all pre-petition debts that can be discharged in bankruptcy.

Requirement for Bankruptcy Proceedings to End
Court must have entered a discharge order.

Effect on Credit
Record of bankruptcy remains on credit record for up to ten years from the date of filing.


Chapter 13

Basic Operation
Obtain mandatory credit counseling within180 days prior to bankruptcy. If a debt management plan is proposed, that should be filed as well. File bankruptcy petition and proposed payment plan with court. Payment plan provides payments over a period of three to five years. As a result of new law, more plans will be for five years. Payments are made from disposable income (i.e., whatever is left over after necessities [food, shelter, etc.] have been allowed for), while debtor retains assets.

Limitations
For debtors owing less that $307,675 in unsecured debt and less than $922,975 in secured debt.

Frequency
Chapter 13 discharge won’t be granted if debtor received discharge in Chapter 7, 11, or 12 four years earlier or more or a previous Chapter 13 discharge two years before.

Effect on Debts
All or a portion of debts paid off over a period of time under a specific plan. With exceptions noted in text (e.g., student loans, support obligations) debts are discharged. Liability to creditors ends when plan is successfully completed and the court enters a discharge order.

Effect on Home
Home will be preserved if plan is successfully completed and if there is not substantial non-exempt equity. If not preserved in this way, home may be preserved under homestead exemption or marital ownership law.
 
Effect on Vehicles
Vehicle will be preserved if plan is successfully completed and appropriate payments made. If not, it might be taken by creditors (unless arrangements are made to pay off lien).

Effect on Nonexempt Assets
No effect if plan is successfully completed. If not, non- exempt assets are sold to pay creditors, as in Chapter 7 bankruptcy.

Time to Repay
Usually three years, sometimes up to five years.

Payments
All “disposable income” is available for payments; that is, whatever remains after necessities (food, shelter, etc.) are taken care of. New law changes Chapter 13 by providing that what is reasonable to pay will be determined in large part by IRS regulations.

Portion of Debt Repaid
  May allow for payment of less than the full amount of debts

Result at the Conclusion of the Bankruptcy
Borrower is no longer liable for most debts if plan is successfully completed and discharge is ordered by court.

Requirement for Bankruptcy Proceedings to End
Borrower must have made all payments in accordance with court-approved plan, after which court enters discharge order.

Effect on Credit
Record of bankruptcy filing may remain on your credit report for up to ten years from the date of filing, although some creditors will report a Chapter 13 bankruptcy for only seven years.. Creditors may prefer to see this form of bankruptcy, since successful completion of plan may pay more debts than will be paid under a Chapter 7 filing.