The Law Offices of Bilu Law have represented individuals and businesses in filing for bankruptcy relief under Chapter 7 (discharge of debt), Chapter 13 (reorganization and discharge of debt) and Chapter 11 (more complex reorganization and discharge of debt). The firm's bankruptcy practice addresses a wide range of financial and legal issues, including mortgage foreclosures, credit cards debt, loan defaults, federal income tax debt, condominium liens, divorce liabilities, real estate taxes, loan guaranties, and business debt.
A substantial portion of Bilu Law’s legal practice is dedicated to providing bankruptcy relief to clients caught in the South Florida real estate crisis, including addressing mortgage foreclosures.
When mortgage payments fall behind, the lender may ultimately take steps to foreclose. Sometimes the best course is to seek temporary relief in the United States Bankruptcy Court. Since the mortgage is a “secured” debt, it cannot be discharged in bankruptcy. The filing of a bankruptcy petition triggers an automatic federal court order temporarily staying (suspending) any pending foreclosure sale. With the additional time provided by the stay, the defaulting borrower can often make arraignments to sell the real property for a much higher price than would be obtained in a foreclosure sale. More importantly, many of the firm's Chapter 13 clients are able avoid a junior mortgage if the value of the real estate has fallen. Some clients are able to obtain a modification of their mortgages while under the protection of the bankruptcy case.
Chapter 7 Bankruptcy - Debt Discharge
Chapter 7 bankruptcy is technically called a liquidation or "straight" bankruptcy, but what the main reason to file for Chapter 7 bankruptcy is to discharge one's unsecured debt (with certain exceptions) while keeping one's "exempt" property. The best known exemptions in Florida are the homestead, a $1,000.00 - $5000.00 of personal property, $1,000.00 of equity in a vehicle, and certain retirement and IRA plans.
Although Chapter 7 bankruptcy is technically called a "liquidation" bankruptcy, most cases do not involve any liquidation of a person's property as one would not file for Chapter 7 if one has significant non-exempt property that one does not want to lose. If one has significant non-exempt property that a Chapter 7 bankruptcy trustee would be able to liquidate for the benefit of your creditors, Chapter 13 is usually more appropriate.
Basic steps in chapter 7 bankruptcy
- First consultation with bankruptcy attorney to discuss financial and legal situation
- Provide documents to to bankruptcy attorney for use in preparation of bankruptcy schedules (Do not need to bring to first consultation)
- credit card and loan statements, other bills
- drivers license
- social security card
- green card
- bank account statements for past 6 months
- vehicle registration
- paycheck stubs or print out for past 7 months
- tax returns for last 3 years
- Set appointment to review and sign bankruptcy schedules
- Filing of bankruptcy case by bankruptcy attorney with Clerk of Bankruptcy Court (filing of case stops most creditor actions against you
- Attend creditors' meeting ("341 meeting") at Federal Building (approx. 4-6 weeks after filing of case), bring original social security card, driver's license, most recent paycheck stub, do not bring portable phone into Federal Building
- Discharge of Debt (approx. 4 months after filing of case), mailed to you by the Clerk of Court
Exceptions from Chapter 7 Discharge Debts not generally dischargeable in chapter 7 bankruptcy include the following:
- Certain taxes and debts incurred to pay certain taxes
- Creditors not listed in the bankruptcy case or not otherwise notified about the case (unless-under some case law-the case is a "no-asset case")
- Cebts for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny
- Cebts to spouse, former spouse, or child for alimony, maintenance, or support and obligations of a similar nature
- Damages for willful and malicious injury to another or another's property
- Certain governmental fines and penalties
- Certain student loans and obligations to repay educational benefits or overpayments
- Certain debts arising from driving while intoxicated
- Debts for money, property, services, or for credit obtained by false pretenses, false representation, or actual fraud (This includes credit card charges, cash advance, etc. made without the intent to repay). The law presumes charges of more than $l,000.00 for "luxury goods" to one creditor within 60 days of the bankruptcy filing or cash advance totaling more than $l,000.00 within 60 days of the bankruptcy filing to be within this non dischargeability rule
- Debts for money, property, services, or for credit obtained by use of a written statement that was materially false concerning your financial condition if the creditor reasonably relied on it that was used with the intent to deceive
- Certain military enlistment bonuses if bankruptcy discharge is less than 5 years after the termination of an enlistment for which an enlistment bonus was paid if the person voluntarily or because of misconduct did not complete the term of enlistment for which the bonus was paid. Other military special pay and accession bonuses are not dischargeable (certain special pay and accession bonuses for pharmacy officers, certain retention bonuses for members of the Armed Forces qualifed in critical military skill, and certain debts related to the Information Security Scholarship Program). PL 106-398, 2000 H.R. 4205.
Chapter 13 Bankruptcy - Reorganization and Debt Discharge
Chapter 13 is a procedure for individuals with a regular source of income to reorganize their debt while under the protection of the Bankruptcy Court. Unlike Chapter 7, it does not involve the potential liquidation of your property by a bankruptcy trustee. Chapter 13 is often used is stop a mortgage foreclosure and propose a plan to catch mortgage payments up-to-date. During the first phase of a Chapter 13 plan (typically the first 4 years), the mortgage is caught up-to-date. During the second phase of the plan (typically another l year), you pay your mortgage payments directly to the mortgage company and continue with monthly payments to the Chapter 13 Trustee in an amount sufficient to pay a dividend to your unsecured creditors. The payments under a Chapter l3 plan are made to the Chapter l3 Trustee.
Chapter 13 is also often by individuals who do not have mortgage problems, but who have credit card, loan, medical bill, etc. problems. In such cases, a Chapter 13 Plan is often proposed with monthly payments over 3 or 5 years sufficient to pay a dividend to unsecured creditors