Sarasota Bankruptcy and Debt Relief

Chapter 7 bankruptcy

Chapter 7 or straight liquidation allows you to get a fresh start, free from most debts in exchange for the sale of property that is not protected by either state or federal law.  The proceeds from this sale are used to pay your creditors.  You can protect many of the things you will need to get this fresh start, which may include a home, a vehicle, certain personal property, and many retirement accounts.

Learn more about Chapter 7 bankruptcy.

Chapter 13 bankruptcy

A Chapter 13 or wage earner bankruptcy is a repayment plan that allows you to keep more of your property, catch up on mortgage payments, past due support obligations or student loans—that Chapter 7 does not allow.  Instead of a sale of your property to pay your creditors, you make monthly payments for a period of three to five years, after which you will be free from most debts and deemed current on long-term obligations, such as a mortgage where you had arrears before your bankruptcy, but wanted to keep your home.  In addition, you may be able to keep more of your secured assets and pay less for them due to the cram down and lien stripping provisions of Chapter 13.

Learn more about Chapter 13 bankruptcy.

Debt settlement and negotiation

If you feel bankruptcy is not for you or if you have a single creditor, debt settlement may be for you.  Debt settlement and negotiation is an effective way to deal with unsecured debt, such as credit card debt, medical bills, deficiencies from repossession, or foreclosure.

If you have a source of funds or regular income over and above your reasonable and necessary living expenses, we may be able to help you get you out from underneath all that debt without the necessity of filing bankruptcy.  It takes hard work, discipline, and getting the right kind of help.

Many consumers, whether due to the economic downturn, job loss, major injury, divorce, or simply overspending with ever increasing interest rates, fees, and late charges, are carrying more and more debt.  Many are hard pressed to even make the minimum payments and they soon find that their balances are increasing (or at least not changing), which causes even more frustration and stress.  In addition, failure to pay credit card and medical debt quickly leads to judgments, because there is no collateral securing these debts.

Debt negotiation and settlement is a completely legal and logical way to get out of debt.  If you file bankruptcy, your creditors may collect nothing on the debt you owe them.  Therefore, they have a strong incentive to work with us to settle it.  And unlike many debt settlement companies, many of whom take your money and disappear without ever having paid your debt, with us, you are dealing with an established and reputable law firm that has done business in the Gulf Coast area for over 25 years.

Continued collection activity can also occur during debt settlement and short sales.  Creditors are not legally stopped from attempting to continue to collect the full amount you owe them should you deviate even slightly from the arrangements you have made with them or should your short sale fall through.

Collection actions may include your creditors getting a judgment against you and exercising their rights to collect it against your property or your deposit accounts, present or future.  If they do get a judgment, it will stand for years.  Bankruptcy offers immediate legal protection from most collection activity—something no other debt relief methods do.

Many people find that they cannot afford to settle their debts or they find that the tax consequences of either option would be prohibitive.  Sometimes these options do not sufficiently resolve financial difficulties over the long-term.  We can review your entire situation and help you determine the best option for you.

Frequently asked questions

Now that the bankruptcy law has changed, I cannot file, but I need to do something.  What can I do?
While there are additional steps that must be taken to file bankruptcy since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, most people who need bankruptcy protection are still eligible and most of those people are still eligible for a straight or Chapter 7 bankruptcy. Repeat filers may have to jump additional hurdles, but even they are not completely prohibited from filing. Keep in mind, though, that there are alternatives to bankruptcy.

I've been told that bankruptcy will damage my credit so that I cannot buy a home or a vehicle or get credit when I need it.  Settling my debt or a short sale is better for my credit.  Is that correct?
No, that is a misconception.  While a bankruptcy will appear on your credit report for up to 10 years, most people who file already have badly damaged credit in spite of great efforts on their part to pay their bills.  They often have many late payments, and may have repossessions, foreclosures, or judgments that, when taken as a whole, damage their credit far worse than a bankruptcy filing.  Debt settlement or short sale may or may not help.  Most people would be surprised to learn that filing bankruptcy in many cases has the effect of cleaning up your credit report since the debts you owed are then discharged.  Getting credit after bankruptcy is not as hard as most people think. There are credit card companies that almost immediately offer new lines of credit, both secured and unsecured, to those who have received their bankruptcy discharge.  You can rebuild your credit after your bankruptcy discharge.  If you have sufficient income to make the payments and meet your lenders’ requirements, it is also possible to buy a home with a conventional mortgage after approximately four years and to get a vehicle loan even before that.  People can and do rebuild their credit after bankruptcy, often much more quickly than they believed possible.

Can I settle my debts or do a short sale of my real property and avoid bankruptcy altogether?
Possibly.  You may be able to settle your debts for significantly less than you owe and you may also be able to make payment arrangements.  You could also short sell your real property, but this may not help you avoid bankruptcy.  Debt settlement may require you to have lump sums available to pay to creditors immediately or you may need to have regular income in excess of your reasonable and necessary living expenses so that you can set up a plan of repayment to get you out of debt.  A short sale will require all of those parties who hold liens against your real property to accept less than you owe to allow the sale to go through.  However, many subordinate lien holders will want you to sign a new unsecured note to pay them the amount they are owed in order to agree to the sale, whether you can truly afford to pay or not.  Tax implications are possible when you settle a debt for less than you owe or when you complete a short sale, because the IRS may view any amount forgiven as taxable income.  There are no tax implications for debts discharged in bankruptcy.

Resource links

• Visit our specialty site at www.TooMuchDebtSarasota.com
• U.S. Bankruptcy Court, Middle District of Florida
• Bankruptcy basics (text and video)
• Bankruptcy basics (videos in English, Spanish, and Creole)
• Chapter 13 Trustees—
  • Terry Smith
  • Jon Waage
  • Payments and claims
• U.S. Trustee Program

To get answers to your debt relief or bankruptcy questions, speak with a Riddell Law Group attorney.  Call 941-366-1300 or contact us online.  We help clients in Manatee, Sarasota, and surrounding counties.