As a consumer bankruptcy attorney, I am often asked: Can I save any money during my bankruptcy? Well, if you filed a Chapter 7 case, this really isn't an issue. If you filed a Chapter 13 plan of reorganization, you will probably be in the bankruptcy for three to five years. The simple answer is: No, you aren’t supposed to save money; however, that is not realistic. In a chapter 13 bankruptcy, a debtor must pay to the bankruptcy trustee all of his disposable income for 3 to 5 years. Continued reasonable 401K contributions are considered an acceptable expense, but most other forms of saving money is prohibited.
Clients frequently ask, “How am I going to get a fresh start without saving?” True. It is difficult. At the same time, however, a debtor can wipe out $250,000 of debt by simply paying $400 a month for 60 months. The fresh start comes with the ability to force your creditors to accept pennies on the dollar for debts. The fresh start comes at the end of the bankruptcy when a debtor emerges free from the stranglehold of debt.
“What if my car needs or I have an unexpected expense? I need to save to pay for it.” This is another common concern. Bankruptcy law has a mechanism to deal with this common occurrence. In many cases, the bankruptcy payment can be forgiven for a period of time to let a debtor deal with unexpected expenses. The key is to let your attorney know about it as quickly as possible.
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When you file for bankruptcy, a bankruptcy estate is created (11 U.S.C. 541). Individuals are allowed to protect items of personal property, cars and equity in real estate from their creditors. The process is called claiming an exemption or exemption planning. When an item is claimed as exempt, the property is theoretically removed from the bankruptcy estate and is no longer available to pay the claims of creditors.
If you are a Florida resident or have lived here for at least two years prior to the date of filing for bankruptcy protection, you must use the Florida Exemptions to protect your personal property in a Chapter 13 or a Chapter 7.
Even if you are just falling behind on your bills or have lost your job and think you may have some financial troubles, knowing the Florida Exemptions is important. In a nutshell, exempt property is protected from liquidation by a creditor. So, if you have a creditor or creditors coming after you, you know that your property is safe because it is exempt.
Florida's most significant exemption is the Homestead Exemption because it is unlimited. The reason it is significant is because the protection arises in the Florida Constitution. Therefore, the homestead exemption cannot be altered without a constitutional amendment. The exemption extends to real property of 1/2 acre within a municipality and 160 acres outside a municipality. Accordingly, a person can own up to 160 acres outside of a municipality with a house with no mortgage and a creditor cannot touch the place. This exemption was limited by the 2005 Bankruptcy Amendments.
In Bankruptcy, to qualify for the unlimited Florida Homestead Exemption, you must own the residence for 40 months. Or, if you owned your current home for less than 40 months, you must have owned a previous home in Florida for 40 months total. If you have owned a home(s) in Florida for less than 40 months, then you are only allowed to exempt $136,875.00 of equity per person.
Recently Carmen Dellutri was interviewed by Rachelle Grossman for Parr Legal. Parr Legal is a website developed for people to find attorneys and the consumer can watch the attorney before meeting them.
"To date, the firm has had excellent results in the cases it has been handling. John and Shannon have proven to the mortgage companies that they are a team to be reckoned with." said Carmen Dellutri. "We look forward to the future and hope to help all our clients achieve their goals." said John
Carmen Dellutri was recently asked several questions by the News Press as part of their ongoing series Road To Recovery. You will have to wait about 30 seconds to get through the preliminaries but the information provided should be useful to many of you. Or you can sign up for one of our blogs and have our blogs e-mailed to you directly.
