People's Law Guide
Marlene A. Posner
Your child wants a computer, wants designer clothing, wants a car, etc. You dismiss these entreaties with, "you don't need it." The truth is you don't have the money for even a down payment on any of those items. Every month we all have basic necessity bills such as mortgage, rent, car payment, car insurance, health insurance, electric, water, cable, food, etc. which we all attempt to pay on a timely basis. However, it has become the norm that there are additional bills to pay monthly in the form of multiple credit card balances and "uncovered" medical bills. Such debts fall into three (3) categories: Secured Creditors (the creditor has the right to take back the actual physical item purchased such as the house, the car, the furniture if payment is not made), Priority Creditors (IRS), and Unsecured Creditors. Just making the minimum payments to these creditors results in little or no left over money (disposable income) at the end of every month. When an unexpected situation arises such as a divorce or a down sized job or an illness not fully covered by medical coverage, etc., one's financial situation collapses.
If you are a full-time resident living in the State of Florida for six (6) months prior to filing and you do not have disposable income after the necessity bills have been paid at the end of the month, do not own excess, extra property (real or personal) above what Florida allows its citizens to keep (exemptions), you should seriously consider obtaining a fresh start through a Chapter 7 Bankruptcy Discharge. True, Notice of the Discharge remains on credit reports for ten (10) years and you will be unable to undergo another Chapter 7 Bankruptcy Discharge for six (6) years. However, because most of your creditors will have been discharged (child support and alimony obligations, governmental obligations, most IRS debt, most student loans, fraudulent acts, etc. cannot be discharged), you are, in fact, a better credit risk than you were prior to obtaining the Discharge. Since you are "trapped" into not being able to get another fresh start via Chapter 7 for six (6) years, prospective creditors are actually looking to issue credit to Chapter 7 debtors!
What can a creditor do to you if you don't seek the protection of the Bankruptcy Court? A creditor has the right to "contact" you when your payments are late or non-existent. When you file a Chapter 7, an Automatic Stay ("reprieve") is triggered to all creditors. Thereafter, they may forward your file to a collection agency (they work on a contingency fee basis) or to an attorney to take you to Court. Once a Judgment is obtained against you, it will be for more than the original money owed, as it will include attorney's fees, arrearage interest and filing fees. This Judgment can be filed in the State of Florida for seven (7) years and can remain on your credit record for twenty-one (21) years. The creditor can periodically conduct asset checks to determine if you own any seizeable property to meet the Judgment (checking, savings account in your name only, vehicle titled in your name only, real property interest that is not your Florida Homestead, etc.).
Seeking a Chapter 7 Discharge should be a last resort; however, obtaining a fresh start and being able to keep the assets/exemptions allowed you by Florida law can positively affect not only your financial situation but your family's peace of mind.
Marlene A. Posner is an Attorney who has been practicing since 1988. She is a participating law firm of Hyatt Legal Services and a member of Broward County Bar Lawyer Referral Service. Her office handles Family law, Bankruptcy, Simple Wills. She can be reached at (954) 749-8400, e-mail: firstname.lastname@example.org or her website at www.lawyers.com/marleneposnerfalken/