MARCH 2017 | LEGAL NEWS & UPDATES
REFLECTIONS ON WOMEN’S HISTORY MONTH
As We Celebrate Women’s History Month, Financial Hardships Still Hamper Women
During Women’s History Month, we honor the important advances and contributions that accomplished women have made to American society. While it’s heartening to celebrate achievements, it’s also important to note that millions of women, particularly mothers in single-parent families, still experience the realities of economic hardship day in and day out. Divorce, medical complications, and lack of child support all contribute to the economic vulnerability and insecurity of women who are otherwise labeled “middle class.” Many must file for bankruptcy.
Senator Elizabeth Warren, writing in the Huffington Post in 2011, stated that people who file for bankruptcy are a fairly representative cross-section of the American middle class…. Women in bankruptcy are more likely than their counterparts to have attended college. And most are employed when they file…. More than half also are homeowners…. But at the time they file for bankruptcy, their incomes tend to hover only slightly above the poverty level, and they are deeply mired in debt. The senator predicted that more than one million women would find themselves in bankruptcy courts that year.
As we pay tribute to America’s heroines, let’s also remember the work society still must do to empower and enrich those women who raise America’s children, teach them in schools, minister to them through churches, heal them in hospitals, and love them every day. Current bankruptcy law protects the rights of women to receive child support and alimony by not discharging those obligations through bankruptcies filed by a divorced spouse. Let’s continue this nation’s work to ensure that women also gain better access to capital, affordable loans, fair credit rates, and ongoing financial protection under the law.
CHAPTER 13 HALTS CREDITOR ACTIONS
AND ESTABLISHES MORE AFFORDABLE REPAYMENT PLANS
Considering bankruptcy? If you are hoping to keep your property and have an income stream that will enable you to pay debts over time, Chapter 13 may be the way to go.
Chapter 13 bankruptcy enables individuals with regular income to repay all or part of their debts through an installment plan over three to five years. This time frame typically allows debtors to hold onto their property while stretching out payments.
Chapter 13 acts like a consolidation loan under which the individual makes payments to a Chapter 13 bankruptcy trustee who then distributes those payments to creditors. Individuals have no direct contact with creditors while under Chapter 13 protection.
When a Chapter 13 bankruptcy petition is filed, the law provides an automatic stay of all or most collection actions against the debtor or his/her property. Creditors are barred from continuing credit collection or starting new actions against the petitioner for debts accrued prior to filing. During the “automatic stay” period, wage garnishments and telephone calls to demand payment are also halted.
How is the repayment time frame determined?
When the debtor’s monthly income is less than the applicable state median, the plan will be for three years; the remainder are normally done over a period of five years. Monthly income is based on a debtor’s current salary or on an average, if the debtor’s income fluctuates.
What types of income factor into the monthly average?
The court counts regular contributions to household expenses from a debtor’s wages, income from non-debtors contributing to a debtor’s maintenance, as well as income from the debtor’s spouse when the petition is a joint petition. All income received is counted with regards to the debtor’s repayment plan in a Chapter 13.
Are any debts discharged under a Chapter 13?
A Chapter 13 trustee reviews your case and determines how much debt you can afford to repay, based on your income. Priority debts, such as taxes, alimony and child support, must be paid in full. Unsecured debts may be discharged in full or in part, depending on your income and expenses. When an unsecured debt is included in the payment plan, the bankruptcy attorney and/or trustee may be able to negotiate the payment to an amount much less than the outstanding balance. Unsecured debts may include credit card debt, medical bills, personal loans, old back taxes, liens and breach-of-contract judgments, stripped liens and cramdowns. (Cramdowns reduce the principal balance of a debt to the value of the property securing the loan. When an asset, such as a car or boat, is less valuable than the amount owed on it, the court may approve a cramdown.)
After a debt is discharged by the courts, the creditor may no longer contact you to collect money previously owed.
As with all legal matters, outcomes are not guaranteed. Each case must be assessed and approved on its own merit. It is important to learn about options available and establish a plan that will work for you. A qualified bankruptcy attorney can answer your questions and assist with filing a bankruptcy petition.
UNDERSTANDING THE CHAPTER 13 BANKRUPTCY PROCESS
What is the Chapter 13 process like?
After a petition is filed with the bankruptcy court serving the area where the debtor has a domicile or residence, the debtor must provide the court with (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executed contracts and unexpired leases; and (4) a statement of financial affairs; (5) copy of the tax return or transcripts for the most recent tax year; as well as (6) tax returns filed during the case (including tax returns for prior years that had not already been filed when the case began).
The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.
Can a Chapter 13 help prevent home foreclosure?
In some cases, Chapter 13 can help prevent foreclosure. When a Chapter 13 petition is filed, foreclosure efforts must stop until a repayment plan is worked out. Often, more affordable payment terms are established to enable the debtor to catch up on mortgage payments. The bank may agree to a mortgage modification and lower the monthly payments to accommodate the court-ordered repayment plan. The debtor still may lose the home in cases where the mortgage company completes the foreclosure sale under state law before the debtor files the petition, or if the debtor does not make timely payments going forward.
Are there other advantages of a Chapter 13?
In addition to protecting a home from foreclosure, Chapter 13 allows individuals to reschedule secured debts (credit cards, auto loans, etc.) and spread them out over the course of the Chapter 13 plan. Chapter 13 also protects third parties who are liable with the debtor on consumer debts, such as credit cards. This provision also may protect individuals who co-signed loans and accounts with the petitioner.
Question of the Month
If I file for a Chapter 13 bankruptcy, does my wife have to file, too?
No. It is not always necessary for both spouses to participate in a bankruptcy action. Individual case situations vary. A husband and wife may file a joint petition, individual petitions, or a petition that does not include assets and accounts held separately by one’s spouse. If your spouse does not want to be included in your bankruptcy petition, consult a qualified bankruptcy attorney who can help you explore your options.
Did You Know?
Bankruptcy doesn’t discriminate. It is gender neutral and used by famous people and regular folks alike to discharge massive amounts of debt. Celebrities from Johnny Depp to Kim Basinger, Marvin Gaye, Toni Braxton, David Cassidy, Isaac Hayes, and talk show host Larry King, are among the many stars who filed for bankruptcy. For more information on celebrity bankruptcies, check out this blog article. The good news is you don’t have to be famous to use the bankruptcy as a tool to get a fresh start.
Bankruptcies in Central Florida
Individuals who file for debt relief have a lot of company, particularly in the state of Florida. The United States Bankruptcy Court for the Middle District of Florida is the third busiest bankruptcy court, nationwide. More than 20,000 Chapter 7 bankruptcies were filed in The Middle District in 2015, along with 9,461 Chapter 13 filings in 2015, according to numbers released by the Middle District. Of those, more than 14,000 cases were filed in Orlando alone. Additional cases were filed under Chapters 11, 12, and 15, for a total of more than 36,000 cases filed by year-end.
About Alec Solomita, Esq.
Mr. Solomita earned his Juris Doctor degree at Barry University School of Law. Earlier, he was awarded a Bachelor of Science degree by University of Central Florida, where he majored in criminal justice. In 2007, Mr. Solomita was admitted to the Florida Bar Association. He was licensed to practice in the United States District Court Middle District of Florida in 2008. A year later, he was admitted to the Connecticut Bar Association. In 2015, Mr. Solomita established Solomita Law; previously, he was an associate in a five-attorney firm in Lake Mary, FL. In addition to his private practice, Mr. Solomita volunteers occasional hours at the Middle District of Florida’s Bankruptcy Pro Se Clinic.
Practicing in Orange, Volusia and Seminole counties as well as The Middle District of Florida’s Bankruptcy Court, Mr. Solomita also addresses debt collection and debt negotiation, Fair Debt Collection Practices Act violations, family law, and landlord/tenant law issues.
Solomita Law is located at 12001 Research Parkway, Suite 236, Orlando, FL 32826. For more information, contact Alec Solomita at 407-545-3625 or Donna Anselmo, public relations director, at 321.622.4138.
Have a question you would like us to answer. Let us know!
We look forward to hearing from you.
The Briefing is an informational newsletter published by Solomita Law, based in Orlando, Florida. The Briefing provides information about legal issues, such as debt relief, bankruptcy, landlord-tenant concerns, immigration, consumer information and more.
The content of this newsletter is provided for informational purposes only and is not intended as legal counsel for any particular situation. If you have legal questions or concerns, please contact a qualified attorney for advice.