Greetings!
We believe that everyone deserves a fresh start. There are legal solutions available that can help you achieve that fresh start. Through this monthly newsletter, it is our goal to offer you information, as well as solutions, garnered over 35 years of combined legal experience practicing bankruptcy law. We understand the seriousness of choosing to file bankruptcy, and we want to give you power through knowledge to help you make that decision. Please contact us for a no-cost consultation.
Sincerely,
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Trying to Determine Which Type of Bankruptcy is Best for You?
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If you are planning to file for personal bankruptcy protection, you will most likely be choosing between a Chapter 7 and a Chapter 13 case.
A Chapter 7 bankruptcy, which is known as a liquidation bankruptcy, is typically filed by consumers who do not have a large amount of non-exempt personal property, and whose monthly expenses exceed their monthly income. Although the Chapter 7 Trustee has the ability to sell or liquidate a Chapter 7 debtor's non-exempt assets in order to at least partially repay creditors, liquidation doesn't actually happen very often. Most people who file a Chapter 7 bankruptcy keep most, if not all, of their assets.
A Chapter 13 bankruptcy, which is known as a reorganization bankruptcy, is typically filed either by consumers who have a large amount of non-exempt personal property, or consumers who own real properties that are worth less than the value of the mortgages encumbering them (so they can attempt to lien strip the mortgages), and who, despite having disposable income each month (income exceeds expenses), can't keep up with their scheduled debt payments.
While Chapter 13 offers its own unique advantages, Chapter 7 has several significant benefits. Examples include:
- Quick process. The time to complete a Chapter 7 is less than a Chapter 13 case. Most Chapter 7 filings last about 3 months, while a Chapter 13 lasts either 3 or 5 years. In a Chapter 7, the discharge order can be entered in as few as 100 days after filing, whereas in a Chapter 13 it is not entered until the plan payments have been completed. This means that a Chapter 7 filer can reestablish his/her credit much sooner than a Chapter 13 filer.
- Future income belongs to you. A debtor must make full financial disclosure, including all income. However, the Chapter 7 Trustee is usually only concerned with a debtor's income for the 6 months preceding the filing of the bankruptcy petition. As a result, a Chapter 7 debtor's future income is typically not considered part of the bankruptcy estate.
- Repayment possibly not required. In a Chapter 7 bankruptcy, a debtor may be able to eliminate unsecured debt without any requirement of repayment. In a Chapter 13 case, the debtor is required to repay a certain percentage of the amount owed to unsecured creditors.
- Lower legal fees. Attorney's fees are typically lower in a Chapter 7 bankruptcy than in a Chapter 13 bankruptcy.
- No debt limitations. Unlike Chapter 13, Chapter 7 does not impose a limit on the amount of debt a filer may have. A filer is ineligible for a Chapter 13 if he/she has more than $383,175.00 of unsecured debt or more than $1,149,525.00 of secured debt.
- No means test if the majority of debts are non-consumer debts. While many over-median income consumers who do not have a lot of secured debt won't be able to pass the means test to qualify to file a Chapter 7 bankruptcy, debtors who have more non-consumer debt (i.e., personal guarantees of business debt or mortgage debt on investment real property, etc.) than consumer debt do not have to pass the means test to file a Chapter 7 bankruptcy. Thus, many consumers who earn a great deal of money, and whose monthly income exceeds their monthly expenses, can still file a Chapter 7 bankruptcy, as long as the majority of their debts are non-consumer debts. However, these debtors must be aware that, based on a recent Eleventh Circuit opinion, the bankruptcy court has the power to involuntarily dismiss a Chapter 7 case based on pre-petition bad faith (a fact-intensive judgment that is subject to the bankruptcy court's discretion under the circumstances of each case).
There are many other advantages to filing a Chapter 7 case. It is important that you consult with a skilled bankruptcy attorney at Leiderman Shelomith, P.A., to determine if it is the best debt relief option for you.
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Learn More About Jonathan Leiderman:
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A picture of Jonathan who was in San Diego attending the National Association of Consumer Bankruptcy Attorneys' 2013 Annual Convention.
 Jonathan is extremely active in his community, and he believes in taking time out of his busy schedule to help others. Among other activities, he volunteers as a Big Brother with Big Brothers Big Sisters of Broward County. On October 24, 2009, Jonathan was matched with a 9 year old boy who is an only child and had recently lost his father to cancer. The 2 recently celebrated the 4 year anniversary of the day they were matched. Jonathan has watched his Little Brother play sports, and has supported him by attending various school and religious functions. Together, they have gone bowling, played tennis, gone to museums, and seen many movies. Jonathan knows that he has made a tremendous difference in his Little Brother's life, and that his Little Brother has made one in his life as well. Jonathan would like to offer a legal tip of the month: Always be completely honest with the attorney you are meeting with. What is discussed at an initial bankruptcy consultation is protected by the attorney/client privilege. An attorney cannot give proper advice to a potential client unless the potential client is completely honest. It is better to discuss and deal with all potential issues at the consultation stage, as opposed to after a case is filed, when it may be too late to do anything about it. |
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Do You Think You Make Too Much Money to File for Bankruptcy?
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A husband and wife came to see us for an initial bankruptcy consultation. They didn't own any real property. They rented a house in Miami-Dade County. They were both employed at high-paying jobs, and collectively earned about $250,000.00 per year. Their monthly income far exceeded their monthly expenses. Their only secured debt was the $34,000.00 they owed on their financed vehicle. However, they had about $1.3 million of unsecured debt, the vast majority of which was non-consumer debt (business credit card purchases, final judgments resulting from the personal guarantees of business debts, and a home equity line of credit that was used to finance business operations) (the real property that had the mortgage against it had been short-sold). The couple's personal property was worth $66,885.58 - $26,363.59 of which was exempt from creditors, and $40,521.99 of which was not exempt from creditors.
The couple wanted to file a Chapter 7 bankruptcy. Normally, given the high amount of income and lack of secured debt, they would not pass the Chapter 7 means test, and thus would not be able to file a Chapter 7 bankruptcy. However, since the majority of their debts were non-consumer debts, they did not need to pass the means test to file a Chapter 7 bankruptcy. Since they had access to retirement accounts that would enable them to re-purchase their interest in their non-exempt personal property, they decided to proceed with filing a Chapter 7 bankruptcy.
Once the case was filed, the Chapter 7 trustee identified some transfers that the clients had made in the 4 years before the bankruptcy petition was filed that potentially could have been avoided. In order to keep all of their non-exempt property, and to avoid the cost and uncertainty of litigating the avoidable transfer issue, our clients reached a settlement with the Chapter 7 trustee, and agreed to pay $50,000.00 in monthly payments over an 18 month period of time.
Our clients treated the bankruptcy as a business decision. They decided that it was worth paying $50,000.00 over 18 months in exchange for keeping all of their personal property and discharging $1.3 million of debt. It was a great result.
If you, or someone you know, is in a similar situation to these clients, but is hesitant to meet with a bankruptcy attorney because of the mistaken belief that people who make too much money can't file bankruptcy, please contact our office for a no-cost consultation.
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About Leiderman Shelomith, P.A.
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Leiderman Shelomith, P.A. was founded by Jonathan Leiderman and Zach Shelomith in 2003. The firm quickly built an excellent reputation across South Florida as a boutique bankruptcy law firm, handling both personal and corporate bankruptcy matters, including Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, as well as state court Assignments for the Benefit of Creditors. Ashley Prager Popowitz joined the firm as an associate attorney in 2009.
The firm's attorneys have been recognized as a South Florida Legal Guide Up and Comer, as a Super Lawyer Rising Star for the State of Florida, and as a Florida Legal Elite Up and Comer. Our attorneys are members of the National Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute and the Bankruptcy Bar Association for the Southern District of Florida, among other organizations. The firm's attorneys are also frequent lecturers at seminars and community programs, speaking about bankruptcy law to attorneys and the general public.
The firm, Mr. Leiderman, and Mr. Shelomith, are AV® Preeminent Rated Attorney's, awarded by LexisNexis® Martindale-Hubbell®, for having obtained the highest possible peer-review rating for their ethical standards and legal ability.
The firm represents debtors, creditors and bankruptcy trustees in all aspects of bankruptcy cases, including litigation and appeals, handling both liquidations and reorganizations. Our office is conveniently located in suburban Fort Lauderdale, Florida, and is easily accessible from anywhere in Miami-Dade, Broward and Palm Beach Counties. We handle bankruptcy debtor cases across the Southern District of Florida, particularly in Broward, Miami-Dade, Palm Beach and Monroe Counties, and other bankruptcy cases throughout the entire State of Florida.
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