Bankruptcy Attorney Stuart Florida
Are you unemployed with no hot prospects for employment and still paying your credit card debt? Are you completely upside down on your home value vs. your mortgage balance? Have you put off medical treatment just so you can pay old creditors? Are you tapping your retirement plan to pay some thankless bank a 24% interest rate on a credit card? We have all been taught to pay our bills and be good citizens.
Listen closely: Its time to look in the mirror and give yourself a hard wake-up slap. Its time to think about your family, your health and your sanity. Its time to say enough is enough. You need to know that by depleting your last dollar, you are not helping yourself. Remember, there is no honor in starvation.You also need to stop kidding yourself. A lot of people tell me that they want to stay in “their” house, and that they do not want to rent. That house that you own, that you paid $450,000 for a few years ago is worth $250,000 today, and you owe $350,000 to the bank. Do you know what that means? It means that you are ALREADY renting. You have zero equity. When do you think the house will be worth $450,000 again?
When Florida experienced a real estate crash in 1929, it took until 1960 for real estate prices to return to the 1929 level. Do you want to wait until 2040 for your house to be worth $450,000 again?The biggest mistake I see people making on a daily basis, and the thing that makes me absolutely crazy, is watching them take money out of a 401(k) or an IRA or other retirement account, and give it to a TARP-fueled bank to pay consumer debt. That is truly financial suicide.
IRAs and 401(k) plans are protected assets that can never be taken away from you by creditors, bankruptcy trustees or anyone else. Why just hand them over when they could be used to help you start your new financial life?
If you have been a Florida resident for at least two years, and you are one of the few people who actually has equity in their principal residence and are current with your mortgage payments, you can keep your home in a Chapter 7 filing. You can protect up to $125,000 in equity if you have lived there for less than 40 months, and can protect any amount if you have lived there more than 40 months. Maybe if you could discharge all of your credit card bills and your medical bills you would be able to keep paying your mortgage without tapping your retirement fund.
If you are not too far behind in your payments on your home, have some equity built up and want desperately to keep it, you can catch up your payments through a Chapter 13 plan of reorganization, which takes 36 to 60 months. In a Chapter 13 plan, you may also have a second mortgage lien removed from the property and declared unsecured debt in the right circumstances. For example, if your property is worth $250,000, and you have a $275,000 first mortgage and a $50,000 second mortgage, the second mortgage is effectively already unsecured. The bankruptcy court has the power to remove the lien on the property, and put the lender’s debt in the pile with the other unsecured debt, such as credit cards and medical bills.
Bankruptcy is a method of saving yourself while you still have some assets. In Florida, if you are not going to keep your home, you are entitled to not only keep your retirement plan, but also $5,000 of personal property and $1,000 equity in a vehicle. For a husband and wife filing together, that means $10,000 in personal property and $2,000 in vehicle equity. Some of the $10,000 can be used toward protecting the value of a car if your equity in the car is more than $1,000. In today’s world, if your car is pretty new, its is probably not worth what you owe on it, so you have no equity and if you can keep making the payments, you can usually keep the car.
The best thing I can tell you is don’t wait too long. Don’t use all of your protected assets to try to keep current. Draw the line at protected assets, and make believe that when you reach that point, you can’t go any further, like the money isn’t even there.
In short, stop beating yourself up and start rebuilding your financial life by getting rid of the burdens that can’t be overcome. Remember, it’s your right as an American. The banks got their bail out, now its time for yours.