Eric Lanigan and Roddy Lanigan of Lanigan and Lanigan P.L. answer Frequently Asked Questions on Bankruptcy in Florida:
Do I Have to Explain My Debt?
No. There is a 341 meeting of creditors in the bankruptcy process. There’s nothing to be worried about in regards to the 341 meeting. The Lanigans have done literally thousands of these meetings and they’re nothing more than a 10-minute question and answer session.
The attorney is there and you’ll be informed in advance about questions and if needed, the attorney can answer all questions. You’re not left alone in this meeting which brings more stress than is necessary. It’s a brief review of issues that are resolved and answered quickly.
Will I Lose My Home?
“I think the biggest bankruptcy law myth that I’ve encountered in my practice is that many times individuals think that they’re going to lose their home, car and everything else,” Roddy Lanigan said.
“For items you want to keep and by law are allowed to keep, you can always enter into what is known as a reaffirmation of debt agreement for secured debt so that you can keep those items.”
Getting Divorced: When to File Bankruptcy?
“Sometimes it works better to file for bankruptcy after a divorce. Usually it’s best to get rid of the debt together, before you file for divorce,” Eric Lanigan said. “The question arises as to whether to file bankruptcy after divorce. This requires amicable behavior at every point with debt resolution as the primary goal so that each party will be in a better financial situation after the divorce.
“Start cooperating and organizing debts now. Clients have to resolve and organize debt issues before filing for divorce or the bankruptcy after by each party will get very messy.”
In a divorce, each involved must carefully divide and accept debts so that it is clear as to which bills will be paid by which person.
- Who is keeping the home?
- Is there a vehicle involved?
- What are the assets?
- How much of the 401(k) if any will be split?
- Who gets what bills?
- Are the bills owed jointly?
- If bills are together, will one person pay the other?
Another issue to resolve before filing bankruptcy is to determine known liens. You know if there is a tax lien, a bank lien, a lawsuit lien against your assets. Don’t keep this information from your bankruptcy attorney because it’s just going to slow things down. It will all come out in the end.
Likewise if you didn’t know of a lien, it will be discovered in the bankruptcy process as creditors are uncovered. Be honest about assets and debts with your spouse to avoid acrimony during bankruptcy.
What Happens to Your Reputation After Bankruptcy?
Will everyone know that I filed bankruptcy? First of all, no one’s going to know unless you tell them—in immediate terms. There is a listing in the local paper, but who’s going to go through that? It is not broadcast and it appears once.
Certainly when you apply for credit bankruptcy will come up. Before applying for credit consider your past challenges with credit cards and debt. Next, be open and honest with the company or bank before applying to find out if there is going to be an automatic denial: there’s no need to have someone run your credit first.
If you’ve eliminated your debts, be cautious before pursuing lines of credit. With money comes spending or the owing to another for work, produce, services, land, livelihood, health and death.
Bankruptcy was created to provide people and businesses a chance to eliminate debt and start over fresh after financial and economic downturn.
Most people want to know whether reputation professional or personal can survive Chapter 7 bankruptcy, Chapter 11 bankruptcy or Chapter 13 bankruptcy and the answer is yes. Most people can successfully save money, use secured credit cards, pay for a vehicle with a co-signer and rebuild credit in approximately two years.
Remember that this is a chance to rebuild and do things over the right way. Don’t get in the same debt situation again. Change habits and actions toward a successful financial future.
How Many People File Bankruptcy?
Florida Bankruptcy Filings by Year*
2015 2014 2013
Chapter 7 32,091 43,027 51,127
Chapter 11 515 636 739
Chapter 13 18,290 22,773 22,243
Totals 50,896 66,436 74,109
*Information from: Epiq Systems Bankruptcy Overview
What Kind of Bankruptcy Should I File?
You don’t really get to choose which type of bankruptcy that you’ll file. Bankruptcy financial guidelines will determine your eligibility to file Chapter 7 if your income is low enough to meet the Florida Means Test. If not, and you earn too much and can’t file Chapter 7, you may have to file Chapter 13 where you repay debt over three to five years on a strict repayment plan.
If you’re a business owner or a high net worth individual, you may be eligible for filing a Chapter 11 bankruptcy.
When you meet with the Lanigans, they will ask questions about your income, about family household income, about your debts, your assets, your business (if you own a business) and then, provide you with the answer to this question.
You’ll have options to consider so that you can decide whether or not bankruptcy will help you. Sometimes, bankruptcy is not the best choice financially. There are alternatives available to you but the key is to find out quickly what choices there are. The longer that you wait, the fewer choices you’ll have.
Can You File a Chapter 7 Bankruptcy?
Your income level and the Florida Means Test actually determine whether you may file a Chapter 7 bankruptcy. If you make too much money, you might not be able to file Chapter 7 bankruptcy. You may have to file a Chapter 13 bankruptcy.
Likewise, you may not be able to file a Chapter 13 bankruptcy if your income is too high. If you have a high net worth, you may have to file a Chapter 11 bankruptcy. Each bankruptcy has its benefits and the Lanigans will explain your options to you in your consultation with them.
Each bankruptcy filed, varies by the individual filing and will not be like your friend’s, or your neighbor’s or your relative’s financial situation. Find out what you should do in a meeting with the Lanigans.
What is Chapter 7 Bankruptcy?
Bankruptcy is an adjustment of debts. A Chapter 7 bankruptcy may be filed by individuals, married couples, corporations and partnerships.
A Chapter 7 bankruptcy is officially explained as the liquidation of one’s assets to pay off creditors. But don’t let this scare you. In a Chapter 7 bankruptcy, some debts are eliminated and there are personal exemptions allowed for each person filing that allow you to keep your home, your income, your 401(k), your car and other assets. Filing bankruptcy provides protection from creditors and you won’t be forced to sell everything to satisfy debts owed to creditors.
In other words, take a deep breath. No one’s pulling up a truck to take your belongings. Bankruptcy is a fresh start that can get rid of some debt and stop creditors from pursuing you in court.
What is Chapter 11 Bankruptcy?
A Chapter 11 bankruptcy is for individuals with a high net worth and for people who own businesses. A Chapter 11 is also for businesses facing creditors who can call in debts that will ruin the company or the individual. A Chapter 11 bankruptcy provides protection for a business that will fail without bankruptcy protection.
In a Chapter 11 bankruptcy—unlike a Chapter 7 bankruptcy and a Chapter 13 bankruptcy–has no limit on the amount of money owed by the debtor.
Only a small percentage of individuals will qualify for a Chapter 11 which is why you’ll often hear of celebrities, athletes, and business owners filing Chapter 11 bankruptcy.
If you have debt and it’s in the high six figures or in the millions, you are likely going to have to file a Chapter 11 bankruptcy.
In a Chapter 11, a creditors’ committee represents most of the unsecured creditors, and negotiates the best possible payment options for them.
If you’re a business owner and need to file bankruptcy, the goal is to restructure the business so that it proves viability to the courts.
A business filing Chapter 11 bankruptcy may continue daily operation under the watchful, guiding eyes of the court which monitors all activity and decides what may be spent, purchased and paid for the sole reason of continuing to generate revenue.
What is Chapter 13 Bankruptcy?
In a Chapter 13 bankruptcy you repay creditors in part or in full through payments made over time. Chapter 13 bankruptcy is designed to allow debtors to keep property and to use part of future income over a period of three to five years to pay creditors A Chapter 13 bankruptcy is filed by someone whose median income and debt don’t meet Chapter 7 guidelines. A Chapter 13 bankruptcy will eliminate some date and will require debtors to repay other debt.
Under a chapter 13 plan, the debtor makes payments based on the type of claim by the creditor. Each creditor’s claim is classified into three types of categories: secured, priority, and unsecured.
What Debts Cannot Be Discharged in Bankruptcy?
There are many debts that cannot be discharged in bankruptcy including:
- Federal Student Loans
- Fraudulent debt from embezzlement charges
- IRS debts
- Child Support
- Some Property Settlements
- Income Taxes
- Sales Tax Liabilities
Will I Have to Tell the Bankruptcy Judge How I Got into Debt?
No, you will not talk to the bankruptcy judge. You don’t go to court. The Lanigans file the paperwork, handle the courts and you continue to work, live and organize your finances. In 90 to 120 days, the bankruptcy will be finalized.
The debt is eventually eliminated and the final bankruptcy decree is either immediate as in a Chapter 7, or when debt is settled in a Chapter 13 over a three to five year period.
What is a 341 Trustee Meeting?
In bankruptcy, you will have what’s called a 341 meeting with the Lanigans and the bankruptcy Trustee who is assigned to your case.
The Lanigans will prepare you for this meeting that may last all of five minutes. The Lanigans will tell you the types of questions the Trustee will ask about your bankruptcy. They’ll know the answers and will be able to answer or explain to you how to answer. It’s very unlikely that you will have any issues to worry about.
The Lanigans protect you from the Trustee whose job it is to find fault or holes in the bankruptcy paperwork, to find assets, to find money to pay creditors.
Only extremely experienced bankruptcy attorneys who regularly handle bankruptcy should represent you. They know the courts, the process, the things that the Trustees will ask and pursue. The Lanigans will handle your bankruptcy professionally, seamlessly.
It is in the Trustee meeting when you will appreciate having the Lanigans as your attorneys to answer questions and defend your financial situation.
For example, if you own a car with a value that exceeds the amount of your personal auto exemption but the vehicle is necessary because you have a special needs child and you need an SUV that’s equipped for wheelchair access, the Lanigans will know how to handle the situation.
Questions and answer are straightforward and the Lanigans will know what to say and do. Every case is very different. When you meet and talk with the Lanigans, you can breath a sigh of relief. You’ll never be without answers to the questions that you’ll have about bankruptcy.
What Kind of Paperwork is Involved in a Bankruptcy?
Bankruptcy cases involve a lot of paperwork because it lists all of your debts and creditors. You should really be thorough because it’s your debt, your account numbers, your creditors. No one else can complete the paperwork and answer questions except for you: it’s your debt. Be careful, be honest, be thorough.
The Lanigans complete, file and handle the paperwork after you turn in your bankruptcy questionnaire. The questionnaire includes all your debts, all your account numbers, all the addresses and phone numbers for your creditors. The more thorough you are the better. You should never forget to include a debt because once the bankruptcy is finalized a debt you forgot cannot be added back in. When the bankruptcy decree is finalized, it’s done. There’s no going back into the case.
How Long Does a Bankruptcy Take?
Bankruptcy takes 90 to 120 days. Keep a list of all your questions so that you can get answers during formal meetings with the Lanigans. Most of your concerns are about bankruptcy issues that will never happen. You may imagine the worst because you’re unfamiliar with what debt can be eliminated and what you can keep. Relax.
Call the office for a formal appointment to discuss bankruptcy with the Lanigans. Do not call with little questions here and there. Ask questions during meetings and realize that most bankruptcies go smoothly. The Lanigans have handled hundreds of bankruptcies and know what to do and how to handle any challenges.