The short answer is temporarily but it will not offer you a permanent solution. When you file a Chapter 7 bankruptcy, there is an automatic stay in place where a creditor cannot pursue payment for approximately 90 days.
The creditor can make a motion for relief of the automatic stay as well. If you file the bankruptcy right before the eviction takes place, the automatic stay will stop it. It will not stop it if you have already received the eviction notice.
Your landlord is not obligated to renew your lease. It is highly likely if you are delinquent on your rent that your landlord would not renew your lease. A residential lease is an executory contract vs. a foreclosure which is a secured debt.
In the case of a Chapter 13 bankruptcy if you have a secured debt you are allowed to pay the arrears through the Chapter 13 plan in a sixty month plan to get it current. For executory contracts, such as a residential lease, you must promptly cure the default.
The executory contract or unexpired lease may not be modified due to insolvency or financial condition of the debtor. It is more difficult to obtain a rental after an eviction than with a bankruptcy on your credit history.
Your best bet is to get your lease current or try to find an alternative living arrangement with a family member or friend. If you have charges for defaulting on your lease agreement, those charges can be discharged in a bankruptcy case.
If you are currently in a loan modification, it would not be affected by your bankruptcy proceeding. If you are behind on your mortgage payments, its best to have a plan of action when your case is filed, with the direction you want to take.
One option is to try work something out directly with the lender to see if they will allow you time to get your payments caught up, modify the loan, defer payment temporarily, or put what you owe on the back end of the loan. I will usually caution people to set a deadline because with each passing month of you not paying your mortgage, the amount of late fees, potentially attorney’s fees, and arrears continues to grow.
Unfortunately, the lenders do not always timely respond and if you want too long for a result then you might find yourself unable to keep your home. If the lender isn’t working with you, some other options would be to sell the home if it has equity or surrender the home if it has no equity. With inflation being so high currently, most people living in the Tampa area do have equity in their homes.
If you want to stay in your house, a Chapter 13 will afford you two options. You can pay back the arrears over a 60-month period. This is helpful because instead of coming up with say $15,000 within 3 months, you would have 60 months to get the payment current and spread it over a longer period of time. You also have a guarantee that the lender cannot foreclose on you while you are in an active bankruptcy. Another option would be to attempt a loan modification in a Chapter 13 case.
It is often more helpful to do so within the jurisdiction of the bankruptcy court because the lenders have time deadlines to respond so it ensures a result. We would need to look at your debt to income ratio and if you have done a loan modification the past to determine if you are a good candidate.
There are certain income requirements to file a Chapter 7. That amount typically adjusts for inflation twice per year. That amount varies based on your household size and by state.
In the State of Florida the amounts are as follows:
One person household: $60,429
Two-person household: $74,131
Three-person household: $83,396
Four-person household: $100,476
Five-person household: $110,376
Six-person household: $120,276
Dependents in your household include children under the age of 18. If custody is split, we usually factor in how much time the child spends at your residence and how many children there are. If custody is split 50/50 and there are two children, we would list a two-person household. Children under the age of 24 that are in school full-time can also be considered dependents or any disabled children. If there are elderly parents living in the household, they can be considered in the household size or any other relatives. However, if any person is included in the household size, we need to include their income and expenses as well. Social security does not count towards the income amount.
If you are still over that amount, there is still a potential you could qualify for a chapter 7 if you “pass” the long form of the means test. The means test is required for all those debtors who are over the “median”. The test determines your eligibility for a Chapter 7 or the amount of your plan payment in a Chapter 13. It uses some of your actual expenses and some expenses are determined by the IRS guidelines based on your household size and county where you reside. It can get a bit complicated, so it is good to consult with a bankruptcy attorney to guide you through the process.
There are situations that arise where a potential debtor inherits property. Let’s say for example, a house is inherited that is worth 200,000 and its devised in the will to all four surviving children so each child has a 25% interest/$50,000 interest in the property.
The first issue to determine is who resides on the property. If the debtor is living in the property than it can be exempted as homestead. If another relative is living in the property and the debtor has another residence, then the trustee does have an interest in the debtor’s proportionate share.
Typically, the trustee will try to have the other owners buy out the debtor’s portion. In this case, the trustee would likely try to see if the other three siblings could put in 50K to buy out the debtor. They would have to figure out how to finance or fund that $50,000 on their own to pay the trustee.
If those three siblings did not have the financial ability to provide those funds to the trustee, the trustee would have the option to sell the property and distribute the proceeds. It is usually best to resolve these issues prior to filing your bankruptcy.
If you do receive an inheritance six months after filing your bankruptcy case then you are obligated to notify the trustee. Anything that is inherited (personal property, jewelry, real estate, liquid cash and/or stocks) would have to be turned over to the trustee.
If the inheritance is more than the amount of your unsecured debt, then you would receive the balance of proceeds. The trustee cannot take more than you owe your creditors (less a small trustee fee to administer the case).
There are occasions that arise either before or during bankruptcy cases where a married couple gets divorced and wants to sell their martial home.
If you are residing in the marital home at the time you file for bankruptcy you can declare it as homestead property, and it is exempt from the trustee taking it. If you decide to divorce and sell your marital home prior to filing bankruptcy, then the proceeds from the sale of the home are not exempt.
You would either have to spend those funds on reasonable living expenses prior to filing your bankruptcy case or invest those sale proceeds into another home. If you are getting divorced in the middle of your Chapter 13 case and want to sell your marital home, you will need to file a motion and have a court order permitting the sale and have a determination made on how the sale proceeds will be spent.
You can typically re-invest the money into a new homestead, as long as, that occurs within a year. You would need to open a new bank account that is clearly titled “Homestead proceeds” and not co-mingle that money with other funds in order to protect those funds.
If you plan to move out of the State of Florida, then the home sale proceeds would not be exempt since you are relocating outside of the state. These situations can be tricky and its best to seek the advice of an attorney prior to making any decisions to ensure those funds are protected.