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.
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 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.
If you have been living in Florida for over 2 years, the homestead exemption can be used as long as there is less than $189,050 in equity for each person filing. For example, if there are two married people filing a joint bankruptcy, then you can double the exemption amounts so that amount would be less than $371,100 in equity you would be allowed to protect. You can have unlimited equity in your home if you have owned it for 1215 days prior to filing your petition.
This includes another home if you have bought and sold another homestead property within those 1215 days. Typically, this is not an issue since the home equity is usually lower than the allowed statutory amount. If you have moved from another state in the last 2 years, we cannot use the Florida exemptions and would have to perform an analysis on which exemptions apply. Some states allow non-residents to use their exemptions. Other states will require non-residents to use federal exemptions. Most states would not allow you to exempt property in Florida after you have moved from another state.
You must also be residing in your home to be able to claim homestead exemption. The homestead exemption would not protect or apply to an investment property or a property where you are on the deed but are not living in the residence. There are exceptions if you are away from your home temporarily but have full intention of returning. Some examples are being away for medical treatment or being active duty in the military. As long as you intend to return to your home and you are not renting out the property, it can continue to be exempt as your homestead.
A “conversion” is when you change the bankruptcy chapter type after you file your original bankruptcy petition. For example, at the time you file your case, you are over the median threshold to file for a Chapter 7 bankruptcy, so you file a Chapter 13 case. Months or even years later, your income declines and you now meet the income threshold to file a Chapter 7. In that situation, you can convert your Chapter 13 case to a Chapter 7 case. It’s a moving target so if your situation changes, there are solutions to change your situation so you are not stuck staying in a Chapter 13 or being forced to have your case dismissed if you can no longer afford the Chapter 13 payment.
Its uncommon to convert a Chapter 7 case to a Chapter 13 . That would be a rare instance if the trustee believes you did not file your Chapter 7 case in “good faith”. In order words, if the trustee’s office believes you have ability to repay your creditors by not reporting your income or expenses correctly. If you cannot pay the amount of your non-exempt assets in a Chapter 7, then you might need to convert to a Chapter 13 to have extended time to pay the trustee. That is why it is so important to have an attorney prepare your bankruptcy petition to ensure you don’t have an unexpected issue about not qualifying for the Chapter type your filing.
