Will bankruptcy help me lower my car’s interest rate? 

Will bankruptcy help me lower my car’s interest rate? 

The short answer to that question is sometimes.  You cannot lower your interest rate in a Chapter 7.

If your vehicle is underwater or has no equity you have the option to surrender the vehicle to the lender and find another vehicle.  There is also another option called redemption which allows you to file a motion to reduce the principal balance.  For example, if you owe the lender $50,000 and your vehicle is worth $35,000 you can reduce the principal balance to $35,000 and refinance with another company.

In a Chapter 13, this is called a “cram down”.  However, you would need to have owned the vehicle over 910 days prior to filing bankruptcy to be eligible for a “cram down”. A Chapter 13 will allow you to lower your vehicle’s interest rate.  This is only a practical solution if you need to file a Chapter 13 for other reasons – like you are paying back mortgage arrears or you’re over the income threshold to file a Chapter 7.

You can also file a motion to value secured property to reduce the interest rate.  The interest rate used is called the “till” rate .  It’s usually 1% higher than the federal prime rate to account for a possible default.  If the federal prime rate is 6.25% then till rate would be a least 7.25%.

There is also a trustee fee of 10% , so unless the federal prime interest rates are very low or you are paying a very exorbitant interest rate, its usually cost prohibitive.

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What types of income are counted in the means test?

What types of income are counted in the means test?

There are certain income qualifications for a Chapter 7 bankruptcy. Social security income, including social security disability does not count as income on the means test (the test on the bankruptcy petition that determines which chapter of bankruptcy you qualify for). Similarly, veteran disability benefits do not count as income. For example, if you are receiving social security or veteran disability benefits you could make an unlimited amount per month and still qualify for a Chapter 7 bankruptcy.

Some people are surprised that pensions for government work such as teachers, police officers, military, or firemen still count as income. Workers’ compensation benefits also count as income. Short-term or long-term disability from a private company that is not social security are considered income. Regular wages or income from self-employment are considered income. Child support and alimony are considered income on the means test. Even if the income is not taxable, it could still qualify as income on the means test.

The issue of whether money in your account at the time of filing is exempt is a totally different issue than whether it counts as income on the means test. For example, workers compensation, child support and alimony are generally exempt even though they are considered as income on the means test Any money you have in your bank account from one of these sources in addition to social security or veteran disability benefits would be protected from the trustee.

We can exempt up to 75% of wages in your bank account. However, self-employment income is not exempt. It is important to have an attorney help you evaluate your candidacy for a Chapter 7 bankruptcy and to ensure you maximize your property exemptions.

Should I file a Business Bankruptcy or Personal Bankruptcy?

Should I file a Business Bankruptcy or Personal Bankruptcy?

In today’s current market business owners are faced with numerous challenges from finding employees to drastically increased costs. They are faced with the question of whether they will be able to continue their business or whether it’s better to close it.

That is a very personal decision since so much goes into starting and sustaining a business. There are several factors we look at in making that determination.

Are there any business assets such a commercial building, inventory, or equipment that should be liquidated to pay your creditors? Your assets cannot be sold or transferred for your benefit at the expense of paying your creditors. Even transferring assets to a new business venture can disqualify you from filing bankruptcy so its very important to consult with an attorney before making any decisions on the proper steps to close your business. Another issue is whether the debt is exclusively in the business name, did you personally guarantee the business debt, or did you use your personal credit lines to fund your business?

In most cases, there is a personal guarantee on business debt and personal credit cards are used to keep the business afloat. If the majority of your debt, is non-consumer or business-related then you would qualify for a Chapter 7. Again, it is important to seek the advice of an attorney to determine which Chapter type you would qualify for under the bankruptcy code.

Many times, if the business has no assets and will be closed then it can just be administratively dissolved without the need to file for bankruptcy. Another issue also is whether there are any outstanding account receivables, do you reasonably expect payments in the future, or expect any reoccurring income? There is also a potential that that could be collectable by the trustee if you are filing a business bankruptcy.

All of these factors need to be considered whether determining whether to file a business bankruptcy or a personal Chapter 7 or 13 bankruptcy.

Married or Separated – How to file for Bankruptcy without your Spouse

Tampa Bankruptcy Attorney Gina Rosato Whether you are married or separated, you can still file for bankruptcy on your own. There is no requirement that your spouse file for bankruptcy.

Chapter 7 or Chapter 13 Bankruptcy?

If you are married and maintaining the same household, then the trustee will consider your joint income to determine if you are over the median income qualifications for a Chapter 7 bankruptcy or to determine what you are financially able to repay in a Chapter 13 bankruptcy.

If you are separated and maintaining separate households, you expenses should also be listed separately.

Contact Gina Rosato Law Firm, P.A. to discuss your Bankruptcy Options

Come speak with me regarding whether Chapter 7 or Chapter 13 bankruptcy maybe right for you and your spouse.

Can I re-assign Joint Debts to my Ex-Spouse in a Divorce?

Tampa Bankruptcy Attorney Gina RosatoYour divorce decree is a contract between you and your ex-spouse. This is completely separate from any contractual obligations you have with your mortgage lender or your credit card company.

Therefore, if you have a joint debt, even though your divorce decree says your ex-spouse will assume all the debt, your creditors can still come after you for the debt.  For example, suppose you and your ex-spouse had a joint credit card with Bank of America for $20,000.  During your divorce, your spouse assumes payment of the $20,000 debt.  Your ex-spouse does not make a payment on this debt or files for bankruptcy.  Bank of America can come after you for the $20,000 debt.   If this happens you would need to pay it or file for bankruptcy.  If you end up having to pay a anything to Bank of America you would have a cause of action against your ex-spouse once you have re-paid the creditor.  If you and your spouse have  significant amount of joint debt, it maybe beneficial to consider bankruptcy prior to filing for divorce to resolve these issues that may cost you more down the road in payments to creditors and additional attorney fees.

Contact Gina Rosato Law Firm to discuss your Bankruptcy Options

Come speak with me regarding whether Chapter 7 or Chapter 13 bankruptcy maybe right for you and your spouse.

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