Bankruptcy in Florida, Part 2
Continued from Bankruptcy in Florida, Part 1
Last time we examined some national trends versus specific statistics for Florida. We also pointed out that providing for orderly bankruptcy relief was charged to Congress in Section 8 (Clause 4) of the U.S. Constitution.
The powerful protection of the Bankruptcy Code
In other words, we, the people, have not yet been recognized as being too big to failbut every individual (and business) is recognized as too important to jail. That recognition has led to the codification of the federal bankruptcy laws contained in Title 11 of the United States Code. Known collectively as the Bankruptcy Code (or, simply, the code), together these statutes provide a powerful tool against harassment by creditors and illegal collection practices. Immediately upon filing, for example, creditors are ruled by an automatic stay from the U.S. Bankruptcy Court. This stay prevents them from contacting you anymore and says they must now work through the federally mandated procedures within the Bankruptcy Code.
That, alone, is often cited by debtors as a great relief as they get on about their lives and the business of starting over.
In short, bankruptcy allows for the legal and orderly disposition of debt such that creditors can get paid anywhere from nothing to some percentage of the total debt. Once all the legal procedures are followed, any monies disbursed to creditors and all the details finalized, the debtor is said to receive "a discharge." Here's how the U.S. Courts explain it:
Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation.
Most cases are filed under the three main chapters of the Bankruptcy Code Chapter 7, Chapter 11, and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court. More on bankruptcy cases.
Role of the bankruptcy attorney
Although the concept is straightforward, bankruptcy law can be quite confusing--especially since the so-called Bankruptcy Reform Act of 2005. That legislation was passed primarily at the behest of the credit-card companies (and their parent big banks) in an attempt to steer people away from filing for protection under Chapter 7 and steer them toward Chapter 13. That being said, it remains legal and possible for all qualifying debtors to file the paperwork themselves; that's called filing pro se. However, in most cases, it's much more efficient to retain a compatible, experienced attorney, especially if a valuable asset is on the line, such as a family home: mistakes that are simple and easy to avoid for an attorney could cost a pro se filer's case to be dismissed. Even worse, if the court decides the filer has crossed the line into bankruptcy fraud, the filer could wind up in serious legal trouble.
A personal story
For example, in my case, besides my other problems, we were dealing with a bank that was trying to foreclose on my home--even though I had never missed a mortgage payment. Because of the complications of my case, I was never sent notification of the foreclosure. Fortunately, my attorney was notified, and she immediately took action.
Later--even after the bankruptcy petition was filed--the bank once again attempted to foreclose. My attorney then informed the bank that it was in violation of federal law and unless they stopped immediately she would have no choice to but to file a Motion for Sanctions against the bank.
At that point, the bank hired its own bankruptcy attorney who basically told them, yeah, you have to follow the law, and if you don't you can get in serious trouble--federal trouble. From that point until today, I simply make sure my bank account has enough to cover the monthly automatic withdrawal to the bankruptcy trustee. The relief and peace of mind has been almost incalculable, given the stress I was in before.
Next--Bankruptcy in Florida, Part 3: Florida bankruptcy courts, locations, maps & FAQ--answering common questions.
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