Bankruptcy Property Miami
Introduction to Bankruptcy laws in regards to cars and houses in Miami
Definition of Bankruptcy Property Miami
It is the legal procedure for the settlement of a property owned by a person who cannot pay off the debts out of their existing assets. Bankruptcy can be carried on itself by an insolvent debtor or may be compelled by a court order issued. Two of the major goals of bankruptcy are:
- Fair settlement of legal claims by creditors through an equitable distribution of the debtors assets.
- Provide the debtor an opportunity to start over.
Types of Bankruptcy
There are six different types of bankruptcy code in the United States on this issue. The chapters most used are seven, eleven, and thirteen.
- Chapter 7: Known as liquidation or new beginning; allows all eligible debts to be excluded entirely but not the active ones. Most cases of Chapter 7 bankruptcy are considered non-active. This means that the trustee makes a determination that there are no assets (houses or cars) to be liquidated for the benefit of creditors. When the bankruptcy laws were passed the intent of the Chapter 7 Bankruptcy Act was to give debtors a fresh start. That is why the law allows you to keep assets under different categories of exemption.
- Chapter 11: Referred to as reorganization bankruptcy; is linked to large businesses or investors who have at least $ 1.1 million in secured debts. These Chapter creditors have to agree to a payment plan that may even be included in this plan business ownership.
- Chapter 13: Known as acquired wages; consists on a payment plan where debts are consolidated to a reasonable number of monthly payments. This will catch up on debts secured by a proportional payment and after 36 to 60 months of making payments any remaining debt will be eliminated. This Chapter is usually used to stop foreclosure or collection of possessions and embargo, protecting the home, car and salary.
Keeping your Car in case of Bankruptcy
Among the most important thoughts in the minds of many people who contemplate to file for bankruptcy is whether they can keep their cars. For the large majority, being in possession of a car is a complete necessity.
After filing a Chapter 7 bankruptcy, there are ways to keep your vehicle.
The first option is to enter into a reaffirmation agreement with the lenders of the car. A reaffirmation agreement means you should make a contract to assume the debt related to the car loan. This means that if the loan after entering the reaffirmation agreement is not fulfilled, the lender can repossess the car and lawsuit the individual.
A reaffirmation agreement should be accepted by the bankruptcy court. Lots of bankruptcy courts take the position that a restatement should not be approved if the lender does not reduce the interest rate or the total loan balance.
A reaffirmation agreement should be accepted by the bankruptcy court. Lots of bankruptcy courts believe that a restatement should not be authorized if the lender does not reduce the interest rate or the total loan balance.
Motion to Redeem
There is the option of buying a car in cash to the lender in the sale value of the car at the time of bankruptcy. This can be a good option if the value of the car is much less than the loan amount. To be eligible for redemption, the car should be used for personal or household purposes. It also has to be paid in one payment.
A motion must file to redeem the bankruptcy court, according to its rules of procedure, including the service of the motion on the car lender. You must provide the court with evidence of the current retail value of the car. If the court agrees, the car lender must accept a lump sum. After receiving payment, the lender will transfer the title, free and clear to the person who requested the motion. The filing of a motion can be complicated and it is recommended to consult with a bankruptcy attorney if you are considering this option.
Owner of the vehicle
People, who already have a car paid, should be sure to protect the car from the supervisor of bankruptcy. This requires claiming exemptions in Annex C to cover the value of the car. If the car is not claimed as exempt, the trustee can sell the car. Although a payment from the trustee is obtained, the vehicle is lost.
How to buy a car during bankruptcy?
The number of bankruptcy filings has increased in recent years due to the behavior of the economy, high level of unemployment and the difficulties to obtain credit. When a person decides to file for bankruptcy, Chapter 13, which restructures debt paying slowly over time, or Chapter 7, eliminating debt without any refund can be applied.
There are actions that can be performed in order to buy a car during bankruptcy:
- Choose a car you can afford: During the bankruptcy process Miami, you must take into account your personal income and spending so you will be limited to buy cars within your budget including cost of fuel, insurance and maintenance.
- Consider cash as a method of payment for your used car.
- Ask someone close to help finance a car, someone you trust, like a family member, friend or employer who is willing to put a car loan on your behalf and you collect monthly payments.
- Corroborate what type of bankruptcy is being presented before applying for a car loan (Chapter 13 or Chapter 7).
- Talk to your bankruptcy trustee about the need for a car. Show your income and expenses to the trustee to prove you can afford a purchase of a car.
- Obtain a written permission of the bankruptcy trustee. The permission must include how much has been approved for a monthly payment.
- Locating a lender to give you a loan to buy a car: You can find lenders who specialize in financing loans to people with low credit or even bankruptcy.
- Wait at least 2 years into the process of Chapter 13: This will give you a better chance of getting a loan.
Car financing under Chapter 7 bankruptcy Miami
Find a lender. There are many vendors of specialized car loans to people with bad credit and even those who have filed bankruptcy.
Prepare to make a large down payment. The financing will be available while in Chapter 7 bankruptcy, but will be more expensive. Almost all dealers require at least a thousand dollars as a down payment.
Having a high interest rate. The car loan is likely to have a much higher than traditional loan interest rate.
Bankruptcies regarding houses.
You can keep the house if you file for bankruptcy under Chapter 7 or Chapter 13. In the majority of the cases, Chapter 13 is a better option because it preserves the house, regardless if it is not up to date on mortgage payments. However, the fact to file Chapter 7 or Chapter 13 bankruptcy depends on the following:
- If you can exempt the entire equity in the property (Mortgage Guarantee)
- If you are behind on mortgage payments.
- If you have liens you want to remove.
- Benefits for Chapter 13 or Chapter 7 bankruptcy
- If you have not exempt equities
One of the most significant factors to consider when deciding to file Chapter 7 or Chapter 13 bankruptcy is if you have equity in the home (which means that the house is worth more than the balance of mortgages or other liens on it).
If the house has equity, it is necessary to identify if it is exempt. Most states and the federal bankruptcy exemptions have an exemption of property that can be used to protect part or all of the equity in your primary residence. Each state has its exemption amounts of goods.
If the amount of exempt assets is not sufficient to cover all of your debt then you have non-exempt home equity property. This means that if a person files for Chapter 7 bankruptcy, the trustee will probably sell the house and distribute the non-exempt income from the sale to the creditors.
But if you file Chapter 13, you can keep your home. This is because in Chapter 13 trustee does not have to sell the assets, even if they are not exempt. Instead, you must pay the creditors an amount equal to the value of its assets.
If you are behind on your mortgage
A chapter 13 bankruptcy is the best option if you have fallen behind on the mortgage payment, because it can stop foreclosure and you can pay the arrears through a payment plan. This payment plan typically lasts three to five years so it provides ample time to replenish the debt. In addition, you are going to be protected from foreclosure as long as you continue to make payments to the end.
However, if you file Chapter 7, you do not have the opportunity to catch up on the arrears through a payment plan. Moreover, a Chapter 7 bankruptcy usually lasts only a few months, so it does not provide as much protection as Chapter 13.
If you want to get rid of a junior lien
If you have a second mortgage at home, Chapter 13 may allow you get rid of it through a process called stripping lien. In Chapter 13, you can strip a lien if the balance of the first mortgage exceeds the value of the property. When speaking of a junior lien, the lien holder is treated as an unsecured creditor and usually receive little or nothing through this plan. When you complete your plan, the lien will be removed from the home. This does not happen in Chapter 7 bankruptcy.
Which one is the best option: chapter 7 or chapter 13?
Chapter 13 is usually the best option if it is not exempt equities, or if you are behind on the mortgage payments, or if you want to get rid of a junior lien. However, if you cannot apply for Chapter 13, Chapter 7 can provide a simpler and faster way to eliminate debts without full warranty and still you can keep the house.
Importance of hiring a lawyer to help you keep the house and car when filing bankruptcy
Bankruptcy laws are quite complicated, so it is very important for people who plan to file for bankruptcy contact a bankruptcy attorney before sending any documents to court. By doing this, they are ensuring that their interests are protected and moving forward in the direction that brings you and your family the most relief.
Legal representation in bankruptcy process can help put an end to situations that you do not have to face alone. You can rely on the professionalism and expertise of the bankruptcy attorneys to guide you through and battle your creditors to protect your legal rights and everything else you have worked for.
Gallardo Law Firm in cases of Bankruptcy with respect to Houses and Cars
Our lawyers at Gallardo Law Miami can help you with filing for Chapter 7, 11 or 13 as applicable. They also explain the benefits and impact of filing for bankruptcy.
They will guide you through the whole process of filing bankruptcy that best suits you. Our bankruptcy attorneys have knowledgeable of the new filing requirements and eligibility standards and will be able to expedite your bankruptcy filing efficiently.
Questions and Answers about Bankruptcy in regards to Cars and Houses
- Wait two years: If you want to buy a house, you must wait two years after filing bankruptcy in order to qualify for a loan.
- Rebuild your credit: The best way for a mortgage after bankruptcy is by the Federal Housing Administration. They will have less stringent credit standards, but still need to have a credit score of 620 or higher.
- Saving for a high down payment: When a person is in bankruptcy, he or she will need to put a high enough down payment to buy a house.
- Pay in cash if possible. You can find a home with a reasonable price to be able to pay a lower price in cash.
- Have a friend or a family member with good credit score to apply for the home loan.
- Consider a rental with option to buy.