Consumer vs. Non-Consumer Debt

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

Debts can be classified as either consumer or non-consumer, which can have an important impact on which bankruptcy chapters are available to you. But what differentiates the two, and what does it mean for you?

What Is Consumer Debt?

Debt incurred for personal or household purposes is considered consumer debt. Consumer debt includes forms of borrowing used to buy goods or services for personal use.

Consumer debt is often unsecured, meaning it’s not backed by collateral. This makes it easier for consumers to obtain credit. But it also means that the lender has fewer options for collecting the debt if the borrower defaults.

What Is Non-Consumer Debt?

On the other hand, debt incurred for business or investment purposes is non-consumer. This can include loans or lines of credit used to finance a business, purchase commercial real estate, or invest in stocks, bonds, or other financial instruments.

Non-consumer debt is typically secured by collateral, such as a business asset or real estate – giving the lender more options for collecting the debt if the borrower defaults.

When Does the Type of Debt Matter in a Bankruptcy Case?

One of the main reasons that the distinction between consumer and non-consumer debts matters involves the Chapter 7 bankruptcy means test. Consumer debts apply to the means test, while non-consumer debts do not. Failing this means test allows a court to dismiss a Chapter 7 filing and convert it to a Chapter 11 or Chapter 13 filing. The presumption is that the debtor has enough income to repay some or all of their debts. If more than half of their debts are non-consumer, the debtor does not have to pass the means test to file Chapter 7.

While the distinctions between consumer and non-consumer debts play less of an active role in a Chapter 13 bankruptcy, they still have an impact. Filing for Chapter 13 places an automatic stay on consumer debts, meaning it stops most collection actions. This stay protects not just the filer but also any codebtors. However, codebtors do not receive the protections of an automatic stay on non-consumer debt.

Common Examples of Consumer and Non-Consumer Debt

Common types of consumer debt include:

• Credit card debt
• Personal loans
• Auto loans
• Mortgages

Alternately, non-consumer debts include:

• Business loans
• Commercial real estate loans
• Investment loans
• Equipment Financing
• Lines of credit for business purposes

Contact a Debt Law Firm in Florida for Help

With over 100 years of combined legal experience helping consumers, Loan Lawyers is a trusted resource for anyone struggling with debt. We’ve helped more than 8,000 Floridians get out of debt, and we can put this track record to work on your behalf. We understand that every debt case is unique and requires a personalized approach – one that we’re ready and willing to offer you during this difficult time.

Let us help you regain financial stability and restore your peace of mind. Contact Loan Lawyers today and take the first step toward a brighter financial future.

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5 Little-Known Tips To Use Bankruptcy And Stop Eviction In Florida – A Guide For Renters!

Florida Tenants Facing Eviction Can Use This Sneaky Bankruptcy Trick to Stay In Their Homes!

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

The COVID-19 pandemic has been difficult on all Floridians. Hundreds of thousands of people lost their jobs and businesses closed at an alarming rate. People also lost their homes, as they could not pay their rent and were in fear of eviction.

At the time, Governor DeSantis placed a moratorium on evictions and foreclosures, so people would not fear losing their home when there were shelter in place orders in effect. Unfortunately, those moratoriums are long over and they are not expected to go into effect again.

With so many people still struggling, there are still many Florida residents in fear of losing their homes. To prevent this from happening, it is natural to wonder if bankruptcy could help you avoid eviction or stop foreclosure. Like with so many other legal questions, the answer is that it depends. If you want to avoid eviction and think bankruptcy may be an option, you should speak to a Florida bankruptcy lawyer as soon as possible.

Bankruptcy Will Provide an Automatic Stay

As soon as you file for either a Chapter 7 or Chapter 13 bankruptcy, the court will issue an automatic stay in your case. An automatic stay prevents creditors and debt collectors from contacting you trying to collect on the debt you owe. As its name suggests, the automatic stay happens right away, which means as soon as you file, all contact will stop. Unfortunately, while the automatic stay will prevent creditors from contacting you, it does not always work the same for landlords that are trying to collect on the rent, or even evict you.

Automatic stays do not last forever and in the case of landlords, the time period may be very short. Landlords do have the right to ask the bankruptcy judge to lift the automatic stay on rent immediately, and many courts will grant these requests. If this happens, the landlord can start the eviction process all over again, and you may be evicted from your home.

Even when an automatic stay is lifted, it takes time for it to happen. You can use this time to find another place to live if you feel as though the eviction will go through. If you think you will be able to make any payments for past due rent, you can also use that time to collect it and give yourself the best chance of staying in your home.

If you filed a Chapter 7 bankruptcy, there is a chance your landlord may even simply wait until the bankruptcy case is over to evict you, which could take three to four months. Once the case is final though, your landlord will likely have the right to evict you from the premises if there is still unpaid rent.

It is important to note that an automatic stay will not stop an eviction if your landlord has already obtained a final judgment for eviction against you before you filed bankruptcy. Automatic stays only apply to the debt you had on the date you filed bankruptcy.

Bankruptcy Can Eliminate Unpaid Debt

Filing Chapter 7 bankruptcy can delay an eviction, but it will not necessarily stop one. However, after you are evicted, a Chapter 7 bankruptcy can eliminate any unpaid rent debt you still owe. Clearly, you also will not have to pay rent for the current premises going forward, as you will no longer have a lease agreement. It is for these reasons that many people consider bankruptcy when trying to avoid eviction. If you were paying too much rent, bankruptcy can help you walk away from it and get a fresh start.

Eliminating rental arrears can also make it easier for you to find a new place to live. You may need the first and last month’s rent, as well as a security deposit and the other fees associated with moving. Bankruptcy will also allow you to discharge other types of debt you may be carrying, such as credit card debt, personal loans, and unsecured medical debt. Getting rid of these debts can also free up some money that can help with finding a new place to live.

While there are many benefits that come with filing bankruptcy to avoid eviction, there are certain consequences you should know about, too. For example, any type of bankruptcy will appear on your credit report, and future landlords will likely look at this to determine if they want to rent to you. To avoid this, some people try to find a new place to live before they file for bankruptcy.

Chapter 13 Bankruptcy Can Help You Avoid Eviction

Although a Chapter 7 bankruptcy may not help you avoid eviction, a Chapter 13 bankruptcy can. When filing Chapter 13, you are not asking the court to discharge your debt, but you are asking them to reorganize it into a repayment plan. Your rent, including what you owe and what you will owe in the future, can be part of this repayment plan, allowing you to stay in the premises.

The repayment plan is also drafted using your income and your current expenses, so the payments are affordable for you. It is crucial that you make any and all payments according to the repayment plan. If you do not, your landlord can complain to the bankruptcy trustee and your case may be dismissed. In that case, your landlord could continue to pursue an eviction and you likely would not be able to file bankruptcy again to stop it.

Call Our Bankruptcy Lawyer in Florida Today

Bankruptcy may be able to stop an eviction, but the process is a long and difficult one. There are also many benefits and some drawbacks to filing, so it is important to speak to a South Florida bankruptcy lawyer that can advise on the specifics of your case. At Loan Lawyers, we have helped thousands of borrowers successfully pursue bankruptcy, and we want to put that experience to work for you. Call us today at (954) 523-4357 or contact us online to schedule a free consultation.

Why Choosing the Right Bankruptcy Lawyer Could Change Your Life

 

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How to Prepare for Your 341 Meeting After Filing for Bankruptcy

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

Within 20 to 40 days after you file for bankruptcy in Florida, the court will mail you and your creditors a notice for your 341 meeting of creditors. The court’s notice will include the meeting’s date, time, and location.

This meeting is a required part of the bankruptcy process. You should know what to expect, how to prepare, and how our bankruptcy attorneys at Loan Lawyers can help you.

What Is the 341 Meeting for Bankruptcy in Florida?

A 341 meeting is required by the Florida bankruptcy law section 341, which is why it is referred to by that name. It’s also often called a creditors meeting. Its purpose is for you to answer questions under oath about the financial information in your bankruptcy petition package, such as lists of creditors, schedules of assets, liabilities, income, expenditures, and a statement of your financial affairs.

You, your attorney, and a Chapter 7 trustee attend the 341 meeting. The trustee is a “private, impartial individual paid to administer and oversee your case on behalf of the U.S. Trustee’s Office.” The creditors are not required to attend, and it’s common for them not to do so. This meeting is not a court hearing, so a judge does not attend.

What to Expect at a 341 Meeting of Creditors

You can expect a creditors meeting to occur within 20 to 40 days after filing your bankruptcy petition. You are required to attend this meeting.

The trustee will conduct the meeting, administer an oath to you, verify your identity, and ask standard questions and other optional questions to evaluate the information in your petition. A record of the meeting will be taken. A typical 341 meeting lasts about 15 minutes.

How to Prepare for a 341 Meeting After Filing Bankruptcy

Before the 341 meeting, you must submit several other required forms and statements – each with its own strict filing deadline. It is acceptable to file these documents with your bankruptcy petition. If you have not already done so, you need to file:

• Certificate of Credit Counseling Course – You must have completed this course within 180 days before filing your bankruptcy petition. If not filed with your bankruptcy petition, it needs to be filed within 14 days after filing your petition. 
• Copy of your most recent tax return – You must provide the trustee with this at least seven days before your meeting date. 
• Statement of Intention – If filing for Chapter 7, the deadline to submit your Statement of Intention is 30 days after filing your petition or on or before the date of your meeting –  whichever comes first. 

You should prepare to bring photo identification and a document showing your social security number. Also, plan to dress professionally.

Contact Loan Lawyers to Help You Prepare for Your 341 Meeting

If you are looking for a fresh financial start, let the bankruptcy attorneys at Loan Lawyers guide you through the bankruptcy process. We’ve helped over 8,000 clients in Florida get out of debt and move on with their lives. To learn more about how we can help you, contact us today for a free consultation.

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Can I Negotiate a Wage Garnishment?

Disclaimer: Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

A wage garnishment is a court order obtained by a creditor to seize a portion of a debtor’s paycheck, bank account, or other assets to meet a debt obligation. If you are already struggling to pay your debts, the effects of wage garnishment can be especially hard on your finances. However, you may be able to negotiate the terms of wage garnishment or avoid it altogether. The team at Loan Lawyers is here to explain the options for negotiating, contesting, vacating, or ending a wage garnishment.

Is It Possible to Negotiate a Wage Garnishment in Florida?

It is sometimes possible to negotiate a wage garnishment directly with the creditor. Most creditors want to recoup as much of their debt as possible and may be willing to work out a deal. Build your argument before approaching the creditor. Collect evidence showing how detrimental the wage garnishment is to your financial stability or how you qualify for an exemption. In either case, the creditor may agree to a solution that doesn’t involve a garnishment, such as an adjustment payment plan or a settlement for a lump sum.

How to Get Rid of Wage Garnishment Completely

The court clerk must notify you when a creditor files a court order seeking to garnish your wages. You have the right to file an exemption within 20 days of receiving notice. If you file a claim of exemption, the creditor has 14 business days to file a response to your claim with the court. If the creditor doesn’t respond in time, the court can cancel the garnishment.

Some exemptions and other strategies that may allow you to contest or stop a wage garnishment include the following:

• Head of household exemption – Under Florida law, you may legally stop a wage garnishment if you qualify as a head of household. A head of household pays at least 50 percent of the living expenses for a child or other dependent.
• Exempted income – Certain types of income are exempt from wage garnishments, such as retirement benefits, veteran’s benefits, disability benefits, workers’ compensation, alimony, and child support.
• Federal protections – Under federal law, wage garnishments cannot exceed 25 percent of your disposable earnings or the amount of your weekly income over 30 times the federal minimum wage, whichever is less.
• Pay off the debt – This may not be an option for everyone. But if you can come up with the money to pay off the debt, you will eliminate the creditor’s need for wage garnishment. For example, you could ask family or friends for money, consolidate the debt with another loan, or sell an asset.
• Bankruptcy – If you do not qualify for any exemptions and cannot possibly pay back the debt or make ends meet while having your wages garnished, you should consider filing for bankruptcy. While bankruptcy comes with drawbacks, it would stop any wage garnishments. Depending on the type of bankruptcy you file, you may be able to structure a repayment plan, liquidate some assets, or discharge some debts.

RELATED: Wage Garnishment FAQs

Do You Need a Debt Lawyer to Investigate Your Wage Garnishment?

To best understand your legal options for dealing with wage garnishment, consult a knowledgeable debt settlement attorney at Loan Lawyers today. Our foreclosure defense, debt defense, and bankruptcy law firm has helped many Florida clients find a way through or out of wage garnishment. Contact us today for a free consultation.

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Is It Possible to Switch Between Bankruptcy Chapters in Florida?

Are you in Chapter 13 bankruptcy proceedings in Florida and wondering if you can switch to Chapter 7? Loan Lawyers is here to help. Chapter 7 bankruptcy allows individuals to get a fresh start by liquidating assets to cover some debts and discharging other debts. Chapter 13 bankruptcy creates a plan where the debtor can repay all or part of the debt owed to creditors over three or five years. Once all payments are complete, the remaining debt can be discharged.

Contact Loan Lawyers for a free consultation to learn more about whether you can switch between bankruptcy chapters in Florida, when and how that might be beneficial, and what’s required.

Can You Convert Your Chapter 13 Bankruptcy to Chapter 7 in Florida?

It is possible to convert from Chapter 13 bankruptcy to Chapter 7. To know if this is true in your particular situation, you should consult a bankruptcy attorney who can determine whether you are eligible and discuss the pros and cons of switching.

For example, after you file for bankruptcy, you must wait a specific period before you can file again. The duration of the waiting period depends upon the type of bankruptcy you previously filed. If you have a prior bankruptcy, your attorney will tell you whether you’re outside the waiting period and could convert to a Chapter 7.

To convert, you must file a Notice of Conversion with the court and pay a conversion fee. An attorney can help you with this process.

Benefits of Switching Bankruptcy Chapters

Switching to Chapter 7 bankruptcy might be beneficial to you if:

• You cannot maintain the Chapter 13 bankruptcy payment plan.
• You have experienced a significant loss of income.
• You no longer wish to keep an asset that your Chapter 13 bankruptcy plan was designed to save.

Do You Qualify for Chapter 7 Bankruptcy?

Before deciding to convert to Chapter 7 bankruptcy, you must ensure you qualify. First, you must pass a means test demonstrating your income falls below Florida’s median family income for your household size. If your income exceeds that amount, you might still be able to qualify after a detailed analysis of your income and expenses.

When the Court Might Force You to Convert to Chapter 7 in Florida

The court could order you to convert to Chapter 7 bankruptcy “for cause.” If the court believes you are trying to manipulate the bankruptcy system, it could force you to enter Chapter 7 bankruptcy and liquidate nonexempt assets to pay back creditors. For example, this may happen if it appears that you are hiding assets or lying on forms.

Contact Loan Lawyers Today for Help Switching Bankruptcy Chapters

If you are having trouble keeping up with a Chapter 13 bankruptcy repayment plan, Loan Lawyers can help you explore whether converting to Chapter 7 bankruptcy would be a good option for you. Our bankruptcy attorneys aim to find the best financial solution for each client and will never pressure you. Contact us today to schedule a free consultation.

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Does a Voluntary Repossession Affect Your Credit?

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

If you fall behind on your car payments and cannot catch up, you can give your car back to your lender. Lenders call this voluntary repossession, and it can potentially give you some financial breathing room. But before you turn your car over to the bank, you need to consider all the potential consequences. To learn more about voluntary repossession in Florida, contact a skilled car repossession lawyer at Loan Lawyers today.

Can Voluntary Repossession Have an Impact on Your Credit?

One reason many people consider voluntary repossession is to protect their credit score. Unfortunately, giving your car to your lender is unlikely to protect your credit. Many lenders consider a voluntary repossession the same as an involuntary repossession, leading to a negative mark on your credit report.

How Much Does a Voluntary Repossession Affect Your Credit?

Estimates vary, but you can expect a voluntary repossession to lower your credit score by 50-150 points. How big of a drop you will see depends on factors such as your prior credit history and how many payments you made before the repossession. A large drop in your credit score can severely impact your ability to obtain future loans for a car, home, or other large purchases. Some lenders may not give you credit after your score drops, or you may have to accept a loan with a high-interest rate.

How Long Does a Voluntary Repossession Stay On Your Credit?

According to Experian, one of the three main credit reporting agencies, a voluntary repossession is considered a loan default. Loan defaults lead to derogatory marks on your credit report that can last up to seven years. You may be able to remove a derogatory mark from your credit report by paying the balance you still owe on your loan or working out an arrangement with your lender.

Pros and Cons of Voluntary Repossession

There are pros and cons to surrendering your car to your lender if you fall behind on your payments. The benefits of voluntary repossession include the following:

• A better repossession experience — Involuntary repossessions upset many people because they often happen at inconvenient times. A voluntary repossession allows you to choose when you turn over your car, giving you time to make plans.
• Lower repossession expenses — If a lender repossesses your car, you may owe additional fees on top of your loan balance. Voluntarily turning over your car means you do not have to pay repossession costs.
• Less stress on you — For better or worse, turning over your car to your lender means you do not have to worry about the car any longer. You may still owe a balance and have other problems to worry about. But you do not have to worry about maintaining your car or when the bank will take it.

Some negative effects of voluntary repossession of a car include the following:

• Lower credit score — You will likely see your credit score drop after you give your car to your lender, which could impact your financial future.
• You may still owe a balance on your loan — You might need to pay back your lender even after giving them your car, though typically just the remaining balance not covered by the car’s resale. An outstanding loan balance can cause significant financial stress.
• You no longer have your car — You may have ways to get where you need to go after surrendering your car. But these options will likely be less convenient than driving yourself.

Talk to an Experienced Car Repossession Lawyer in Florida Today

The Florida foreclosure defense, debt defense, and bankruptcy attorneys at Loan Lawyers can help you decide whether to voluntarily repossess your car. We will protect your rights and help you find the best way forward from this challenging situation. Call us today or visit our contact page for a free consultation.

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Can a Loan Modification Stop Foreclosure?

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss, and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

Homeowners who can no longer afford their mortgage payments have options for stopping foreclosure and keeping their homes. Depending on the circumstances, a homeowner may consider applying for a loan modification with their lender to avoid or stop a mortgage foreclosure. But how exactly does a loan modification prevent a homeowner from losing their property to foreclosure? Learn from our Florida loan modification attorneys below.

What Is Loan Modification?

In a loan modification, a lender and borrower agree to change the terms of a loan. Loan modification often happens when a borrower can no longer afford payments under the loan’s current terms. Altering the terms of the loan can provide temporary relief from payments or reduce the monthly payment amount to a more affordable level.

Examples of terms that can be modified include:

• Modifying the type of loan, such as changing from an adjustable-rate mortgage to a fixed-rate mortgage
• Reducing the interest rate
• Extending the loan term
• Pausing payments for a certain period
• Recapitalizing the loan to fold in missed payments
• Reducing the amount owed on the loan, typically by having the lender agree to forgive a portion of the balance

Who Can Use Loan Modification?

Loan modification frequently is used by homeowners who can no longer make their mortgage payments. A homeowner who has defaulted on their mortgage may use loan modification to avoid foreclosure. Lenders tend to grant loan modification to borrowers who have suffered some form of financial hardship but will resume making payments soon or can afford lower payments.

Circumstances where borrowers may seek loan modification include:

• Loss of a job with a reasonable chance of securing new employment soon
• Sudden illness or temporary disability that results in missed time from work or substantial medical bills
• Loss of income due to the death of a financially contributing family member
• Separation or divorce
• Increases in housing or living costs, such as an increase in property taxes

Advantages and Disadvantages of Loan Modification

The advantages of seeking loan modification during foreclosure include the following:

• You can keep your home by pausing payments if you experience temporary financial difficulty or reducing mortgage payments to a more affordable level.
• Loan modification can help you resolve missed payments or a default on your mortgage.
• You may avoid damage to your credit rating that foreclosure would cause.

However, there are disadvantages of loan modification as a way to stop foreclosure, such as the following:

• Most types of loan modification result in you paying more money throughout the loan than you would under the original terms.
• You may have to pay fees as part of the loan modification process.
• You can incur tax liability if the lender forgives part of the mortgage.
• There may be an impact on your credit score if the loan modification is reported to the credit bureaus as a debt settlement.

Talk to an Experienced Foreclosure Defense Lawyer About Modifying Your Loan

If you are facing mortgage foreclosure, a skilled foreclosure defense lawyer can help you learn more about how options such as loan modification can help you keep your home. Contact Loan Lawyers today for a free, confidential consultation with our foreclosure defense, debt defense, and bankruptcy law firm to discuss how we can help you find the best solution to resolve your foreclosure.

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