What is the Advantage of filing Chapter 13 Bankruptcy?
Why Chapter 13 Instead of Chapter 7?
What is the Difference in Costs Between a Chapter 7 and Chapter 13?
What is the Length of the Process?
What is the U.S. Trustee’s Role in Reviewing Your File?
What is an Adversary Complaint?
What is False Financial Non-Writing?
What is D.U.I. Liability?
What are the Tax Issues?
What About Tax Disputes?

What is the Advantage of filing Chapter 13 Bankruptcy?
In a Chapter 13, you have the advantage of discharging debts which otherwise could not be forgiven. The dischargeable debts, however have been radically reduced. The advantages are not nearly as great as they once were.

It must first be understood that in order to file a Chapter 13, one must meet the qualifications. Chapter 13 allows a party to file when their debts are unsecured for $336,900 or less and their secured debts are $1,010,650 or less.

If your debts are less than that amount, and you have any of the above-referenced unique debts, Chapter 13 may be the best chapter for you. If you filed a Chapter 7 with any of the above-described debts, the creditor would have the right to file an action seeking acceptance to the discharge and could benefit by having all the other creditors cleansed from your list of liabilities and thereafter be the only creditor to be permitted to pursue any and all assets which you may obtain in the future.

If you have any questions about any of the above-referenced specific debts, please click on the specific debt where an outline will be delivered to you about the same.

Why Chapter 13 Instead of Chapter 7
The true difference between a Chapter 7 and Chapter 13 is the discharge. In Chapter 7, there are over 34 different types of debt which cannot be discharged. In Chapter 13, that list is only approximately 13. The thirteen debts which cannot be discharged in a Chapter 13 include: (a) certain tax liabilities; and the newly created exceptions of; (b) money obtained by fraud; (c) unlisted creditors; (d) embezzlement/larceny/fiduciary breach; (e) Alimony or child support ordered obligations; (f) willful or malicious injury to another; (g) most student loans; (h) DUI liabilities to another for loss of life or injury; and (i) restitution or a criminal fine, included in a sentence on the debtor's conviction of a crime.

The debts which cannot be discharged in Chapter 7 include the above-referenced debts and: (a) ) gross negligence torts; (b) government fines not for actual pecuniary loss; (c) debt waived by the debtor; (d) non-DSO debt derived from a divorce decree; (e) failure to fulfill a commitment to a depository institution; (f) any restitution awarded under title 18; (g) certain condominium association debts; (h) certain federal securities violations; and (i) various debts unique in their facts.

Before you assume that Chapter 13 is perfect for you, understand that in order to file a Chapter 13, you must meet the jurisdictional qualifications. Chapter 13 allows a party to file when their debts are unsecured for less than $339,600.00 and their secured debts are less than $1,010,650.

Most commonly in the State of Florida, Chapter 13 is utilized to reinstate a mortgage which has been subjected to a foreclosure. The ability to utilize the Chapter 13 procedure to compel the mortgagee to receive payment and cease the foreclosure is extremely important to mortgagors (homeowners)in the State of Florida and permits them often times to save the homestead of the family. This reinstatement time will be anywhere in the neighborhood of 3 to 5 years and payments will also, more often than not, include payments to the unsecured creditors.

In order to save the home, or to permit one to be discharged of certain debts (see the second paragraph above), the debtor is often more than willing to enter into a payment plan so as to receive a discharge from debts in Chapter 13 which are not afforded in Chapter 7.

What is the Difference in Costs Between a Chapter 7 and Chapter 13
A Chapter 13 case costs $274.00 to file. A Chapter 7 case costs $299.00 to file.

The fees for handling a Chapter 7 case range anywhere from$1,200.00 to thousands of dollars. The large charges are ordinarily associated with complex cases involving non-dischargeable debts (see Nondischargeable debt discussion elsewhere in this webpage) or large corporations involved in Chapter 7.

A Chapter 13 costs $2,750.00 in fees and can be as much as $5,000.00. That fee will include the handling of the case, the filing of the plan, and a presentation of the plan before the Court. Numerous papers will have to be delivered to the Trustee, as recited (see Papers Needed for Filing) and numerous discussions are made with the Trustee.

Any modification of the plan after the filing and confirmation will require an addition $500.00. However, be assured that fee does not need to be paid up front. More often than not, the fees are paid for a Chapter 13 in the plan. Therefore, a Chapter 13, although the fee may be large at first glance, is affordable as you can make the payments to your attorney in the plan over a significant period of time.

In the case that a Chapter 11 applies, please be advised that the filing fee is $1,039.00 and that the fees for filing such a case will be no less than $7,500.00.

What is the Difference in Costs Between a Chapter 7 and Chapter 13
A Chapter 13 case costs $274.00 to file. A Chapter 7 case costs $299.00 to file.

The fees for handling a Chapter 7 case range anywhere from$900.00 to thousands of dollars. The large charges are ordinarily associated with complex cases involving non-dischargeable debts (see Nondischargeable debt discussion elsewhere in this webpage) or large corporations involved in Chapter 7.

A Chapter 13 costs $3,500.00 in fees and can be as much as $5,000.00. That fee will include the handling of the case, the filing of the plan, and a presentation of the plan before the Court. Numerous papers will have to be delivered to the Trustee, as recited (see Papers Needed for Filing) and numerous discussions are made with the Trustee.

Any modification of the plan after the filing and confirmation will require an addition $500.00. However, be assured that fee does not need to be paid up front. More often than not, the fees are paid for a Chapter 13 in the plan. Therefore, a Chapter 13, although the fee may be large at first glance, is affordable as you can make the payments to your attorney in the plan over a significant period of time.

In the case that a Chapter 11 applies, please be advised that the filing fee is $809.00 and that the fees for filing such a case will be no less than $7,500.00.

What is the Length of the Process?
Most people want to know how much time will transpire between the date they file their bankruptcy to the date they receive their discharge in bankruptcy. The answer is extremely different for the different chapters. Below we will analyze how they differ in regard to Chapter 7 and Chapter 13.

Pursuant to the Federal Rules of Bankruptcy Procedure, the First Meeting of Creditors must be held no sooner than 30 days from the date of filing and no later than 45 days from that same date. This is true for either Chapter 7 or Chapter 13. Therefore, it is typical for a meeting to occur approximately one month to five weeks from the filing date of the petition. At that meeting, the debtor is required to appear at court and be questioned by the Trustee and any creditors who appear. This meeting typically takes a maximum of five minutes. A review of the questions which are included in the schedules will be made at the meeting. If a party has read their schedules just prior to attending this meeting, they should have no problem in responding to the questions asked of them at the same meeting.

In Chapter 7, if no one objects to the discharge of the debtor within 60 days from that meeting, the discharge will be entered by a computer. The discharge will be then mailed to all the creditors as well as the debtor and the debtor's attorney. Therefore, a time frame of 90 to 105 days from the date the petition is filed, a Chapter 7 debtor should receive his/her discharge from the computer of the Court.

In a Chapter 13, the discharge is entered after payments are made in full. The payments must take a place a minimum of 3 years and a maximum of 5 years. Therefore, the soonest a discharge can be entered in a Chapter 13, under normal circumstances, would be 3 years 3 months after the filing of the petition. The latest would be 5 years after the date of the petition. The reasons for filing a Chapter 13, as opposed to a Chapter 7, are outlined in a separate question. It is often a requirement that a party file a Chapter 13, as opposed to a Chapter 7, and therefore delay in the discharge is part of the cost of either saving ones assets or preventing the creditors from making discharge ability complaints against the debtor.

What is the U.S. Trustees Role in Reviewing Your File?
There has been a section in the Code for a long period of time identified as "707." It is now being enforced by the U.S. Trustee.

If you are a party who makes a significant income (its all relative and the term "significant" cannot be easily identified), the U.S. Trustee will look very seriously into your finances to determine whether or not you should be in Chapter 13 instead of in Chapter 7. Moreover, when your debts are primarily consumer and you show substantial income, the presumption by the U.S. Trustee is that you should be in Chapter 13 as you have the ability or capability to pay your creditors some sum of money over a period of time.

Be advised that there are numerous cutbacks on your ordinary spending habits. For instance, things like lawn men, motor vehicles with expenses over $400.00, pool men, and expensive visits to the beauty salon will be deemed "luxuries" which will not be allowed or will be reduced in your budget. Moreover, there have been attacks on such things as private education for the children or large budgets for the clothing of the children.

There is no die and cast rule about what can be paid. For instance, although a mortgage payment may be high, it is an obligation which must be paid. Therefore, it appears that any mortgage will be allowed. The car payments in excess of $400.00 are very much questioned. Case law is arising on this issue. Day care is allowed. However, the amount paid to day care and the amount of use may be questioned. Lawn men and pool men who are paid a reasonable amount are not deemed to be luxuries, but when they are paid extraordinary amounts of money, then they will be questioned. More often than not, dining out is a luxury. Therefore, food budgets in the thousands of dollars on a monthly basis have been attacked successfully by the U.S. Trustee. In order to avoid these situations, you may very much want to consider utilizing Chapter 13 instead of Chapter 7. This is the purpose of this section of the Bankruptcy Code and the purpose of the U.S. Trustee in enforcing the same.

If you are a party who is earning in excess of $35,000.00 as a single person and in excess of $45,000.00 as a married person, I highly recommend that you go through your budget by looking at your checks, credit cards, or whatever method of payment you use for each and every item in the budget that you will be filing with the Bankruptcy Court.

What is an Adversary Complaint?
Sometimes the jargon included in bankruptcy is antiquated and makes it difficult to understand. Although we know the term adversarial, or adversary, the term adversary complaint is not commonly used by American laymen.

To put it simply, a lawsuit is filed within the bankruptcy. That lawsuit, pitting Plaintiff against Defendant, is called an adversary complaint. Such complaints are filed by creditors against the debtor, by the panel trustee against parties, or by the debtor against third parties. In any event, the complaints involve what would normally be seen in other forums. In an adversary, there is a complaint, discovery, and ultimately a trial, if necessary. Such actions are over and above the standard scope of services rendered.

It was rare to see an adversary complaint filed in a Chapter 13. The only time that it would probably be filed would be in a Chapter 13 involving tax liabilities where discharge of the taxes is sought. The new law has greatly expanded the debts which are subject to adversary complaints. Hence, the need to hire counsel who can handle litigation exists whether you file a Chapter 7 or Chapter 13 case.

Quite often, in Chapter 7 there are complaints filed against the debtor for the dischargeable debts (see dischargeable debt list in another section of this page). There are complaints filed by the debtor against third parties seeking the termination of a dischargeable liability. There are complaints filed by the debtor to retrieve assets. Lastly, there is always a trustee appointed in Chapter 7 cases. That trustee often files lawsuits against parties in regard to the case. Those complaints tend to be called Apreferential transfer @ complaints or Afraudulent transfer @ complaints.

In Chapter 11 case, there quite often are cases brought by the debtor against parties for the retrieval of assets. Sometime a trustee is appointed. Either the trustee, or the debtor itself in Chapter 11 can file suit. Those complaints also tend to be called Apreferential transfer @complaints or Afraudulent transfer @ complaints.

What is False Financial Non-Writing?
A false financial non-writing is unequivocally non-dischargeable under 11 U.S.C. 523(a)(2)(A). For that reason, if you file a Chapter 7 case, that debt would be non-dischargeable if a creditor files an action under that subsection within the time frame permitted under the appropriate bankruptcy rules of procedure.

However, the filing of a Chapter 13 which included a non-dischargeable debt as recited above would not subject you to either the litigation or to a question of whether your discharge should be granted. Instead, the price a debtor would pay would be to make payments to the trustee over a period of 3 to 5 years and, upon the completion of payments, be discharged of all unsecured debt as well as the false financial statement debt. Before you determine which chapter to file, you must look into this matter with your attorney to determine whether or not a false financial statement exists in your case. And, make sure the attorney can review all of the facts to accurately assess the likelihood that your discharge will be affected by such representation

What is D.U.I. Liability?
Although it refers to "vehicles" in the Code, any DUI accident involving a motor vehicle, boat, or other motor assets (and the same being subjected to DUI-type statutory liability) could affect your discharge. If there has been an adjudication of guilt for the violation of the statute regarding DWI or DUI, it is best to think about filing a Chapter 13. In Chapter 13, that debt would be discharged. All the liability associated with that debt would be discharged. In addition, upon that discharge being granted, any revocation of your driving privileges could be reinstated. Therefore, Chapter 13 cases involving debtors with DUI/DWI convictions or adjudications of guilt would permit the debtor to receive not only a discharge of a potentially disastrously large civil liability, but would further permit the debtor to have his/her license reinstated.

What are the Tax Issues?
The tax issues are covered by 11 U.S.C. § 523(a)(1). A simple rule of thumb is that if you have no lien placed against you, and if the taxes were filed more than 3 years prior to the petition date, and if you have not been assessed within 240 days of the petition or no assessment is pending at the time of your petition, the tax would be very likely to be dishcharged. The ultimate exception to such tax liability would be any kind of tax where you held money for others – most commonly called trust taxes, or most commonly seen by 941 returns by corporate offices.

In the past, there was a great tax loophole in Chapter 13. Until recently, if you did not file a tax return, or your tax return was filed between 2 and 3 years from the date of the petition, or you willfully fraudulently file the tax return more than 2 years from the date of the petition, that tax could be discharged under 11 U.S.C. § 523(a)(1)(B) as looked upon in 11 U.S. C. § 1328. This required an adversary complaint and some affirmative action on behalf of the debtor against the United States of America, the party representing the taxing authorities.

Those days are gone. The new law has closed that loophole.

Working with and through the taxing authorities is more required under the new law. These issues are neither simple nor are they meant to be. Before you engage with any issues in regard to the same, you must have the following in your possession and delivered to your attorney: (a) a copy of the tax return; (b) a copy of any offers and compromise delivered to the taxing authorities; ( c) a clean bill of health from the county in which you reside showing there are no liens filed against you any time during the 3 years prior to the time you meet with your attorney; and (d) a document showing the history of the IRS’s collection activities against you in regard to the taxes in question.

If taxes are a major concern, these offices have handled such issues on numerous occasions and would be more than willing to enter into an engagement to handle such matters.

Tax Disputes
Whenever one hears about tax disputes, most taxpayers associate such audits or attacks with their other greatest fears. Not dissimilar to that monster that lived underneath your childhood bed, the tax man looms.

Fortunately, legislation over the past decade has made handling tax disputes much easier. The rights of taxpayers have grown immensely. The Internal Revenue Service has become a "kinder and gentler" enforcing authority. The interest rates have lessened extremely. The penalties can often be waived if the taxpayer shows good faith in making remedies for past errors.

To handle a tax dispute, you must bring the appropriate documentation. It is probably most advisable that your accountant coordinate with your attorney to determine what documents exist and what needs to be done. Thereafter, contacts will be made with the Internal Revenue Service to determine what it is that they seek and what can be done to fashion a remedy.

Tax disputes have so many methods of being handled. You can handle the dispute in Claims Court (a court which enters many unique rulings on the issues), in the District Court (where you must deposit your liability before having jurisdiction), and in the Tax Court (where no deposit is required but the taxpayer oftentimes does not fare well). If you have other monetary problems associated or not associated with your tax issues, a fourth forum is available: the Bankruptcy Court. Oftentimes, the Bankruptcy Court is the most friendly.

Handling tax disputes is best handled in a non-adversarial fashion. Reviewing the documents and presenting an open case to the taxing authority tends to work most effectively. They are not out there to seek your family heirlooms and other assets. Instead, they want to be paid over a period of time and they are usually extremely reasonable in accepting payment terms.

If you would like to utilize the services of this firm for handling your tax disputes, it is advisable that you originally try to obtain all documents affiliated with your tax disputes from your accountant and meet with counsel. At the time you receive your documents from your accountant, obtain a business card or other documentation regarding your accountant so that your attorney can coordinate the efforts with the tax expert who you have used in the past for your federal liabilities.

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