The Hancock Firm, P.A. Beach Bankruptcy Blog

Many people think bankruptcy is just a way to erase debts, but one of the other uses of bankruptcy is to restructure debts. The Bankruptcy Court in the Middle District of Florida has a highly successful mortgage mediation program for debtors in chapter 13 bankruptcies that need help lowering their mortgage payments or even lowering the balance on their mortgages. In this program a debtor, his or her attorney, the mortgage company's attorney, the mortgage company's representative, and a neutral mediator get together for a conference and try to work out a mortgage modification for the debtor. The approved modification is filed with the Bankruptcy Court to protect the debtor from the bank trying to go back on its word. In several cases where the bank has not followed the order, bankruptcy judges have entered judgments against the mortgage company that gave the debtors enough money to pay off their mortgages. These cases are few and far between, but this shows the power of modifying a mortgage through the bankruptcy system rather than outside of bankruptcy where there is no federal court order to back you up. Additionally, the bank has to stop the foreclosure process when a bankruptcy is filed whereas the bank does NOT have to stop the foreclosure process while a modification outside of bankruptcy is pending. Another benefit is that most of the attorneys fees for a chapter 13 bankruptcy and loan modification are paid through the case in the form of monthly payments so debtors do not have to come up with thousands of dollars at one time.

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Many people are probably wondering how the current government shutdown impacts bankruptcy filings. Although the courts are short staffed they are currently still open and the electronic filing system is up and running. If you need a bankruptcy now, please don't let the current state of affairs stop you from seeking the relief you need. Please feel free to contact me with any questions.

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The first few steps are the same as filing for a Chapter 7 (see post below); the main differences begin with the 341 Meeting of Creditors. Instead of meeting with a Chapter 7 Trustee you will meet with the Chapter 13 Trustee. The hearing usually takes a little longer because there are more things for the Trustee to go through, such as your Chapter 13 repayment plan. If all goes well at the 341 Meeting, your plan will be approved by the judge at the Confirmation Hearing. Although you must attend the 341 Meeting, you do not have to attend the Confirmation Hearing (your attorney will be there on your behalf). Once the plan is approved your main responsibility is to keep making your plan payments in a timely manner. If something happens and you cannot afford your plan payments, you should immediately contact your attorney so he or she can see if your Chapter 13 can be modified or even converted to a Chapter 7 Bankruptcy. The Chapter 13 is a three to five year plan, so it is important to keep in touch with your attorney to make sure everything goes smoothly. You will also have access to a website where you can check the progress of your case.

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Once the bankruptcy petition is filed, a case number is assigned by the court and a date is set for the 341 Meeting of Creditors. This meeting is typically the only court hearing a debtor will have to attend and is set about a month after the case is filed. The date, time, and trustee are assigned by the court (not your attorney). In the meantime, the required debt management course should be completed. The debtor attends the meeting with his or her attorney and is asked questions by the trustee under oath. The questions are based on the petition filed and the hearing lasts about five minutes. If the trustee has everything he or she needs, the discharge (the official court paper forgiving your debt) will be issued in about three months and your case is completed. If any creditors bother you during this time or at any time after your filing date it is important to contact your attorney. 

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Many people want to know how long a bankruptcy takes. This post will be the first in a series outlining the process from start to finish. 

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