Should you Reaffirm a Mortgage In Bankruptcy?

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My answer is NO.

Reaffirming a debt means that if you don’t make your future payments the mortgage company can sue you for the balance due after your Chapter 7 is over.   The debt is not discharged if you reaffirmed the debt.

Debtors are required to reaffirm their car loans in bankruptcy in order to keep their vehicles, even if they are current on the vehicle.  Mortgages are a different story however, you can just continue to pay the mortgage and keep the house, without reaffirming the debt.  The mortgage company will not report your mortgage payments, on time or late to the credit bureaus.

If the debtor stops paying the mortgage and has not reaffirmed the debt, the most the mortgage company can do is to take the house back in foreclosure.  The mortgage company will not be able to obtain a personal judgment against you if you have a bankruptcy discharge and did not reaffirm the debt.

This means if later you decided you do not want to keep the home any longer, you can strategically default on your mortgage and just walk away.  This is very valuable.

Why would you consider reaffirming a mortgage then?

If the mortgage company agrees to modify one or more of the mortgage terms so the mortgage is more beneficial to the Debtors you could consider reaffirming.   Possible modifications terms could be a lower interest rate, a lower monthly payment, placing arrears on the back end of the mortgage, or deeming a default current on your credit report.

Reaffirming a mortgage debt requires a complex multi-page agreement which must be approved by the Court.  Unless the Debtor is receiving a  benefit from the mortgage company, most attorneys will not sign off on the agreement and it will require a court hearing.

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney

How Do I Know If I Can File Chapter 7?

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To file for Chapter 7 bankruptcy, you must qualify under the Chapter 7 means test. The means test first compares your income to the median income in Florida. If your income is lower than Florida’s median income for the size of your household, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income, other calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.

As of 5/1/2020, the Medium Family  Income is as follows:

State 1 earner Family Size
2 People 3 People 4 People *
Alabama $48,544 $56,918 $68,554 $82,991
Alaska $63,997 $77,589 $102,315 $103,055
Arizona $52,319 $65,713 $71,704 $86,950
Arkansas $43,230 $53,946 $58,258 $74,086
California $60,360 $79,271 $88,235 $101,315
Colorado $61,921 $81,155 $94,193 $107,867
Connecticut $66,689 $88,594 $101,666 $125,714
Delaware $55,578 $72,644 $84,584 $102,625
District of Columbia $63,414 $115,082 $129,777 $140,615
Florida $51,559 $62,736 $68,944 $82,560
Georgia $50,128 $65,007 $73,738 $87,317
Hawaii $65,977 $77,621 $100,620 $114,381
Idaho $52,117 $61,916 $67,422 $77,923
Illinois $54,877 $72,593 $83,759 $103,074
Indiana $48,834 $62,931 $73,537 $87,636
Iowa $51,579 $69,127 $78,930 $95,581
Kansas $51,867 $67,221 $76,999 $88,698
Kentucky $44,594 $56,257 $66,732 $80,115
Louisiana $45,634 $55,410 $63,039 $82,282
Maine $51,453 $64,889 $78,379 $95,614
Maryland $70,789 $90,424 $106,282 $128,272
Massachusetts $67,119 $84,125 $108,130 $134,418
Michigan $53,113 $64,428 $78,217 $93,653
Minnesota $58,050 $77,702 $97,657 $114,326
Mississippi $42,414 $51,904 $58,472 $69,732
Missouri $49,086 $61,519 $73,857 $92,129
Montana $51,074 $64,425 $74,919 $87,293
Nebraska $49,680 $69,294 $78,674 $95,445
Nevada $52,449 $65,756 $74,856 $81,528
New Hampshire $66,585 $80,429 $102,095 $122,523
New Jersey $69,705 $83,739 $106,650 $131,331
New Mexico $45,645 $56,327 $60,617 $67,560
New York $57,137 $72,642 $88,240 $107,550
North Carolina $48,772 $62,050 $69,162 $87,505
North Dakota $53,306 $80,899 $87,824 $99,327
Ohio $51,297 $64,665 $77,642 $93,239
Oklahoma $49,198 $59,495 $66,585 $76,691
Oregon $56,957 $71,838 $80,698 $99,074
Pennsylvania $54,605 $67,540 $83,868 $103,316
Rhode Island $61,706 $75,858 $85,100 $104,833
South Carolina $47,487 $61,529 $66,595 $81,226
South Dakota $47,906 $69,046 $70,326 $83,823
Tennessee $48,219 $60,913 $69,734 $79,701
Texas $50,902 $66,899 $73,948 $86,259
Utah $64,806 $69,006 $82,638 $93,474
Vermont $57,859 $75,602 $81,686 $103,627
Virginia $62,029 $79,412 $91,995 $111,993
Washington $67,511 $80,251 $92,568 $107,481
West Virginia $49,056 $52,028 $64,281 $76,273
Wisconsin $52,730 $68,363 $83,607 $100,098
Wyoming $62,090 $74,286 $78,310 $97,862
* Add $9,000 for each individual in excess of 4.
Commonwealth or U.S. Territory 1 earner Family Size
2 People 3 People 4 People *
Guam $42,770 $51,139 $58,275 $70,520
Northern Mariana Islands $28,722 $28,722 $33,416 $49,148
Puerto Rico $24,701 $24,701 $26,023 $34,108
Virgin Islands $33,935 $40,785 $43,486 $47,642
* Add $9,000 for each individual in excess of 4.

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney

 

Chapter 7 Debts

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The most common debts that are dischargeable in Chapter 7 bankruptcy include:

  • Credit card debt
  • Repossession deficiencies on vehicle loans
  • Medical bills
  • Personal loans
  • Judgments
  • Auto accident claims
  • Negligence claims
  • Business debts
  • Leases
  • Guaranties
  • Tax penalties over three years old
  • Income taxes that are not priority taxes

Under the United States Bankruptcy Code, Congress has determined that certain types of debt are not dischargeable in Chapter 7 bankruptcy for public policy reasons, which means you must still repay these debts after bankruptcy. The following debts are usually not dischargeable:

  • Child support and spousal support (alimony) obligations
  • Government-backed student loans
  • Debts incurred by fraud or intentional wrongdoing
  • Criminal fines and restitution

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney

Time Limits Between Bankruptcy Filings

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Many people are now wondering since I previously filed Chapter 7, can I file bankruptcy again?   Yes of course, there is no lifetime limit on filing.  There are however limits between filings.  Chapter 7 bankruptcies must have eight years between the filing date and the new Chapter 7  filing date.  If you previously filed Chapter 7 and are now thinking of filing Chapter 13,  you should wait four years in order to receive a discharge in Chapter 13.

  • If you file Chapter 13 within four years of filing Chapter 7, you cannot discharge your debts after you complete the three- to five-year Chapter 13 plan. You can still file Chapter 13 to keep creditors from suing you, garnishing your paychecks, or levying your bank account.  You may want to file another Chapter 7 bankruptcy when you have passed the eight-year mark.
  • If you file Chapter 13 four years after filing Chapter 7, you can have a very low monthly Chapter 13 payment plan and receive a full discharge of all remaining balances after you complete the three- to five-year plan.

There are some circumstances where you may want to file a Chapter 13 right after receiving your discharge in Chapter 7,  even though you will not be eligible for a discharge in Chapter 13.   These are called Chapter 20 cases. This would be done to save your home for example, since there is not a way to do this under Chapter 7 if you are behind on payments.

Remember 2-4-6-8! 

Two Years – Two years between a prior Chapter 13 bankruptcy case and a new Chapter 13 Case.
Four Years – Four years between a prior Chapter 7 bankruptcy case and a new Chapter 13 case.
Six Years – Six years between a prior Chapter 13 bankruptcy case and a new Chapter 13 case.
Eight Years – Eight years between a prior Chapter 7 bankruptcy case and a new Chapter 7 case.

In some cases you can file a new Chapter 13 before your previous Chapter 13 is discharged. It also is possible to convert your case to Chapter 7 if your financial situation has drastically changed.   Give us a  call to discuss your particular case at (727) 410-2705.

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney

 

 

Pinellas County Teachers and Staff

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Pinellas County Schools

Teachers and staff did you know that if you participate in the MetLife Legal Plan through Hyatt Legal – you can receive – a free trust, will, quitclaim deed, living will, healthcare surrogate, and DPOA before the end of the year.

If you use my office – Carol Lawson PA- #727-410-2705, not only are after school appointments available, but you will receive a Dementia Directive for free.

Hyatt will also pay the Attorney fees ( no costs) for a Bankruptcy. Our office participates in this area handling Chapter 7s only.

To get started go online to your Hyatt legal plan, obtain a case number and then call me to schedule a free appointment today.

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate

HOW WILL YOUR BANKRUPTCY AFFECT YOU PERSONAL

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HOW WILL YOUR BANKRUPTCY AFFECT YOU PERSONAL INJURY CASE?

How will Bankruptcy affect your Personal injury case? This greatly depends on which occurred first, and which chapter of bankruptcy you are in. Is your personal injury case pending and you needed to file bankruptcy? Or were you in bankruptcy when you were injured and your personal injury case arose? Are you worried now about getting the right personal injury lawyer? Well don’t worry, there are plenty that you could pick from. Why not check out someone like this Columbia personal injury attorney to give you a better idea of what to expect.

When did the Injury occur? If it was before you filed bankruptcy it is the property of the estate.

Chapter 7

If your personal injury case is pending and you file Chapter 7, you will lose your claim (Bk §101(5)) entirely, it will become the property of the estate, including your entitlement for payment of future medical expenses. The trustee will settle the claim liquidating damages, for the benefit of your creditors (Bk Code §726) (BK Code §521(a)). The bankruptcy judge will enter an order approving your settlement. The injured party- debtor has no standing to object to this settlement unless they can convince the judge that the claim would have sufficient recovery to pay all creditors in full and a surplus for the debtor. The Debtor bears the burden of proof.

There are some personal injury claims that are exempt from this such as a Worker’s Compensation Claim. Contact our office for more details.

Also, the Debtor needs to be aware that any medical expenses incurred after the filing of the bankruptcy petition are not discharged in the bankruptcy. You will not be released from personal liability. The trustee will pay only a portion of those medical bills as part of the estate’s administration.

It is also extremely important that your personal injury attorney and your bankruptcy attorney be made aware of your filing both for your protection and theirs. If you would like some more guidance on what to do then you should check out a website like www.nehoralaw.com, this might help you have a better understanding of what to do. Insurance companies regularly check bankruptcy filings to see if you disclosed the claim and if it was done so properly. Failure to disclose can result in the insurance defense attorney moving to have your case dismissed on the day of trial, as the trustee is now the proper party plaintiff. If the statute of limitations has run, then the trustee’s only recourse is now to sue you, revoke your discharge and possibly refer you for criminal fraud charges to the F.B.I.!

Property interests or settlements you may be entitled to within 180 days of filing your bankruptcy petition are also subject to administration by the bankruptcy court.

Your personal injury attorney needs to know not only for how they are going to administer your case going forward, but they must be selected by the trustee, and appointed by the court to continue in your case and receive compensation. There are loads of personal injury attorneys that you could get. For example, you could check out someone like this Forth Worth Personal Injury Lawyer, but there are plenty of others that you could pick from.

Chapter 13

If your personal injury case is pending and you file Chapter 13, you again must disclose the personal injury claim. The debtor will be able to choose and retain counsel, pending court approval. The personal injury attorney will represent both the debtor and the bankruptcy estate/ chapter 13 trustee. Once a settlement is agreed to it must be approved by the bankruptcy court, along with the personal injury attorney’s motion for attorney fees and costs. The Court under a separate motion the Court will determine the distribution of the remaining proceeds between the debtor and the bankruptcy estate.

If you are experiencing problems with multiple creditors, and can benefit by filing bankruptcy while awaiting the resolution of your personal injury claim, or would like to discuss any debt issues, contact our office to schedule a free consultation.

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate

April-July Special- Chapter 7 at $795

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Clearwater Bankruptcy Attoreny

Chapter 7- $795 excludes filing fee includes personal property appraisal and credit report.

Chapter 13 -$1,500 down balance through plan capped at $4,500 plus administrative fees excludes filing fee, includes personal property appraisal and credit report, does not include loan modification ( additional $1800 through plan).

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate

Chapter 13- MEANS TEST

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Chapter 13 is a section of the Bankruptcy Code which allows individuals who are in financial difficulty to pay their creditors over time, while under the protection of the Bankruptcy Court. The Bankruptcy Court issues an order, preventing creditors from taking any action against you the moment the bankruptcy is filed just as in a Chapter 7.

You are required to pay your “disposable income”, which is defined as income that is not reasonably necessary for the maintenance and support of you or your dependents, during the “applicable commitment period” . What the Court says is your disposable income may differ greatly from what you think is your disposable income.   The Trustee looks   at the IRS code if it is not allowed as a deduction there, you probably can not take it on the DMI. If you want to take additional expenses you need to have all the receipts to prove the expense for at least 6-12 months. You will need to provide these receipts for expenses to the Trustee. For example all those school supplies you have to buy each year- not an allowable expense.

Prior to October 17, 2005 under the bankruptcy code, disposable income was calculated by subtracting reasonable monthly expenses from actual monthly income. This system was changed by the passing of BACPA.  The new law is not consumer debtor friendly.

Under the current law, however, this is no longer true. pursuant to the required “means test” the amount of your monthly income is equal to your average monthly income received during the previous six months, and not actual income received at the time of filing. This will include any bonus you received, even if they were only a one time payment.   I know this sounds ludicrous! For example, consider the example of a debtor who, during the six months before filing, enjoyed a high income, but whose income now is much lower. The bankruptcy code, as written, requires the use of the higher, but no longer real, income. A debtor who during the last six months had a comparatively low income but who now earns a high income would not have to use the higher income in calculating disposable income.  Bankruptcy courts have struggled to attempt to reconcile the disposable income as determined by the means test with the amount left after deducting actual expenses from actual income. The court might allow the lower disposable income amount calculated by subtracting actual expenses from actual income, but require interest to be paid to unsecured creditors. The Trustees in the Middle District of Florida- Tampa want 5.25% per month interest paid to unsecured creditors for an over the means debtor who pays 100% plan over 60 months at less then the amount determined by the DMI.

Disposable Income is determined by allowing you to deduct “reasonable” expenses.   Higher income Debtors those above with income above the state median for a household of the same size as yours, are not necessarily the expenses you actually incur.  These expenses are based on national or regional standards determined by the IRS and enforced by the US Trustee Office through the Chapter 13 Trustee, they are irrespective of what you actually spend.

Needless to say, this can require involved and detailed analysis, and determining the amount you will pay in a Chapter 13 plan can be very difficult, time consuming and frustrating for you. This is why you need an attorney to file Chapter 13.  Contact my office to schedule an appointment at (727) 410-2705 or you can use our contact form.

 

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate

FLORIDA EXEMPTION STATUTES

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One of the most common questions I receive are what exemptions are available to me in Florida under bankruptcy.   I have  included a list of  exemptions under the bankruptcy code below.   Please remember to contact us for your bankruptcy needs .

FLORIDA EXEMPTION STATUTES

Description LAW Max Individual Amount Max Joint Amount
Alimony Child Support FSA § 222.201, U.S.C.§  522(d)(10)(D) UNLIMITED
Annuity Contract Proceeds FSA § 222.14 UNLIMITED
Any Personal Property – No Benefit from Homestead Exemption FSA § 222.25(4) $4,000.00 $8,000.00
Benefits – Public Employee Optional Retirement Program FSA § 121.4501 UNLIMITED
Benefits Exempt From Taxes And Execution FSA §112.359 UNLIMITED
Benefits Payable Under The System FSA §121.091 UNLIMITED
Church Benefit Plans And Church Benefit Board FSA § 624.4031 UNLIMITED
Community College Optional Retirement Program FSA § 1012.875 UNLIMITED
Coverdell Education Savings Account FSA § 222.22 UNLIMITED
Crime Victims§ Compensation -100% FSA §960.14 UNLIMITED
Disability Insurance Benefits-100% FSA § 222.18 UNLIMITED
Disposable Earnings-Head of Family Earning<=$500/Week-100% FSA § 222.11(2)(a) UNLIMITED – 6months
Disposable Earnings-Head of Family Earning>$500/Week FSA § 222.11(2)(b) UNLIMITED 6 months
Disposable Earnings-Non-Head of Family 30x Minimum Wage FSA § 222.11(2)(c ) UNLIMITED 6 months
Florida Retirement System Preservation Of Benefits Plan FSA §121.1001 UNLIMITED
Fraternal Benefit Society Benefits FSA § 632.619 UNLIMITED
Gov. Employees Deferred Comp. Benefits FSA § 112.215 UNLIMITED
Health Aids – Prescribed FSA § 222.25(2) UNLIMITED
Health Insurance – Retired Public Employees FSA § 112.363(9) UNLIMITED
Homestead Fla. Const., Art. 10, §4(a)(1), FSA §§ 222.01, 222.02 UNLIMITED
Hurricane Savings Account FSA § 222.22 UNLIMITED
Life Insurance – Cash Surrender Value FSA § 222.14 UNLIMITED
Life Insurance Proceeds FSA § 222.13 UNLIMITED
Materials Furnished to Improve Real Property FSA § 713.17 UNLIMITED
Mobile Or Modular Home FSA § 222.05 UNLIMITED
Moneys Paid In To Or Out Of Medical Savings Account FSA § 222.22 UNLIMITED
Motor Vehicle (One) FSA § 222.25(1) $1,000.00 $2,000.00
Motor Vehicle Financial Responsibility Deposits FSA § 324.161 UNLIMITED
Optional Retirement Program For The State University System FSA §121.35 UNLIMITED
Partner’s interest in Partnership Property FSA §620.153, 620.8307 UNLIMITED
Partnership Interest FSA §620.8504 UNLIMITED
Payment For Injuries/Death (Hazardous Occupations) FSA § 769.05 UNLIMITED
Pension Money Of U.S. Pensioner FSA § 222.21(1) UNLIMITED
Personal Property Art. 10 § 4(a)(2), FSA § 222.061 $1,000.00 $2,000.00
Preneed Funeral Contract Consumer Protection Trust Fund FSA §497.456 UNLIMITED
Property Listed In 11 USC 522(d)(10) FSA § 222.201 UNLIMITED
Qualified Tuition Programs FSA § 222.22 UNLIMITED
Retiree Health Insurance Subsidy FSA §185.50 UNLIMITED
Retiree Health Insurance Subsidy FSA §185.50 UNLIMITED
Retirement Benefits – Firemen-100% FSA § 175.241 UNLIMITED
Retirement Benefits – Police-100% FSA § 185.25 UNLIMITED
Retirement Benefits – Public Employee-10 FSA § 121.131, 121.055 (6)(e)2 UNLIMITED
Retirement Benefits – State & City Empl. FSA § 122.15 UNLIMITED
Retirement Benefits – Teachers-100% FSA § 238.15 UNLIMITED
Retirement, Profit-Sharing Benefits FSA § 222.21(2) UNLIMITED
Senior Management Service Class FSA §121.055 UNLIMITED
Social Security, Public Assistance Benefits FSA § 222.201, U.S.C.§  522(d)()(10)(A) UNLIMITED
Tax refunds or Credits FSA § 222.25(3) UNLIMITED
Unemployment Compensation Benefits FSA § 443.051(2) UNLIMITED
Veteran’s Benefits FSA § 744.626 UNLIMITED
Wages, Travel Expenses, Unemployment Compensation Payments FSA § 222.16 UNLIMITED
Workmen’s Compensation Benefits FSA § 440.22 UNLIMITED

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate

How Long Does it Stay on My Credit?

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The Answer is  usually 7-10 years. A Break down by account types is below:

  • Collection Accounts – Are required to be removed 7 years from the date of default on the original account. The “date of default” is the date that the original account became 180 days or approximately 6 months past due. The date the original account was assigned to the collection agency is NOT the date when the 7 year clock starts ticking.  Problems arise in find the actual default sate since many creditors tend to flip accounts from one collection agency to another.
  • Foreclosures and Repossessions – Required to be removed after 7 years from the date of the original terminal delinquency. “Terminal Delinquency” means that the account has been unpaid for 180 days, which leads to the foreclosure or repossession.  This is not the same date that the foreclosure was filed. In some instances foreclosures have been filed at 45 days  delinquency, and in others they have been over 2 years  delinquent  before the foreclosure action was filed.
  • Charge Offs – Required to be removed 7 years from the date of original terminal delinquency.
  • Settlements – Required to be removed 7 years from the date of original terminal delinquency.
  • Late Payments – Required to be removed 7 years from the date the late payment occurred. The account does not have to be removed if it did not go into default, just the late payments associated with the account.  I do not see this being followed by the credit bureaus unless you point it out.
  • Judgments – Required to be removed 7 years from the date the judgment was filed, whether it has been satisfied or not.
  • Bankruptcies – Chapter 7 bankruptcies must be removed no later than 10 years from the date filed. Chapter 13 bankruptcies can remain on your credit reports for 7 years from the date of discharge, though this date may not exceed 10 years from the date filed.
  • Tax Liens – Paid and released tax liens are required to be removed from your credit reports 7 years from the date released. Withdrawn tax liens will be removed from your credit reports immediately. Unpaid tax liens are never required to be removed from your credit reports.
  • Federal Student Loans – The FCRA is silent on the issue of defaulted federal student loans.  Credit reporting limitations for these items are governed by the Higher Education Act. Once a defaulted student loan has been paid it is required to be removed from your credit reports after 7 years. However, unpaid federal student loans can remain upon your credit reports forever. The good news is that they may not be able to sue you or collect on them depending on the Statute of Limitations in Your State.  In  Florida they need to initiate suit on a written contract within 5 years of  the  default. F.S. §95.11(2)(b).

In some instances items that normally would be removed and not appear still may be on your report:

  1. Report is used for employment screening of a job expected to pay $75,000 or more.
  2. Report is for a life insurance policy with a value of $150,000, or more.
  3. Report is used as part of loan underwriting for an amount of $150,000, or more.

Filing Bankruptcy will result in the other negative items, other then Student Loans , Judgments( if a Motion is not filed) and Tax Liens being  zeroed out on your credit report with the notation included in bankruptcy or in some cases totally removed.  Bankruptcy will actually increase your credit score once your discharge is entered.   For a free consultation  please contact my office.

Related Articles

Unpaid Debt and the Statute of Limitations

Debt Collection Calls

Debt Collector’s Calling?

 

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

 Clearwater Bankruptcy Attorney, Clearwater Bankruptcy Lawyer, Clearwater Bankruptcy, Clearwater Estate Planning Attorney,  Pinellas Estate Planning Attorney, Pinellas Probate Attorney #FileLocallyDontOverpay #ClearwaterBankruptcy #ClearwaterBankruptcyAttorney #ClearwaterEstatePlanning #ClearwaterProbate