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Orlando Attorney Lewis Roberts

Tag: daytona beach

Tag: daytona beach

Chapter 13 Bankruptcy and Your Car Payment

Posted on November 27, 2024 - 12:00 am by

Florida Chapter 13 cases often come with questions about cars. Clients frequently own or are financing an automobile and are worried about losing their car when they file a Chapter 13 petition. This is a reasonable concern, especially since the main benefit of Chapter 13 bankruptcy over Chapter 7 bankruptcy is that it is supposed to allow you to keep most or all of your assets.

The Good News for People Filing Chapter 13 Bankruptcy

The good news is that when you file for Chapter 13 bankruptcy in Florida, there may be a way to get relief from car loans with high payments, high interest, or loan amounts greater than the car’s value. If you are paying a high interest rate on your car loan or have payments that are too high to be affordable, Chapter 13 may be able to help you lower the interest rate or payments. Many people are paying more than 10% for their car loans. In Chapter 13 cases filed in Florida, it is fairly routine for a lender to be required to accept 10%.

Most people who are making car payments will pay them at a lower rate after declaring Chapter 13 bankruptcy.

The Till Rate

The reason that many lenders will accept a 10% rate is due to the outcome of a court case that set a fair rate for car loans. The shorthand lawyers use is called the Till Rate, named after a 2004 court case decided by the U.S. Supreme Court called (what else?) Till v. SCS Credit Corp.

There are some limitations on your ability to use a Till Rate, but if it is possible, then it would allow you to reduce your car loan rate – and thereby lower the monthly payment amount.

Let’s take an example of how the Till Rate may work for you. Let’s say you’re paying $500 per month for your SUV. The loan has 36 months left on it, and your interest rate is 18%. When you file for Chapter 13 bankruptcy, I may be able to reduce that amount to 10%; you’d pay the balance of the loan through your Plan, which would reduce the monthly payment and possibly provide some relief.

One potential pitfall with this scenario is that you must complete your bankruptcy case. If your case is dismissed or fails, the deal is off and you’ll be back to your old 18% rate, and have to catch up the shortage you were paying during the time you were in chapter 13.

Worried about losing your car after filing for Chapter 13 bankruptcy? I will help you get your finances back on track while keeping your prized possession. Contact me at (407) 749-0080 today.

Committing to a Chapter 13 Payment Plan

This type of bankruptcy requires a long-term commitment. You will need to make payments, on time, for three to five years. The cost of those payments is determined by the court based on your ability to repay, so you won’t be required to pay more than your income allows.

However, just because the payment plan is viable, that doesn’t necessarily mean it is easy. You will likely need to be very careful with money for the full duration and won’t be able to enjoy luxuries. That can be a difficult commitment for some people. Not everyone successfully makes it through Chapter 13 bankruptcy. Failing to complete bankruptcy is difficult because your debts are still hanging over your head and you can no longer rely on the bankruptcy process to protect you. In this situation, you would likely lose your car as you would be required to make full payments to catch the loan up at the same time that all of your other delayed bills also come back to life.

What if Your Car Is Paid Off?

This is the best-case scenario. If you have no debt on your vehicle, it shouldn’t be at risk in a Chapter 13 bankruptcy situation. As soon as you enter Chapter 13 bankruptcy, an automatic stay is placed on all of your debts. This means, among other things, that creditors can’t place liens on your property.

Safety of Your Car After Bankruptcy

Possibly the best news is that once the bankruptcy process has been completed, you will no longer have any debt on your vehicle, unless your loan is longer than the life of the plan. That is true even if the amount you paid during the bankruptcy process was less than the total amount that you should have paid to fully pay off your car. That is the beauty of the bankruptcy system. It is designed to help you get a fresh start as long as you do your best to pay what you can.

The experience of a debt-free life is a powerful one, possibly allowing you to take care of your family and provide for your future in a way not otherwise possible.

Contact a Chapter 13 Bankruptcy Lawyer in Florida Immediately

The fear of losing your car from bankruptcy is entirely reasonable. Thankfully, that is a fear that shouldn’t come to fruition with the right preparation and assistance. My law firm can help you take advantage of bankruptcy without losing your freedom to get around.

Chapter 13 bankruptcy may seem daunting, but it can potentially protect you when you are in financial peril. When you’re ready, it’s worth it. Call (407) 749-0080 now for a free consultation to see how I may be able to help you.

Federal Tax Intercept – What is it?

Posted on April 15, 2019 - 11:16 am by

A Federal Tax Intercept is an interception of any refund you are receiving from your tax return by the Internal Revenue Service to pay off government debt.  Federal Student Loans are such a government debt which may result in a tax intercept. Typically, you will not receive any specific advance notice of the intent to intercept, but it is often in the list of potential resolutions listed on other delinquency and default notices you received from your servicer or collections company for your student loan. You find out the hard way that a tax intercept has occurred when your tax refund is not delivered.

Can I Stop A Federal Tax Intercept?

Stopping a Federal Tax Intercept is not easy, but it can be achieved. Typically, staying the intercept requires multiple documents to be submitted which may cause confusion.

An attorney familiar with the necessary documents and form preparation can perform this work. In fact, you may need to consult with an attorney to complete the forms correctly and understand the implications of filing them.

If you use a document preparation service, be sure they disclose the price before you tell them what you need and that they can explain the tax intercept, its process and ramifications before you pay them anything.  Many of these service companies do not understand and are unclear about the process and chance of acceptance. They do not know the laws and may leave you frustrated and defenseless. I can evaluate your federal tax intercept and advise you, before you go through the process, what your chances of success are and if you even meet the requirements to avoid the tax intercept.

Does My Spouse Lose Tax Refunds as Well?

If you and your spouse file jointly and you receive a Federal Tax Intercept, your spouse may have an option to recover their portion of the intercept.  Your spouse may submit an Injured Spouse form to the Internal Revenue Service and get the refund in an amount similar to the amount your tax return justifies for your spouse’s portion.  This can appear to be somewhat subjective as the IRS is not obligated to agree with the amount you feel your spouse is due.  However, the IRS will typically go with the amounts calculated directly from your tax return. If you do not file taxes jointly with your spouse, your spouse will most likely not be affected by your federal student loans and have their tax refund intercepted.

Can I Go to Jail If I Don’t Pay My Debts?

Posted on February 25, 2011 - 8:57 am by

Many people think they can go to jail (debtor’s prison) for not paying their debts. This is not true.

It is your right to ignore a lawsuit, if you want to – up to a certain point. I don’t think that is a very good strategy, but it is your right.

If for whatever reason you don’t want to fight a lawsuit against you, it can be ignored. But a judgment will likely be entered against you.

Some people feel that since their creditors have nothing to take from them (maybe they are unemployed, their assets are exempt, etc.), then there is nothing a creditor can do to them in the lawsuit. This can lead to problems as well.

First, if you are working, a creditor may be able to garnish your wages. And once a garnishment hits, it can put a stranglehold on your finances and ability to make necessary payments – like your car or mortgage.

Second, if a creditor gets a judgment against you, and you ignore it, you could end up in jail.

Yes, an extreme result. Please see a Wall Street Journal article on the topic.

And I know what you are saying: But there is no debtor’s prison in Florida!

This is true. You cannot be thrown into jail or prison for not paying your debts.

But you CAN be thrown into jail for ignoring a court order. This is how some creditors get around not having debtor’s prison.

Once the creditor gets a judgment against someone, they are entitled to get certain information from the debtor. This is usually in the form of a Fact Information Sheet. As a judgment debtor, you will have to let the creditor know about your assets, wages, bank accounts, as well as other information.

If you don’t provide this information to the creditor, then they may ask the judge to hold you in contempt of court – for failure to abide by the court’s order. This is how someone ends up in jail.

While a contempt order is not very common, it shows you the peril of simply ignoring a lawsuit – which is almost always the worst course of action one could take. Burying your head in the sand, or running from the problem, usually will make the problem worse and more costly to fix later.

If you are served with any lawsuit, the first thing you should do is consult with me as to your options. Get your options early, make a decision, and follow through.

Call 407-749-0080 for a free consultation to see how I may be able to help you.