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Fritz
Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience:  Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
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If I file a chapter 7 bankruptcy in Florida for credit card

Customer Question

If I file a chapter 7 bankruptcy in Florida for credit card debt and all I own (aside from clothing) is a car which is worth between $1k to $2k, some old furniture (probably totals about $800 at the most for everything, incl my son's) and a piece of vacant land which I co-own with another individual who has nothing to do with my debt will those be "spared" from liquidation in the bankruptcy to help pay debts? I am most concerned with the vacant land. I am afraid if I don't file I can lose the property in some way as I am starting to get letter from lawyer about one of the cards.. Right now the property is valued at less than what is owed.
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  John A. Flynn, Esq. replied 2 years ago.
If you have no equity in the vacant land and based on the other assets you describe, you would not lose anything in a Chapter 7, assuming you qualify for a Chapter 7, which will also involve the "means test". If your income is below the median income for the State of Florida, there should be no problem whatsoever.
Customer: replied 2 years ago.
I am sorry I am not sure what you mean if I have no equity in the land. Do mean because I owe more in debt than what the property is valued at? What if one of the creditors sues before I would be able to file bankruptcy and wins. Would they be able to take the property with it being owned by myself and another person? Also, since I own it with another person does that mean only half of the value is mine? I have checked the means test and am well under for a family of two. Me & my son. My income is less than $25,000 a year which includes Alimony payments IF my ex actually pays them.
Expert:  John A. Flynn, Esq. replied 2 years ago.
Since there is more debt on the vacant land than what you owe, you have no equity in it, meaning if it sold for a fair market price, you would receive nothing because it would all go to pay on the land. Based on what you are telling me, you could get a chapter 7 discharge and not lose the land so long as you can make whatever payments are required on the land note. The only creditor that can take that property from you is the creditor you owe on the land note. No other creditor could take that land from you whether they sue you or not.
Customer: replied 2 years ago.
Thank you again for the response. I think you misunderstood what I wrote. Sorry. There is no debt on the land itself. The land is paid off. The debt is from credit cards only. So then even with no debt owed on the property a credit card company I owe money to can't try and take it & I can still file bankruptcy? Please remember I am not the sole owner of this land.
Expert:  John A. Flynn, Esq. replied 2 years ago.
OK, I really did misunderstand. I thought you meant you owed a secured debt where the land was the collateral. This is going to become an issue of how much the land is worth and how much in wildcard exemption you would have available to cover it. If you want to file a Chapter 7, your best bet is to find a Florida attorney to look at your situation in detail to determine if you stand to lose the land in a 7. If you do, you might be able to file a 13 and pay the non-exempt amount over 5 years to unsecured creditors.
Expert:  Fritz replied 2 years ago.

I wanted to provide another perspective here because it sounds like bankruptcy may not be necessary for someone in your situation.

You might want to consider the following alternatives to bankruptcy:

1) Selling your interest in the vacant land to pay your credit card debt, or

2) Taking out a bank loan secured by the vacant land to repay your credit card debt.

I understand that you don't want to lose your investment, but in monetary terms, it's far better to pay down your credit card debt and invest later when you have some free cash. Right now, you're basically losing 30% per year (or whatever the current interest rate on your credit card may be) on all of the money you have "invested" in your credit card debt.

Like the previous poster, I am concerned that a bankruptcy trustee would force a liquidation of the property at a significant discount to what you could probably sell the property for if you had six months or a year to sell it.

Customer: replied 2 years ago.
Thanks for your perspective. However, The land value is way less than what I owe in credit cards and the way the market is right now I am not going to sell for pennies on the dollar. It may cover paying off one card if I'm lucky. Then I'm stuck dealing with filing bankruptcy anyways for the rest of it because there is no way I can afford to pay the debt my EX husband stuck me with when he used my cards for his business expenses.
The one big point everyone seems to be missing here is I do not own the land by myself. It is CO-owned. I wanted to know the effect of that on a lien possibly being placed by one of the credit card companies.. Also, how would it affect my filing the bankruptcy... That is what I really wanted to know. The co-owner does not want to lose the land because of something they have no part of... What protection do they have if I file....
Expert:  Fritz replied 2 years ago.

If you file a Chapter 7 Bankruptcy, the bankruptcy trustee would likely sell the vacant land to pay your creditors. The co-owner would receive his share of the proceeds from the sale, but he probably wouldn't be able to stop the sale from happening.

If you don't file a Chapter 7 Bankruptcy, the credit card companies would need to take the following steps to reach your property. First, to obtain a lien against the property, the credit card companies need obtain a Final Judgment against you in court (which requires actually filing a lawsuit against you, personally serving you or your son with a Complaint, and setting at least one court hearing where you would have the opportunity to appear in court and present a defense). Then, once the credit card companies do obtain a Final Judgment against you months or years later, they need to record the Judgment in the County where the property is located (which may not be the County where you live or where the lawsuit was brought) in order to effectuate a valid lien on your property. Only at that point would the credit card companies be able to levy the property and have it sold at a sheriff's sale.

My basic point here is that if I were the attorney for the credit card company, I would be happy to see you file a Chapter 7 Bankruptcy (as opposed to having to go through the state court system to collect against you) because it would make my job a lot easier. I'm not saying the credit card company won't necessarily go after the land through the state court system, but it almost certainly won't be worth the time and expense it would take them to do so.

Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience: Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
Fritz and 2 other Bankruptcy Law Specialists are ready to help you
Expert:  cfortunato replied 2 years ago.
Question answered and answer accepted.
Thank you!

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Fritz
Fritz
Bankruptcy Lawyer
302 Satisfied Customers
Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases