Filing bankruptcy in Florida doesn’t mean you have to lose your IRA savings. IRAs (short for Individual Retirement Accounts) are exempt from the liquidation process of a Chapter 7 bankruptcy. This means you can keep the full value of any IRA account when you file for bankruptcy. IRAs, as well as other forms of retirement savings, such as 401(k) accounts, are considered exempt property under Florida and federal law. The idea is that a debtor’s retirement savings should not be sacrificed when a “fresh start” is needed.
Florida judgments seem to be finding their way to my bankruptcy practice lately. As a result of a new law relating to mortgage foreclosure deficiencies, I am having to help more people who find themselves at the receiving end of the debt collection process. They are surprised to be getting sued, even though their foreclosure is long over. What they, and any person who is in financial distress, need to understand is that a Florida judgment is the most pernicious form of creditor action, for which there is no real cure other than bankruptcy.
Medical debt and the threat of personal bankruptcy for unaffordable healthcare have surfaced as headlines in the recent mass shooting in Aurora, Colorado. Whatever the gunman’s intentions were, he likely did not mean to call attention to the tragedy that this country’s citizens face if they survive an encounter with the for-profit medical-industrial complex. The media is now reporting that many of the victims of the shooting were uninsured and that they face catastrophic medical debt for the unaffordable healthcare they received at local Colorado hospitals. Knowing that any uninsured family would face personal bankruptcy for their unaffordable healthcare, three of the five hospitals that treated the victims have agreed to waive or limit the victim’s medical bills. Fundraising efforts are underway to rescue these families from financial ruin.
A very nice Orlando couple who were convinced they needed to file a chapter 7 bankruptcy came to my office today for a consultation. Initially, it seemed that they had good reason to believe that filing a chapter 7 bankruptcy would be a good idea.
Their home had been in foreclosure for sometime. A judgment of foreclosure had been entered, and in just a few weeks, it was to be sold. Like so many Orlando homeowners, the house was substantially underwater, meaning that they owed more on the mortgage debt than the house was worth.
Until now, an Orlando chapter 7 bankruptcy has not done much to help a homeowner with an unsecured, or “underwater,” second mortgage on their property. (These mortgages are also commonly known as HELOCS, or Home Equity Lines of Credit.) In an Orlando chapter 7 bankruptcy, the courts have refused to remove a second mortgage lien, even though the chapter 7 bankruptcy eliminates all mortgage debts. Even after the chapter 7 bankruptcy is over, and the homeowner is granted a discharge of all debts, including mortgage debt, the mortgage liens remain on the property until the lender is repaid. (First mortgage liens can never be removed in a chapter 7 bankruptcy).