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Celebrity Bankruptcies

• Burt Reynolds: He filed for bankruptcy in the 1990s after his divorce; he was $10 million in debt at the time.

• Toni Braxton: She’s declared bankruptcy not once but twice, most recently in 2010.

• Willie Nelson: He owed the IRS more than $16.7 million when he filed for bankruptcy in 1990.

• LaToya Jackson: She got into debt thanks to her failed music career, and declared bankruptcy in 1995.

• Larry King: He filed for bankruptcy in 1978, when he was $350,000 in debt, before making it big on CNN.

• Cyndi Lauper: After her group disbanded and she was sued by the manager, she filed for bankruptcy in 1981. But then her solo career took off.

• MC Hammer: He was more than $13.7 million in debt when he filed for bankruptcy in 1996.

• Donald Trump: Not only has he filed for bankruptcy—he’s done so twice, but obviously rebounded both times.

• Kim Basinger: She had to file for bankruptcy after pulling out of a movie and owing the studio $8.1 million in damages.

• Tia Carrere

• Burt Reynolds

• Toni Braxton

• Teresa Guidice

• Willie Nelson

• Suge Night

• LaToya Jackson

• Mike Tyson

• Larry King

• Cyndi Lauper


Can My Credit Card Company Reject My Bankruptcy Claim?

In Chapter 7 bankruptcy cases, credit card debts are treated like any other unsecured claim. If your assets have been liquidated and there is enough to pay off the credit card debt, your bankruptcy trustee will do so. However, if there is debt left over after your claim has been allowed and the funds from the liquidation process have been exhausted, you are under no obligation to pay off the debt. However, in some cases, your credit card company might reject your bankruptcy claim.

Can They Really Do That?

Because challenging your entire bankruptcy claim would be very costly for the credit card company, it is extremely unlikely they will do so. Instead, it could try and cause trouble by objecting to the discharge of only that particular debt. The company might even try to get the court to dismiss your claim by trying to prove that the filing is an abuse of the system; when you should be filing under Chapter 13 and not Chapter 7, for example.

There are a number of grounds on which your credit card company can reject your bankruptcy claim. It is never a good idea to file for bankruptcy without hiring an experienced lawyer first. Otherwise, there is a good chance that you will make some mistake, which could lead to your claim getting rejected.

Some Credit Card Debts Are Non-Dischargable In A Bankruptcy Claim

Your bankruptcy claim will only be rejected if the company can prove that the card charges were incurred through willful misrepresentation, fraud or under false pretenses. There are two circumstances under which credit card charges are presumed to be fraudulent:

Cash advances: If you have used your credit card to get a cash advance of at least $925 within the prior 70 days of filing bankruptcy, the debt is presumed non-dischargeable. Where you have spent the money is not given much consideration.

Luxury goods: If your credit card has been used to buy luxury goods worth at least $650 within the 90 days prior to filing bankruptcy, the debt is considered non-dischargeable. Goods or services which are not absolutely necessary for you and your family’s support or maintenance are considered luxury goods. Items like clothing, gasoline, food, etc. are generally not considered luxury goods.

If you have incurred charges to your credit card that are believed to be fraudulent, it is up to you to prove otherwise. Unless you have hired an experienced attorney, it could be very difficult to show that you actually believed you could pay off the debt when you incurred it.

If your credit card company intends to reject your bankruptcy claim, it should file a complaint with the court within 60 days of the first meeting of your creditors. After the company files a complaint, you should respond in a timely manner. When the hearing is due, your bankruptcy attorney will argue your case before the court, and could be successful in getting a judgment in your favor.

If you have significant credit card debt and are considering filing for bankruptcy, it is very important that you hire the services of an experienced attorney as soon as possible. These types of cases can be very complex and without the aid of an experienced bankruptcy lawyer, your case may not be very strong and you will likely be unprepared in the event that your credit card company tries to reject your bankruptcy claim.

The Law Firm of Joel Aresty, P.A. is well versed in Florida bankruptcy laws and can assist you with your bankruptcy filing. Call today for a consultation at 1-855-DOC-LAWS.

Do I Qualify For A Chapter 13 Bankruptcy?

If you live in south Florida and have many unpaid debts, then bankruptcy can be an option for you.  For an individual who has a higher level of income, the best approach may be Chapter 13 reorganization rather than Chapter 7 liquidation.  The advantage of Chapter 13 is that it allows you to keep your property and assets as long as you can meet a payment plan of 3 to 5 years, in order to repay all or a portion of your debts.

What Are The Debt Limits For Chapter 13 Bankruptcy?

There are thresholds for the amount and type of debt that can be reorganized under Chapter 13, and this will be the first test to see if you qualify.  Secured debts, such as a mortgage, can’t total more than $1,149,525. Unsecured debts must be less than $383,175. Unsecured debts include credit cards, medical bills and utility bills that are not attached to any piece of property or asset.  Additionally, certain kinds of debt must be repaid in full, such as tax debts, owed employee wages, alimony and child support payments.

What Are The Income Limits For Chapter 13 Bankruptcy?

You must also pass the income test in order to qualify for a Chapter 13 bankruptcy to reorganize your debt.  There are many sources you can include to compute your disposable income to meet this test, including regular wages, social security benefits, child support, royalties and welfare payments.  There is a formula used to determine eligibility, and essentially, you must show that after meeting all of your monthly payments, you have excess disposable income to use in the Chapter 13 payment plan.

For example, a debtor in Miami would use the median income level for the same size household in all of Miami-Dade County.  If the individual’s income is more than that, they may qualify for the 5-year repayment plan. If the household income is less than the median, then the court may grant a three year plan of repayment if the debtor can still show sufficient disposable income.  The monthly median income in Miami-Dade County for a one person household is $3445, and for two people, it is $4320 per month.

How Is Eligibility Determined?

To determine eligibility, there are deductions from income that apply to south Florida residents that may differ from the rest of the state.  For example, in Miami the amount allowed for rent or mortgage is $1566 for two people, and living expenses may be as high as $1053 for the household.  The median income and expense ratio for a Miami debtor will affect the type of payment plan they can receive, and if their income is too low to make payments they may be forced to file Chapter 7.

Federal law provides for exemptions in bankruptcy for certain types of property, but in Florida those do not apply.  An individual must use the state specific exemptions under Florida law for both types of bankruptcy. In a Chapter 13, this can affect how much the debtor will repay creditors.  The computation of the specific Florida exemptions and application to the level of debt is complex, and should be handled by a competent bankruptcy attorney who knows the details of the state’s laws surrounding income, deductions and exemptions.

If you are struggling to repay your debt and are considering reorganizing them under Chapter 13, call Joel Aresty today at 1-855-DOC-LAWS (1-855-362-5297) to find out if you qualify.

Do I Qualify For Chapter 7 Bankruptcy?

Many people find themselves in the situation where their personal debts have become unmanageable, and they begin to consider filing bankruptcy and making a fresh start. Several areas of bankruptcy law changed recently, and it is helpful to understand some of the basics before making a decision on which type of bankruptcy may work best for you.

The first question one must ask when considering bankruptcy is whether or not you can qualify for Chapter 7, which allows you to erase all debts, or if you must file Chapter 13 and repay a portion of the debt with a payment plan. The answer to this question depends on both the debtor’s income and current monthly expenses, and is determined by a two-part analysis as a threshold for qualification.

The Income Test

Although the bankruptcy laws are federal statutes, the income test uses your state median income rather than a national median. If you live in Florida, the Florida median income will be used in the formula, which measures your pre-tax household income for the six months prior to filing for bankruptcy. Using the current median, a single person living in Florida that made less than $3493 per month the previous six months, or a total of $20,958, would pass the income test to qualify for Chapter 7.

But the test does not stop with only the debtor, as it also requires that you include the income of other members of the household in making the determination. For example, a couple living together are allowed $4313 per month in income, while a family of four would be allowed $5438 and still qualify. Looking at those figures, if your household income is below the median then the analysis is complete, as you will qualify and can file Chapter 7 bankruptcy. The median is adjusted each year, and should be checked prior to filing.

The Means Test

If your income is higher than the state median, and if more than 50% of your debt is consumer debt, then you have another hurdle in front of you to show that you need the complete protection that Chapter 7 provides. Simply, the bankruptcy law is designed to make sure that anyone who files Chapter 7 is financially unable to repay any portion of their debt, and that depends on the ratio between monthly personal income and allowable living expenses. In other words, if you have the means to make payments on your debts, you may have to file chapter 13, but there are specific criteria used to determine that ability.

Even if your income exceeds the median, you may still be able to qualify if you have high monthly expenses, such as a mortgage, taxes, childcare and medical expenses. Many high-income debtors are able to qualify for Chapter 7 if they can show that their monthly expenses are also significant enough that it would be unfeasible to satisfy a Chapter 13 payment plan.

As word of caution, you should be aware that you cannot escape the income test by quitting your job, as your income is determined by a formula that includes the past six months. However, the bankruptcy trustee does have some discretion if there are extraordinary circumstances such as major medical expenses or recent unemployment, areas that you can discuss with your legal counsel.

After you have evaluated whether you qualify for Chapter 7 bankruptcy protection, it is time to contact a qualified and experienced bankruptcy attorney to assist you with your filings and hearings required by the court. At the Law Firm Of Joel M. Aresty, PA, we are able to guide you in the process that will lead you to be free of your debts in 3-6 months time.

Can Bankruptcy Help Me Pay Off My Student Loans?

For many graduates, paying off student loans is the first financial task that they face, and often the most daunting. Even if one is employed, starting salaries can be low and it is easy to quickly fall behind on monthly loan payments. This problem can grow over time as loans are easily deferred through the agencies that service student loans, but the balance will remain and interest will accumulate for years. A single five year deferment of a $10,000 loan at the current 6.8% interest rate will add over $3400 to the balance owed, a substantial increase that does not solve the problem of repayment.

Will Bankruptcy Dissolve My Student Loan Debt?


At some point, one may look at alternatives to repayment just to relieve the financial pressure, and bankruptcy is one of those options often considered. However, student loan debt is not one of the categories of debt that can be dissolved by filing bankruptcy. Since 1976, student loans have been classified as exempt from bankruptcy protection, with substantial collection powers given to government agencies in the case of default. Although there have been a few cases where student loan debtors were allowed by the courts to include that debt in a bankruptcy, those situations are uncommon. In each case, the debtor was able to show a level of undue hardship that persuaded the court that an exception could be made, but in one case it took 10 years to receive a favorable ruling.

Assuming that you are not facing extreme economic hardship, how can bankruptcy help you pay off your student loans? Usually, student loans are not the only debt one carries, and you may have credit cards, personal loans or medical debt as well. These areas are all covered by the bankruptcy law and can be discharged under Chapter 7, or reorganized under Chapter 13 with a payment plan. Given this fact, there is an opportunity to adjust your finances and place a priority on paying your student loans, while discharging other types of debt in bankruptcy.

Filing Chapter 7 Bankruptcy


If you choose to file Chapter 7, your student loans will be listed on the bankruptcy filing, but will not be discharged with the rest of your debt. However, if you had significant debt payments of other types, you may be able to take the money previously paid monthly to those creditors and apply it now to your student loan payments. For example, if you were paying $500 a month on credit card bills, discharging that debt will allow you to use that $500 toward reducing your student loan balance.

Under a Chapter 13 filing, the student loan debt would be grouped together with the other listed debts, and included in the payment plan set up by the court. At least in this case the debt is under the jurisdiction of the bankruptcy court and is given equal treatment with other debts for repayment. In some cases, you may be allowed by the court to allocate more of the payment to the student loan debt.

Filing bankruptcy to reallocate money to student loans can be a sound financial strategy, and is a valid part of the ‘fresh start’ policy that lies behind the bankruptcy laws. For some, it may open the door to creating financial balance for the future. Call the Law Firm Of Joel M. Aresty, PA today to learn more about bankruptcy and student loans.

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