Bankruptcy and Foreclosure Attorney Blog

Chapter 11 is really designed to help businesses or high net worth individuals restructure their debts and repay a large portion of them. If a business entity wishes to stay in business but needs bankruptcy relief, this chapter of the Bankruptcy Code is available for that purpose. Business or corporate entities cannot file under chapter 13.

Many celebrities file under chapter 11 because they either make investments under some type of entity and want personal liability protection or they do not qualify for other chapters. Chapter 11 is very expensive, but it does allow an entity to avoid certain contracts and has other benefits connected with the filing.

If a business files under chapter 11, the executives of the company will have to show that they are competent enough to continue operating the business during the bankruptcy. If creditors object or if the Trustee feels he can run the business more efficiently, then the Trustee may try and remove the executives from management and run the business himself.

Continue reading " What is a Chapter 11 bankruptcy? " »

Whether a debtor files a chapter 7 or 13 bankruptcy, the effect on the credit report will be the same. A bankruptcy will stay on a debtor's credit for 10 years. However, many of debtors find themselves getting credit offers within months of filing for bankruptcy.

There are two main reasons why creditors do this. (1) They know the debtor is about to have a large part of their debt discharged or will only have to pay back a small portion and (2) The debtor will be personally liable for the new debt because it will be several years before he or she can file for bankruptcy again. For larger purchases such as for homes and vehicles, it may take a bit longer to get lines of credit.

There are several ways to rebuild credit. The overall scheme to rebuilding your credit is to make payments on time to as many creditors as you can. Some examples are apartment leases (rent), utility bills, and small limit credit cards.

Continue reading " How long will bankruptcy show on my credit history? " »

With the recent housing market crisis, many homeowners are finding themselves "underwater" on their homes. Underwater means the homeowner owes more than the house is worth. However, many homeowners had equity in their homes before the values began to plummet.

Many homeowners have taken out 2nd mortgages on their homes. In a chapter 13 bankruptcy, it is possible to have the 2nd mortgage discharged (after a debtor's final plan payment) if the total debt on the home (between 1st and 2nd mortgage) is more than the value of the home.

If the 1st mortgage is more than the home itself, then there is no collateral for the 2nd mortgage to claim. The 2nd mortgage becomes unsecured and is treated just like the rest of the unsecured debt. After the final plan payment in a chapter 13 bankruptcy, the balance owed on unsecured debt is discharged. If the value of the home is worth more than the primary mortgage, then the 2nd mortgage lender would have secured status up to the value of the home. Any remaining balance would most likely be unsecured. You should consult with an experienced bankruptcy attorney if you have additional questions.

Continue reading " Can a 2nd Mortgage be discharged in a Chapter 13 Florida Bankruptcy? " »

When a debtor files for chapter 7 bankruptcy, she/he will be allowed exemptions to protect certain property from the reach of the trustee on behalf of creditors. For example, in Florida, there is an unlimited homestead exemption (with a few exceptions). This means the Trustee cannot seize and liquidate a debtor's home in order to pay back creditors. Most states do not have an unlimited homestead exemption. Most states cap the exemption and if the debtor wants to keep the property, then she/he will have to buy back the equity.

Since the amendments to the 2005 Bankruptcy laws, it has become tougher to use certain state exemptions.

For example, in order for a debtor to use Florida exemptions, the debtor must have lived in the state of Florida for at least 730 days ( 2 years) leading up to the filing of the petition. If the debtor has not lived in the state for 730 days right before filing, the Trustee will look to where the debtor resided 180 days prior to the 730 days.

If the debtor lived in more than one location during the 180 day period, the state where the debtor lived the longest during that 180 day period will be the state in which the debtor can use that state's exemptions. However, many states require that the debtor be a current resident in order to use its state exemption.

If the debtor is unable to use the state exemptions because she/he is not a resident of that state, then the debtor would default into using the federal exemptions outlined in the bankruptcy code.

Continue reading " Can I Use Florida Exemptions In My Chapter 7 Bankruptcy? " »

The short answer is no. Not all personal judgments against a debtor are dischargeable in a chapter 7 bankruptcy. The type of judgment against the debtor is important.

Debtors who have civil judgments for fraud or other intentional torts entered against them are not going to be able to have those debts discharged in bankruptcy. Public policy plays a role in the dischargeability of certain debts. If people intentionally do bad things but can escape their actions by filing bankruptcy, that does not send a positive message about the bankruptcy system. There would be no deterrent in committing those actions in the future. However, judgments for negligence or breach of contract are more than likely going to be discharged in a chapter 7 bankruptcy.

If you have questions about what debts can be discharged by filing for bankruptcy, you should contact an experienced attorney.

Continue reading " Are All Personal Judgments Dischargeable in a Florida Bankruptcy? " »

Once a bankruptcy petition is filed, the Trustee (representative of the creditors) sends notice out to all of a debtor's creditors that are listed on the debtor's schedules within the petition. Debtors must make sure all creditor's and potential creditors are listed in their schedules. Once the creditor receives notice, the creditor can no longer contact the debtor or the debtor's family members in an effort to collect the debt owed to them.

If a creditor disregards the notice and contacts the debtor, the creditor is in violation of Section 362 of the Bankruptcy Code and damages may be available for the debtor's benefit. The creditor can no longer make phone calls, write letters, garnish wages, or proceed with litigation. (with a few exceptions, i.e. Familiy law and criminal cases).

Continue reading " What Constitutes A Violation Of the Automatic Stay In A Florida Bankruptcy? " »

Many times debtors file for Chapter 7 bankruptcy but either have their cases dismissed or do not wish to continue. If a Chapter 7 bankruptcy petition is filed, you must get the court's permission to have the case dismissed.

The reason for having this rule has to do with court efficiency and debtor awareness. It is very time consuming and expensive to put a petition together, have the clerk's office review it, and enter a case on a court docket.

Courts are wanting to make sure debtors are not being taken advantage of or maniupulated by attorneys and creditors. A bankruptcy judge is going to want to hear why you all of a sudden want to dismiss your case.

Unless your financial situation has changed dramatically and you are able to repay your debts, why would anybody want their case dismissed and dropped back to square one?

Another option available may be to convert your chapter 7 case to a chapter 13. This is often done when a debtor does not meet the "means test" or if they have property in excess of the allowed exemptions and wish to keep it.

Continue reading " I Filed A Chapter 7 Bankruptcy And Changed My Mind: What Are My Options? " »

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA) of 2005 changed this country's bankruptcy laws substantially. This legislation has made it much more difficult for debtors to file for Chapter 7. In order to qualify for Ch. 7, a debtor must pass the "mean's test" unless a majority of the debts are business related.

An analysis of the "mean's test" must be conducted if a debtor's household income is over the state median income level. The Trustee will look back to the last six months leading up to the filing of the petition in calculating your income. All income from every source will be considered.

For example, the median monthly income for households in Florida is $3,281.92 for a single earner. The median income level for two earners is $4,100.08. If a debtor's income is more than the median income for the state, you must pass the mean's test. The mean's test looks to your disposable income (monthly income - living expenses) every month.

The Bankruptcy Code sets guidelines as to how much you can claim as an expense. This is done for all common living expenses. A debtor may be allowed to claim more than the limit set by the Bankruptcy Code if good cause is shown. In any event, the Trustee will look to the debtor's disposable income and basically multiply that number by 60. If the debtor's number exceeds the allowed figure set by the Code, then the debtor has failed the mean's test and vice versa.

However, the debtor is not automatically disqualified from filing a Ch. 7, but there is a presumption of abuse and the debtor must overcome that presumption in order to become eligible.

Continue reading " The Chapter 7 Means Test In Florida: A Quick Overview " »

The automatic stay is arguably one of the most powerful features of a bankruptcy. The stay takes effect once a bankruptcy petition is filed and is applicable in every bankruptcy case in every state.

The federal law stops creditors from trying to collect on debt after a debtor has filed the bankruptcy petition. Once a creditor is put on notice that the debtor filed for bankruptcy, the creditor can no longer contact the debtor or the debtor's family members in trying to collect the debt owed. In fact, it is a breach of federal law to do so and the debtor may be entitled to damages.

However, mortgage companies and holders of car notes typically will ask the bankruptcy court for relief from the automatic stay. This is done by filing a motion with the court and if granted, the automatic stay would not longer be applicable to the party who filed the motion. Thereafter, the lender can request that the debtor continue making payments on the property in order to keep it. Such relief is usually not granted until 30-60 days after the initial bankruptcy petition is filed, affording the debtor valuable time to make arrangements to move out of a property or work out a settlement with the lender to catch up their payments.

Continue reading " How does the Automatic Stay in a Florida Bankruptcy help me? " »

Having your wages garnished is very serious. In Florida, a creditor can garnish up to 25% of your take home pay.

However, proper notice of the garnishment is required. If you have recently moved or changed your mailing address, notice by publication may have been sufficient to satisfy this requirement. Even then, there are ways around a garnishment lien.

For example, in Florida, head of household income and government benefits are exempt from garnishment (except on certain student loan debt). There are several other exemptions available to Florida debtors which you should consult with an attorney about. Furthermore, filing bankruptcy will cease a garnishment action.

Even if there is a judgment and garnishment order against you, the automatic stay in a bankruptcy ceases all debt collection activities. In most cases the bankruptcy will discharge the underlying debt altogether.

Continue reading " How do I stop a Garnishment in Florida? " »

1) The first effect this will have is making it virtually impossible to rebuild your credit. Each time you miss a payment you will take a hit then your account will be sent to collections where it will continue to fester unresolved until the collector eventually sues and gets a judgment against you which will be good in Florida for twenty years. Once that happens you will have twenty years of worrying about the judgment creditor trying to collect it from you.

2) If you stop paying a mortgage, the lender can foreclose against your property and come after you, personally, for any deficiency.

3) If you are an apartment tenant and stop paying rent, you can be evicted and the landlord can sue you for the remainder of the lease. If you are renting property, it can be repossessed.

4) If you are behind on any type of vehicle payment, the asset can be repossessed and you could be personally liable for any deficiency.

5) After being granted personal judgments against you, creditors may be able to garnish wages,garnish bank accounts, put liens on your property, and will more than likely harass you and your family to pay them.

Continue reading " What happens if I stop paying my creditors and do not file bankruptcy? " »

Whether a debtor files Chapter 7 or Chapter 13 really makes no difference on his or her credit report. The bankruptcy will be on your history for ten (10) years. However, it is a common myth that debtors who file bankruptcy will struggle to ever receive another line of credit.

Basically, there are two reasons a creditor will be willing to extend credit after you have received a discharge from your bankruptcy. If your case is dismissed or you do not receive a discharge for whatever reason, this is not applicable to you.

1) After your discharge, the creditor knows you cannot file for bankruptcy again for at least a few years and you will be personally liable to them in the interim.

2) After your discharge, you should have some extra cash to pay back your new creditor because a lot of your old debt has been discharged.

You can begin rebuilding your credit by staying current on your bills (including utility) and other daily living expenses. If applicable, stay current on your secured debt that was not discharged in bankruptcy. If you continue to pay your car loan on time until the end date or stay current on your mortgage you will have already begun strengthening your credit score.

Continue reading " How Do I rebuild My Credit Once I Have Filed Bankruptcy In Florida? " »

This is a question that comes up in nearly every bankruptcy situation. There are debtors who try and self-file thinking they are saving money on legal fees and just paying the court costs.

Most of the time debtors wind up going to see an attorney shortly thereafter because their case has just been dismissed. The process can be very difficult. If you do not fill out documents correctly or miss deadlines your entire petition can be dismissed. Now your out court fees and will have to pay those again most likley if you choose to refile. Had you gone to an attorney to begin with, you probably could have avoided dumping these costs and saved yourself some stress.

Many times, if a debtor knows bankruptcy is imminent, the debtor can free up extra cash by stopping payent towards unsecured creditors. Unsecured creditors are creditors who do not have collateral againt the debt they are owed. For example, credit card and medical debt is usually considered unsecured debt. If you are entitled to a tax refund this year you can put it towards your legal fees to file bankruptcy. Once you file the refund may be subject to administration by the Trustee in a bankruptcy anyway to pay your creditors.

Continue reading " How do I pay for a Florida Bankruptcy if I am broke? " »

Each situation is different and you should consult with an attorney before deciding on bankruptcy. There is not a magic number of debt or threshold you must incur before you can file. However, there is a cap on the amount of secured and unsecured debt you can have in order to file chapter 7. There may be other options available to avoid bankruptcy altogether.

Many factors are taken into consideration such as: household income, overall debt, type of debt, and the value of your assets. Chapter 7 should probably be considered if you have a lot of unsecured debt, (creditors who do not have collateral on any of your property)you have very few assets, make a lower income, and will not be able to repay these creditors anytime soon.

Chapter 13 should be considered by those who have a lot of property they wish to keep, have a stable income, and who are unable to file Chapter 7.

There are typically other options available when you are behind on your mortgage. To qualify for these alternatives to bankruptcy, you should check with your lender to see if you in fact do qualify.

Continue reading " How Much Debt Is Enough To Consider Bankruptcy In Florida? " »

For the most part, student loans are not dischargeable in a bankruptcy. There are exceptions if the debtor can show an “undue hardship,” but this is very difficult to show and is rarely granted.

However, many debtors are unaware of what actually qualifies as an “educational loan” under the federal bankruptcy code and just assume the loan is non-dischargeable in a bankruptcy.

Section 523(a)(8) of the US Bankruptcy Code, at 11 U.S.C., excepts from discharge debts for "an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or an obligation to repay funds received as an educational benefit, scholarship, or stipend; or any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual" unless "excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents".

For the purpose of this paragraph, the definition of a qualifying education loan includes loans made solely to pay the higher education expenses of an eligible student, where the student is either the debtor, the spouse of the debtor, or the dependent of the debtor. In addition, the loans must be for study at a school that is eligible to participate in Title IV programs and where the student is enrolled at least half time. Loans that don't meet this definition are still dischargeable even if they were used to pay for higher education expenses.

Continue reading " For Purposes of a Florida Bankruptcy, What Is A Student Loan? " »

Homeowners may still be liable for HOA dues after a Bankruptcy Discharge. One major issue in a number of the bankruptcy cases I deal with is the disposition of Homeowner’s Association Fees after a bankruptcy is discharged. In the typical chapter 7 bankruptcy the debtor who owns a home with a loan on it either surrenders their home and discharges the debt, or keeps the home and continues to pay the mortgage.

One thing that most homeowners do not understand is that even though they surrender their home in a bankruptcy they continue to hold legal title to the property until it is foreclosed on by the bank and the property is sold. Unless of course the bank will accept a deed directly to them from the homeowner/debtor.

The significance of this, with respect to HOA fees, is that the Debtor continues to be liable for HOA fees that accrue after the bankruptcy petition has been filed. Any fees that were unpaid at the time of the filing will be discharged but the debtor will be liable for post filing fees until the property is no longer in the Debtor’s name.

Continue reading " Homeowner's Association Fees In Florida Bankruptcy " »

A Chapter 7 Bankruptcy may be filed once every 6 years. Filing under Chapter 7 will allow you to keep most of property and discharge most of your debt. Below is a step-by-step guide that will explain to you the things you need to do in order to file your Bankruptcy Petition and related papers as well as what you can expect to happen after your bankruptcy case is filed.

1. Gather the following information:
a. A credit report. - You can get your credit report from any credit reporting agency such as Experian and Equifax.
b. Statements that include the addresses of all your creditors as well as the balances owed.
c. All contracts signed by you relating to your debts.
d. All court and paper documents received.
e. All letters and correspondences from attorneys and collections agencies.
f. Your Tax Returns from the previous two years.
g. Proof of income (last 4 pay stubs)
h. Any other papers relating to your debt.
i. Check the public records division in your county for any public records concerning your debt.

2. Make a list of all your creditors. - this list shall include the creditor's full name, address and amount owed. You MUST list all your debts.

3. Fill out a Bankruptcy Form as a draft, then have it reviewed by a Jacksonville Bankruptcy Attorney.

4. Complete the Bankruptcy Forms after they have been reviewed by a Bankruptcy Attorney. - Make sure the forms are legible.

5. File your Bankruptcy Petition with the Bankruptcy Court. - When you file your petition with the court you must:
a. File the original and 2 copies.
b. Pay the filing fee ($299.00). Or, request to pay the fee in four installments - $80.00 must be paid initially.
c. Get your Case Number.

6. Notify your Creditors.

7. Carefully read your Notice of Meeting of Creditors. - Approximately 2 weeks after your file, the Court will sent you a "Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, and Deadlines." Carefully read this notice and be sure you know the date and time of your meeting of creditor - if you fail to appear you run the risk of having your case dismissed.

8. Attend the Meeting of Creditors.

9. Objections by Creditors. - After the Meeting of Creditors, creditors have 30 days to file objections to your petition. If a creditor does file an objection and you do not already have legal representation, now would be the time to contact a Jacksonville Bankruptcy Attorney.

10. Order of Discharge. - If no creditors file objections to your discharge, you will receive an "Order of Discharge" approximately 4-6 months after you file for bankruptcy.

The high rate of Jacksonville foreclosures succeeded in vaulting the city to a #17 ranking on the list of cities nationwide with the highest foreclosure rates in May, up 23 positions from its #40 ranking just one month earlier.

RealtyTrac reported the jump, with one analyst saying that while Florida’s markets are generally more volatile due to the state’s judicial foreclosure system, it is unusual to see such a marked change in one month.

May was the first month that Jacksonville was in RealtyTrac’s Top 20 U.S. cities with the highest rates of foreclosure. In May, the Jacksonville metro area jumped 57 percent from April, and 42 percent from May of 2009.

Jacksonville had 2,805 foreclosure filings in March, and the foreclosure rate dipped to 2,415 filings in April. Jacksonville foreclosure filings in May jumped to 3,789, the highest by far in 2010.

In addition, recent data from the Real Estate Strategy Center of North Florida shows that 95 percent of the homes sold in Jacksonville went for less than their purchase price.

Jacksonville homeowners facing foreclosure can learn more about the Florida foreclosure process and their legal options in avoiding foreclosure by consulting with a Jacksonville foreclosure lawyer.

Bankruptcy filings in the U.S. Bankruptcy Court Middle District of Florida are currently on track to exceed 68,000, about ten percent higher than 2009, according to a recent article in the Florida Times-Union.

In the first six months of 2010, Middle District bankruptcy filings totaled 34,104 and were dominated by Chapter 7 filings, which totaled 25,458, or 75 percent of total filings.

Chapter 13 filings were the second most common, with a total of 8,190.

Chapter 11 business reorganization filings were up 43 percent for the first half of 2010, when there were a total of 440 petitions versus 308 for the first six months of 2009.

The U.S. Bankruptcy Court Middle District of Florida covers over 10 million Florida residents in Jacksonville, Tampa Bay, Orlando, Daytona, Fort Myers and Ocala.

One key reason for the continued high rate of bankruptcy filings in Florida continues to be ongoing unemployment. Earlier this year, Congress did not extend unemployment benefits and for many unemployed Florida residents, employment benefits have started to run out.

The bad economy has shown many Floridians that filing bankruptcy is a viable option for many of them to keep some personal assets while shedding onerous debt.