Bankruptcy and Foreclosure Attorney Blog

Many Florida residents took out 2nd mortgages on their homes before the recent housing crisis deflated home values. These same citizens are now frustrated because most are paying well over the current value of their homes.

Should you file a Chapter 13 just to strip off the 2nd mortgage? No. First, a bankruptcy filing will be on your credit report for 10 years.

Second, even if the 2nd mortgage is stripped, you will be paying on it for 3-5 years in the form of unsecured debt to the Trustee before it is actually stripped.

Third, there is no guarantee that the mortgage will be stripped. It is totally up to the bankruptcy court and the Trustee in determining this issue.

Finally, you probably will be paying an attorney legal fees and court costs just to file the case. If you are thinking about bankruptcy, you should consult with an experienced bankruptcy attorney.

Continue reading " My 2nd Mortgage is Wholly Unsecured: Should I file for a Ch. 13 Florida Bankruptcy? " »

The answer really depends. A debtor who incurred attorney's fees for the purpose of obtaining a divorce will most likely be on the hook for those fees even after a bankruptcy discharge.

In addition, child support and other domestic support obligations are generally non-dischargeable. However, property settlement obligations may be discharged in a bankruptcy. The debtor will have to show that the financial obligations were not for support or alimony but for property settlement purposes.

Other debts that are generally not dischargeable include criminal fines, judgments for intentional torts or fraud, and student loans

Continue reading " Can I discharge attorney's fees and domestic support obligations in a Florida Bankruptcy? " »

Many ex-spouses still share debt on mortgage/vehicle notes and credit card accounts. If only one party files for bankruptcy, can the creditor go after the party not filing for bankruptcy to collect a debt?

The answer is, probably not. In bankruptcy, a co-debtor stay may be available (at least during the bankruptcy). The stay would apply to the party filing for bankruptcy and to the non-filing party if requested. If the debtor is in a chapter 13, the co-debtor stay would last as long as the debtor continued making the plan payments to the Trustee and the case does not get dismissed.

Creditors can ask the court for relief from the automatic and co-debtor stays. If granted, the co-debtor may have to continue making the payments in order to keep his or her interest in the property.

However, please keep in mind, once the debtor receives his or her discharge in connection with the shared marital debt, the creditor can collect the full balance from the non-filing party at the conclusion of the bankruptcy.

Continue reading " Mortgages, ex-spouses, and My Bankruptcy " »

Bankruptcy is always an option of last resort. You may not even need to file for bankruptcy if you do not have wages that can be garnished or assets that can have liens filed against it.You may be considered "judgment proof."

Many times the only source of income a debtor has coming in is some sort of public assistance. These sources of income are generally protected in a bankruptcy from the Trustee. The advantage to filing for bankruptcy when you are unemployed is you do not have to worry about passing the "mean's test." Also, if you do not own a lot of property you do not have to worry about having it liquidated to pay off your creditors.

Most judgments can only last on your credit report up to 7 years as opposed to 10 in a bankruptcy. However, if you are expecting to find a job, want to avoid garnishments, and stop creditor phone calls, you may want to wipe out your debt in order to get a fresh financial start.

Continue reading " I have no Job or Assets: Should I file a Florida Bankruptcy? " »

Most bankruptcy courts and Trustees will require debtors to be current on filing past tax returns before the debtor can file a bankruptcy petition. (at least the last 4 years of returns) It is rare to see a Trustee allow a debtor to file a petition without being current.

In the rare instance that it does occur its usually in a Chapter 13. The Trustee may allow the proceeding to move forward after negotiations with an IRS or state agent to include whatever balance owed in the Chapter 13 plan.

Debtors cannot assume the Trustee will permit that. Therefore, debtors should be current on filing returns if they are thinking about filing for bankruptcy.

Continue reading " Bankruptcy and Tax Returns " »

The answer really depends on whether or not you have equity in those properties. In Florida, there is an unlimited homestead exemption as long as you bought your home over 3 1/2 years ago from the date of filing your bankruptcy petition. This means the Trustee cannot liquidate your home to pay back your creditors.

If you bought your home within the last 3 1/2 years, your protection is capped at $125,000 equity. If you have more than $125,000, than you will either have to surrender the home or buy back the equity.

However, there is not unlimited protection in investment properties. The moment you have equity in a property, it becomes an asset and may be subject to liquidation by the bankruptcy Trustee.

In that instance, assuming you were wanting to keep the properties, it may be wise to file under Chapter 13 bankruptcy protection. In a Chapter 13, you keep all of your property as long as you are able to keep up with your monthly plan payments.

Continue reading " Can I keep my investment properties in a Chapter 7 Florida Bankruptcy? " »

Chapter 7 is often referred to as a "straight liquidation." The Trustee is the repesentative of the creditors and he/she is looking to liquidate property of the debtor(s) in order to pay back the unsecured creditors.

Once the debtor files the bankruptcy petition, the 341 meeting will be held about 30 days after the petition is filed. The 341 meeting of creditors usually involves the Trustee asking a series of questions to the debtor. After the 341 meeting, it usually takes between 60-90 days to get a discharge on the unsecured debt portions.

Once the bankruptcy court issues an order for the discharge, that debt is wiped out and those creditors are forever barred from collecting on those past debts.

Continue reading " How long does a chapter 7 take before I get my discharge? " »

A recent study shows U.S. citizens who are facing foreclosure are more likely to have higher stress levels. That seems pretty obvious.

There are over 3,000 counties in the U.S.. A county is labeled "stressed" if it receives a scaled score of 11 or more out of a possible 100.

The score is based on unemployment, foreclosure, and bankruptcy rates. Based on 2010 data, Florida is considered a very stressful state. This is due in large part to the substantial increase in foreclosure, bankruptcy, and unempoyment rates.

What may come to a surprise is the fact that States that have many manufacturing facilities actually saw a decline in stress levels. Is that a sign that manufacturing plants are finding work or factory workers have moved elsewhere to find employment? Hopefully, 2011 will be a much less stressful time for all US counties.

To learn more about this article, please visit AP analysis: Foreclosures raise US economic stress.

Continue reading " Foreclosures Linked to Americans' Stress Levels " »

Bankruptcy is always an option of last resort. If you have not applied for a loan modification with your lender, you probably should before filing for bankruptcy. If approved for the loan modification, it may help lower your payment.

Unfortunately, only those that are behind on their mortgage payments will usually be considered and approved for a loan modification. Loan modifications can take several months. Meanwhile, your mortgage debt is accruing unless you continue making the payments during the modification process.

If the loan modification is denied, your option of last resort may be to file for bankruptcy relief. This will stop any foreclosure action (at least temporarily) and allow the debtors to remain in the home while they negotiate with the lender.

Continue reading " Should I file for a loan modification or bankruptcy to protect my home? " »

The bankruptcy code provides that if a debtor has primarily business debts, the means test is not applicable in a Chapter 7 bankruptcy. To determine whether or not a debtor must take the means test, he/she will have to take a look at the type of debts they have and their family income. The debts must be primarily consumer based and their household income is more than the Florida state median income level for the debtor's size household.

For example, if 1 earner makes more than $3,281.92/month, then that debor must take the "mean's test."

Once again, if the debtor's debts are primarily business related, the debtor does not have to take the mean's test. There is no presumption of abuse despite the debtor's household level of income.

Continue reading " Applicability of the Means Test and Business Debts " »

The answer is yes. Many times debtors begin making their monthly payment plans to the Trustee and the costs are just not affordable or sustainable for long periods of time. At that point, debtors may have to start making decisions whether or not to surrender certain properties, including their homes.

Many Floridian homes are underwater and citizens are tired of making mortgage payments towards a property where the value of the home will never exceed the value of the loan. Debtors can surrender their home in a Chapter 13 plan and the remaining balance will become part of the unsecured portion of the overall debt.

By doing this, you will ensure the lender cannot come after you personally as long as you continue to make your plan payments.

Continue reading " Can I surrender my home in a Chapter 13? " »

If the ex-wife is the only party on the deed, then the ex-husband creditors cannot put liens against the house even if the ex-husband is the only one on the mortgage. This type of property settlement is common among divorced couples.

One spouse will continue to make the mortgage payments while the other spouse has full ownership (through the deed). As mentioned in a recent post, only one spouse can file for bankruptcy. Whether that is the best cause of action really depends on the amount of shared debt.

Also, if a couple recently divorced, then whatever was agreed upon in the settlement distribution is important. Did one spouse agree to become fully responsible for what was otherwise known as shared debt? These are important factors in determining whether one or both spouses/ex-spouses should file.

Continue reading " My ex is the only one on the deed: Can my creditors put a lien against the house? " »

LLCs (limited liability companies) are very common and are one of the preferred business structures in todays business economy. For the most part, LLCs protect or insulate members from personal liability regarding business debt.

But what if the LLC is a single member LLC an he or she has personally guaranteed the debt? Well, if the owner personaly guaranteed the debt, then the company protection is lost. The business and the individual become responsible for the debt. If that is the case, the debtor may want to think about personal bankruptcy and taking the company into bankruptcy. This can be accomplished through a chapter 7.

Taking a business into chapter 13 cannot be done. If the business was looking to restructure or reorganize, the only option would be Chapter 11. In fact, recent Florida cases have held that the assets of a single member LLC may be considered when the owner files for personal bankruptcy.

Continue reading " LLCs and Personal Bankruptcy " »

If you and your spouse are contemplating divorce and bankruptcy, you may want to finalize the divorce first. It may be more beneficial especially if there is a lot of marital property that must be settled.

Many times, part of the divorce settlement will include one spouse completely assuming the entire debt where it once was shared jointly. For example, many times a spouse will agree to become solely responsible for making the mortgage payments and allow his or her ex-spouse and family to remain in the home.

However, if there is no marital property, it may be in your best interest to go ahead and file your personal bankruptcy first. This is especially true if there are pending lawsuits or garnishments against you.

You should contact an experienced bankruptcy attorney before making such a decision.

Continue reading " When should I file for Divorce if I am considering Bankruptcy? " »

After a debtor receives a discharge in bankruptcy (whether the debtor filed for Chapter 7 or Chapter 13), the automatic stay follows the debtor for the past debts. If a debt was discharged in a bankruptcy, and that creditor continues to contact the debtor, any collection action or attempt breaches the automatic stay.

The debtor may be entitled to equitable and monetray relief. However, if a creditor was not listed in the petitions or schedules during the bankruptcy, the debt may or may not have been discharged. If the old debt is unsecured debt, more than likely it can still be discharged and the automatic stay would come into effect once the creditor receives notice of the past filed bankruptcy.

If you have had a recent bankruptcy discharge and your are still being harassed for old debts, you should contact an experienced bankruptcy attorney.

Continue reading " Collection Activities after a Bankruptcy Discharge " »

Active service members have financial problems just like ordinary civilians. Many times the active member is stationed elsewhere but his or her spouse lives in Florida. Can the couple file for bankruptcy in Florida?

The answer is probably. The debtor would just need to show that the Florida residence is the marital home. Also, the court may look to the intent of the debtor as to whether or not he or she plans to live in Florida permanently once resigning from active service.

What impact does a bankruptcy have on an active service member? The impact really depends on what level of security clearance the debtor has obtained. The higher the clearance, the more likely he or she may lose that clearance.

If you have questions about bankruptcy and residency requirements, you should contact an experienced bankruptcy attorney.

Continue reading " Military Debtors and Spouses in Florida " »

Bankruptcy will stop most garnishment actions. However, garnishments for domestic support obligations will continue even after the bankruptcy is filed. Garnishments must stop because of the automatic stay.

The automatic stay comes into effect as soon as the bankruptcy petition is filed and it operates to stop most debt collection activities. Once a creditor receives notice that a debtor has filed for bankruptcy, the creditor MUST stop contacting the debtor or the debtor's family members through all forms of communication.

If a creditor continues to contact the debtor in an effort to collect on a debt, the debtor may have a cause of action against all creditors breaching the automatic stay. Money damages may be available.

Continue reading " My Wages are Being Garnished: What can a Bankruptcy do for me? " »

The answer depends on several factors. Bankruptcy should always be a last resort. First, does the debtor have mostly secured or unsecured debt? Secured debt is debt backed by collateral. Examples of secured debt are mortgages, vehicle loans, etc. Unsecured debt is not backed by collateral. Examples of unsecured debt include medical bills and credit cards.

Second, has the debt been charged off? If most of the debt has been charged off, the creditor may report it to the credit bureaus but that debt is essentially forgiven and a bankruptcy would do nothing for you regarding that debt.

Next, are your wages being garnished or are there pending lawsuits against you? If so, the bankruptcy will stop the garnishment and most lawsuits unless the garnishment is related to dometic support obligations.

Are the biggest expenses in your life, daily living expenses? If so, bankruptcy probably will not benefit you. You should consult with an experienced bankruptcy attorney to determine whether or not bankruptcy is right for you.

Continue reading " Is Bankruptcy right for me? " »

A U.S. Bankruptcy Judge in Providence, RI upheld the court's decision to establish a mediation program for homeowners facing foreclosure. Although this is something that has been established in Florida Foreclosure court since last year, it is not a common occurrence in bankruptcy court.

The program is designed to give troubled homeowners an opportunity to negotiate with their lender or loan servicer when they are behind on their loan payments. Although lenders and servicers are not required to offer a loan modification, they are required to come to the table and make a good faith attempt to negotiate with the borrower.

Several creditors objected to the program and were overruled by Judge Arthur N. Votolato. U.S. Sen. Sheldon Whitehouse said, "I hope today's decision will encourage other bankruptcy districts to follow Rhode Island's lead and adopt similar programs."
Programs such as this one in Rhode Island may be the answer some homeowners are looking for to help save their homes.

Continue reading " Bankruptcy Court Launches Foreclosure Mediation Program " »

This answer really depends on several factors. First, have you filed for bankruptcy before? If so, did you get a discharge on your debts? A debtor must wait 8 years between filings in order to qualify for a Chapter 7.

The important dates are the filing dates not the discharge dates. A debtor would qualify for a Chapter 13 if 4 years have lapsed since the debtor first filed for Chapter 7.

Second, a debtor must have had an intent to pay back debt incurred. If the Trustee suspects a debtor made purchase after
purchase and never made a payment on the debt, it does not look good.

Next, the debtor must qualify from an income standpoint. An average income will be caluclated going back six months from the date of filing the bankruptcy petition. In addition, the Trustee will look to the size of the household and all generated income within the household. We look to the Florida state median for the appropriate levels of income and if a debtor(s) is over that limit, the debtor must pass the means test. Ask an experienced bankruptcy attorney about the "mean's test" and whether or not you would qualify to file a chapter 7 bankruptcy.

Continue reading " Do I qualify for a Chapter 7 Florida Bankruptcy? " »

Many debtors are forced to file for bankruptcy because they have personal judgments or liens against them. The most common judgments are for car repossessions, credit cards, foreclosures, and domestic support obligations. Are these judgments discharged in a Chapter 7 bankruptcy?

Yes, except the child support judgments. More than likely, a debtor is going to be responsible for child support judgments even after the bankruptcy. In addition, tax liens, student loans, fraudulent acts, and intentional tort judgments are not dischargeable. An intentional tort is an act intentionally committed for the purpose of causing physical, mental, or financial harm to another.

Driving under the influence and causing injury to a person or property is considered an intentional tort and any judgments connected to the DUI will not be discharged. However, personal judgments for negligence can be discharged through a bankruptcy.

Continue reading " What happens to judgments against me in a Florida Bankruptcy? " »