Bankruptcy and Foreclosure Attorney Blog

Yes. Whether a debtor files for chapter 7 or 13 bankruptcy relief, the debtor must disclose all assets that are in his or her name. That does not mean go out and take your name off assets retitle personal property. That is a very quick way to have your bankrptcy case dismissed and you could subject yourself to federal charges for trying to defraud the court.

Listing all assets includes all bank accounts where you are listed as an accountholder, all vehicles in your name, all retirement accounts, all stock plans, etc. It even includes your clothes and household appliances. Many clients always ask me, "Why do I have to list all of my assets if I am filing for Chapter 13 relief?" The answer is because the federal bankruptcy code and the courts say you do.

Also, in a chapter 13, a debtor's unsecured creditors must recevive a distribution over the life of the plan of what they would have received had the case been filed under chapter 7. That is why the debtor must still apply exemptions in the case.

Continue reading " Do I have to disclose all of my assets in a Florida bankruptcy? " »

What is a deficiency judgment? A deficiency judgment is a judgmet obtained by a creditor typically for a car repossession or a foreclosed upon home. The deficiency is the difference between what original borrower owed on the property and what it was ultimately sold for after reposession or foreclosure.

Typically in the past, lenders have not been real aggressive in pursuing these types of claims. However, the frequency and volume of filings is picking up nationwide. These types of judgments can be large sums of money.

If wages are garnished to satisfy these types of debts it could take a lifetime to pay these creditors back. Bankruptcy can stop garnishments on these types of action and judgments.

Continue reading " Banks May Start Pursuing Deficiency Judgments in Florida Foreclosures " »

The Third District Court of Appeals for the state of Florida handed down its opinion in Dawson v. Wachovia this past week. Mr. Dawson and his business defaulted on a mortgage secured by commercial property in April of 2008. A foreclosure suit was filed by Wachovia against Dawson and his business and the litigation roller coaster began.

Wachovia brought suit as the noteholder but used a different company to service the loan. The company that serviced the loan used to own the note but assigned it to Wachovia following the sale to Mr. Dawson and his business.

Dawson tried all types of tactics to delay the sale and get the case dismissed but was ultimately unsuccessful. However, he nor his business made a payment on the note for over 2 1/2 years and was able to stay on the property. The Third District ultimately affirmed the order of the sale of the property and the judgment was not set aside.

Continue reading " Foreclosure Stalled for over 2 years but ultimately Defendant Loses the Property " »

Many people are under the misconception that bankruptcy attorneys work for the state and/or local government. The standing Trustees are appointed and work for the government. They usually contract out services to other attorneys to help them with hearings and the gathering of data.

However, these attorneys are not government employees. Bankruptcy trustees are representatives of debtor creditors. Most debtor attorneys work in the private sector unless they are employed by the state for legal aid purposes. Debtor attorneys should be keeping the best interests of the debtor(s) in mind at all times.

Debtor attorneys should help te debtor protect assets, provide sound legal advice about the bankruptcy process and the dischargeability of all types of debts.

Continue reading " Who are the Parties in a Florida Bankruptcy? " »

Recently Chief Bankruptcy Judge Glenn ordered that debtors who did not claim their homestead exemption in a chapter 7 bankruptcy could keep their home. In this particular case the debtors lived in a homestead property in which they had no equity. On their bankruptcy schedules they did not exempt the property and instead used their wildcard exemptions totaling $8,000 ($4,000 per debtor). The trustee objected to their use of the wildcard exemption while retaining their homestead property, arguing that the debtors were receiving the benefit of the homestead exemption and therefore were not entitled to use the wildcard exemption.

Under Florida Statute §222.25(4) a debtor may claim personal property up to the value of $4,000 as exempt unless the debtor either “claims” a homestead exemption or “receives the benefits of” a homestead exemption under Art. X, § 4 of the Florida Constitution. In re Kent, 411 B.R. 743, 749 (Bankr. M.D. Fla. 2009)(citing In re Gatto, 380 B.R. 88, 91 (Bankr. M.D. Fla. 2007). The Florida Supreme Court has held that whether the debtor in a bankruptcy is receiving the benefit of the homestead exemption is a determination that should be made based on the particular facts of the case. Osborne v. Dumoulin, 2011 WL 1772160 (11th Cir.)

Continue reading " Can I Keep My Home and Use The Wildcard Exemption In Florida? " »

Many times our clients feel ashamed and embarrassed about having to file for bankruptcy relief. However, in most cases it is absolutely necessary for that debtor to file in order to come out of harassment and overwhelming financial stress. Noone should have to live under those types of circumstances.

Bankruptcy was designed to give individuals and businesses fresh starts to their financial well being. Most collection agencies and credit card companies are only concerned about one thing: getting paid. And they will go to extremes in order to get what is owed. Nevermind, that they impose 25% interest rates or that they have no desire to negotiate and work out payment plans when you have had a drop in income.

Although many clients are eligible for chapter 7 relief, they sometimes choose to go with a chapter 13 so that they can sleep at night knowing that their creditors are getting paid at least something back. Attorneys should always do what is in the best interests of their clients under the confines of the law ethics rules. If this includes allowing a clients to choose a legal route that helps them sleep at night, then so be it.

Continue reading " Feel no Shame for Filing for Bankruptcy Relief " »

The answer depends on a few different factors. As mentioned in prior posts, a chapter 13 plan is a plan devised by the debtor or debtor's attorney that takes into consideration all living expenses and income. The debtor will have to go by IRS guidelines though and will most likely have caps on certain expenses.

After taking everything into consideration, the debtor will come up with a percentage of what to pay pack unsecured creditors and propose a plan to the bankruptcy court and Trustee. If they believe the plan is fair and there are no creditor objections, the plan will be approved and confirmed. If the debtor(s) are over the median income level for the state of Florida, they must propose a 60 month (five year) plan.

If the debtor(s) make less than the median income, they may propose less than a 60 month plan. Usually, the shorter the duration of the plan, the higher the plan payments and vice versa.

Continue reading " How do I know if I will be in a three, four, or five year plan in my Chapter 13 Florida Bankruptcy? " »

Many times debtors are in bankruptcy and experience an unexpected death. Following the death, the debtor may become concerned about any inheritance or distributions made to the debtor on behalf of the estate.

The Trustee (in a Chapter 7) may consider inheritance distributions six months before and six months after the filing date. Therefore, if the debtor can hold off on receiving distributions for six months after the file date, then he or she should do so. Furthermore, Florida has certain exemptions that are available to protect other distributions such as life insurance proceeds. Whether or not 401(k) proceeds should or should not be protected depends on if the 401(k) rolled into a an inherited IRA.

It is still up in the air whether or not Florida law will protect such an IRA but it is has a better chance of being protected than if the proceeds went straight to the beneficiary. You should contact an attorney should you have any questions or concerns.

Continue reading " My Florida Bankruptcy and my Unexpected Inheritance " »

In a chapter 7 bankruptcy, the debtor(s) may choose to surrender, reaffirm, or redeem secured debt. If they choose to surrender the personal or real property, they certainly can, and they are forever discharged of that personal debt obligation.

vIf the debtor chooses to keep the property and continue making payments, then the debtor will have to sign a reaffirmation agreement and show proof of the agreement to the bankruptcy court. The debtor does have 60 days to rescind the agrrement if they change their mind.

One final option that is available for personal property only, is to redeem the property. Redemption means if the debtor is able to pay the full value of the property (at replacement value) in one lump sum, then he or she may do so and own the property free and clear of any liens.

Therefore, (hypothetically speaking) if a debtor owes $10,000 on a vehicle and the vehicle is only worth $3,000, then if the the debtor was able to pay a $3000 lump sum value up front to the lender, he or she could and they would own the vehicle outright.

This is very rare because most people who file for bankruptcy are struggling financially and do not have the means available to make such a payment.

Continue reading " What does redemption mean? " »

The answer really depends. Who is the creditor trying to garnish your social security? Is it the IRS or is it a credit card company? Garnishment can occur even though the law may prohibit such a garnishment. Credit card companies are sneaky and many times overambitious.

Florida law prohibits credit card companies from garnishing social security, including once the income flows to a bank account. Therefore, bank levies are prohibited as well where social security income is the only source of income in that account. It gets tricky if it is combined with other sources of income.

Moving forward, the Internal Revenue Service (IRS) may try and garnish a debtor's social security and they are, for the most part, authorized by the federal code to do this. Student loan companies that are backed by the Federal Government may try and garnish social security. If you feel income is being garnished wrongfully, you should contact an experienced attorney.

Continue reading " Can my Social Security be Garnished? " »

Many times debtors complete the bankruptcy process and are relieved to start fresh from a financial standpoint. Unfortunately, debtors may continue receiving incoming calls from creditors whose balances against the debtor should have been discharged. It begs the question, does the automatic stay continue after the bankruptcy discharge?

The answer is most likely. If a creditor was listed in the bankruptcy schedules, had notice of the bankruptcy, and the debt was discharged, that creditor cannot contact the debtor in trying to collect past debt even after the discharge goes through. In some cases, an unsecured creditor may accidentally be ommitted from the schedules.

If the case was a chapter 7 no asset case, that debt should also be discharged even though it was excluded from the schedules. The reason being has to do with the fact that since no unsecured creditors got zero distribution, the ommitted creditor would have received nothing anyway. However, if there was a distribution to unsecured creditors, the debtor could not discharge the ommitted unsecured creditor balance.

Therefore, if you feel a creditor is violating the automatic stay after your bankruptcy, you should contact an attorney to assist you. There may be monetary damages available.

Continue reading " Does the Automatic Stay Follow my Bankruptcy Discharge? " »

One of the new requirements from 2005 mandates that debtors must take two credit counseling classes in order to successfully file and complete their bankruptcy. The debtor must take a pre-filing course and a post-filing course.

Both can be taken over the Internet or over the phone. If it is a married joint filing, then they can take one course together. There is no need for both spouses to take two separate courses. It is cheaper to take it over the internet. The course will send you a certificate of completion.

You just need to make sure your attorney or the court receives the prefiling certificate (before or just after you file) and the post-filing certificate (just before your discharge)

Continue reading " Do I have to take Credit Counseling classes in Order to File for Bankruptcy? " »

Moody's downgraded Bank of America's mortgage service ratings from "strong" to "above average." The recent downgrade is due in large part to the number of lawsuits against BOA for fraud and deceptive trade practices against borrrowers during the housing boom.

Allegedly, BOA is being investigated by state attorney generals, the Federal Reserve and other governmental agencies as to whether its mortgage representatives pushed through foreclosure cases without thoroughly looking at the documents. Reps were allegedly signing affidavits and swearing that they had thoroughly looked through documents before actually moving forward with the foreclosure, when in fact, they had not.

To learn more about this article, please visit Moody's cuts BofA's mortgage servicing ratings.

Continue reading " Bank of America Service Ratings Take a Hit " »

Businesses have two options in filing for bankruptcy relief. There are separate chapters for farmers and municipalities. Businesses can either file for Chapter 7 or Chapter 11 bankruptcy relief. Chapter 13 (Reorganization) is not available for businesses, trusts, or any other entity. In a Chapter 7 (Liquidation), the bankruptcy Trustee looks to capture and liquidate assets in the name of the business that are not protected by exemptions.

At the close of the bankruptcy, the business will also be dissolved. Business reorganization is available in a Chapter 11 bankruptcy. That is where current management is permitted to continue running the business unless the bankruptcy Trustee feels current management is inadequate for the job. In a Chapter 11, the business may be able to opt out of contracts without civil liability.

Continue reading " My Business Needs to File Bankruptcy: What Chapter should it File? " »

You may be collection proof for now. Collection proof simply means that your creditors have nothing to garnish or lien against you. However, if you ever intend on getting another job or having assets in your name, your past and future creditors may try and garnish wages or place liens against assets.

Therefore, it may be in your best interest to file when you are unemployed and have no assets. This should also help you pass the mean's test in a chapter 7. However, because you are unemployed or are on a low fixed income, it will probably be difficult to come up with attorney's fees and costs for a bankruptcy. Maybe you have friends or family members able to financially help you through this time with bankruptcy fees and costs.

If you do borrow money from friends or family do not pay them back on loans shortly before filing for bankruptcy. If you do this the trustee in your bankruptcy may be able to recapture that money from the person you paid it to. Let them know you will pay them back after the bankruptcy is completed.

Continue reading " I have no Job and no Assets: Should I file a Florida bankruptcy now? " »

Since 2005, the bankruptcy laws have been much tougher on debtors. The infamous mean's test was introduced and debtors and bankruptcy attorneys hae to keep this in mind when looking to what chapter debtors qualify for.

A debtor must take the mean's test if the debtors entire household income is above the state median. The mean's test looks at the debtor's disposable income. Disposable income just means gross income less allowable expenses. we use the word allowable because expense limits or caps are set by the IRS guidelines.

Therefore, hypothetically, if your family of four spends $1,200.00 a month on groceries and the IRS guideline for a household of four is only $800.00, the debtor only gets to use $800 in expenses. Theoretically, the additional $400.00 should be used to pay back creditors.

Continue reading " Deducting Certain Expenses for Mean's Test Purposes (Part I) " »

In the most recent post, we discussed IRS guidelines for mean's test purposes. This post deals with secured debt that debtors wish to surrender but want to claim as an expense under the mean's test. Can debtors do this?

The answer is probably yes. The mean's test looks to actual expenses incurred before the debtor files the petition. Therefore, if a debtor is wanting to surrender either real or personal property, if the IRS provides for that expense in its guidelines, then the debtor may deduct that expense even though he or she is surrendering the property. This should really help the debtor lower overall his or her disposable income.

The lower the debtor's disposable income, the better chance he or she has at passing the mean's test.

Continue reading " Deducting Certain Expenses for Mean's Test Purposes (Part II) " »

The answer is unfortunately no. Public policy plays a big role in prohibiting a bankruptcy from discharging criminal fines and costs. If a debtor, convicted of a crime or crimes, is permitted to discharge those obligations, that would certainly inhibit the deterrence factor.

The system wasnt to deter those convicted of crimes from doing similar acts in the future. Therefore, there are penalties imposed on these people. These penalties could include paying costs and fines, losing civil rights, etc.

If a penalty is lifted because someone files for bankruptcy, this weakens the deterrence factor. So for example, toll booth charges, speeding tickets, and DUI fines are not dischargeable.

Continue reading " Can I discharge criminal restitution fines and court costs in my Florida bankruptcy? " »

This really depends on the district your case is filed in and that Trustee's preference. If you want to keep credit cards that you owe balances on outside of the bankruptcy, you would have to reaffirm the debt. It is almost never in a debtor's best interest to reaffirm unsecured debts.

Reaffirm just means the debtor agrees to become personally obligated after the bankruptcy for the debt. This is also assuming the Trustee in your district allows or permits the debtor to keep the accounts open. Most of the time, Trustees prefer you to include all unsecured debt in the bankruptcy. In their eyes, its not fair that one creditor gets paid more than other unsecured creditors.

Continue reading " Can I keep certain credit cards outside of my Florida Bankruptcy? " »

The answer depends on the facts. It depends on how long ago the advance or loan was issued in relation to when you filed. It depends on whether or not you have made payments towards the debt. In addition, the court or Trustee may want to know what the debtor's intent was when he or she took out the advance or loan.

If the debtor had no intentions of ever paying that back, the Trustee may assume the debtor acted fraudulently and could dismiss the entire bankruptcy case. The bankruptcy code does provide that if a debtor takes out more than $750 in cash advances within 70 days of filing the petition, that debt will be presumed nondischargeable.

Therefore, if a debtor has taken out a large advance recently, it may be in their best interest to wait to file for bankruptcy unless filing sooner is a must.

Many times clients want to know where they can pull their credit report. We have our clients pull credit reports from three agencies: Equifax, Transunion, and Experian. We have them pull all three in case one report misses something. You can pull them over the phone or by the internet

If you have not pulled a report within the last year, each report should be issued at no charge. If you have pulled within the year, it may cost around $15-20 per report. We do advise that you be careful of what agencies you pull your report from.

In many instances, other companies will ask for credit card information and charge you for pulling credit information. In addition, they may not be as reliable as the three reports mentioned above.

Continue reading " Where can I get my credit reports? " »

In a recent post, we mentioned the fall of powerhouse attorney foreclosure firm, David J. Stern. As a result, many foreclosure cases are in limbo and lenders/servicers are struggling to figure out where to go next.

For one Jacksonville investment property, the entire loan was written off and the man who owns the property owns the property free and clear of any liens now. David Stern was handling the foreclosure case against the owner of the Jacksonville property.

The loan was for around $72,000. The owner made one payment and then stopped paying because the value of the property dropped dramatically. However, once Stern dropped the case, Wells Fargo didn't feel it was worth pursuing because the value of the property had dropped drastically.

Continue reading " Man Benefits from Foreclosure Error on Jacksonville Property " »