Articles Posted in Chapter 7

Many people ask me whether or not “Pay day” loans can be included in a bankruptcy. Unfortunately, the classic legal answer is, “It depends.”

A “Pay day” loan is one where an institution offers a loan equal to a portion of your next pay check. Typically, you have to provide evidence of what that paycheck will be by showing prior check stubs. When you get paid, you are then obligated to pay the loan company back. Many of these companies will take post-dated checks or will schedule an automatic debit on your account.

When the “Pay day” loan was taken out is the most important factor in determining whether the debt can be discharged in a bankruptcy. For instance, if a “Pay day” loan were taken out just weeks before the bankruptcy, there is a presumption that the loan was taken out with the intent to defraud the creditor. In these cases, it’s up to the person filing to prove that they were not trying to be fraudulent. It is best not to get into these situations and to make a good faith attempt to repay the loan prior to filing.

According to the Washington Post, Warren Sapp, former NFL star, has filed for bankruptcy in a Florida federal bankruptcy court. In his Chapter 7 filing he claimed that he owed nearly $7 million to creditors and for child support and alimony. In his filing he listed his assets as his collection of Jordan athletic shoes, watch, and ring, but it did not include his Super Bowl ring and his national championship ring. He claimed that he lost both rings.

Sapp’s current income is listed as being nearly $116,000.00. Included in that number is a $45,000 final payment from Showtime, a $48,000 appearance fee, and a nearly $19,000 advanced from a book. Sapp is currently employed as an analyst at the NFL Network. His contract is set to end in August and it is unclear whether he will renew that contract.

Warren Sapp is best known for his time with the Tampa Bay Buccaneers and with the Oakland Raiders. He spent 13 years in the NFL and had a sizeable income. Somehow his income could not compensate for his debts and now he is forced to file for bankruptcy.

As I was doing research for this blog post, I came across a treasure trove of information on the subject of bankruptcy. Surprisingly, much of the information is supplied by the federal government itself. On the official website for the federal courts, USCourts.gov, the government provides you with all of the necessary information on the basics of bankruptcy. Although it is remains the advice of this firm to always have experienced bankruptcy counsel if you decide to file, this website will provide you with the background information on what a bankruptcy is, which version may be best for you, and the appropriate procedure to successfully accomplish the task.

Article I, Section 8 of the U.S. Constitution gives Congress the power to make and enact bankruptcy laws. Using that power, Congress in 1978 passed the Bankruptcy Code. It can be found in Title 11 of the United States Code. The Bankruptcy Code provides all of the laws that govern bankruptcy. Along with the substantive law, there is a set of procedural standards that must be followed, called the Federal Rules of Bankruptcy Procedure, those rules along with any local rules of the district where the bankruptcy court is located, provide the procedure that govern all bankruptcy proceedings.

Although a bankruptcy is presided over by a federal bankruptcy judge, most of the action in a bankruptcy action takes place outside of the courtroom. The process is typically overseen by a bankruptcy trustee who is appointed by the court. When the case goes before a judge, it is the judge who decides whether a debtor is eligible to file for bankruptcy, whether a debtor’s debts can be discharged in bankruptcy, as well as other matters.

The recent rejection of Natalie Suleman’s bankruptcy petition illustrates the importance of having counsel when filing for bankruptcy. Suleman’s petition filed in April only included the first five pages of a normal petition and a mailing list of her creditors that failed to indicate their priority.

A typical bankruptcy petition is between forty and fifty pages. Many of the pages missing were those that outline the income, expenses, assets and liabilities of the debtor. A general summary of some of these items is featured on the first page of the petition, but since the other sections were omitted, it is impossible to really know what Miss. Suleman owed, owned or if she even qualified for a Chapter 7 bankruptcy.

Taking into account that she did not hire an attorney, failed to file proper paperwork and appears to have filled out the petition on a type-writer (which is uncharacteristic of modern petitions), I have serious doubts about the legitimacy of her intent to file for Chapter 7 bankruptcy protection. This may have been a cry out to energize the public’s interest in her to restore the celebrity status she once enjoyed. Although filing a sham petition to make money appears to fall in line with the intentions of the bankruptcy system as it helps someone who can’t pay their bills, it is an unorthodox and reproachable method.

A recent article in Forbes states, “Octomom Files for Bankruptcy, because our Bankruptcy Laws Are Great”. While this seems to quote Nadya Suleman (The Octomom) as having made such a statement, the term “great” only comes up in their article in a quote from the french political philosopher, Alexis de Tocqueville who said in relevant part: “There is no American legislation against […] bankruptcies. Is that because there are no bankrupts? No, on the contrary, it is because there are many. In the mind of the majority the fear of being prosecuted as a bankrupt is greater than the apprehension of being ruined by other bankrupts…” What Tocqueville says here is not that the bankruptcy laws of the United States are great, but that because we as individuals see so many bankruptcies in our friends and neighbors that we realize that the possibility of our own bankruptcy as possible reality. This causes us to fear anti-bankruptcy legislation because we may one day need the relief ourselves. The fear of losing the ability to go bankrupt as a debtor is greater than the fear of losing the money we are owed as creditors. This is interesting because we don’t enter into the same kind of analysis when forming other laws. For instance, we don’t prevent laws that punish murder because we know as individuals that we may one day murder someone. This proves that there is something unique when it comes to bankruptcy, which I believe to be the public opinion that bankruptcy happens in large part by no fault of the debtor. It is well understood that medical debt, unexpected job loss, natural disaster, having eight babies, etc. are “out of our hands” as individuals. If we believe this negates the responsibility, we are less likely to punish people for it.
Octomom has filed for bankruptcy due to her financial inability to care for such a great number of children on her own. She may be an extremely unlikely example of a scenario that could happen to anyone but having a similar scenario could bring about the same result. I personally know someone who had unexpected twins. This caused an unexpected financial hardship and they did in fact file for bankruptcy, though they didn’t indicate the kids were the cause (who with other places to point the blame would?).
The causes of bankruptcy are vast, frequent and are well recognized as being indiscriminate in whom they afflict. If you, like so many successful Americans before you, would like to explore your options in bankruptcy, contact a Duval County Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

When people think of foreclosures these days they know bankruptcy may not be far behind, but it’s the amount of bankruptcies brought about by medical debt that’s most astonishing. Back in 2009 medical bills were cited as the cause of more than 60% of all U.S. bankruptcies. This occurred despite 78% of those people having some form of health insurance. It’s the gaps in the insurance, the deductible and benefit limits that cause the majority of medically bankrupt people to be unable to pay their bills. Now in 2012, with foreclosure rates flying higher than we ever thought the percentage of bankruptcies caused by medical issues has gone down to 20%, but this is more likely due to the enormous increase in foreclosure related bankruptcies rather than a decrease in medical bankruptcies as a whole.
Unfortunately, not everyone who files a medical bankruptcy does so at the right time. If a case is filed before the person has recovered from their surgery or illness, there may be other bills that the person is unable to pay. The outcome of these cases are people who owe money they can’t repay and who aren’t eligible for a bankruptcy discharge for up to eight years.
If you’ve suffered a major illness or medical expense that won’t be covered by your insurance, you should contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 to discuss your options.

Florida Middle District Judge Alexander Paskay passed away on Friday after an extraordinary life. He was born in Hungary in 1922 and after being conscripted into the German army, he defected to the American side of the war. He proved useful as he spoke four languages -Hungarian, Italian, French and English. Although he had been an lawyer in Hungary, the Florida Bar required him to attend law school again, which he did. He became a judge in 1963 and served until 1999 when he retired for a brief period, then served again until December 2011. Federal records show that he handled over 150,000 bankruptcy cases in his many years, making him one of the longest-serving bankruptcy judges in our nation’s history.
He was known to have a strong sense of humor and a firm grasp on bankruptcy law, always keeping abreast of recent changes. His wisdom will undoubtedly be missed by those in the bankruptcy community.