Articles Posted in Chapter 7

Oftentimes when people prepare to file for bankruptcy we find that there are other people who appear to owe debts jointly with them. The rights and obligations of these people vary depending on whether they are Co-Debtors or Authorized Users.

A Co-Debtor is any person who has signed into a debt with someone else. A Co-Signer is a Co-Debtor. All bankruptcy petitions have a section dedicated to Co-Debtors.

While bankruptcy can remove your personal liability from a debt, anyone who is joint on that debt remains liable. Because of this, Co-Debtors are given notice when a case is filed and will be obligated to pay of the person filing bankruptcy doesn’t.

John Pregent of Georgetown, Massachusetts plead guilty to one count of bankruptcy fraud involving a scheme to defraud creditors in the bankruptcy case of Technical Fabrications, Inc. (TechFab), his business.

The Chapter 7 case (businesses can only file Chapters 7 and 11) was filed July 26, 2010 in the Massachusetts District Court, Case No.: 10-18028 and intended to discharge the debts of the business. Normally, this wouldn’t be a problem, however prior to filing the bankruptcy case and at his direction, Mr. Pregent had TechFab sell of valuable assets to a newly-formed company and had that new company pay him directly for the assets. This was done in an attempt to prevent TechFab’s creditors from getting paid money from the liquidation of those assets. Pregent also failed to disclose these transfers (even under penalty of perjury), which probably explains why it took nearly two years to prove him guilty.

Unfortunately for Pregent, the Federal Bureau of Investigation got involved and he now faces a felony with up to five years imprisonment, three years supervised visitation and a hefty $250,000 fine. Sentencing is set for 2:30, May 5, 2012.

William “Gary” Busey of Malibu, California filed for Chapter 7 bankruptcy protection on February 7, 2012 citing less than $50,000 in assets and over $500,000 in liabilities.
Gary, who starred in the original Lethal Weapon film alongside Mel Gibson and Danny Glover claimed to have snorted cocaine off of his dog, “Chili” with a straw as recently as 2008. While such a history would render a average citizen unemployable, Busey appears to still be making films although two of the most recent titles are horrors titled as Piranha3DD and Mansion of Blood. With any luck, he’ll be able to pull of a “Vincent Price-esq” image for himself.
For now, the court awaits the remainder of Busey’s paperwork as he filed a bare bones petition and the documents that were filed on his behalf do not have his original signature. While this may lead one to think they could be fraudulent, it is not likely as many bankruptcy attorneys forgo original signatures of the majority of related papers.

Twenty-two years ago Patricia Kluge divorced her husband of nine years and was given one of the largest divorce settlements in history at one billion dollars. The annual interest rate as predicted by People Magazine was $1.6 million a week. Even so, the former actress of, “The Nine Acres of Nakedness” managed to deplete those assets to less than $2.6 million in real and personal property in a little more than two decades.

Mrs. Kluge and her husband listed $123,000 worth of personal property as exempt on their petition including a $5,000 wine collection and a $80,000 wedding/engagement ring set. §34-26 of Virginia’s exemptions allows for wedding rings and bands of any value.

Perhaps shedding some light as to what caused Kluge to plunge financially, I would note that her mansion, once listed for £62 million, finally sold for £9.3 in mid-2011.

Bankruptcy is complicated. If you’re represented by counsel, your attorney will ask you questions and based on your answers, will advise you on which of the four chapters of bankruptcy available to individuals you may want to file. Sometimes choosing the chapter that will put the client in the best position hinges on a single fact or two -and sometimes facts change.
Fortunately, the legislature realized the possibility of changing facts in bankruptcy cases and created a solution, 11 U.S.C. §706. This provision allows a debtor to convert their case to another chapter. Of course, the debtor still must pass the qualifications for the chapter to be converted to, such as passing the “Means Test” for a Chapter 7 or being under the debt limits of Chapter 13.
If you would like to meet with an attorney to discuss the possibility of Bankruptcy, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Tenancy by the Entireties, only permitted in a few states, is a term unknown even to many attorneys. The lack of knowledge of it’s existence helps to illustrate the stupidity of it’s application: Spouses must intend to hold property as “Tenants by the Entireties” to be afforded it’s protection, yet nearly no one knows that this system (or any system) of ownership exists.
There are several ways people can hold property. Tenants in Common is fairly frequent. Another is Joint Tenants with Rights of Survivorship. Each of these open a different can of worms in different areas of law. What Tenancy by the Entireties (TBE) can do, is allow a bankruptcy filer to keep their property provided that the property is held by a non-filing spouse provided that the property is held by TBE and that the property is not under-secured. Fortunate for Florida debtors, the inherit flaw of requiring the owners to intend TBE is overcome by the courts now presuming that TBE is intended if the couple is married and the property is acquired pursuant to the requirements of TBE. TBE requires that property be acquired at the same time for both spouses, they must have the same title, same interest in the property, have the same right to possession and, of course, be married.
If you have questions about TBE, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

It is generally accepted that bankruptcy’s origins began in the Torah and Old Testament within the Book of Deuteronomy Chapter 15:1-2 as well as under Mosaic law. The story loosely translated states that all debts shall be forgiven at the end of every seven years. From this our founding fathers outlined bankruptcy rights and courts in our Constitution. Even today we have maintained the “end of every seven years” rule by allowing a Chapter 7 discharge to be achieved only ever eight years (eight being the end of seven).
These holy books also say that a person who is freed from debt-bond should not be left empty handed. The idea behind this is that releasing a person from debts does no good if they must then incur new debts to survive -they need some amount of property with which to rebuild. Again, our country has followed this wisdom, this time by creating bankruptcy property exemptions. By allowing debtors to retain some property, they will be better suited to rebuild and will be less likely to become ‘slaves’ to debt again.
There are many complexities to bankruptcy that you should know before you make the life changing decision to file. If you’d like to sit down with me for an hour to see if bankruptcy is right for you, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

As I’ve said before, there has been a steep decline in foreclosure filings, however a recent article in The Florida Bar News by Gary Blankenship, explains that despite the decrease in foreclosures last year, there appears to be an enormous backlog of foreclosures yet to come.

Linda Goodner, a States Courts Administrator recently appeared before the Senate Criminal and Civil Justice Appropriations Subcommittee to discuss what changes would be needed to handle the estimated 368,000 foreclosure cases pending in courts across Florida as well as the cases that are yet to be filed. In her estimation, there will be another 380,000 cases filed by 2016 -at which point she anticipates that foreclosures will return to normal.

One proposal came from Representative Shawn Harrison who proposed that banks be given the ability to pursue non-judicial foreclosure in exchange for giving up their rights to file deficiency judgments. This is an interesting proposal.