Jacksonville Bankruptcy Lawyer Blog

Published on: August 15, 2012

Your Credit Score and the Impact of Filing Bankruptcy

One of the biggest worries for those who are considering filing for bankruptcy is how the bankruptcy will affect their credit score. Most people believe that they will not be able to receive credit in the future after their debts have been discharged in bankruptcy. It is true that a bankruptcy will do some damage to a debtor’s credit score. However, there is a silver lining to the otherwise bad news: someone who has discharged their debts in bankruptcy is in a very good position to begin to rebuild their credit following a bankruptcy filing. There are several factors that impact how quickly a debtor can begin to rebuild their credit score.

After the debtor’s debts have been discharged in bankruptcy, each of the three major credit bureaus will make a notation on the credit report and the debtor’s score will then feel an impact. Just how big this impact is can depend on a few different factors: how high the credit score was prior to the debtor filing for bankruptcy; how many accounts have been discharged in the bankruptcy; income; and whether the debtor has any outstanding debts or financial obligations not discharged in the bankruptcy.

There are a few things that you can do to help minimize the damage to your credit once you’ve filed for bankruptcy:

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Published on: July 31, 2012

Listing Creditors In Bankruptcy

By David M. Goldman

When you file for bankruptcy, every debt you owe must be completely and accurately disclosed. The process does not permit you to pick and choose which debts you’d like to leave behind. Intentionally omitting debts or assets from your filing may prevent those debts from ever being discharged, the dismissal of your case, fines and even imprisonment.

The bankruptcy court requires that you engage in due diligence to determine your debts and to identify any and all potential creditors. This means that you are required to make a real effort to track down the money you owe and to whom it’s owed. You need to sit down and go through your credit report, account statements, collection notices, and other information pertaining to the existence of debt. When you sign your bankruptcy petition, and testify at the Meeting of Creditors, you are telling the Court that your petition is true, accurate and complete. This is important to you because bankruptcy courts will only result in the discharge of those debts where the creditor received notice.

What if you accidentally leave someone off the list? If you neglected to list a creditor and you have not yet received a discharge, it is possible to file an amended schedule of your debts to include the missing debts for a fee of $30.00. This means a new list of debts must be created and in some cases, a Motion for Leave to Amend Schedules must be granted. The Court will most likely allow the change but there is a filing fee associated with this process. The Court will then give your newly mentioned creditor time to object to having the debt discharged.

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Published on: July 23, 2012

New Median Income Figures; Means Changes

By David M. Goldman

Twice a year the United States Department of Justice releases new Median Family income figures for each state. These figures are used to calculate a debtor’s eligibility to file for bankruptcy under Chapter 7 of the Bankruptcy Code. If your income is greater than the median(average) income for your state of residence and family size, the trustee may be obligated to dismiss your case.

if your income exceeds the median family income then a presumption arises under part (a) of the Means Test that you do not “qualify” for a Chapter 7 bankruptcy.

The Means Test calculation compares your average monthly income (as calculated over the last six (6) months) to the median family income in your state for a household of your size. If your average monthly income is lower than the median family income for your state of residence and family size, then you meet the means test and there is a presumption that you will be permitted to file for Chapter 7 relief. There are even a few exceptions to the means test for military families and those whose businesses failed.

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Published on: July 20, 2012

How many times can I file for bankruptcy?

By David M. Goldman

If you have filed bankruptcy in the past and you have fallen victim to the recent plummet in the economy, you may be wondering how many times you can file bankruptcy. Whether you are allowed to re-file for bankruptcy depends on whether or not you received a discharge under your most recent bankruptcy filing and what kind of filing you made in the first place.

While there are no limits on how many times you can file bankruptcy there are limits to how often you can file. If you received a discharge under a Chapter 13 bankruptcy case, then you cannot file for relief under Chapter 7 unless:

1. Six (6) years have passed since the discharge in the Chapter 13 case; or

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Published on: July 16, 2012

How should you handle your car in bankruptcy?

By David M. Goldman

Filing a Chapter 7 bankruptcy can be used to save your car under limited circumstances, but it is possible. In Chapter 7, a debtor only has three options when it comes to deciding what do to with their personal property covered by a lien. Once you and your bankruptcy attorney decide which option is best, your attorney will file a “Statement of Intention” with the bankruptcy court to let everyone know what your intend to do with regard to your secured collateral. Here are your options:

1. Surrender

The first option is to surrender the property to the car lender in full satisfaction of the debt. The car lender can never come after you for the difference between what the car sold at auction and what you owe on the note. In normal situations, if you owe $10,000 on a car that gets repossessed, and the lender can only get $6,000 for it at auction, the car lender can sue you for the remaining $4,000 on the note. Because a Chapter 7 bankruptcy wipes out your personal liability on your debts, your lender will never be able to come after you for the deficiency.

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Published on: July 9, 2012

The difference between dischargeable and non-dischargeable debts in Florida

By David M. Goldman

Many Florida residents are under the impression that once they have filed for bankruptcy and their debts have been “discharged” they are no longer liable for those debts. This is not always the case as there are certain debts that cannot be discharged in bankruptcy. This is especially important for people to know before they begin the process of filing for bankruptcy.

Each chapter of the bankruptcy code specifies which debts are dischargeable and which are not. Section 523(a) of the Bankruptcy Code lists the types of debts that generally cannot be discharged in bankruptcy. This means that even after the debtor has prevailed in bankruptcy court, if the debts have not been discharged, then the debtor is still responsible for paying those debts. According to the Code, these non-dischargeable debts are exempt from discharge for reasons of public policy.

If a debt falls into one of the exempted categories in Section 523(a), then it is usually automatically removed from the discharge and the debtor remains obligated to pay those debts. Most commonly, those are child support and alimony debts, some tax debts, debts that the debtor failed to disclose to the court during the application process, most federal student loan debt, personal injury claims against the debtor for DUI-related incidents and personal injury claims against the debtor for willful or malicious damage to a person or to property.

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Published on: July 6, 2012

Bankruptcy and Child Support

By David M. Goldman

One of the most powerful effects of filing a bankruptcy is the Automatic Stay. This Automatic Stay prevents any collection attempts from being made upon the debtor. Thus, every person that the debtor owes cannot continue to pursue the debtor for repayment of the debt.

There are some situations, however, when the automatic stay might not be able to prevent other court proceedings from continuing, at least in part. One of those situations is in family law cases involving child support and custody. Proceedings that are concerned with visitation or with current payment of child support are generally not subject to the Automatic Stay, which means those proceedings will continue despite the debtor having filed for bankruptcy. However, cases that involve past due child support may be subject to the Automatic Stay. These matters will continue if the stay is lifted by bankruptcy court order or once the bankruptcy proceeding has concluded. Sometimes family law judges in such cases will not hear any issues at all, including current child support obligations and current visitation matters, until the Automatic Stay has been lifted.

It is necessary for all debtors to understand that even though the Automatic Stay may stop court proceedings, if there is an order for current child support or alimony already in place, those amounts will continue to accrue. In other words, if an individual is ordered to pay child support or alimony each week, he or she is still required to meet this weekly obligation after a filing for bankruptcy.

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Published on: July 3, 2012

Your Bank May Help Pay For Your Bankruptcy

By David M. Goldman

Hard times have fallen upon most of the United States and Jacksonville, Florida is no exception. Bankruptcy filings are down and many of the other attorneys I speak with agree that it’s not because people no longer need bankruptcy -it’s because people can no longer afford the cost to file.

Filing bankruptcy generally costs around $1,500 for a Chapter 7 and those fees must be paid prior to filing. With so many people stretched to their financial limits, attorneys are getting more creative about how clients can pay for fees.

It’s rare these days to find a debtor who has equity in their home, but it’s not uncommon to find a debtor who has equity in their vehicle. Due to the high interest rates on car loans and the lower pay-off amount, it’s not infrequent for a debtor to have paid off their car note early, often having in excess of $2,000 of equity in the car.

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Published on: June 26, 2012

Warren Bodeker Forced To Recognize The “Burdens As Well As Benefits” of Bankruptcy

By David M. Goldman

Montana Bankruptcy laws have lead to the liquidation of a WWII veteran who has been forced to leave the home he built for himself and his wife in 2000.

Warren Bodeker, 89, was ordered to leave the home as it was not exempt from collection by creditors.

“There will be nothing left. I’m not going to have anything.”

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Published on: June 1, 2012

New Ruling: Second Mortgages Can Be Stripped in Chapter 7

By David M. Goldman

The Eleventh Circuit Court of Appeals has ruled that Second Mortgages can now be “stripped” in Chapter 7 cases. This means that as long as the amount owed on the first mortgage is greater than the home’s market value, the second mortgage becomes unsecured and can be discharged in the bankruptcy with the remaining unsecured debt.

Previously, second mortgages could only be “stripped” in Chapter 13 cases because the courts felt that 11 USC §506(d) did not apply in Chapter 7 cases because of an old Supreme Court Decision. However the Court of Appeals felt that although the Supreme Court expressly stated that §506 didn’t apply in Chapter 7 when it came to partially secured “cram downs” of primary residential property, the Supreme Court did not formally make an opinion on whether or not §506 will apply to Chapter 7 cases in other ways.

I must admit that this feels like a weak decision. Weak or no, someone will have to petition the Supreme Court on the issue, await the Supreme Court’s decision on whether or not to take the case and then await the Supreme Court’s final opinion on whether or not the statute applies within the Chapter 7 context. Long story short, this is probably going to take a long time to work out. Hopefully in the meantime, people can get the relief they need from unsecured second mortgages.

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