Jacksonville Bankruptcy Lawyer Blog

Published on: April 11, 2012

Property Division Through Divorce, Enforcement, and Bankruptcy

Divorce in Jacksonville, Florida is not a rare thing. According to Daily Beast, the city of Jacksonville has the ninth highest divorce rate of all cities in the United States. Many of these couples are jointly liable on home mortgages when they file for divorce. Since 46% of homes that have mortgages are underwater, many people are “left holding the bag” for mortgage payments they can’t make, refinance or otherwise settle with. Often times the only option for these people is bankruptcy. Bankruptcy and Refinancing are often the only options for debtors to have their personal liability removed from un-payable mortgage notes.
When one ex-spouse files for bankruptcy, it almost invariably causes the other to file. Of course this depends on whether or not couple had purchased a home using combined credit scores and on whether or not the non-filing individual can handle the mortgage payment on their own. If the individual is able to make the payment on their own, they may be able to refinance the mortgage, allowing for the other party to be removed from the liability on the note.
If you have questions relating to the interplay of bankruptcy and divorce, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

Published on: April 10, 2012

“Use It Or Lose It.” Right To Amend Claim Of Exemptions

By David M. Goldman

When one files for bankruptcy, a petition must be created. That petition is made up of several different sections called, “Schedules”. Each of these sections deals only with one specific issue, for instance, Schedule A deals with real estate, Schedule B with personal property, and so on. It is generally accepted that these schedules can be amended at any time, however a recent case out of the Middle District of Florida has limited this freedom somewhat.

Although every schedule is important, the schedule most debtors are interested in is Schedule C. Schedule C is where the debtor lists which property (s)he wishes to keep a exempt from collection by creditors. The rules allowing for property to be kept are called “exemptions” and are outlined by either state or federal statutes.

In Florida the use of one such exemption may forbid the use of another. As such, debtors can choose only door A or door B, but not both. Since there are so many rules in the bankruptcy code and because those rules are not always clear, it is often the case that people filing bankruptcy without a lawyer (pro se) mistakenly choose incompatible exemptions. This forces the Trustee to file an Objection to Claim of Exemptions, which requires a hearing for the judge to determine whether or not the objection is valid. If the objection is valid and the exemptions are denied, the trustee can then file a motion for turnover. The motion for turnover is the trustee’s way of asking the judge to force the debtor to surrender their rights in the property to the trustee. This is where the turning point is. Up to and until the judge orders turnover, the debtor can amend their Schedule C list of exemptions and change the amount and type of property they wish to keep, but once the judge signs an order requiring the debtor to surrender their rights, the debtor can no longer amend.

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Published on: April 9, 2012

IRS To Revoke Passports Of Tax Delinquent Americans

By David M. Goldman

Senate Bill 1813 will allow for the revocation of passports from anyone who owes more than $50,000 to the Internal Revenue Service. The Bill will Amend Sub-chapter D of Chapter 75 of the Internal Revenue Code of 1986 to read:

“SEC. 7345. REVOCATION OR DENIAL OF PASSPORT IN CASE OF CERTAIN TAX

DELINQUENCIES.

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Published on: April 6, 2012

Some Attorneys Are Biased For Some Chapters

By David M. Goldman

As a counselor for others, attorneys are obliged to be fair and honest in their candor with everyone, including clients. Unfortunately, this idealist principle often falls short when it comes to attorney practice. There is a segment of the population of lawyers who intentionally try to persuade debtors to file Chapter 13 cases when Chapter 7 would serve them better. The reason for this is the fees. Chapter 13 cases pay almost twice that of Chapter 7. Therefore, we as attorneys stand to gain double the fees if we can convince you that a Chapter 13 is better for you. Lawyers are not the only ones whose morals cause clients to fall victim to greed. In 2011 Judge Mark Ciavarella of Pennsylvania was sentenced to 28 years in prison as a result of a “cash for kids” deal with a local private prison. If the judge sent a child to prison, the prison would in turn send the judge a check. After the judge had received nearly a million dollars in so called “finder fees” from the prison, suspicion grew. It is unlikely that we will ever know how many innocent children were sentenced to prison terms or how many guilty children had their prison terms unjustly extended as a result of this ghastly corruption, but when it comes to lawyers helping you choose which chapter of bankruptcy best suits you, you have been warned.

There are four chapters of bankruptcy available for individuals in the United States. These chapters vary in their usefulness in different situations as much as people do. They also often vary greatly in cost. When you consult an attorney for bankruptcy advice, their job is to determine which chapter, if any, best fits your financial situation. As time permits, they should explain to you why that chapter is best for you and equally important, why the other chapters do not work for you.

In Jacksonville and even across the United States, the attorney’s fees for a Chapter 7 is about half that of a Chapter 13. The court filing fees are about the same. The Chapter 11, which is rare but not unheard of has enormous attorney’s fees when compared to the other chapters as it is typically only filed by either businesses or by individuals with a very great amount of money and/or debt. It also has filing fees that are more than three times that of 7 and 13. Chapter 12, which requires the petitioner to be a commercial farmer or fisherman, is so rare that I can’t even approximate the fees as I’ve never known any attorney who filed one. The court’s fees are slightly lower than those of 7 and 13 and because a Chapter 12 is very similar to a Chapter 13, I would imagine the fees for it to be similar.

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Published on: April 5, 2012

Amelia Island Bankruptcy Attorney: Privacy in Bankruptcy

By David M. Goldman

Bankruptcy can be scary. There are a lot of rumors about bankruptcy, some of them are true, some not. One of the things people fear for the most is the lost of their privacy. They don’t want people to know they’ve filed bankruptcy and they don’t want people from the court going to their house or snooping through their things.

When you file for bankruptcy, everything you own becomes part of your “bankruptcy estate”. A trustee of that estate is appointed by the court who sifts through the property listed in your schedules, uses his or her experience to judge it’s reliability and as long as it passes the smell test, the trustee administers the estate and you can go on without having people poke in your business. However, if you fail the smell test because the trustee thinks something stinks in your schedules, he or she can petition the court to permit an appraiser to visit your house. This is typically done because your Schedule B (Personal Property) list either omits property the trustee suspects you actually have or because you have seriously undervalued the property on Schedule B so as to keep more property than you would otherwise be exempt.

If an appraiser is to visit your home, the inspection is typically scheduled with you so as to make the appointment as convenient as possible. The appraiser creates an independent list of all of the property there that has value. This appraisal is then given to the case trustee who may use it as evidence against the bankrupt.

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Published on: April 4, 2012

Atlantic Beach Bankruptcy Attorney: Bankruptcy’s Effect On Credit

By David M. Goldman

People contemplating bankruptcy often fear the effect it will have on their loved ones. Debtors often think that their credit is somehow merged with their spouse or that their children will be liable for their debts if they’re still outstanding at time of death. I would like to dispel these rumors because they at worst are untrue and at best are misleading.

First and foremost, from a credit perspective married couples might as well be strangers on the street. One spouse may have a stellar credit score while the other may not. Sometimes all the unsecured debts are all in the name of one spouse, while the home mortgage liability is in the name of the other and so on. Oftentimes, home mortgage liabilities are so great that they require the commitment of income from both spouses to justify the bank’s risk in permitting the loan. This is likely the reason people mistakenly believe that marriage results in the “merge” of credit. If there is any truth to this, it is like so: Once two spouses sign a mortgage note on a house, they are now in the same boat as to that debt. If that boat sinks, whose fault it is ceases to matter and they will both drown equally. This is why so many people file for bankruptcy soon after their divorce is completed.

The idea of inheriting debt is archaic. It’s true that there are account of our own Thomas Jefferson having inherited debt from his late father-in-law, but any such law transferring liability on debts by inheritance is a thing of the past. Still, there are some ways in which a son or daughter may ‘feel’ they have inherited a debt. For instance, when someone dies and leaves an estate, the personal representative of the estate must make an accounting of the decedent’s (dead person’s) property and pay their creditors off before allowing the property to be distributed to the heirs. This may make those who inherit feel as though they’re being forced to pay the decedent’s debts. The distinction here being that it is the decedent’s funds that are used to pay the debts and not those of the living heir.

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Published on: April 4, 2012

Fleming Island Bankruptcy Attorney: Homestead

By David M. Goldman

Although it’s rarer these days, people occasionally come into my office who have equity in their home. This is fortunate because Florida has one of the most generous homestead exemptions in the United States. There are exemptions on a federal level, but if a state chooses to create their own, residents of that state must utilize the state exemptions instead of the federal ones. Some states, like Pennsylvania, have no homestead exemption at all.

The Florida homestead exemption requires that the property be either: one half acre if within a municipality or one hundred and sixty contiguous acres outside a municipality. This is a unique benefit for many folks who live in Fleming island because it is largely unincorporated. What this could mean is that a person could file bankruptcy and retain a home with two million dollars in equity as exempt property and, if it’s in an unincorporated area, the property could cover several acres of land.

This exemption is outlined by the Florida Constitution, Article X, § 4. Land located within a municipality that was previously unincorporated can still be “homesteaded” as it so referred, unless the owner of the land consents to inclusion into the municipality.

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Published on: April 3, 2012

Mandarin Bankruptcy Attorney: The Means Test

By David M. Goldman

Anyone who knows anything about bankruptcy knows that there were big changes to the bankruptcy code in 2005. Several things were changed by that amendment, but the one having the greatest effect was the creation of the dreaded, “Means Test”.

The Means Test was so terrifying and misunderstood that people rushed to file bankruptcy before it’s scheduled enactment. Some said it made filing Chapter 7 impossible.

Of course, as with all big changes in the news, not all rumors are completely accurate. What the Means Test does is look at the number of people in the debtor’s household, compare that number to the annually published IRS standards and see if the debtor makes less money than the average American in the area. If the person makes less money than average, they can file a Chapter 7. If they make more than the average, they have to file another chapter and make payments to their creditors. This is because they have the Means to do so, i.e. the Means Test.

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Published on: April 3, 2012

Baldwin Bankruptcy Attorney: Keeping Cars in Bankruptcy

By David M. Goldman

Ever since Henry Ford popularized the car a little more than a century ago, people have loved their cars. So it’s no surprise when people looking to file bankruptcy ask me how filing will effect their car. And since Henry Ford filed bankruptcy himself, the two subjects are even more related.

People need cars to get to work, to buy groceries and to live. The legislature knew this when they created the bankruptcy exemptions (the things you get to keep). So, everyone is allowed to keep a car in their bankruptcy, but how much car? Certainly not a Mercedes Benz. Well, maybe a Mercedes Benz, but only if it’s very old. People who file bankruptcy in Florida may have to use the Florida exemptions. These exemptions require a person to live in Florida for more than two years, but they allow a Florida citizen to keep $1,000 in vehicle equity $1,000 in personal property and then either a home or $4,000 additional personal property. Now, personal property can apply to a vehicle, for example: If Jeff owns a car worth $1,500 he can use the $1,000 vehicle exemption on the car and then use half of his $1,000 personal property exemption to cover the rest. If his car was worth $4,000 then he would use his $1,000 vehicle exemption and the $1,000 personal property exemption but if he owned a home he’d be out of exemptions. This doesn’t have to mean that Jeff loses his car (although that’s an option he can choose), instead he can offer to pay the car’s value in exchange for getting to keep it. Typically these payments are spread out over a year to make them reasonable. Since most people pay off their car before anything else, this comes up a lot.

Another option Jeff may have is to get a loan on his vehicle. If Jeff’s car is worth $4,000 and he can’t pay within twelve months of his bankruptcy case, he could take a loan for $3,000 out with his car as collateral and spend that $3,000 on reasonable and necessary living expenses such as food, gasoline, rent, or legal fees. He would still have to pay for the car, but as long as it was a loan term longer than a year, his payments would be lower than they would be paying the court.

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Published on: April 2, 2012

Ponte Vedra Bankruptcy Attorney: “Disposable Income”

By David M. Goldman

#bankruptcy, #chapter 13, #b22c

One of the first questions I get when I tell people that they have to present a repayment plan in a Chapter 13 bankruptcy is, “How do they determine how much I have to pay?”. Since in most cases they’ll have to make payments for five years (60 months) the amount that must be paid is critical to their success. Not making a payment means the discharge is never granted and the debtor is left in about the same status they were previous to the bankruptcy.

The analysis of the debtor begins at the filing of their Form B22C. The B22C lists the debtor(s) income, deductions for reasonable and necessary living expenses and determines the amount of disposable income the debtor(s) then have. The disposable income is the maximum monthly payment that unsecured creditors will be receive during the bankruptcy.

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