Jacksonville Bankruptcy Lawyer Blog

Published on: April 2, 2012

Yulee Bankruptcy Attorney: Automatic Stay

Let’s face it, when people file bankruptcy it’s because they want their creditors to leave them alone. They’re tired of the receiving second and third late notices and of the constant telephone calls. They may even admit they owe the debts, but now there’s penalties and interest they can’t afford. Bankruptcy may be a solution.

Regardless of which Bankruptcy Chapter you choose, an automatic stay goes into effect when you file. The automatic stay prevents creditors from making collection attempts -this is a very powerful thing.

If someone files bankruptcy and the next day their house is sold by the court, there trustee can request that the state court judge “vacate” the sale and depending on the kind of bankruptcy the debtor can continue to live in the house and catch up on their arrearage.

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Published on: March 30, 2012

Bankruptcy Can Stop Florida Evictions

By David M. Goldman

#bankruptcy

The Jacksonville, Florida court determined in 100 B.R. 579.pdf that the automatic stay protections extend to protect against not just evictions but damage resulting from those that are done wrongfully.

The debtor had entered a lease agreement with a residential property. Days prior to filing a bankruptcy case the debtor was served with an eviction notice. Despite receiving notice of the bankruptcy filing, the landlord forced her way into the Debtor’s home and placed the debtor’s belongings on the street. Before the debtor was able to discover the eviction, her personal possessions were stolen.

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Published on: March 29, 2012

Free Legal Advice To Help Save Your Identity

By David M. Goldman

#bankruptcy

The following are helpful hints to help preserve your credit in the event that your wallet is stolen:

1. Instead of signing the back of new credit cards write, “See ID”.

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Published on: March 28, 2012

Florida Courts Offer Unique Garnishment Defense

By David M. Goldman

There are several steps that must occur before you can be garnished. Typically, a creditor must file a complaint, serve the debtor with a copy of the complaint then, if they debtor responds they fight it out in court or, more commonly, the debtor never responds and a default judgment is entered against them. Once this judgment is received, the creditor can petition the court for permission to garnish your bank account.

Recent court findings state that a garnishment from a Florida court does not have jurisdiction to hear cases involving bank accounts that originated outside the state.

This creates a huge hurtle for collection agencies. For example, I came from Maine and have bank accounts that originated there. If someone attempted to garnish me in Florida they would have to obtain a judgment against me, then petition the Maine court to domesticate a foreign judgment, then would have to follow Maine laws to garnish my wages. This would require the creditor to hire a lawyer licensed in multiple states or to hire multiple lawyers.

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Published on: March 27, 2012

Secured vs. Unsecured Debts: What’s the Difference

By David M. Goldman

When you file bankruptcy you’re required to provide a list of everyone to whom you owe money. Those people and businesses are your creditors. There are separate sections in your bankruptcy petition for creditors that are secured and unsecured.

A secured debt is one that is backed by collateral. This means that if you don’t pay the debt, the creditor can repossess something, typically a car or house, to help pay what is owed. If the collateral is sold for less than what is owed, the debtor must pay the difference. This is called a deficiency.

Unsecured debt doesn’t have collateral like secured debt. It’s security is the creditor’s ability to damage the debtor’s credit. This includes items like, medical bills, signature loans and most credit cards. Occasionally, a credit card will attempt to collateralize the item purchased using the card, such as furniture or jewelry.

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Published on: March 26, 2012

Florida Debtors Sometimes Allowed To Keep Unexempt Property

By David M. Goldman

One of the first questions I’m asked by a person considering bankruptcy is what effect filing has on the property they own. If you’ve lived in Florida for a while, you are allowed to keep property that is exempt from the collection of creditors under Florida law. While there are a large number of somewhat complicated exemptions, you can generally think of exemptions as follows: You may keep $1,000 in personal property, $1,000 in vehicle equity and then either a homestead property that has equity or $4,000 in additional personal property. So, if the homestead property was retained in the bankruptcy case, but it had no equity, the debtor could keep $1,000 in vehicle equity and $5,000 ($4,000 + $1,000) of personal property. Any property the debtor has beyond that amount is subject to the whim of a trustee appointed by the court to preserve the debtor’s assets for the benefit of the debtor’s creditors. The trustee takes the debtor’s non-exempt property in a method similar to repossession and then auctions those goods off. The funds from this liquidation are used to pay the repossessing agent, the auctioneer’s fee and the trustee’s portion (typically 25%). The remaining funds are paid on a pro rata share to the debtor’s creditors who timely file claims.

Just because a debtor has property that is non-exempt does not mean the trustee will claim an interest in the property. Sometimes repossession and auctioning are impractical. When determining whether to liquidate an asset, the trustee must decide on the likelihood of sale and the cost benefit analysis of using estate proceeds to repossess and sell an item which may not render a sufficient sale to cover it’s own cost.

There is no clear-cut amount on which trustees rely when deciding to abandon an asset, but many trustees will occasionally leave an asset that will not earn more than $1000. Because these decisions are so subjective, trustees will almost always consider a debtor’s request to keep the asset in exchange for a cash settlement. As the old cliché goes, “There is no harm in trying.”

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Published on: March 23, 2012

Bankruptcy Can Make Cars More Affordable

By David M. Goldman

Car payments seem to be unavoidable. Unless you’re one of the rare people who have the luxury of being able to ride a bicycle to work, you must have a car. Everyone knows that the value of a car drops as soon as you drive it off the lot and as a result, many people who drive financed vehicles owe more to the lender than the asset is worth. Wouldn’t you love to be able to pay what you vehicle is worth right now, rather than what you owe on it? You can, and here’s how:

11 USC 722 allows a bankruptcy debtor to pay the secured portion of the debt owed on the car to satisfy the lien. “Security” for a loan the physical asset which can be exchanged to satisfy a lien. A typical security is a house or car. If you stop paying on the lien, the lender can take the house or car to satisfy the lien amount. Any value in the house or car above and beyond what is required to satisfy the lien (and associated fees) is returned to the borrower. A “Deficiency” occurs when the house or car sell for less than the lien amount. Deficiencies are unsecured debts for which a lender may sue. Deficiencies are very typical in the housing market these days.

When a debtor elects to use 11 USC 722, the court bifurcates the lender’s single claim into two claims, one secured which is equal to the fair market value of the car and one unsecured which represents the remainder. This way the borrower can discharge the unsecured portion, pay the secured portion and keep the vehicle. This is relatively easy in a Chapter 13 because the debtor can re-amortize the secured debt to be paid over the length of the Chapter 13 repayment plan, typically over five years. However, in Chapter 7 the payoff must occur immediately which is often impossible for people who’re already bankrupt.

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Published on: March 21, 2012

Florida Garnishment Exemption Used in Bankruptcy

By David M. Goldman

The head of family exception to wage garnishment also applies in an application for Chapter 13 Bankruptcy. Under the statutory exemption, an individual is considered to be the head of the family when (s)he “provid[es] more than one-half of the support for a child or other dependent.” Fla. Stat. Ann. § 222.11(1)(c). This statute allows for the head of family whose disposable earnings do no exceed the statutory amount to exempt all of his or her earnings from garnishment or attachment. Additionally, the disposable earnings of a head of family exceeding that amount may not be attached or garnished unless the individual agrees otherwise in writing, and then the amount available for garnishment is limited by 15 U.S.C. § 1673.
However, if the individual filing is only claiming a spouse as a dependent, the dependent spouse’s income must be insufficient to support him or herself without the income of the spouse claiming them. The purpose of the head of family exemption is to preserve the home and shelter for the family, so as to prevent the family from becoming a public charge.
The head of family exemption is intended to protect the family unit; therefore, when an individual filing for bankruptcy and claims the head of a family exemption, the dependent she is supporting must be receive income insufficient to independently support himself without the claimant’s income. If the claimant’s dependent is able to independently support himself, the claimant will not qualify under this exemption.

Published on: March 19, 2012

Florida Debtors With Investment Properties Get Reprieve

By David M. Goldman

When in 2005 Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a flurry of people ran to file their cases before the changes occurred. Everyone had heard that the new law would make it impossible to file for Chapter 7 and that everyone would now be required to file Chapter 13 cases, making payments for five years. Well, Chapter 7 bankruptcy is still alive and well and the big change that was put into place is called, “The Means Test”. The Means Test requires the debtor to show that their income, based on their family size, is less than the average American in their area. It’s that simple. The problem debtors are having is that they don’t want to file Chapter 13 cases, where they have to pay a trustee their disposable income for five years, they want to file Chapter 7 cases where their case can be closed in five months with no payments made.

Congress thought that by forcing higher income debtors to file Chapter 13, creditors would get paid some of what they’re owed and creditors deserve to get paid what the debtor is able to pay. Fortunately for the many residents of Jacksonville, Florida who have heavily invested in rental properties, Congress thought of them as well. When BAPCPA was drafted someone realized the chilling effect a means test would have on small businesses and other small investors. Since only Chapters 7 and 11 are available to corporations, most small businesses would have to be liquidated in Chapter 7 or would have to pay the enormous cost of filing a Chapter 11. Small investors would be forced to file Chapter 13, which would prevent them from doing business for the five year period it took to complete their payment plan. These are the reasons why Congress created an exception to the means test for those individuals whose consumer debts make up less than half of their debt, i.e. if more than half of your debts are business, you can file Chapter 7 without taking the means test at all.

During the housing boom many residents of Jacksonville purchased homes to rent in speculation that their value would keep increasing. Instead, the market tanked to the point where nearly half of all homes owe more money on their mortgages than the homes are worth. Many of these people have higher incomes than average and wouldn’t be permitted to file under Chapter 7 due to the means test but because these properties were purchased as investments, they should all be able to bypass the means test and file Chapter 7 automatically.

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Published on: March 16, 2012

Florida Trustee Can “Undo” Payments Made Before Bankruptcy

By David M. Goldman

Jacksonville, Florida Trustees look for payments made by debtors to creditors within ninety days of the debtor’s bankruptcy filing. The trustee can recover these funds under the theory of “Preferential Payment”. A “Preferential Payment” is any payment made by a debtor to a creditor within ninety days of filing bankruptcy. The theory behind allowing return of those funds is this: the debtor paid one creditor and not the others, the debtor preferred that creditor over the others and that is unfair, so the court will require the money to be returned so it can be distributed evenly among the existing creditors.

This ninety day period is extended to two years if the creditor is considered an “insider” a.k.a. friends or relatives. So, if you paid your father back $2,000 on a debt last year and you file bankruptcy today, he may have to pay the $2,000 back to the trustee. This two year period can be extended should there be a case of actual fraudulent intent on behalf of the debtor.

There is a disagreement among the courts as to whether or not a debtor can use their available exemptions on money they used to pay creditors before a bankruptcy. Exemptions refers to property limits established by the legislature that say what the debtor can keep in a bankruptcy as it is exempt from collection. In the example of the father above, there are some jurisdictions where the debtor could use their available remaining exemptions to protect the father from having the pay back the funds on the premise that if the funds were in the control of the debtor, they could be protected. In other jurisdictions, those funds would not be protected because by paying them to the father, the debtor did not have the proper mental state of desiring to keep the funds; the very root of the cause for keeping exempt property is that the debtor seeks to keep the property.

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