Jacksonville Bankruptcy Lawyer Blog

Garnishments in Jacksonville usually take one of two forms:
A Continuing Writ of Garnishment, which deducts from your income; and
A Writ of Garnishment, which freezes your bank account.

A Continuing Writ of Garnishment is authorized under Title VI, Chapter 77, section 305 and it allows a creditor to take up to 25% of your income to pay your debt.

A writ of Garnishment on a bank account can give a creditor the right to deduct from your account the money you owe them. All too often these writs occur without notice the debtor who only finds out when they attempt to withdraw cash. When this happens, they should consult an attorney.

Certain amounts and kinds of income and people of certain income levels are exempt from garnishment, but you must file the proper paperwork and often attend a hearing (or hearings) to establish your exempt status.

If your income is being garnished, do not hesitate, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

Sometimes debts that are supposed to be 'dead and gone' don't stay buried. These debts are nicknamed, "Zombie Debts". With the difficulties in the economy, debt collectors are being more creative with their collection attempts.

A Zombie debt is one that shouldn't be collectable. It's been paid, discharged in bankruptcy or was never valid to begin with. The debtor thinks the debt has been disposed of but some day, often years later, a collector sends a notice. Then it begins again.

Sometimes creditors sell the rights to collect on a note that has already been paid, other times creditors simply make mistakes. Either way, average people shouldn't have to deal with it. If a creditor starts calling about a debt that you don't think you owe, contact a Jacksonville Creditor Harassment Attorney or call us at (904) 685-1200 for a free consultation. Typically, there is no cost to the debtor as these cases are usually dealt with on a contingency fee basis.

Did you know that in the state of Florida it is a violation of the Florida Consumer Collection Practices Act (FCCPA) section 559.72 (8) for a creditor to swear at you or a family member?

This protection exists even if the collector is from out of state as all collection agencies are required to register with the state of Florida before contacting it's citizens in an attempt to collect a debt.

If you live in Florida and a creditor does contact you using profane or vulgar language, you can sue them under the FCCPA. If you would like to discuss the quality of your case and see what we might be able to do for you, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

With more than 800 million active users, it's no surprise that creditors are using the social networking site to contact debtors in attempts to collect monies owed. One Florida woman from St. Petersburg Florida received a friend request from a creditor using a fake name. Once she accepted that request her telephone number and 'friends' contacts were made available to the creditor who then contacted her family regarding her debts.

Similarly, a Chicago case dealt with a man who was 'friended' on Facebook by a young woman in a bikini. Once he accepted her request she posted on his public wall, "Pay your debts, you deadbeat."

Although these situations were found to be violations of the Florida Consumer Collection Protection Act (FCCPA), that hasn't stopped creditors completely. A report out of Great Britain has shown that their Office of Fair Trading is now working to implement laws to protect debtors from creditors taking the same actions in their country. A 59% increase in new complaints about debt collecting has been reported, some of which is probably linked to Facebook activities.

If a creditor is using means to contact you which you think may be illegal, please contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

UPDATE

The Office of Fair Trading (OFT) has agreed to ban debt collectors who have been using social-networking sites to hassle and embarrass people to pay the debts.

Credit Counseling is a pre-filing a requirement under 11 U.S.C. § 9(h) for all people who have filed for bankruptcy. Debtor Education is also required under 11 U.S.C. § 727(a)(11). These courses are available online, over the phone or in person and typically take about two hours. Only Credit Counseling Agencies approved under 11 U.S.C. § 111 can offer a valid course.

Douglas W. Neway, the Chapter 13 trustee, offers a free debtor education course to all Chapter 13 filers in the Jacksonville Division. These courses are held on every Monday (Holidays excluded) and run from about 2:00 PM to 4:30PM. At the commencement of the course the debtors are handed a Certificate of Debtor Education which their attorneys must file with the court. Considering that this course typically costs debtors about $30.00, I think it's a fantastic idea to take it with the Trustee's department for free (they let lawyers sit in for free too).

Now, not only does the course provide debtors with the necessary certificates at no cost, it also gives them the opportunity to ask the trustee (or members of his office) questions regarding practice and policies going forward. The trustee will not give legal advice to the debtors, but he can tell them what his office policies are. Considering that the debtors will be having direct contact with his office for five or so years, it only makes sense for them to be familiar with their office's policies and procedures.

Debtors are also provided a workbook titled, "Personal Financial Choices" which has about a hundred pages of tips from managing a budget to building credit after the case is over.

The Claims Bar Date is vitally important in any bankruptcy because it establishes the date by which all creditors must make a claim on your estate or be barred from collecting their debt. This date first appears on your Notice of Filing, which is automatically generated when your case has been filed. Any creditor who received notice of the bankruptcy must provide a claim within 90 days or be barred from collecting the debt owed. If a creditor is not properly noticed, they may be allowed to bring a late claim. Governmental Units are provided additional time to bring claims, but have a claims bar date as well.

Despite the fact that the creditors receive a Notice of Filing that comes with a claims form and instructions, some creditors never file their claim or file their claim improperly. You or your attorney can object to claims that are unfounded, incorrectly filed or state inaccurate sums owed. Knocking out claims can save Chapter 13 debtors significant amounts of money and can sometimes create the possibility of 'paying out' of a bankruptcy. Paying out occurs when all creditors who have filed claims get paid every penny they're owed. When this happens, and there is no one left to pay, the case is closed.

Continue reading "What is The Claims Bar Date in a Bankruptcy." »

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector cannot communicate with any person other than the you without that your permission. There are some exceptions, such as situations if you gave permission to the collector to speak to other people or when the debt collector is speaking with your attorney.

A debtor cannot tell your neighbor that you are behind on your mortgage without your prior permission. If this has happened to you, it is a violation of the FDCPA and we may be able to sue the creditor on your behalf.

If you think that a creditor is doing something unethical in an attempt to collect a debt, it may be illegal. Contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

When a home is foreclosed on and sold for less than the amount owed, the bank has two options:

1. Sue the ex-homeowner for the deficiency (an amount the bank knows they're not going to get) or
2. Write the loss off on their corporate taxes.

When a bank writes a loss off on corporate taxes, the amount of the write off becomes Debt Forgiveness Income to the ex-homeowner. The IRS says that when someone's debt has been forgiven, their total worth has gone up, therefore this counts as income. When this happens, the ex-homeowner will actually get a 1099-C for the difference and will owe income taxes on the new amount.

For example, a debtor who makes $50,000 a year with a balance of $200,000 lets their home go into foreclosure. The house is sold on the courthouse steps for $150,000. The bank can either sue him for the $50,000, which they know they're unlikely to obtain, or they can write the $50,000 off as a loss which causes the debtor's $50,000 of taxable income to increase to $100,000 for that year. Can you imagine having to pay taxes based on double your income without having actually earned the income?

There are situations when you may be exempt from a forgiveness of debt and the related taxes.

This is an unfortunate but real possibility for people who go into foreclosure without knowing what can happen to them. If you have questions about how to avoid these issues or don't want to go through them without legal counsel, please contact us at (904) 685-1200 for a free initial consultation or contact a Jacksonville Foreclosure Attorney or a Jacksonville Bankruptcy Attorney.

Recently, a small debate has been brewing in the legal world about whether a person facing foreclosure should file bankruptcy before or after their foreclosure comes to a close. First of all, bankruptcy is not always the best option for someone facing foreclosure.

If filing bankruptcy is right for you, some attorneys recommend filing after your home has been foreclosed on. This should allow you to discharge the debt and will help you move on with your life. But this may also limit your options.

It has been suggested that filing bankruptcy before foreclosure may give you the option to fight the foreclosure post bankruptcy. You would "Surrender" your interest in the property to the Trustee, which gives him the option to liquidate the property subject to the mortgage. However, because the mortgage is often higher than the house is worth, the Trustee disclaims any interest. It is then up to the bank to continue the foreclosure process either during or after the bankruptcy. While the bankruptcy goes on you may still be able to remain in your home (this may effect your exemptions). Theoretically, you will remain there essentially rent-free, as you will not be making your mortgage payments during this time. This could mean saving thousands of dollars in unpaid mortgage payments, depending on how long the bankruptcy takes. At the end of the bankruptcy you should have no unsecured debt and would have savings to use in negotiations with the bank. What's even more interesting is that you would no longer be personally liability for the mortgage, so if negotiations failed, you could just walk away.

If you think you'd like to file bankruptcy and stay in your home, you should speak with a Jacksonville Bankruptcy Attorney or a Florida Foreclosure Defense Attorney to set up a free initial consultation.

On October 15, 2011, I attended Clark Howard's "Clark in the Park" at the Nocatee Welcome Center. At this meet and greet Clark gave a small speech, answered individual questions and autographed copies of his new book, Living Large in Lean Times.

Clark's book has some refreshing ideas about how to save money and is written in an approachable and unintimidating manner. Though there were a few things I was already employing in my day to day life (such as using mint.com for free personal financial management), I was enthusiastic to learn the interesting new techniques to stretch dollars. There are even some unexpected tips that help extend the life and usefulness of razor blades.

The point Clark makes is simple: saving a dollar is like earning an extra dollar. The more dollars you save, the more stable and wealthier you become. I recommend this book for anyone looking to rebuild after a bankruptcy. After all, there is little benefit in getting a financial fix in bankruptcy if the habits that got you there aren't fixed as well.

For information on how to order Clark Howard's newest book,click here:

UPDATE:

Here's a photo of Clark and I discussing ways to save more money on monthly cell phone bills.

On October 1st, 2011, the Honorable Karen S. Jennemann became the Chief Bankruptcy Judge for the Middle District for a four year term. Judge Jennemann, a graduate of William & Mary has been practicing law in Florida for over 25 years. She presides in Orlando, Orange County, Florida.

Jennemann replaces the former Chief Judge, the Honorable Paul M. Glenn who presides here in Jacksonville, Duval County, Florida. Judge Glenn, who was appointed to the bench in 1993, has over 40 years of legal experience having graduated from Duke University in 1970.

Both Orange and Duval counties are in the Middle District bankruptcy court, so cases decided in either location are persuasive authority to one another when deciding new cases with similar facts. However, cases decided by the Chief Judge are generally considered to be more persuasive than those of a non-chief. This means that arguably, the most powerful decisions arising out of the bankruptcy court are now made in Orlando, not Jacksonville.

If you have filed a bankruptcy in Jacksonville and have had debts discharged in the Florida bankruptcy court, a creditor cannot make an attempt to collect on that debt. If the creditor does, they are likely violating 11 USC §524. §524 serves as an injunction preventing the creditor from contacting the discharged debtor. This is similar to an injunction in family law commonly known as a Restraining Order. However, while a violation of a Restraining Order can lead to imprisonment, violation of a bankruptcy discharge injunction often leads to money being awarded to the client.

Discharge violations occur often and are sometimes overlooked by clients who just want to move on with their lives. The amount of money a client can be awarded depends on the severity and frequency of the collection attempts. Generally, the cost to bring an action against the creditor is paid for by the money collected from them. That means that a client could pay nothing out of pocket and could still walk away with cash.

If you are being contacted by a creditor who should have been discharged in your bankruptcy and would like them to stop, please contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

A gay couple was permitted to file a joint petition for Chapter 13 despite the Trustee's argument that the Defense Against Marriage Act (DOMA) made their marriage illegal. Only legally married couples can file joint bankruptcy petitions.

On June 13, 2011 a California court ordered that a joint Chapter 13 case would not be dismissed for the sole reason of the debtors being a homosexual couple. 11 USC 302(a) permits a single petition for a debtor and such debtor's spouse.

The court stated:
"In this court's judgment, no legally married couple should be entitled to fewer bankruptcy rights than any other legally married couple."

The In re: Balas decision, signed by twenty judges (decisions are customarily signed by just one judge) makes it clear that in California's Central District there is little doubt about whether homosexual couples married under California law can file joint petitions for bankruptcy.

If you have entered into a homosexual marriage that was legal in the state in which you filed it and would like to consider your options in bankruptcy, please contact a Jacksonville Bankruptcy Lawyer or call (904) 685-1200 for a free initial consultation.

Before spending a single dime from your IRA or 401k in an attempt to make ends meet, you should meet with an attorney. Most retirement plans are exempt from the reach of creditors in a bankruptcy, even those not subject to Employee Retirement Income Security Act (ERISA).

Many people I meet have used up or begun to use their retirement accounts before considering bankruptcy. The thought in mind is, "I'm going to lose it anyway, I might as well use it, even if in vain." Unfortunately, some of these people are even assessed non-dischargeable tax penalties for early withdraw of funds.

Federally, 11 U.S.C. 522(d)(12) sets out retirement exemptions, but because Florida has opted out of the federal exemptions, so we must use Florida state law. The Florida state law provision protecting qualified retirement plans is Fla. Stat. Ann. § 222.21 (2) .

If you are at the point where you are considering withdrawing funds from a retirement account to make ends meet. Please contact me via email here or call (904) 685-1200 to schedule a free initial consultation.

A finalized divorce may not be enough to protect you from marital debts. Just because a divorce decree states that your ex will "hold you harmless' from a creditor does not mean that the creditor can no longer attempt to collect from you.

The division of property in a divorce is called "property division". Often, one party gets an upside down house in exchange for not being 'liable' for a different debt. Each party is ordered to pay their allocated debts and to 'hold harmless' the other party. This order is enforceable in county court as a "Contempt Action" and can give such remedies as court fines, attorney's fees and even imprisonment, but it can't remove your name from that debt. Because your name is still on the debt, the creditor can attempt to collect from you if your ex stops paying. The most common ways to remove your name from a debt is to have the collateral refinanced or to remove your personal liability by bankrupting on the debt.

When the ex-spouse gets the home they often don't have sufficient income to refinance. They often didn't have sufficient income to refinance because they didn't have sufficient income to make the payments on their own. Eventually, they get to the point of foreclosure or bankruptcy- sometimes without the other party's knowledge. Many debtors don't get notice of their ex's non-payment until the house is in serious arrears. When this happens, they have the option of suing their ex for contempt, but even the threat of imprisonment will rarely solve the problem -you cannot get blood from a stone.

Because home mortgages often extend as long as thirty years, the risk of liability continues for a long duration. In these cases, a house left unpaid for decades after a divorce can still fall upon the credit of an otherwise innocent ex who simply wishes to move on with their life. When this happens the only ways to avoid foreclosure are often paying off the note in full or bankruptcy.

Continue reading "An Ex-spouse Filing Bankruptcy May Effect You." »

The Jacksonville Bankruptcy court is part of the Middle District and a Middle District Court ruled on October 11, 2011 that Social Security benefits need not be included in either the Means Test or in the disposable monthly income (DMI) paid to unsecured creditors in a Chapter 13.

To quote the Honorable Judge Steele:
"Therefore, a Chapter 13 plan need not provide that social security benefits be included as projected disposable income which will be applied to payments for unsecured creditors." See Vandenbosch v. Waage

Now we know that Social Security funds will not be used in calculating Chapter 13 payments, but what about cases that have already been filed? Judge Steele stated in his opinion that these benefits, "need not... be included as projected disposable income". I would analyze this to say that they can be included if the debtor desires or needs to use the funds to show that they can fund a plan to overcome the "Good Faith" requirement of Chapter 13, but that the debtor cannot be required to use these funds if the debtor chooses not to.

What is yet to be seen is whether we can reduce payments on already confirmed plans that contemplated including the social security as income on Form B22C (Means Test). The court requires that a plan be modified if there is a, "change of circumstances" as to income. Historically, this meant an increase or decrease of income, not a reclassification of what income means. I take the position that this is a change of circumstances sufficient to justify a modification, though we will have to wait and see.

Continue reading "Social Security Benefits Exempt From Chapter 13 Payments" »

"Chapter 20" is the informal name given to the unique situation that occurs when a debtor files a Chapter 7 bankruptcy to discharge their unsecured debts and follows up that bankruptcy with a Chapter 13 (7+13=20) to deal with other debt issues.

A debtor cannot receive a discharge under Chapter 13 if they received a discharge in a Chapter 7 in the last four years per 11 U.S.C. 1328(f)(1). However since discharge is obtained at the end of a case, rather than at the beginning, a Chapter 13 case can be filed the day after the debtor receives a Chapter 7 discharge so long as the Chapter 13 is going to last at least the next four years.

Many people know that a Chapter 7 can usually only be achieved by passing the "means test", but not a lot of people are aware that one must "qualify" for a Chapter 13 as well.

Under 11 U.S.C. 109(e) a debtor wanting to file a Chapter 13 must show that their secure debts are less than *$250,000, and that their unsecured debts are less than *$750,000 to file under Chapter 13.

If someone's debt exceeds the limits for Chapter 13, but they make too much money to pass the means test and file a Chapter 7, they are often forced to file a far more expensive Chapter 11. One of the purported benefits of the "Chapter 20" is the ability to discharge some of the secured and/or unsecured debt in a Chapter 7, then follow that up with the desired Chapter 13.

An opportunity unique to Florida is the filing of a Chapter 7 to discharge secured/unsecured debts, but retaining the homestead. Then, the debtor files a Chapter 13 and uses lien stripping to remove the second mortgage. As long as the case is proposed in good faith they will leave the Chapter 13 free of their unsecured debts and will only have to pay their first mortgage to keep their house. This can save the debtor tens of thousands of dollars and give them a better chance of making it through their Chapter 13 plan.

Continue reading "Stripping Mortgages in "Chapter 20" Bankruptcy" »

If you would like to file for bankruptcy, come in and speak with our Jacksonville Bankruptcy Attorney during a free consultation. Call 904-685-1200 to schedule an appointment that is convenient for you. During the consultation, the attorney will discuss your particular situation. Next you need to fill out a bankruptcy questionnaire, which will aid us in drafting your bankruptcy schedules. You will be given this questionnaire at your consultation and can fill it out at your leisure. Before we file for you, you will need to complete your credit counseling. There are many different online sources that offer this service. If you supply them with our fax or email address, they will send over a certificate after you have completed your counseling. After we have drafted your schedules, you need to review them to make sure that they meet with your satisfaction. Then we can file your case!

The process is designed to be convenient and as seamless as possible. Contact our Jacksonville Bankruptcy Lawyer today to get started!

Debt can be classified as secured, unsecured, or priority. A secured debt is one that is collateralized by property. This means that if you default on the debt, the creditor can take the property that secures the loan. Your mortgage loan is probably secured by your home. Your auto loan is probably secured by your auto.

An unsecured debt is when you make a promise to repay the debt, but the debt is not secured by any collateral. If you default on the promise, the creditor cannot take your property without obtaining a judgment.

A priority debt is a debt that is entitled to repayment ahead of other debts that you owe. Taxes and some attorney fees are priority debts. A list of priority debts can be found in 11 U.S.C. §507.

If you are having issues with debt, contact Jacksonville Bankruptcy Attorney today for a free consultation.

For those of you who don't know, a Chapter 13 requires you to make payments to your creditors, typically from 3 to 5 years. What most people don't know is that there are two different payoff schemes in a Chapter 13, the Disposable Monthly Income (DMI) plan and the 100% plan. Which plan you get depends on the facts of the situation but it basically works as follows:

In a DMI plan, your monthly payment to the trustee for unsecured creditors is calculated based on your monthly income minus the established by the IRS reasonable and necessary living expenses allocated to your family size. The idea is that you get to keep enough money to live, which is important, but that any money you earn in excess of living must be paid to your creditors. This is the more difficult plan to succeed in, as it requires you to go a number of years living off of the IRS standard, which requires a strict budget. This plan cannot get paid off early unless it's first transformed into a 100% plan, which would only happen if you had a significant increase in income.

In a 100% plan, your monthly payment to the trustee is calculated based on your total debt rather than your monthly income. We add all of your debts together, add 10% to pay the trustee (see how the trustee gets paid), and divide the total by the number of months you need to pay (typically 60 months/5 years). This payment is less than what your DMI payment would be. If the payment is higher, then you should be a DMI plan instead of a 100% plan. Since you're paying 100% of your debts in this plan, you can pay off your bankruptcy early.

When in a Chapter 13 bankruptcy you have an ongoing obligation to report any increase or decrease in your gross income. You also must annually provide a copy of your tax return to the trustee. Changes in your income will require recalculation of your plan, which can increase or decrease your plan payment. Changes in your income can also mean the difference between your being a DMI plan and a 100% plan.

Continue reading "Chapter 13: Paying off and getting out " »

Most debts are dischargeable in bankruptcy. However, there are a few debts that are not:

1. Debts arising from fraudulent conduct
2. Government-backed student loans (unless severe hardship can be shown)
3. Debts stemming from death or personal injuries related to your operation of a motor vehicle while intoxicated
4. Certain taxes and fines
5. Some debts not listed on your bankruptcy
6. Domestic support obligations (alimony, child support, etc.)
7. Debts arising from willful and malicious injury by the debtor to another person or property.

To see if your debts qualify for discharge, contact a Jacksonville Bankruptcy Attorney today to schedule a free consultation.

Although we often think of Herman's Hermits when we think of Henry the VIII we should note that it was during his reign that the English Statute of Bankrupts was enacted. This 1542 act allowed creditors to bring action against debtors so that they be involuntarily bankrupted, their properties sold and they themselves imprisoned to satisfy their debt. There have been a lot of changes over the last 450 years. Debtor's Prisons, of course, have been abandoned, but involuntary bankruptcy is still alive and well.

To bring an involuntary case against a debtor, a creditor must show that the debtor owes at least *$14,425 in unsecured debt to less than twelve creditors. If the debtor owes money to more than twelve creditors (certain kinds of creditors don't count), at least three of those must work in concert to bring action.

Although only Chapters 7 and 11 are available in involuntary bankruptcy mostly all individual debtors are fair game, except for commercial and family farmers. There are defenses to involuntary bankruptcy which are strongest when brought to the court's attention as soon as possible.

Continue reading "Involuntary Bankruptcy" »

The Fair Credit Reporting Act (FCRA) was originally enacted in 1970, and was amended in 2003. It applied to consumer reporting agencies, which are companies that collect and distribute information about people's credit. Under the FCRA, consumer reporting agencies must provide you, upon your request, with a free copy of your credit report once per year. This is so you can verify the information contained in your credit report and dispute anything that disagree with. You can request your free report via phone, mail, or www.annualcreditreport.com. The FCRA also dictates how long negative information can be retained on your credit report. This is usually seven years, though bankruptcies stay for ten years.

If you feel that you have an issue with your credit report, contact a Jacksonville Consumer Law Attorney today at 904-685-1200.

If you find that you cannot make your payments under your confirmed Chapter 13 Plan, you should call and write your trustee's office and let the trustee know when and why you cannot make your payments, and whether the situation is temporary or permanent. If it is temporary, the trustee will usually agree to give you time to catch up. If, however, you permanently cannot make your Plan payment, the trustee may move to dismiss your case or convert your bankruptcy to another chapter. If your situation is permanent, there is another solution. Your Jacksonville Bankruptcy Attorney can file a motion with the court to modify your Chapter 13 Plan payments. Call us today to discuss your case.

Yes, legal fees can be included in your Chapter 13 Plan. Legal fees owed to the attorney filing your case are oftentimes put into the Chapter 13 Plan. This can help you afford to file sooner in most cases, which may be in your financial best interest. Here at Apple Law Firm, we can work with your budget to help you afford to file your bankruptcy.

Legal fees from past cases can sometimes be discharged in your bankruptcy. Legal fees that are not dischargeable can be those that you are dictated to pay in an Order signed by a judge, and sometimes legal fees stemming from family law cases. To see if your legal debt can be discharged in a bankruptcy, contact a St. Augustine Bankruptcy Attorney today to discuss your specific case.

There are three classifications for debts in a bankruptcy. They are: Priority debts, Secured debts and Unsecured debts.

Priority debts are generally not dischargeable, they include debts like those to the IRS, domestic support agreements and penalties for death or personal injuries arising from DUI offenses (If you do have a DUI scenario that sounds like this, please call our Jacksonville DUI Attorney as it is easier to defend the DUI liability than trying to discharge it in bankruptcy). You will continue to owe Priority debts after a Chapter 7 as well as after a Chapter 13 until or unless they are paid off.

Secured debts are monies owed pursuant to a purchase contract, such as a car with a purchase money security or a house with a mortgage. A debtor has three choices when it comes to secured debts in a Chapter 7 bankruptcy:
1. Surrender. The debtor can surrender the secured asset to the creditor to satisfy the debt.
2. Reaffirm. The debtor can offer to the creditor a new contract to allow them to keep the property- typically this is done with the same initial terms as the original contract. It is important to remember that this is an offer to reenter the contract, the creditor is not obligated to agree, though they usually do as long as payments are up to date.
3. Redeem. The debtor can pay the creditor the market value of the secured asset and keep the asset. Since market value is often less than the value in the secured instrument, this is an attractive choice, but it is rarely used because the money is owed at that time- while the debtor is in bankruptcy.

Secured debts in a Chapter 13 are treated differently than in a Chapter 7. In a Chapter 13 the debtor can either surrender the asset or continue to pay on it through their bankruptcy plan. Chapter 13 offers the unique ability to "catch up" on arrearages over the life of the plan, so payments on a secured asset in a Chapter 13 need not be up to date and the creditor has little choice but to allow the debtor to make up the money owed over the length of their plan. There is also the possibility of doing a "Cram-Down" as outlined in my earlier article.

Unsecured debts are monies owed with no security interest, such as credit cards, payday loans, etc. These are generally eliminated in a Chapter 7 bankruptcy. In a Chapter 13, secured creditors may get very little (though never less than they would get in a Chapter 7), they may also get paid off entirely, it depends on the kind of repayment plan your debt and disposable income requires.

Continue reading "Debts in Bankruptcy" »

Whether coming before a marriage begins or after a divorce, bankruptcy is all too often connected to matrimony in some way. Jacksonville, with 13% of it's population having been divorced at least once and over 11,000 bankruptcy filings a year, there's no surprise the two are connected.

Many couples fail to consider how bankruptcy can be effected by their co-habitation. Because qualifying for a Chapter 7 bankruptcy often requires that the couple's combined income is less than the median income for their family size and people often marry prior to filing bankruptcy, making the an already stressful process more trying.

The first thing I do when a couple enters my office is establish if in fact both need to file. Sometimes all of the debts are in one person's name allowing us to file one spouse and protect the other's credit. Other times it's more advantageous to file both jointly, taking advantage of the "two for one" filing fee and credit counseling costs. There is even the possibility that one spouse take advantage of the "clean slate" benefits of a Chapter 7 bankruptcy, while the other avails themselves of the potential reduced interest rates and principle balance reductions in a Chapter 13.

After a marriage has ended financial problems typically follow. Generally, couples divorcing have a home mortgage in both their names. When this happens they may attempt to keep the property, but often can't get proper financing. This often leads to a "Short Sale", however even a successful short sale is not a solution to the problem as they are still held liable for the deficiency on the note. Without strong financial backing, bankruptcy is one of the only solutions to this problem.

There are many ways in which a bankruptcy might be in your financial best interest. I work daily with Kelly Ryan Lee, co-author of the Divorce Attorney Blog here at Apple Law Firm PLLC. If you are considering bankruptcy and a divorce, we know the inner-workings of both and how they interrelate. Call us today at 904-685-1200 to schedule a free consultation.

The Fair Debt Collection Practices Act (FDCPA), as amended in 2006, is a federal law that outlines some practices that are illegal for debt collectors to employ. The purpose of the Act is to eliminate abusive debt collection practice by debt collectors. Here are some highlights of the Act, though this list is not exhaustive:

A debt collectors may not:
1. Use or threat to use violence to harm your physical person, reputation, or property
2. Use obscene or profane language
3. Publish a list of consumers who allegedly refuse to pay debts
4. Call you continuously with the intent to annoy, abuse or harass
5. Falsely represent the character or amount of any debt
6. Falsely represent that the debt collector is an attorney
7. Threaten to take any action that cannot legally be taken or is not intended to be taken
8. Falsely represent that you committed a crime in order to disgrace you

These are just some of the provisions of the FDCPA. There are also other statutes to protect consumers against debt collectors. If you are having a problem with a debt collector contact a Jacksonville Consumer Law Attorney today. We may be able to file suit against the collector, recover damages, and get the harassment to stop.

Many people who come through my door want to know if their personal property is at risk of seizure in a bankruptcy. Generally, the answer is no, but it really depends on how much property we're talking about.

A certain amount of property is exempt in bankruptcy. Which property qualifies as exempt depends on which state you live in and how long you've lived there. The state of Florida requires you to use its exemptions if you've lived here for two years or more.

Up until 2007, Floridians filing bankruptcy were able to exempt $1,000.00 in vehicle equity, $1,000.00 in personal property and their homestead property. However, many debtors lacked a homestead property, making the bankruptcy rules inequitable to a large class of debtors. Because Florida exemptions favored home owners for so long, an bill, CS/SB 2118 was passed to change the homestead portion of the exemption from "a homestead" to, "a homestead or $4,000.00 in additional personal property." Oddly enough, it was in part the efforts of Douglas Neway that helped pass this bill. Douglas Neway is the Chapter 13 trustee, the very person whose job it is to attempt to collect money on behalf of the creditors.

If you are in a Chapter 7 bankruptcy and your personal property exceeds the exempt amount, we can offer the trustee a "buy back" plan. In one of these plans, we offer the trustee a manageable monthly payment to allow you to retain your property. If you don't or can't pay the monthly payment, you must surrender the property or have your discharge revoked. In a Chapter 13 the "buy back" option is automatically accounted for in the Chapter 13 payment plan.

Another way we have been keeping personal property from the hands of the trustee is by exempting it as property held as, "Tenancy by the Entireties", a unique form of property ownership that requires a couple to be married couple and debts to be allocated a particular way.

Continue reading "Keeping Personal Property in Bankruptcy" »