Jacksonville Bankruptcy Lawyer Blog

According to Marianne Culhane's chapter in the collaborative book, "Broke", 36% of those filing bankruptcy considered divorce or separation as a result of the stress. This is not at all surprising as people often cite "financial difficulties" as a reason for separating. 36% is an enormous number. Less alarming is that the number of people who actually did divorce after bankruptcy was 18%. Still, that's just short of one out of five couples.
Florida has become well known in the divorce world, being home to eleven of the fifty cities with the highest divorce rates in the United States. If you live in Panama City, there is a 16% chance that you've been divorced before -the highest rate in the country.
However, Florida also filed the second highest number of bankruptcies in the United States in 2010. While this doesn't prove that the bankruptcies caused the divorces, I think it's safe to assume that one has some effect on the other.
If you are considering either bankruptcy or divorce, contact a Jacksonville Bankruptcy Attorney or a Jacksonville Divorce Attorney call us at (904) 685-1200 for a free consultation.

When you finance a car, it's accompanied by a note and there's a monthly payment. The note gives the seller security, as they now have recourse if you don't pay -they can repossess the vehicle. This system is good for the seller because their money is backed by an asset instead of backed by your credit score. You can damage a credit score, but you can't repossess a credit score and sell it to someone else.
Ideally, the payment on the vehicle is based on the predicted future value of the car. If the car costs $10,000 today and will only be worth $2,000 in eight years, your payments over the eight years need to add up to $8,000 to keep the value balanced to the payments (I left interest out to make it less complicated). However, in some instances where the buyer's credit is good the seller can offer the vehicle at a lower monthly payment despite knowing that the vehicle will be worth less than is owed on it. This is called negative equity. Eventually, that vehicle dies and the buyer is forced to purchase another car, still owing on the first. Instead of having a buyer who is unable to make two car payments, the new financing company offers to pay off the first car and roll the debt from it over into the new car's note. Over time this vehicle gets more and more underwater and eventually the debtor is forced to file bankruptcy.
A "Cram-Down" occurs when a debtor asks the court to determine the value of their vehicle and to make this value the secured amount of the debt. i.e. if the debtor owes $10,000 on a vehicle, but it is now only worth $2,000, the court can lower the secured amount owed to $2,000. The remaining $8,000 becomes unsecured. This can be done in both a Chapter 7 or a Chapter 13 bankruptcy. However in a Chapter 7 the $2,000 has to be paid immediately, so it is less practical than in Chapter 13 where the debtor has several years over which to make payment.
In Americredit Financial v. Penrod, the Ninth Circuit Court of Appeals found that the security interest in a vehicle does not include the amount paid off to a previous finance company to settle a prior vehicle's debt. In Penrod, the debtor owed $13,000 on a Ford Explorer and received $6,000 in credit for the vehicle. The $7,000 in negative equity was rolled into the note on her new Ford Taurus. This brought the Taurus' balance of $25,600 up to $31,700 at 20% interest. When she filed a Chapter 13 bankruptcy a year and a half later, she sought to have the court evaluate the security interest in the car to the car's market value (currently about $7,000 in the best shape). The creditor objected to this, but the Bankruptcy Court ruled in her favor. The creditor then appealed the decision to the Bankruptcy Appellate Panel, who also ruled in her favor. The creditor then appealed the decision to the Ninth Circuit Court of Appeals, who also ruled in her favor. The only court left for Americredit to appeal to is the United States Supreme Court and it may be worth their while to try it as in most cases there will be thousands of dollars at stake but I have to say: I believe they'll lose.
If you have a seriously undervalued vehicle and think bankruptcy may help you, contact a Jacksonville Beach Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Three companies receiving assistance under the Energy Department's economic stimulus law have filed for Chapter 11 Bankruptcy protection.

Solar panel producer, Solyndra Inc. was the first renewable-energy company to receive a loan guarantee under the new stimulus law. President Obama even dedicated his first reelection commercial to the business as part of his "Going Green" campaign. They were given the largest loan at $528 million in 2009 and filed for Chapter 11 in 2010. They are currently under investigation by the FBI who is investigating allegations of fraud.

They were followed by Beacon Power, an energy storage firm, who received $43 million. The most recent filing was just yesterday by electric car maker Ener1, whose subsidiary EnerDel recieved a $118 million dollar grant two years ago. One of their products is government intended lithium-ion battery technology to support GPA tracking systems designed to work in harsh climates for the "real-time" tracking of vital assets, so perhaps the investment by Obama had non-green intentions. Stock for this company went from $4.00 a share last year down to $0.20 in October and then to zero since the company failed to properly file with the NASDAQ.

These failing businesses were just part of the $18,000,000,000 Congress has earmarked to go out as part of the stimulus package.

Tony Alleyne, an avid Star Trek fan converted his UK apartment into a mock set of the Starship Voyager. This was actually done as a business decision, in hopes to entice other "Trekkies" to hire him to decorate their homes in the same way. Unfortunately, he is alleged to have maxed out 14 credit cards with over £100,000 in debt in working on the project. He then filed bankruptcy.
His website, 24th Century Interior Design has various photos of the interior of his home. While most would argue that this sort of eccentric child's play is an idiotic waste of time and resources, you do have to agree that his craftsmanship is exceptional. If you watch the video featured on UberReview, you'll see that the apartment does look just like the science fiction television ship. You should also know that the apartment was listed on eBay where it sold for £425,000, far more than it's estimated value.
Alleyne may have gone bankrupt because of his strange business plan, but he alleged that it only cost him £130,000 to do the conversion, netting a £295,000 profit. If he could do just one of these conversions a year, he'd make twice the UK Prime Minister's annual salary.
This only goes to show that you can go bankrupt, but still come back with a bang.

A 34% decline in foreclosure filings sounds like good news, but according to Brandon Moore, the CEO of REalty-Trac, this is largely because of the foreclosure freeze brought about by robo-signing.
Foreclosures in 2011 are reported to have taken 348 days to complete compared with 305 days in 2010. This doesn't speak well of robo-signing, as that data would reflect a mere 43 day (13%) savings in time for doing something illegal.
Bankruptcies have also seen a reduction in the last year by about 12%. However consumer spending was still on the decline in 2011.
The decrease in foreclosures can be attributed to both the courts being bogged down and the robo-signing foreclosure freeze, but what about the decline in bankruptcies? It is my belief that a huge proportion of bankruptcies are due to housing alone. There were 480,635 Consumer bankruptcies in 2007 compared with 1,470,000 million in 2011. The housing bubble is reported to have burst in 2007. It is my opinion that the greater part of the one million consumer bankruptcy case filing increase between 2007 and 2011 is completely due to foreclosures. If foreclosures go down, bankruptcies will go down and vice versa. I expect 2012 to be as grim, if not more grim than 2011.

The average American isn't the only one facing the effects of a sunken housing market as recent sales show that even very wealthy celebrities have failed to sell their homes for near their asking price. Regis Philbin recently sold his Greenwich, Connecticut home for $3 million dollars. This may not seem like a hardship, but it's a far cry from the original $5.9 million he started at in 2008. Regardless of the price, taking three years to sell and having to drop the price by nearly half is not a good economic sign.
Mel Gibson is having similar problems selling his Greenwich home, but he is also facing a divorce- putting the actor on a tighter time line to sell. Mr. Gibson first listed him home for $38.5 million, but the price has dropped by nearly $10 million since then and it still hasn't sold.
Neither of these celebrity home sale losses are as great in percentage as Beyonce's recent sale of a condo she'd purchased for $465,000 but sold for $110,000.
Unfortunately, most Americans don't have the financial strength to handle this kind of loss. They don't actually own their homes and having to sell for less than owed forces them into bankruptcy. If you're one of the many Americans who is trapped in this situation and aren't mega rich, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

Chase has been accused of filing false claims in bankruptcy cases, with allegations that their attorneys have gone so far as to Photoshop documents to increase the ease of obtaining relief from the automatic stay. Those attorneys are purportedly paid from $600 to $1,000 for every relief from stay they obtain. These fees are then added to the bank's claim to be paid by the debtor.
It's not just Chase's lawyers that are alleged to be doing funny business. The institution is also alleged to have falsely collected on Deeds of Trust that they are not the true party of interest on. The declarations of ownership and endorsements come from employees who are purported to be known, "robo-signers". A copy of the Complaint can be found here.

Although they have no belts to tighten, Texas prisoners have had their meals cut down to two a day each weekend and have been on this schedule since April 2011. These budgeting measures are purported to come as a response to severe shortfalls in tax revenues for the state.
Florida has taken the stance that rehabilitation and shorter jail time for non-violent prisoners makes more sense as outlined in Cynthia Veintemillas's blog.
Other, more unique, budgeting mechanisms would be Georgia's Camden County's inmates-to-firefighters proposal. That's right, inmates become fire fighters. Although the county does estimate that it would save a half million a year if they went through with the project, it defies reason to think that people would want a violent criminal axing down their bedroom door to "save them".
Gunpowder Plotter Guy Fawkes once said, "Desperate times call for desperate measures" and apparently he was not wrong. These government entities are exploring all possibilities to avoid bankruptcy. Harrisburg, Pennsylvania was the sixth city to file bankruptcy in 2011 and your guess is as good as mine as to who is next.

In 2008 John Ignatius Quinn was declared the richest person in Ireland with holdings worth approximately $6 billion dollars. Now, three years later, he finds himself facing bankruptcy.

Quinn, the son of a small farmer began earning his vast wealth through the Gaelic Athletic Association. From there he went into the concrete business, then hotels, and so on. But Quinn, like many of us in the Western World, is facing severe financial problems.

Unfortunately for Quinn, bankruptcy in Northern Ireland differs from bankruptcy in the Irish Republic. Filing in one country will allow him to resume business in a year, the other can take up to twelve years. Since this will have a profound effect on one of his largest creditors, Irish Bank Resolution Corp., they are fighting viciously to get have the court move his bankruptcy to the twelve year forum. This is similar to our Chapter 7 and Chapter 13 bankruptcies, in that a creditor (or trustee) can attempt to have a case dismissed or converted if it is shown to be improper for the debtor. This is often done only if financially beneficial for the creditor.

If you are one of the many who has been struck by the lightening bolt of our dismal economy contact a Orange Park Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

If you want to reaffirm a debt after filing for bankruptcy, your must executed a new agreement with your creditor. This reaffirmation agreement must be written and must be signed by both you and the creditor. Should you sign this reaffirmation agreement? Here are some pros and cons.

Pros
First, if you want to keep the property, you must sign the reaffirmation agreement. Also, if you do sign, you will be certain what your payments will be, what your interest rate is, etc. Signing a reaffirmation agreement may also help rebuild your credit, since you are taking responsibility for a pre-filing debt and are making regular payments on a debt.

If the collateral is something other than a car, say furniture or electronics, then you may be able to negotiate a lesser amount due before signing the agreement. This is because the alternative to reaffirmation for the creditor is to repossess and auction off the property -something that costs the creditor money. Sometimes creditors would rather renegotiate your contract than to go through this hassle.

Cons
By signing the reaffirmation agreement, you are stating that you are now going to be responsible for the debt again. So if you cannot pay in the future and default, you no longer have the remedy or protection of bankruptcy available to you (unless you file again). If you default, a creditor may be able to garnish your wages to cover your debt.

If you have a debt for which you would like to reaffirm, or have any other consumer law issue contact a Jacksonville Bankruptcy Lawyer today for your free consultation.

Leigh Steinberg filed for Chapter 7 bankruptcy protection last Wednesday in the face of a warrant being issued for his failure to appear in court over a $1.4 million dollar debt owed to a landlord. While Steinberg recognizes that he owes several million to creditors, he claims that since his 2008 divorce, his only assets are stock.
In 1996, Steinberg's inspiring story was embodied in the classic film, "Jerry Maguire" staring Tom Cruise. However, since the films release, the sports agent has faltered, having faced a divorce and subsequent rehabilitation treatments for his alcoholism. While coming to terms with his alcohol problem, one of his employees took an unauthorized loan from an NFL client. This loan that violated the NFL Player's Association regulations. That player subsequently fired Mr. Steinberg and signed on with a rival agency -one lead by an ex-Steinberg employee.
Due to a suit against him by a the National Football League Player's Association (NFLPA), Steinberg cannot be certified by the union. Without certification, he cannot return to the work he does best -representing players. He has struggled with his debts for some time, but it has become apparent that bankruptcy may be the only way he can return to work.
If you have questions about Chapter 7 bankruptcy and would like to speak to an attorney, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

While most debtors need only attend a single 341 hearing, Middle District Courts are now requiring that Pro Se debtors attend a hearing appraising them of their rights in respect to reaffirmation agreements if they are to be enforceable.
A reaffirmation agreement is a proposal to re-enter into a contract once a bankruptcy has ended, often with the same terms as the original agreement. Most often it functions to allow people to keep a financed car through a bankruptcy.
When people file for bankruptcy and have an attorney, their attorney appraises them of their rights and obligations when it comes to a reaffirmation. However, there are rare occasions when people attempt to file bankruptcy on their own or with a petition preparer (a non-lawyer who helps fill out forms but cannot give advice). When this happens, the Court has now ruled in In re Pitts, that an official hearing must occur at which time the Court will inform the debtor of their rights and obligations under the reaffirmed agreement. If this hearing does not occur, then the reaffirmation agreement will be deemed unenforceable.

If you want to file a bankruptcy and wish to reaffirm a debt, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Bain Capital, co-founded by Presidential Candidate Mitt Romney, has been hired by AMR Corp. to streamline their work force of 88,000 employees. Apparently, American has already stated that there will be layoffs. This is not much of a surprise as one of the hottest political topics today surrounds Romney's business policies regarding cost-cutting job termination.
American Eagle should not be confused with the clothing line. This American Eagle is owned by the same parent company as American Airlines.
It's not just employees that are set to be cut, according to The Wall Street Journal, there will likely be a surrender of 21 aircraft to their financier and some flight routes will be no longer be available.
It's also interesting to note that as part of American Airlines' Chapter 11 case, the company will have the option of rejecting previously negotiated union contracts. A move that could offer the company unique relief at the risk of disrupting employee satisfaction in a "customer satisfaction" saturated service industry.

Federal Investigators are pouring over bankruptcy filings across the country having found that banks may have been double-billing those in Chapter 13 bankruptcy for escrow fees. This is strangely reminiscent of the 2011 Countrywide scandal where the Federal Trade Commission stepped in and sent half a million homeowners checks for miscalculated fees except in this case, all of the victims are in bankruptcy. The New York Post's analysis shows in excess of $150 million in profits just for cases filed in 2011. Several institutions have been implicated in the matter though the original cases involved Wells Fargo and GMAC Mortgage. One attorney stated that up to 75% of her clients were being double billed.
The scam is perpetrated by charging the homeowner the late mortgage payment which already includes escrow and then charging them a secondary "escrow shortage" charge. The shortage charge not making up for any actual shortage, just being extra cash in their pockets.
Whenever I hear the term, "Bank Robber", a new image comes to mind. One where the bank is stealing the money and the American Homeowner is the victim.

Twinkies have been around more than eighty years and during that time they've become something of a cultural icon. In the recent blockbuster hit, Zombieland, there is a comedic interplay between the gruff main character, Tallahassee, and his affectionate nostalgia for the childhood treat. Even President Bill Clinton is reported to have placed a Twinkie in a time capsule as a child.
Unfortunately for Twinkie lovers everywhere the Hostess company has not been doing well. This Chapter 11 case is its second in the last few years and it still remains $860 million in debt. Informally, two quick Chapter 11 bankruptcies are called a, "Chapter 22". A "Chapter 22" is generally done when a business is going to be completely liquidated, which I don't believe is the case with Hostess. Movie Gallery Inc. and Polaroid Corp., were forced to liquidate upon their second Chapter 11, but two more obscure companies, Hayez Lemmerz International and Pliant Corp., an auto and packing company respectively, survived multiple bankruptcies.
If Hostess is liquidated, it's assets will be sold to the highest bidder. This fact alone will not mean the end of the iconic Twinkie. Whoever buys the Twinkie rights will likely produce it just as we remember. Hopefully for Hostess, they're successful in avoiding liquidation, but either way, I think we'll see our beloved Twinkie around for another 80 years.

The Mortgage Debt Relief Act of 2007 was enacted as a response to the growing foreclosure problem. More specifically, it addresses the issue of "Debt Forgiveness Income." Debt Forgiveness Income is an IRS theory that if a debt you owe is forgiven, you have gained in monetary value because you no longer are required to pay that debt. That gain in value is taxable as income despite the fact that you didn't actually earn any money. For example: Stephen owes $5,000 in old medical bills. He can't pay the bills, so the hospital forgives the debt and writes it off on their taxes. Come tax time, he will receive a Form 1099 for $5,000 of additional, previously untaxed, income for that year. Now, $5,000 may not be too much of a problem, even in the highest tax bracket this would only increase his taxes by $1,750, the trouble starts when the amount forgiven is higher, as it is with a house.

If Stephen's home is foreclosed upon and the bank forgives a $50,000 debt, he will owe taxes for his actual annual income, plus this $50,000. You could've argued that $5,000 wouldn't effect what bracket he was in before, but $50,000 is almost certain to increase his tax bracket and will leave him with a minimum of $12,500 in additional tax debt. As a result, Stephen may be in debt for a long time. If he didn't have the money to pay his mortgage, it doesn't make sense that he'd have enough money to pay the taxes.

It was because of Stephen's scenario that the Mortgage Debt Relief Act of 2007 was passed. The act allows a person whose homestead has been foreclosed on to have his debt forgiveness income waived so long as it is less than a million dollars per year.

This waiver is set to expire by January 1, 2013, which has some economists worrying. Personally, I think these economist's concerns are without merit. The original act of 2007 was set to expire in 2009. When 2009 rolled around, Congress could see that there was still a problem and passed the Emergency Economic Stabilization Act of 2008, which extended the tax waiver until 2013. So, as gloomy as our housing economy is, I cannot fathom that Congress will not pass another act extending the homestead foreclosure tax waiver, but if they do, the debtors can always file bankruptcy and discharge the debt before it becomes a tax liability.

If your home is in foreclosure and you have questions about your future or the tax implications forthcoming, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Being married to a billionaire did little to prevent Anna Nicole Smith from filing a Chapter 11 bankruptcy. When she did, her son in law, E. Pierce Marshall, filed a claim in her bankruptcy case for defamation of character. His claim was based on her suing him for tortuous interference with an expectancy interest i.e., unduly convincing his father to disinherit her.
E. Pierce Marshall had originally filed suit in Texas state court but Smith filed bankruptcy in California federal court. Each court made independent decisions of their own and the Supreme Court eventually was required to hear the case to determine which court had jurisdictional authority to hear the cases already decided.
It was found that while the bankruptcy court has statutory authority to hear non-core (weakly related to bankruptcy) cases, they lack the constitutional authority to hear those cases. As such, the bankruptcy court could determine that Anna Nicole Smith had an interest in suing E. Pierce Marshall, but the court lacked jurisdiction to determine the amount of that claim. Resulting from this, Marshall was awarded the inheritance of his late father, but as he himself had also passed away, the property was given to his surviving spouse and children.

When someone files for bankruptcy protection they don't expect to have their discharged bills come back to haunt them. Zombie debts are not unheard of, but are rarely seen in the multitude that has been alleged against Capital One by a court-appointed monitor. Some of these debts, including one sought fourteen years after it was discharged, are for thousands of dollars.

Unlike most lenders, Capital One handles most of it's debt collection internally, rather than outsourcing to collection firms. This may be part of their problem as collection firms are usually well versed in the Fair Debt Collection Practices Act.

Out of the 15,500 bogus claims made by Capital One only about 800 of those borrowers filed lawsuits against the creditor. 130 of these cases were settled without Capital One admitting fault. Not all attorneys will file suit against a creditor for attempting to collect a discharged debt, but it's important that debtors know that they can. Without the remedy of suing the creditor, there would be little to no use of the bankruptcy court at all.

If you have debts that have been discharged in bankruptcy, but the creditor is still attempting to collect, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

One of the worst things I see happening to the youth of America is caused by their pursuit of education. From kindergarten through high school every student is instilled with the mantra, "Go to College" or the classic, "If I could go back in time I'd study harder." Not to say that higher education is inherently bad, obviously, I chose to take that path myself. No, it's not the education that causes a problem, it's the loans taken out to pay for that education that's a problem.

These loans wouldn't be a problem if the income from the jobs that followed the loans was sufficient to pay the debts. The problem graduates are facing is that those jobs either don't pay enough to make the monthly loan payments or the jobs don't exist at all.

Fortunately, for those with federal loans there are programs like Income Based Repayment. Income Based Repayment or IBR, allows graduates in the private sector to pay a monthly payment based on a percentage of their gross income. After 25 years of payments, the remaining debt is discharged. Some people feel that this is unfair because those people signed into those debts with knowledge of the interest rates. There is truth in that, however most, if not all of those students did not anticipate the economic collapse of 2007.

Student loans are one of the only unsecured debts that remains almost always exempt from discharge. You can file bankruptcy again and again but the student loans will remain and if the loans are private (i.e. not government), there are few if any alternative repayment plans. Some people I've encountered owe $2,000 per month, which is more than they make. They can't discharge the debt in bankruptcy and they can't modify the loan terms. Their only alternative is to let the loan garnish their wages. In Florida, the maximum wage garnishment is 25% as long as the debtor makes less than a threshold amount. Couple that with degrees that offer no jobs and the student is basically a lifelong slave to the loan company, sometimes owing interest rates higher than they could ever pay.

Legislatures have discussed remedies for the issue, but no bills have passed Congress to address the issue. Hopefully, students will soon realize that some degrees are actually traps rather than paths to success or our legislature will be contending with an ever-growing population of lower class with little to no hope to pay their debts.