Jacksonville Bankruptcy Lawyer Blog

Florida residents often roll off car lots without knowing if the high interest rate financing they received is even legal. There are protections from high interest rates for people in the Florida Statutes, but you need to know the protections are there and have a lawyer whose prepared to bring an action on your behalf.

Florida Statutes Title 34 §520.08 states that:
"(1) Notwithstanding the provisions of any other law, the finance charge, exclusive of insurance, shall not exceed the following rates:
(a) Class 1. Any new motor vehicle designated by the manufacturer by a year model not earlier than the year in which the sale is made--$10 per $100 per year.
(b) Class 2. Any new motor vehicle not in Class 1 and any used motor vehicle designated by the manufacturer by a year model of the same or not more than 2 years prior to the year in which the sale is made--$11 per $100 per year.
(c) Class 3. Any used motor vehicle not in Class 2 and designated by the manufacturer by a year model not more than 4 years prior to the year in which the sale is made--$15 per $100 per year.
(d) Class 4. Any used motor vehicle not in Class 2 or Class 3 and designated by the manufacturer by a year model more than 4 years prior to the year in which the sale is made--$17 per $100 per year."
For example, 1994 Chrysler Concorde is purchased and $6,524.35 is financed. The finance charge is $3,704.33 and the annual percentage rate is 27.5%. Forty-two payments are to be made monthly at the rate of $243.54. To determine whether the finance charge violates §520.08, the following equation is used (mouse-over a number to see where it came from):

$17 x ($6,524.35 / $100) x (42 / 12) = $3,881.78

Since the $3,881.78 allowable finance charge is greater than the $3,704.33 actually charged, this example of financing does not violate §520.08. If your contract indicates that you are being charged in violation of this statute, contact a Jacksonville Consumer Law Attorney at (904) 685-1200 for a free consultation that may end up with you paying less to keep your vehicle and the financier paying your attorney's fees.

Many Floridians contemplating bankruptcy believe that they can only keep one car when they file. This is because the Florida statutes only have one, "motor vehicle" exemption up to $1,000. Florida also has a $1,000 wildcard exemption as well as either a house or an additional $4,000 wildcard exemption. These wildcard exemptions can be used to keep a vehicle as well if the debtor decides. If a debtor had several vehicles worth less than $4,000, they could keep those vehicles. Note that the exemption amounts are only to be used on vehicle equity. If a car is worth $4,000 but has a $5,000 balance on the note, the vehicle has no equity and can be kept in the bankruptcy without using any exemptions.
There are two ways to keep a vehicle that has too much equity in a Chapter 7 bankruptcy. The first way is to go to a bank and to take a loan out with the vehicle as security. The funds from that loan can be used to pay for reasonable and necessary living expenses, which can include attorney fees. So, if a vehicle was worth $6,000, a debtor could take out a note for $5,000 on the car and then spend that money on groceries, gasoline, electricity and the attorney who files their case. They could then reaffirm the debt on the car and keep it in the bankruptcy.
The second way to keep a vehicle that has too much equity is to enter into a "buy back" agreement with the Trustee. Since the Trustee would be auctioning off your vehicle if you couldn't exempt it, they are often willing to sell you the car for a price slightly less than the vehicle's value. This makes sense for the Trustee because by selling the car to you they no longer have to pay any auction or repossession fees. The Trustees will also accept these payments over a reasonably long period of time, occasionally as much as a year.
If you have a car or truck (or both) that are near and dear to your heart, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

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.
If you have questions about bankruptcy and it's effect on your vehicle, contact a Baldwin Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

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 reaminer. 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.
Those in Chapter 7 generally have three options when it comes to redemption: they can use their exemptions to hold onto a sufficient amount of cash to pay off the redemption, they can have a relative or friend pay off the balance or lastly, they can find third party financing. One might thing that third party financing for someone in a bankruptcy is difficult to find, but there are actually several businesses who specialize in financing 11 USC 722 payoffs. Yes, the interest rates for these transactions are high at around 28% but since the debtor no longer has to pay the unsecured portion of the debt they can still make economic sense.
I look at various third party finance companies to see if taking a third party loan and electing to use 11 USC 722 makes sense. If you're considering bankruptcy and want to make sure you put yourself into the best possible economic situation once the case is over, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

These days, debts are bought and sold like stocks. By the time a debt collector files suit against you, they may be the third or fourth agency to hold your debt. Generally, this is a good thing because Debt collectors assume that they will be able to win by default in nearly all of their cases. As a result, these collectors rarely keep proper documentation (or don't even get it in the first place).
Adopted by nearly every state, the Uniform Commercial Code sets forth requirements that must be met by a secured creditor before they can assess a deficiency against a debtor. There are varieties of other provisions that can be used to protect consumers: the Fair Debt Collection Practices Act, the Federal Truth in Lending Act, etc. One of the most powerful protections a consumer has is the Florida Rules of Civil Procedure. When one knows how to get evidence and how to present pleadings properly, the strength of a case is greatly amplified.
When a collector files a complaint with the court, they must have the debtor served at their last known address. There are a variety of defenses that can be used: Perhaps the collector hasn't properly shown that they are owed the debt, perhaps the debt amount has been improperly calculated, perhaps the debtor isn't even the right person -the list goes on and on. What is important to keep in mind is that a lack of action on the part of the defense means that they consent to the facts alleged. This is called a default judgment. Default judgments are difficult, though not always impossible to "re-open" and work out properly. It's far easier to defend such a case if counsel is sought prior to a judgment being obtained, preferably before the initial twenty days after service of process has occurred. By getting into a case early, a lawyer will almost invariably have a better chance at defeating the complaint and may be able to get attorneys fees or file a counter-claim for damages (suing the person who is suing you).
If you've been served due to an unpaid debt, whether legitimate or not, the creditor in your case must follow the proper procedures to collect against you. Contact a Jacksonville Consumer Debt Defense Attorney at (904) 685-1200 for a free analysis of your case.

When you file for bankruptcy in Jacksonville, Florida, a certain amount of your personal property is exempt from collection by creditors. Generally, you are allowed to keep $1,000 in personal property, $1,000 in vehicle equity and then either a qualified homestead or $4,000 dollars in additional personal property.
To be a qualified homestead the property must be under 1/2 acre if within a municipality or up to 160 acres if in an unincorporated area. Abutting lots can qualify as long as the land maximums aren't exceeded.
The value you assign to your property should be the approximate auction value of the property. That is to say, how much do you think you could get for that property at a bankruptcy auction? My bedroom set may have cost $1,200 ten years ago, but it is certainly not worth that today, especially at an auction. Evaluating your property is difficult and can sometimes require professional assistance. What is more important is that you are thorough in creating a complete list of what you own. Omitting valuable property interests by accident can look like an attempt to commit fraud. There are cases in which an appraiser will be sent to your house to evaluate your property. It is rare, but it does happen. You can, of course, pick and choose which property you keep based on it's value. If you don't care for an old, but valuable, wedding present you never use, you can list that property but not elect to exempt it, exempting something else instead.
Sometimes we run into the situation where a person has more property than can be exempted. This is often the case for automobiles which are owned outright. If a person's car is worth $5,000 and they keep a home and $1,000 in personal property, then they only have the $1,000 exemption for vehicle equity to apply toward this car. That leaves them with $4,000 in vehicle equity that is unprotected and could be subject to seizure by the trustee for the benefit of the creditors. What we can do in this situation is offer the Trustee a sum of money, typically around 85% of the unexempt value in exchange for keeping the car. The trustee often accepts the discount because if they had to repossess the item there is a cost to tow it and store it as well as to auction it off. The agreed sum can be paid to the trustee over an agreed to period of time, which is sometimes as long as a year. This is called a, "buy back" because in essence, you are buying the equity in your car back from the trustee. The trustee will even file a, "Notice of Private Sale" in the case indicating that the vehicle was sold to the debtor.
Every state has different kinds and amounts of property which can be claimed as exempt. There are also residency requirements to file using those exemptions. To use most of the Florida exemptions, the debtor must have resided here for at least 91 of the last 180 days. If the debtor wishes to exempt a homestead that is valued at more than $125,000, then they must have owned the property for at least 1215 days.
If you have questions regarding the best way of structuring your bankruptcy exemptions to maximize the property you have after bankruptcy, contact a Atlantic Beach Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Although bankruptcy filers using Florida exemptions are only allowed to keep around $1,000 in vehicle equity, financed vehicles can almost always be kept through a bankruptcy case. Generally, items that are reasonably necessary for the care and support of the debtor and their dependents are exempt from seizure for the benefit of creditors. For more about exemptions, read my article on Keeping Personal Property in Bankruptcy.
Different rules apply when the vehicle is unreasonable or has an inappropriately large amount of equity. For instance, a Maserati may be unreasonable to attempt to reaffirm in a Chapter 7. In Chapter 13 there are two mechanisms that can cause problems with keeping high value or unnecessary vehicles. The first of these is the "Feasibility Test" of the Chapter 13 plan. When you submit a payment plan in Chapter 13 the plan itself must be reasonable. If you're making a $700 payment per month on a turbocharged super-mobile and only make $1,200 a month, your plan may be unfeasible.
The second and more likely test is the "best interest of the creditors" test. This test, more formally known as 11 U.S.C. § 1129(a)(7)(A)(ii) requires that the creditors in a Chapter 13 obtain at least as much money for their claims as they would in a Chapter 7 liquidation case. If a debtor retains a motorcycle that would have to be liquidated in a Chapter 7, the debtor must either turn the vehicle over to the Chapter 13 trustee or offer to pay the value of the motorcycle to the unsecured creditors over the life of the plan.
Overall, there is often some way to keep your vehicles, especially those necessary for your daily life and there are even some occasions when you can keep luxury vehicles. If you have questions and want to make sure your bankruptcy is done properly so that you can retain all the vehicles you can, contact a Jacksonville Beach Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

It has been slightly more than three years to the day since Chrysler LLC and Fiat S.p.A. agreed to form an alliance. That alliance wasn't formally announced until Chrysler's bankruptcy, later that year. Fiat bought out a large chunk of Chrysler Group, approximately 30%, and reports it's eventual goal to be 51%, however cannot make this purchase until Chrysler's debts to the U.S. Government are repaid. That being said, Chrysler Group has reported a profit this year of $183 million which is a huge improvement over the $652 million loss in 2010. My first thought when reading this is that I ought to go buy some stock, but apparently it's not currently publicly traded.
It will take a few good years of profit to get the company on the solid ground upon which it once stood, but this is certainly a good start. It inspires hope in those who have gone bankrupt and it helps produce more jobs for Americans.
If you are considering bankruptcy and have questions, please contact a Jacksonville Beach Bankruptcy Attorney or 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.

Two bankruptcy petition preparers in Wisconsin are in big trouble with the Court, facing possible criminal charges. Jennifer Abbott, who is a disbarred attorney, was cited with contempt by a bankruptcy judge. The Court said that she has violated bankruptcy Court Orders repeatedly and she refused to obey a subpoena issued by the U.S. Trustee's office. Abbot has also been convicted of felony theft for stealing from a client.

The second bankruptcy petition preparer, Gaynor Morrison, is in trouble for failing to appear in bankruptcy Court when ordered to do so. Also, he was alleged to have been overcharging clients and failed to return fees to clients after being ordered to by the Court.

Bankruptcy petition preparers are non-attorneys who help people file for bankruptcy. Courts and trustees often comment that the petitions or other required documents are flawed when drafted by a bankruptcy petition preparer. If this happens and the case gets dismissed without discharge, people could lose valuable assets or have to pay additional filing fees. Not all bankruptcy petition preparers are unprofessional, but it is best to have a licensed attorney with knowledge of the complexities of the Bankruptcy Code prepare your bankruptcy documents. To contact a Jacksonville Bankruptcy Attorney today, call 904-685-1200.

The first automobile company to come up with heated seating has filed for bankruptcy in it's home country of Sweden. Although it began as an aircraft manufacturer, Saab entered the growing automobile market after World War II. Saab sales peaked in 1988 at sales of nearly 135,000 and nearly returned to that peak in 2006. USA Today's, data shows a decline in Saab sales by 20.3% from 2006 to 2009.

According to Inside Line, the Swedish Company Reorganization Act requires that a bankruptcy application be approved only if there is reasonable cause to assume that the purpose of the reorganization will be achieved. Since the purpose of this reorganization is to keep the company running, it will be interesting to see what transpires.

Of course, the worst of the impact of a corporate bankruptcy is borne by the employees of the company. BBC News reports that Saab's employes have complained that they've not been paid since last month. Since corporate bankruptcies often take months (if not years) to complete, it's hard to imagine just how many personal bankruptcies this corporate one will cause.

If you are having financial difficulties as a result of a layoff or corporate shut down, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Jacksonville residents have several options when it comes to dealing with secured assets when filing bankruptcy. They can redeem the property by paying the creditor it's fair market value, reaffirm the debt by offering the creditor the same loan terms or surrender the item by giving it back to the creditor.

Redemption is an attractive choice for debtors because it allows them to pay what a secured asset is worth instead of what they owe on it. There can be a significant savings here as vehicles plummet in value as soon as they roll of the car lot. However, there are two conditions precedent that often get in the way.

First, if the car is being used for personal consumer use, the date of purchase (or refinance), must be longer than 910 days before filing the bankruptcy to redeem. If the car was purchased for business use, there is no waiting period. The second, and more difficult issue, is that the money to pay for the vehicle's value must be paid for at the time of redemption. This is a problem because the debtors are bankrupt and rarely have enough cash to meet the payoff amount.

The unique possibility here comes into play when the case involves a married couple and only one spouse is filing. If the vehicle is financed in the name of the spouse who is filing bankruptcy, the filing spouse may still opt to redeem the vehicle and keep it paying only the fair market value by having the non-filing spouse finance the redemption. Even if the non-filing spouse doesn't have cash in the bank, they could still attempt to get a signature loan and use those funds to finance the redemption. In effect, this is a chance to refinance a vehicle and reduce the principle at the same time. I also want to note that it doesn't have to be a spouse who helps refinance the vehicle -it can be anyone whose willing to put up the cash on behalf of the bankrupt person, so parents and friends can work too.

If you have questions about bankruptcy and would like to set up a free initial consultation, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Florida was hit harder than most states when the recession of 2007 hit. The so named, "Middle District" being the third highest rate in the nation from mid-2010 to mid-2011.

As a result, it's no surprise that Trailer Bridge, a local trucking and shipping company, filed for Chapter 11 bankruptcy reorganization yesterday. Truckers have been hit hard by the economic downturn and several of them are seeking loan modifications on their trucks. In a Chapter 13 reorganization, the secured amount owed on a truck can be reduced to what it's fair market value is on the date of filing rather than what the driver actually owes in the contract. This method is called, "Redemption". The loan new amount is also re-amortized to five years so that the driver leaves the bankruptcy owning the vehicle free and clear.

If you would like to learn more about "Redeeming" a vehicle, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 to schedule a free initial consultation.

A reaffirmation agreement is an agreement between you and the creditor that holds a secured lien on collateral that you have previously purchased. This reaffirms the debt that you owe the creditor. So if you own a car and you file Chapter 7 bankruptcy, you can either surrender the collateral (give it back to the creditor), redeem the collateral (refinance through another company), or you can reaffirm the collateral by signing a reaffirmation agreement with the creditor and filing it with the court. This reaffirmation agreement basically says that you will be responsible for the debt just as you were before you filed the bankruptcy. If you do not do one of the above options, the creditor can repossess your vehicle.

As for your home, In re: Linderman dictates that you must also do one of the above options for your real property. So if you file a Chapter 7 bankruptcy and want to keep your home, you must sign a reaffirmation agreement with your mortgage company.

If you need help with your bankruptcy or want to know how to file a reaffirmation agreement, contact a Jacksonville Bankruptcy Attorney today.

Debtors have three options when it comes to secured assets in a Chapter 7 bankruptcy. The first option may be the most obvious: Surrender. The option of surrender gives the debtor the ability to simply give up their interest in the secured property and pass it back to the creditor.

The next option is to Reaffirm. To Reaffirm a debt, the debtor offers the creditor a contract to allow the debtor to keep the property, often with the same terms as the original agreement. This allows the obligation to "go through" the bankruptcy and often enables debtors to keep their financed cars or homes. However, it is important to note that it is up to both the creditor and debtor to come to this agreement. If for some reason the creditor doesn't want to reaffirm the debt, no one can make them. For this reason I make sure to advise my clients to be sure they're up to date on all payments on these secured items going into the bankruptcy to induce the creditor into agreeing. Typically, these agreements do work out.

The final and least used option is Redemption. Redemption is the debtor's right to purchase the secured property for it's fair market value at the time of filing. It is important to note that this is not the agreed upon amount in the contract. You may owe $3,800.00 on a car, but if it's only worth $1,000.00 on the day you file, you can pay the $1,000.00 and satisfy the debt to the creditor. The problem with this option, which is why it's least used, is that very few people who are bankrupt can come up with the additional money. Still, it is better to have options you have little chance of using than have no options at all. I have also heard of some third-party financing companies who will pay off your Redemption amount if you sign a secured note with them. I have never actually seen this work out for the debtor and it seems counter-intuitive to begin a bankruptcy with a new debt, but as I said before, options are good.

Continue reading "Secured Assets in Bankruptcy" »