Jacksonville Bankruptcy Lawyer Blog

The economic squalor many of us have been enduring over the last year has lead to foreclosures, bankruptcies and a larger than usual amount of debt settlement.
Debt settlement is a useful tool in improving an individuals financial situation, but it is not without pitfalls. When someone has a large unsecured debt, such as a credit card, they can offer their creditor an alternative payment plan. For example: Marc owes $7,000 to a credit card company. Marc has had a severe drop in income and hasn't been able to make payments to his creditor for several months. Marc wants to pay his debt, but can't afford the large payment the company requires. He goes to his attorney friend and the attorney negotiates with the creditor on his behalf. Creditors often prefer large initial payments, with a promise to pay small incremental amounts thereafter. If the credit card company agrees, Marc can pay them $1,000 today and make $200 payments each monthly for twenty-four months. They may agree to this because he hasn't been making payments thus far and it is well known that his attorney friend files bankruptcy cases. If Marc were to file a bankruptcy, this creditor knows they would get little to nothing in payment. When they agree, Marc has struck a deal that has him paying $5,800 to satisfy a $7,000 debt obligation. This is a $1,200 dollar savings which makes Marc happy because it's more manageable and less than he originally owed. Just before taxes are due, when Marc's debt is long forgotten, he gets a letter in the mail from the IRS. He nervously opens it to find a Form 1099-C for $1,200 in income, the exact amount he saved in his settlement. This is called "Debt Forgiveness Income". The IRS' theory is that because Marc's overall worth has gone up by a net $1,200, he has in effect earned $1,200 in value and should be taxed on it.
In Marc's situation he can probably handle the tax liability from an extra $1,200 in income for the year, but as the debt forgiven gets larger, the ability to absorb that liability decreases.
It's important to know that in a bankruptcy, there is no such tax liability. Once a discharge is granted the debtor's obligation to repay those debts is extinguished and the debtor can never again be asked to pay them- and there's no Form 1099 to worry about.
Granted, there are circumstances in which debt settlement is better than bankruptcy. Hiring good legal counsel can help you make that distinction. If you would like to know your options when it comes to debt, contact a Jacksonville 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.

Inheritance can be an issue in bankruptcy law. One might think that after you receive a discharge in your bankruptcy case, your case is done and the court does not have an interest in your finances. This is not always so.

In a Chapter 7 case, if a loved one dies and leave you an inheritance within 180 days from the date of filing your case, then this money becomes part of your bankruptcy estate. The trustee may want some or all of the inherited funds to distribute to creditors. The important thing to remember is that the date that you become eligible for the inheritance that is the date to use in this 180 day analysis. This is the date of the loved one's death, not when you actually receive the money or property.

In a Chapter 13 case there is an ongoing obligation to keep the trustee appraised of what property you own. Once they learn of an inheritance, they will likely take those funds for the benefit of your creditors. This can occur any time during the case. Since Chapter 13 cases are often as long as five years, it is important to make arrangements with relatives who may pass on during this time.

If you think you may receive an inheritance around the time when your going to be in bankruptcy, make sure to discuss this with your Jacksonville bankruptcy attorney so that steps can be taken to preserve your family's interest in those assets. To speak with a Jacksonville Bankruptcy Attorney today, call us at 904-685-1200.

If you file for Chapter 7 or Chapter 13 bankruptcy, you must attend a 341 Meeting of Creditors at the federal courthouse. This is a hearing with the trustee, and any creditors are invited to attend, though usually they decline to. You will be put under Oath and asked to produce a photo I.D. and social security card. Then the trustee will ask you some questions. Here are some sample questions that a trustee might ask.

1. Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct?

2. Are all of your assets identified on the schedules?

3. Have you listed all of your creditors on the schedules?

4. Have you previously filed bankruptcy?

5. What is the address of your current employer?

6. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

7. Do you have a domestic support obligation? To whom? Please provide to me the claimant's address and telephone number, but do not state it on the record.

8. Have you made any transfers of any property or given any property away within the last one year period?

9. Do you have a claim against anyone or any business?

10. Does anyone owe you money?

11. Do you own an automobile?

12. If you do not own an automobile, how do you get around?

The questions that the trustee will ask you will most likely pertain to your specific circumstance, as outlined in your schedules. Your bankruptcy attorney will attend with you, so if you do not know the answer to a question or are confused, your attorney will be able to help you. It is important, as when filing, to be honest in your answers. The 341 Meeting usually only takes around 10 minutes per person. To contact a Jacksonville Bankruptcy Attorney today for a free consultation, call 904-685-1200.

As is most legal processes, bankruptcy can be a difficult thing to maneuver. There is a lot of misinformation out there, you need to be careful to get your information from a trusted source. Here are some myths regarding bankruptcy:

Myth 1: If I file for bankruptcy, everyone will know.
Like most legal proceedings, most bankruptcy documents are public record. Since I work at a law firm in the bankruptcy department, I search these records all the time. I even have a special username and password that allows me access online. However, how many times do you think your friends, family, or co-workers search through federal court records? The truth is that while your bankruptcy documents will be public information, it is unlikely that those you know would search to find them.

Myth 2: If I file for bankruptcy, I have to give up all my house.
If you are filing a Chapter 7 or Chapter 13 bankruptcy, you are often able to keep your house. Obviously, you need to be sure that you can pay your mortgage, or it would be useless to try and keep the house. But if you can afford the payments, then you can reaffirm the debt and retain your house. In a Chapter 13, you can even catch up on mortgage arrearages through your Plan, which may be all the help you need to keep your home.

Myth 3: Chapter 13 Plans require you to pay all of your unsecured debts.
A "means test" is the tool used to figure out if you qualify for a Chapter 7 or Chapter 13 bankruptcy. If you must file a Chapter 13, then a similar test tells you what your disposable monthly income is. This amount must be paid to your unsecured creditors. So, depending upon your situation, you could pay all of your unsecured debt, very little of your unsecured debt, or none at all.

Myth 4: Married couples must file bankruptcy together.
This is not true. You can file a joint petition if you want to save on court costs, but you are not required to. A Jacksonville Bankruptcy Attorney can assess your particular situation and tell you whether it is beneficial for one of you or both of you to file, based on how much debt you have, what kind of debt it is, and in whose name the debt is in. Often times it is more beneficial for one spouse to file.

To discuss any questions you have regarding bankruptcy, creditor harassment or consumer law, contact a Jacksonville Bankruptcy Attorney today at 904-685-1200 for a free consultation.

The Florida District Court of Appeals shed light on how Florida's Statute of Limitations functions as to Judgments in their recent decision in Corzo v. West.

In Corzo, the creditor, Corzo Trucking Corporation, had obtained a judgment against the debtor, Bob West in 1984. Corzo had been unable to locate West for twenty-one years, but since the debt owed by West was so large, ($120,223.80 in principle plus $297,933.61 in interest, totaling $418,157.41), an attempt was made and he was located in the state of Georgia. Suit was brought in 2006 in an attempt to force West to "make good" on the 1984 judgment. West did not file any papers or attend hearing in 2006 and a default judgment was obtained against him. In 2009, when Corzo attempted to enforce the new 2006 judgment, West replied the action and the judge dismissed the case. Corzo appealed this decision and brought about the new case.

The District Court of Appeals explained that the 2006 judgment is a distinct and different judgment from the 1984 judgment. Despite being based on the prior judgment, the new one had it's own case number and was enforceable once obtained for another twenty years. What West should have done was appear to court when summoned in 2006 and brought up the defense of the statute of limitations then. At that point the new judgment wouldn't have been entered and the old judgment would have been unenforceable, but because he didn't bring up the defense at that time, the court considered it waived. Now he has to deal with nearly half a million dollars in debt.

If you have an old judgment that is attempting to collect, contact a Jacksonville 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.

In a Chapter 13 bankruptcy, some of your debts must be paid through a Chapter 13 Plan. This plan lasts up to 5 years. A part of filing for Chapter 13 bankruptcy is that all of your monthly disposable income is committed to your unsecured creditors. Without proper budgeting, this may not leave money for unexpected expenses, like your car breaking down, unexpected medical bills, or needing to fly to California last-minute for a funeral. It is not uncommon for debtors to fall behind on their Plan payments on occasion. So what happens if you do?

If payments are a month or more behind, the Trustee will typically file a Motion to Dismiss your case for Failure to Make Plan Payments. If this is your first time missing a payment, the Court will enter an order giving you a specific amount of time to make up your payments, usually 60 or 90 days. The Order will state the date by which you need to be current.

One great way to make sure and not get behind on your payments is to have the money taken directly from your paycheck and given to the trustee. In the Jacksonville, Florida Middle District, we can have a judge sign an order for direct withdraw of those funds. This makes it much more difficult for debtors to get behind.

Another thing you should do is to keep track of your payment online. The Jacksonville, Florida Chapter 13 trustee has a website where you can see if your payment has been received, which creditors are getting money, if you are delinquent and by how much.

If you are thinking of filing for bankruptcy contact a Jacksonville Bankruptcy Attorney today at 904-685-1200.

Yes, you can still file for bankruptcy. However, a very important part of every bankruptcy case is your exemptions. Exemptions allow you to keep your real and personal property. There are federal exemptions, but most states have adopted their own exemption laws. To use Florida exemptions in your bankruptcy, there are residency requirements. If you have lived in Florida for the 730 days prior to your filing, you can use Florida's exemptions. If you have not lived here for that long, then your exemptions will be those of the state in which you resided for during the 180 days prior to your filing or the federal exemptions, whichever your prior state's law indicates.

Florida is often seen as having a liberal homestead exemption, as it allows you to keep your home despite unsecured creditors. However, to use the Florida homestead exemption, you must have owned the home for 1215 days, otherwise you can only protect up to $125,000 in equity. Since nearly half the homes in Florida are underwater on their mortgage, it is a rare circumstance that anyone has more equity that the federal system allows. If you are unclear what exemptions you are allowed to use, contact a Jacksonville Bankruptcy Attorney today to discuss your specific case and what exemptions would be best for you.

The U.S. House of Representatives introduced a new bill, the Mobile Informational Call Act of 2011, that would allow businesses to dial consumers' cell phones using an automatic dialing system. This practice is oftentimes called "robo-calling". This means that the operator does not have to manually dial each number. Rather, the computer system can dial the numbers and play a prerecorded message on many phones at once. The current law is that operators have to manually dial the numbers (unless the customer consents to robo-calling), which is not very profitable for many collection agencies.

The down side to this bill would obviously be that creditors would be able to start robo-calling your cellphone. This does not sit well with many consumers. But some creditors say that the current regulations have not kept up with the technology of today, and that a lot of people do not have home phone lines anymore. Creditors are wanting robo-calling access to cell phones.

The upside to the bill, however, is that an airline company could robo-call passengers if a flight was cancelled or is running late. Or your credit card company could set up a system to automatically call you if they think someone is fraudulently using your card. Or your bank could robo-call with a message that someone changed the address or PIN number on your account.

It does not look like the bill will be passed as it is. But the proponents may make some changes and re-introduce the bill. Either way, remember that the FDCPA is still in effect. Creditors cannot harass you. Creditors can only call at certain times during the day. Creditors cannot be abusive. If you have problems with creditors, contact a Jacksonville Bankruptcy Attorney today.

Jeffrey Summers, of Taft, California, and Stafan Miller, of Santa Clara, California, perpetrated a scam upon multiple creditors. They formed Maxwell, Turner & Associates, a collection services company who employed around 20 people. From February 2009 until May 2010, their company did not deliver on their promises to clients. Summer and Miller would provide false information about legal proceedings and tell their creditor clients wrong contact information for debtors. Also, if the company did collect any money from debtors, it would not pass this money along to the appropriate creditor. Instead, the two would pocket the money. The scheme took in more than $2.7 million.

Summers was convicted for conspiracy to commit mail fraud and sentenced to 8 years in federal prison. Miller was ordered to serve 6 years and 9 months for conspiracy to commit mail fraud and money laundering. The two have also been ordered to repay $1,311,700 in restitution to the victims of their fraudulent scheme.

If you feel that you have been defrauded in any financial situation, you should speak with a Jacksonville Consumer Law Attorney to see if a remedy this available for you.

Filing for bankruptcy can be very confusing for those trying to go it alone. As an in-depth legal process, it is greatly beneficial to have a Jacksonville Bankruptcy Attorney to help you navigate your way through a successful bankruptcy. Here are some reasons why:

1. There are many calculations that must be done correctly. To file for bankruptcy, you must first know which Chapter you qualify for, a Chapter 7, 13, 11 or 12. One step to figuring it out is by completing a Means Test. This is complex thing to do. You must know things which deductions you can use for food, clothing, personal care, health care, housing, and many more. You'll need to how the allowances for vehicles work and what involuntary deductions you can take. You must know how to list future debt payments correctly. And the list goes on and on. Without the proper knowledge and skill, this can be very difficult to do right the first time. If you do not do this correctly, the court could dismiss your case without a discharge, penalize you with fines or in rare cases, even send you to jail. Hiring a Jacksonville Bankruptcy Attorney would be beneficial because someone with knowledge and experience would be handling these issues, taking the stress off of you.

2. Another daunting task is drafting a Chapter 13 Plan. This Plan is very important, as it outlines your responsibilities over a three to five year period. You must know which creditors get paid, how much is required to go to unsecured creditors, and how to allocate the Trustee's portion. You want to make sure that you get all the benefits you can through your Plan. It is not the job of the Court or Trustee to watch out for your interest, it is there job to be sure that the code is being applied properly.

3. A Jacksonville Bankruptcy Attorney can negotiate with creditors for you, if need be. We can dispute claims on your behalf or negotiate lesser amounts owed. If you hire us, then you will not have to deal with creditors on your own. Once creditors know that you are represented with regard to their debt, then they cannot contact you anymore. This can be a relief, especially if the creditors are calling multiple times per day or you have multiple creditors calling.

4. Time can be saved by hiring counsel. While it may only take an attorney a short time to fill out a document correctly, it might take you hours. An attorney is trained to know how to fill out the paperwork quickly and efficiently. Since you do not do this everyday, it will likely take you much longer.

These are just a few reasons to hire a Jacksonville Bankruptcy Attorney to file your bankruptcy. There are many more. Contact us today at 904-685-1200 to set up a free consultation.

Is your credit card company driving you crazy? Think they are trying to rip you off or aren't taking your complaints seriously? The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB), an agency to whom you can voice concerns regarding your credit card companies. Since their opening in July 2011, the office has fielded more than 5,000 consumer complaints. Some of the most common complaints dealt with collection practices, debt protection services, account closures, identification theft, fraud, and fees.

After a complaint is filed, the CFPB acts as a go-between in order to resolve the issue between you and your credit card company. So far, approximately three quarters of the complaints have been either partially or fully resolved by the credit card company. The rest are either still under review or there was no relief found.

Consumers can submit their complaints either online with Consumer Finance's Government Site or by calling 855-411-CFPB (855-411-2372). In the near future, CFPB will be fielding complaints for all kinds of consumer financial products, including mortgages and other loans.

If are having some of these issues with a credit card company or any other financial company, don't hesitate to contact a Jacksonville Consumer Law Attorney at 904-685-1200 to discuss your options.

AMR, the parent company of American Airlines, announced November 29, 2011 that they filed for Chapter 11 bankruptcy in the Southern District of New York. The company said that in the first nine months of 2011, they lost $868 million and project that they will lose around $1.1 billion by years end. AMR, a Fort-Worth based company, listed $24.7 billion in assets and $29.6 billion in debt in their bankruptcy Schedules.

An article in the Financial Times says "the move brings to end a nearly decade-long effort to avoid Chapter 11. In 2003, American chose to avoid bankruptcy, while its rivals used the process to shed their pension plans and reduce structural costs, leaving it at a substantial disadvantage."

The company's CEO, Gerard Arpey, was not in favor of the company filing for bankruptcy. In fact, he had spoken out several times saying that he did not want AMR to file for bankruptcy. So he retired. Tom Horton, previously the company's president, will now step in as the new CEO.

For now, American Airlines says that they will continue normal business operations. Flights will go on as scheduled, and tickets will be honored as usual. Employees, their paychecks and benefits will also not be affected, at least not right away.

Contact a Jacksonville Bankruptcy Attorney if you have any questions about bankruptcy at (904) 685-1200 for a free consultation.

I admit that the title of this blog, "Jacksonville Debtors Stripping Second Mortgages with Chapter 7" is technically inaccurate. An older post addresses how lien stripping and cram-downs actually work. This blog post is going to tell you how we can get an effect similar to "lien stripping" but in a Chapter 7 case instead of a Chapter 13.

When a person files Chapter 7 bankruptcy, they have the opportunity to keep their debt on a secured loan in a Chapter 7 as long as their current on payments. This, along with the Florida Constitution allow people to keep their financed homes through a bankruptcy.

The problem most people have these days is that their home is under water and their second mortgage is no longer secured by equity. To make things easier, let's use the following example:

Home Value	Mortgage Amount	Secured Amount
$110,000	1st Mortgage $120,000	$110,000
	2nd Mortgage $80,000	$0

In this example, the debtor owes $120,000 + $80,000 or $200,000 on their home, but the home is now only worth $110,000. This means that the debtor is underwater $90,000. A smart debtor might choose to give up their home in a bankruptcy because it's horribly underwater. After all, no one in their right mind would knowingly agree to pay $90,000 more than something is worth. Back to the example: If the debtor did surrender the home in bankruptcy, the first mortgage holder would get the whole $110,000 from the sale (first mortgage holders always get paid first) and the second mortgage holder would get $0.

The second mortgage holder knows that they will get zero if the debtor bankrupts as it happens all of the time. They also know that the debtor is likely to go bankrupt if they're under water because it makes financial sense to do so. What we do is negotiate with the second mortgage holder. We tell them that they can either lose their entire interest in a bankruptcy, or we will offer to settle their lien for a paltry sum. If they accept, the bank can still write off the remaining unpaid amount on their taxes and get cash in the meantime. The debtor can then wait 90 days to avoid the transaction being classified as a "Preferential Payment" and then file a Chapter 7, reaffirming the up to date first mortgage, discharging their other unsecured debts and going on with their life.

If you think you might be a candidate for the "stripping" of a Chapter 7 mortgage contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.