Jacksonville Bankruptcy Lawyer Blog

If somebody broke into my home while I was gone and took all of my personal property, I would want to be compensated for my loss, and I should be, right?
Imagine that like many in Florida today, you live in a home that is underwater on it's mortgage. You consult an attorney and because you fear a deficiency judgment or a 1099 for debt forgiveness income, either of which could result from a foreclosure. That attorney suggests that you file bankruptcy, which you do. You indicate in the bankruptcy petition that you want to surrender the home to the creditor. You are also required to provide a list of personal property to the court, but because you know you're only allowed to keep a certain amount of property in a bankruptcy, you decide to omit some valuable items. You rent a side apartment, but don't completely move out of the house. One day you return to the house to pick up some items and find it completely bare. You call your attorney and find out that the mortgage company violated the bankruptcy rules by entering your home and that you can sue them to recover the value of the lost property. You quickly create a list for your attorney of all the property that is missing and the attorney stops you. You did not list all of these items on your petition. This brings about at least two problems: first, you lied to the court under oath. This is perjury and your attorney may have to withdraw from representation because you used their services to perpetrate a fraud. Second, when you filed your petition you swore that you provided a complete list of your personal property and at the 341 hearing, you were sworn in and asked if the list was complete. If you now sue the creditor for taking your property, you're going to have to explain to the court why you failed to disclose property on your schedules and show that the property did, in fact, exist in the first place.
Listing all of your assets is a requirement of the Title 11 bankruptcy code. This is in the code because you're only allowed to keep a limited amount of non-exempt property in a bankruptcy. Situations like the one above turn the law on it's head, but really do stress the importance of honestly and accuracy on bankruptcy schedules. If you're considering a bankruptcy, it is important to get legal advice. Contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

When a person files for bankruptcy, they must list all of their assets and liabilities on their bankruptcy schedules. This is to help the court administrate and determine which assets the debtor should be permitted to keep and which assets will be subject to liquidation by the trustee for the benefit of the creditors. If someone is going to keep property during a bankruptcy case, it will need to be listed in their bankruptcy schedules with the proper exemption provision (if any) indicating why that property is allowed to be retained.
Often times, people forget what may be included as an asset. The following are commonly overlooked assets that if not listed in the bankruptcy schedules, could lead to seizure of the assets by the bankruptcy trustee: Accrued vacation pay, unpaid insurance claims, class action lawsuits, liquor licenses, timeshares, trademarks, season tickets, and security deposits.
I have even had the circumstance where the debtor disclosed at their 341 hearing that they had forgotten that their daughter's home was in fact titled jointly in both their names. Fortunately for the debtor, that home had very little equity and the debtor's bankruptcy petition was easily modified to protect the asset. Had the property had a lot of equity, this could have been a fatal mistake.
Just as there are things that people often forget are assets there are also things that people think are assets that actually are not. For instance, homes and cars are almost always thought of to be assets. However, this is not the case when the property is worth less than what is owed on it. In the case of property being worth less than what is owed on it, it ceases to be an asset of the debtor and is instead an asset of the secured creditor. This means that the debtor needn't use up any of their exemptions to maintain ownership of the asset.
If you would like to know what may qualify as an asset in your case, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

When one files for bankruptcy, a petition must be created. That petition is made up of several different sections called, "Schedules". Each of these sections deals only with one specific issue, for instance, Schedule A deals with real estate, Schedule B with personal property, and so on. It is generally accepted that these schedules can be amended at any time, however a recent case out of the Middle District of Florida has limited this freedom somewhat.
Although every schedule is important, the schedule most debtors are interested in is Schedule C. Schedule C is where the debtor lists which property (s)he wishes to keep a exempt from collection by creditors. The rules allowing for property to be kept are called "exemptions" and are outlined by either state or federal statutes.
In Florida the use of one such exemption may forbid the use of another. As such, debtors can choose only door A or door B, but not both. Since there are so many rules in the bankruptcy code and because those rules are not always clear, it is often the case that people filing bankruptcy without a lawyer (pro se) mistakenly choose incompatible exemptions. This forces the Trustee to file an Objection to Claim of Exemptions, which requires a hearing for the judge to determine whether or not the objection is valid. If the objection is valid and the exemptions are denied, the trustee can then file a motion for turnover. The motion for turnover is the trustee's way of asking the judge to force the debtor to surrender their rights in the property to the trustee. This is where the turning point is. Up to and until the judge orders turnover, the debtor can amend their Schedule C list of exemptions and change the amount and type of property they wish to keep, but once the judge signs an order requiring the debtor to surrender their rights, the debtor can no longer amend.
Thus it is vital to make sure the claim of exemptions is correct when filed and that no incompatible exemptions are used. If you are considering filing for bankruptcy and want to ensure that it's done correctly, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

One of the first questions I'm asked by a person considering bankruptcy is what effect filing has on the property they own. If you've lived in Florida for a while, you are allowed to keep property that is exempt from the collection of creditors under Florida law. While there are a large number of somewhat complicated exemptions, you can generally think of exemptions as follows: You may keep $1,000 in personal property, $1,000 in vehicle equity and then either a homestead property that has equity or $4,000 in additional personal property. So, if the homestead property was retained in the bankruptcy case, but it had no equity, the debtor could keep $1,000 in vehicle equity and $5,000 ($4,000 + $1,000) of personal property. Any property the debtor has beyond that amount is subject to the whim of a trustee appointed by the court to preserve the debtor's assets for the benefit of the debtor's creditors. The trustee takes the debtor's non-exempt property in a method similar to repossession and then auctions those goods off. The funds from this liquidation are used to pay the repossessing agent, the auctioneer's fee and the trustee's portion (typically 25%). The remaining funds are paid on a pro rata share to the debtor's creditors who timely file claims.
Just because a debtor has property that is non-exempt does not mean the trustee will claim an interest in the property. Sometimes repossession and auctioning are impractical. When determining whether to liquidate an asset, the trustee must decide on the likelihood of sale and the cost benefit analysis of using estate proceeds to repossess and sell an item which may not render a sufficient sale to cover it's own cost.
There is no clear-cut amount on which trustees rely when deciding to abandon an asset, but many trustees will occasionally leave an asset that will not earn more than $1000. Because these decisions are so subjective, trustees will almost always consider a debtor's request to keep the asset in exchange for a cash settlement. As the old cliché goes, "There is no harm in trying."

If you are considering filing for bankruptcy and have non-exempt assets you wish to keep, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 to discuss your circumstances and the options available to you.

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

Jacksonville, Florida Trustees look for payments made by debtors to creditors within ninety days of the debtor's bankruptcy filing. The trustee can recover these funds under the theory of "Preferential Payment". A "Preferential Payment" is any payment made by a debtor to a creditor within ninety days of filing bankruptcy. The theory behind allowing return of those funds is this: the debtor paid one creditor and not the others, the debtor preferred that creditor over the others and that is unfair, so the court will require the money to be returned so it can be distributed evenly among the existing creditors.
This ninety day period is extended to two years if the creditor is considered an "insider" a.k.a. friends or relatives. So, if you paid your father back $2,000 on a debt last year and you file bankruptcy today, he may have to pay the $2,000 back to the trustee. This two year period can be extended should there be a case of actual fraudulent intent on behalf of the debtor.
There is a disagreement among the courts as to whether or not a debtor can use their available exemptions on money they used to pay creditors before a bankruptcy. Exemptions refers to property limits established by the legislature that say what the debtor can keep in a bankruptcy as it is exempt from collection. In the example of the father above, there are some jurisdictions where the debtor could use their available remaining exemptions to protect the father from having the pay back the funds on the premise that if the funds were in the control of the debtor, they could be protected. In other jurisdictions, those funds would not be protected because by paying them to the father, the debtor did not have the proper mental state of desiring to keep the funds; the very root of the cause for keeping exempt property is that the debtor seeks to keep the property.
Regardless of whether your jurisdiction follows the "No Harm, No Foul" approach allowing debtors to exempt preferential payments or not, the debtor always has the option of filing the money as exempt on the petition and seeing if the trustee objects to the debtor's claim of exemptions. If the trustee does not object within thirty days of the filing as prescribed by law, the claim of exemptions is allowed by default.
If you have questions about payments you've made or what you can exempt in bankruptcy, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

"If you cannot reason with a man, reason with his wallet."
11 USC 326(a) determines a Chapter 7 and 11 Trustee's compensation to be twenty-five percent of the first $5,000, ten percent from $5,000 to $50,000, five percent between $50,000 and a $1,000,000 and three percent of any monies disbursed or turned over in a bankruptcy case. For this reason, trustees are zealous in collecting all property of the debtor's estate as is their role as representatives of the estate.
When a case is filed, a debtor must list all of the property they claim is exempt. The trustee then has thirty days to object to the debtor's claim of exemptions, otherwise the trustee's right is waived and the exemptions stand. If the trustee files the objection to the claim of exemptions, the objection must be justified by some kind of measurable facts. Typically, the trustee states that they disagree with the value assigned to the debtor's property. For instance, if the debtor lists his car's value at $1,000, which he's allowed to keep but the trustee feels it's worth an amount closer to $2,000. This would be a valid ground for the trustee's objection. The debtor would then have to either amend their list of exempt property or attend a hearing in front of the judge and argue the evidence with the trustee.
The most typical form of evidence in these cases is a property appraisal. The trustee hires an appraiser who declares that they have no interest in the debtor's property, that they have created a fair appraisal and that they have no bias effecting the appraisal. As long as the appraiser is qualified to do appraisals, which is a relatively easy standard to meet, the appraisal is found to be prima facie (presumed) valid evidence. The debtor must appear with their own evidence to refute the appraiser's values or those values stand. This means that the debtor must hire their own appraiser, which costs from $300 - 500 dollars. Often times, the debtor cannot afford to do this. They are after all, bankrupt.
Appraisers often have another related job, frequently, they are actually auctioneers who moonlight as appraisers. This encourages them to artificially inflate values of appraised property so that the trustee will use their auctioneer service to liquidate the estate. When this happens, the appraiser is paid the appraisal fee, as well as their commission percentage on the auctioned goods.
An appraiser who artificially assigns values to property higher than what is accurate gets hired by unethical trustees because these trustees can obtain more property for the estate and that means more money in the trustee's wallet. I have seen appraisals of used personal property come back with higher values than a new retail price for the same item.
This is where the trustee offers a "buy back". A "buy back" is an offer from the trustee to the debtor where the trustee gives the debtor the opportunity to purchase their unexempt property from the estate, typically over a one year period. The debtor often accepts this offer because of the strong emotional attachment one gets to their personal property. If this happens, the appraiser doesn't get to sell the goods, but was still paid for the appraisal itself and because an unethical trustee got an inflated paycheck, they'll be more likely to hire that appraiser again.
To defeat this scheme, a debtor must either find the $300 - 500 dollars to pay for their own appraiser and probably hire an attorney to attend this hearing or attempt a motion to have the trustee removed from the case. 11 USC 324(a) creates statutory ground for removal of a trustee, permitting the court to do so, "for cause". If a trustee is removed, the trustee is removed from all cases unless a special order is entered. Although nothing in the bankruptcy court should be taken lightly, motions for removal of a trustee are particularly serious and difficult due to the extreme effect of trustee removal. If a motion to remove trustee is entered, the trustee can hire counsel to defend themselves and can pay that counsel from assets of the estate. If the trustee wins and can show the suit is baseless, they can sue the party who filed the motion against them for sanctions. The slightest inkling of sanctions sends most attorneys running and with the heavy standard for removal, it seems to be an over some burden and not a real option.
The individual debtor is often best served by paying off the unethical trustee which is often less expensive than paying the $300 - 500 for an appraiser as well as whatever the attorney for the turnover hearing will cost.
If you are facing an appraisal that appears ludicrous, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free initial consultation and we'll discuss the best strategies available to you.

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.

A commonly overlooked issue when it comes to bankruptcy is what happens to the debtor's tax refund. Income tax refunds are treated like any other asset owned by the debtor except that it is still being held by the government. The Trustee has an interest in a pro-rata share of the refund based on the month you file because the refund has been earned up to that point. If you file at the end of April, the trustee could have an interest in 4/12ths of your next year's tax return. When someone files for bankruptcy protection, they are only allowed to keep a limited amount of assets, called exempt property. These exemptions are limited and are declared at the time of filing the petition. If the trustee has any objections to these exemptions, he or she must formally announce those objections within thirty days of the filing of the bankruptcy.
There are a few different strategies on how to deal with refunds. Some attorneys suggest that the debtor wait until they get their refund, spend the refund on reasonable and necessary living expenses such as gasoline, groceries, healthcare etc. and then file for bankruptcy. Others suggest that the debtor adjust their deductions (if there's enough time to do so) so that the return will be smaller or non-existent. If possible, I prefer to use the debtor's remaining exemption amounts to cover the trustee's interest in the return. If the trustee would get $400 and the client is eligible to keep $400 due to their exemptions, I can use the exemption to let the client keep the money.
Although it's not often an attractive option, the debtor can also simply give up the whole tax return if they feel their exemptions are better used elsewhere.
If you have questions about keeping your tax return in a bankruptcy, or some other kind of bankruptcy question, contact a Jacksonville Beach Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

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.

When filing for bankruptcy, it is very important to be very honest and disclose everything. If you do not, you risk having your bankruptcy denied, discharge revoked or even prison time in the worst case scenario. When you sign your bankruptcy documents, you are doing so swearing that they are true under penalty of perjury. If the trustee finds out that something you have in your schedules is incomplete or untrue, this will raise a red flag and the trustee will scrutinize your bankruptcy schedules even more.

A common way that people fail to disclose everything in bankruptcy is trying to hide assets. Debtors might leave off a gold watch or a private bank account. This is a big mistake. When filing for bankruptcy, you must list all of your assets. Even if you think an asset is inconsequential or minute, you should list it. It is better to have overkill than to raise a red flag.

Another thing debtors sometimes fail to list is creditors that happen to be friends or relatives. Or maybe the debtor does not want a specific creditor to know that they have filed for bankruptcy, so they do not want to list that creditor. You should not do this. You need to list all creditors to whom you currently owe any kind of debt on your bankruptcy papers. The trustee wants to make sure that all of your creditors get their fair share of your estate. No matter your intentions, make sure to list every creditor. If you do not and the trustee finds out, this will raise a red flag.

If you fail to disclose everything on your bankruptcy schedules, you will most likely be sorry in the long run. However, the trustee may be understanding if you make an honest mistake. If you accidentally leave something off your schedules, correct the mistake by filing an amendment as soon as you realize the mistake.

To learn more about bankruptcy and to schedule a free consultation, contact a Jacksonville Bankruptcy Attorney today at 904-685-1200.

For Jacksonville Bankruptcies, individuals filing bankruptcy are permitted to keep certain amounts of property pursuant to the "Florida Exemptions". One of these pieces of property is their Homestead.

Article X § 4 of the Florida Constitution prevents a home of up to 1/2 acre within a municipality or 160 acres outside a municipality from being forced to sale by anyone except those holding liens for taxes, mortgages, mechanics and the like. This protection is one of the most liberal in the United States Bankruptcy Courts and has lead to the relocation of celebrities such as Oj Simpson who homesteaded property to avoid the loss of otherwise obtainable assets. Due to the quick relocation of people like Simpson, Florida now requires a person to own the property at least 1215 days (about 3.3 years) to exempt the entire value of equity in the home.

A new case, In re Gentry rules that even when a debtor initially states that they intend to abandon their homestead at the date of filing, they can later change their mind by filing an amendment and keep the home. Originally it was thought that the debtor's intention on the date of filing is what controlled this issue, but the Tampa court stated that Florida Homestead protection is so widespread and liberal that the debtor can change their mind mid-bankruptcy. The question that remains unanswered is just how far into a bankruptcy a debtor would be to be "too late".

If you have questions about the homestead exemption or would like to know if your home would be protected from creditors, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

One of the most unfortunate situations I see in bankruptcy cases occurs when a debtor has borrowed money from friends or relatives. In the old days, people headed toward bankruptcy would pay their creditors here and there what they could when they could. Often this would lead to one creditor being paid more than the others. Creditors were right in thinking that this was unfair and so the Legislature created 11 U.S.C. 547 (b)(4)(A) which states that any payment to a creditor made within 90 days of filing can be "avoided" (reversed) if that payment is greater than what the creditor would get from the bankruptcy estate. Further, if the creditor being paid is an "insider", the 90 days is inflated to a full year.

What is an insider? 11 U.S.C. 101(31) defines insiders as relatives, business partners, etc. So, if you owe your parents $3,000 and you're about to file a bankruptcy, know that payments to them within a year of the time of filing can be reversed. This can cause huge family upsets and in the wrong circumstances could lead to a bankruptcy for the parents.

If you want to pay money or transfer property to a friend or relative but you also think you may need bankruptcy protection soon, please contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

George Sadorus could have been more careful when he hired an attorney over the internet to file his bankruptcy case. However he really should have been suspicious when his attorney told him to lie to the Trustee about why he could not attend his 341 Meeting of Creditors.

Sadorus was advised by a paralegal that $8,000 he had in a bank account would be exempt in his bankruptcy. His attorney later filed his case not disclosing the account holding the $8,000 because the paralegal hadn't informed the attorney of the account. Once the attorney realized his mistake, he advised the client to not attend the mandatory 341 hearing and to lie about his reasons for not attending. The theory was that if the client's case was dismissed, he could spend the money on reasonable and necessary living expenses and then refile.

The attorney then refiled the case without discussing whether any funds were remaining in the client's account. $5,000 remained in the account when case #2 was filed. This time the client attended the 341 hearing, disclosed to the trustee what had gone on and fired his attorney. The trustee, surprised by the revelation sued the debtor for the contents of that account as well as the lawyer for sanctions and discouragement (refund) of his fee. The attorney was suspended from practicing law in that state upon the condition that he take educational courses in ethics and general practice and was forced to return to the debtor his retainer fee.

Unfortunately, because the retainer fee was returned to the client while in bankruptcy, the money became property of the estate and was subject to collection for the benefit of the debtor's creditors. So, because the debtor chose an attorney who gave him poor advice and then followed that poor advice by lying, he lost the $5,000 in his account and lost the $1,000 he'd paid the attorney (he paid it, had it returned, then had it garnished for the estate). For more information, see In Re Sadorius.

We all would be tempted to hire the least expensive attorney we can find, but all to often we get what we pay for, which can sometimes cost us more than we anticipated. If you are considering bankruptcy and want to meet with an attorney who you can shake hands with and trust, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Doctors practicing in the Jacksonville area should consider their options in bankruptcy if they've been found liable for medical malpractice, especially if they were not covered by insurance.

Some debts are non-dischargable, as referred to in our previous entry. However, 11 U.S.C. 523(a)(6) prevents a debtor from discharging debts arising from willful and malicious injury to another person.

In Kawaauhau v. Geiger attorneys argued about the definition of "Willful", as it could mean an intentional act that brings about an injury or an act that brings about an intentional injury. The Supreme Court oversaw the case and unanimously found that Congress intended the statute to prevent only intentional injuries, not intentional acts that lead to injuries. This means that a doctor who commits negligence can still discharge their liability for that injury in bankruptcy.

In theory, this means that a doctor could practice medicine without malpractice insurance and file bankruptcy if they were ever liable for negligence. Of course, this would likely mean filing a Chapter 13 due to a doctor's income being traditionally too high for the means test, but it would allow that doctor to keep his home as exempt in bankruptcy and allow him to discharge the debt.

If you are a doctor who has been practicing without malpractice insurance and are concerned about your liability, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation and we'll explore your options.