Jacksonville Bankruptcy Lawyer Blog

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.

The final adversary proceeding in the Chapter 7 bankruptcy of Teresa and Giuseppe "Joe" Giudice is now closed. An adversary proceeding may be thought of as "case with in a case". This adversary proceeding was filed by the United States Trustee seeking to deny the Giudices a discharge of their debts. The trustee's one-hundred-and-twenty-five allegations indicate what may be the true nature of a "Real" housewife and her husband.
Some of the allegations include:
1. Non-disclosure of any bank accounts, vehicles, copyrights or intellectual property.
2. They also disclosed their combined monthly income to be $3,250 for Joe and $3333.33 for Teresa (plus assistance of $10,000 per month from family members).
3. They failed to disclose ownership of 393 Lexington Ave., Clifton, NJ and 399 Lexington Ave., Clifton, NJ.
The Giudices both signed this petition under the penalty of perjury.
There are generally two reasons why you wouldn't disclose the truth: neglect or fraud. By not disclosing their personal property, they would be allowed to keep that property if the trustee or creditors did not object. By citing only about $79,000 in annual combined income, they'd probably qualify for Chapter 7 bankruptcy in New Jersey, where the median income is very high (you must be under the median for Chapter 7). By not disclosing whole houses, they could potentially keep them if the trustee or creditors did not discover them. But the trustee did discover them and sent them a letter requesting documents relating to these items.
Within a month of the trustee's letter, the Giudices filed amended documents listing one of the pieces of real estate, four vehicles, a Maserati lease and three previously unlisted businesses. Teresa's reported income more than doubled.
It appears that the trustee wasn't satisfied with their answers and subjected the Giudices to a 2004 examination (similar to a deposition). Under oath, Teresa disclosed that she had a Lakeland Bank account, a previously undisclosed business and a previously undisclosed book deal for her now published book, "Skinny Italian." Her husband Joe disclosed that he had not actually filed taxes for 2006, 2007 or 2008 (although he'd provided the Trustee with copies of returns previously), disclosed another business and disclosed that he collects rent from two other commercial businesses.
Teresa's now disclosed bank account at Lakeland Bank showed $106,819.90 in deposits in the seven months leading up to their case filing and $192,620.90 during the three months AFTER the case filing. She also disclosed that she'd been paid $250,000 as an advance on her book.
Now, I must admit that these were all allegations and that none of them were specifically proven to be true. Pursuant to a consent agreement, Teresa was denied a discharge acknowledging "...her desire to resolve the Adversary Proceeding without the need for further inquiry or litigation, and without her making any further admissions..." her husband was also denied a discharge.
Bankruptcy fraud is a crime punishable by imprisonment and fines. When someone attempts to lie about their income hide assets in bankruptcy, it is an insult to everyone -those filing bankruptcy themselves and those who can and do pay their creditors. When an attempt to defraud occurs at this magnitude, I think that only imprisonment should follow. These two should be investigated thoroughly and if these allegations are true, they should go to jail for their crimes.
The Giudice's bankruptcy case remains open.

A Shreveport, Louisiana man was sentenced to 6.5 years in federal prison for concealing over $400,000 in assets in a joint Chapter 7 petition. He also attempted to discharge a debt of $750,000 which was supposed to be held in escrow for a real estate project. He was convicted of concealing assets, making a false statement under penalty of perjury and bankruptcy fraud. As part of his criminal monetary penalty, he is to pay the U.S. Trustee $754,000. According to the National Association of Bankruptcy Trustees, the case was investigated by the FBI and the United States Bankruptcy Trustee's Office and prosecuted by the Assistant United States Attorney.

Many people forget that bankruptcy relief is a privilege with limitations and that abuse of the system can be severely penalized. Before taking actions could lead to trouble, you should first consult experienced counsel. Contact a Jacksonville Bankruptcy Attorney or call us 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.

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.

An Amended Complaint was filed on Monday in the case against the Madoff family bringing the amount of the lawsuit up to $226.4 million from $198.7 million. Most of the sum reflects salaries and bonuses obtained by Bernard Madoff's family members during the ponzi scheme. Those being sued are Peter Madoff who invested $32k but withdrew over $16 million, Andrew Madoff and Mark Madoff's estate who withdrew more than $35 million (Mark's estate, not him due to his recent suicide) and Shana Madoff (Peter's daughter) who was a member of the company's compliance division at Bernard L. Madoff Investment Securities LLC.

Although the family "steadfastly contend their involvement with BLMIS was entirely legitimate..." they appear to have made withdraws of unreasonable sums of money based on their investments. Shana Madoff, who appears to have taken no withdraws herself is being sued for the lowest sum, $12.7 million for being "derelict" in her duties on the securities firm's legal board.

The legal justification for the suit comes from fraudulent transfers, preferential payments (favoring one creditor over others when making payments just prior to bankruptcy) and turnover of property, which will allow the court to obtain property or cash from the defendants.

Although being in the Madoff situation is a very rare situation, we can all run into issues of fraud and preferential payments. If you are considering bankruptcy in the future, you need to know what sort of transfers you can and cannot do. Contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Jacksonville bankruptcy filings are always down from November through February and the reason is obvious: the holidays are upon us and no one wants to file bankruptcy during the holidays.

The problem with the delay is that despite the fact that people are in debt, they are still obliged to buy gifts. 11 U.S.C. § 523 lists various, "Exceptions to Discharge" which include under (c)(i)(I) any, "luxury goods or services incurred... ...within 90 days]" of the day of filing over $500 in value and any "cash advances aggregating more than $750... ....within 70 days of filing. There is an exception for goods and services that are reasonably necessary for the support or maintenance of the debtor or debtor's dependents. Presents, even though traditional, are likely to be considered a luxury unless especially modest. These purchases just prior to filing would be non-dischargable in the bankruptcy causing debtors to enter life after the bankruptcy already in debt again.

Purchases made without the intent to repay the debt are fraud under 11 U.S.C. § 727(a)(2) which can lead to a denial of discharge (bankruptcy case closed and debts still owed), or even jail time.

Filing before the holidays makes more sense because Chapter 7 property of the estate is determined on the date of filing. Purchases made with post-filing funds would not be fraudulent and would allow the debtor to enter the New Year without having to worry about the dischargability or criminal liability of new holiday debt.

If you'd like to prepare your bankruptcy before the holidays, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

The Las Vegas Mobster Museum is headed to court, but not for racketeering. The museum that houses the world's largest collection of organized crime artifacts (other than the FBI evidence room), has found itself faced with a Chapter 11 bankruptcy filing citing $5.8 million dollars in debt.

This museum's debt is proportionally greater than the amount Capone owed to the IRS. When Capone was arrested in 1931 he owed $215,000 to the IRS. According to WestEgg.com this is the equivalent of about $3 million dollars today (after adjusting for inflation) and lead to Capone being given an eleven year prison sentence.

The Mobster Museum will be purchased for $2 million by JVLV Holdings LLC. The former developer, Jay Bloom, is faced with accusations stemming from overstated potential daily visitors and using corporate money to pay for personal automobiles, credit card bills and groceries. Depending on Mr. Blooms testimony, these transactions may be a violation of the bankruptcy code under 18 U.S.C. § 152. which protects against fraud in bankruptcy cases. Even if so, the maximum imprisonment under this statute is only five years, which is quite light when compared to Capone's eleven. I guess this tells us something we already knew- that it's bad to lie in bankruptcy court, but it's far worse to lie to the IRS.

As you may be aware, the L.A. Dogers filed for Chapter 11 bankruptcy protection in late June of this year. Chapter 11 is a reorganization bankruptcy available to both individuals and businesses where the creditors get to vote on whether or not to approve your proposed repayment plan.

Although McCourt is the owner of the Dodgers, it is the business, the "Los Angeles Dodger" that is filing the bankruptcy. McCourt withdrew an alleged $189.16 million dollars from the businesses funds according to the Los Angeles Times to settle his divorce with Jamie McCourt. To read more about the divorce side of things, see Kelly Ryan's divorce blog. Taking money from your own business probably wouldn't be an issue if that business weren't already insolvent.

In theory, Mr. McCourt has diverted money that could have gone to pay the business' creditors to his now ex-wife. These transactions could be violations of the bankruptcy code. Things have gotten so contentious that Major League Baseball has petitioned the court to order the sale of the Dodgers. It is difficult to say what will happen in this case as new facts and arguments are coming every day, but the moral of the story is that you don't drain the assets of an insolvent business and then try to file that business in a bankruptcy.

If you feel the need to liquidate assets of an incorporated business you should speak to an attorney first. Please contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

UPDATE: McCourt has agreed to sell the Dodgers. This is a little reminiscent of the Texas Rangers who were sold only last year in their own Chapter 11.

NFL Star Rick Sanford initially filed for Chapter 7 bankruptcy in February 2009 in South Carolina. Sanford did not list all his assets, however. He failed to disclose his interest in a Colorado condo, which later sold, netting him $70,000.00. When the trustee in Sanford's case challenged his listing of assets, Sanford withdrew his bankruptcy petition. He was subsequently charged with fraud and plead guilty. The court sentenced him to 2 years probation, 30 days home confinement, and 100 hours of community service.

When filing for bankruptcy, it is very important to be honest and list all of your assets. Oftentimes, your Jacksonville Bankruptcy Attorney can exempt your assets so you can keep them away from creditors.

First of all, as far as your credit score goes, banks usually report a deed in lieu as a foreclosure. In other words, a deed in lieu will probably have the same effect on your credit score as a regular foreclosure. Further, even if a bank has a deed in lieu, they will likely require you to sign a note saying you will pay them any amount left over if the sale of your home is less than what you owe.

You're probably wondering: What is the advantage of a deed in lieu over a foreclosure? For most people, there isn't one. If you accept the foreclosure, you should ensure your agreement states you will not owe any amount on a potential deficiency sale. Both deeds in lieu and foreclosures will look the same on your credit score, so bankruptcy is also another consideration here.

If you are thinking of filing bankruptcy, contact a Jacksonville Bankruptcy Attorney today. If your home is facing foreclosure, contact a Florida Foreclosure Defense Attorney to further discuss your options.

For example, what if someone thinking about bankruptcy has stock. Can he or she sell that stock before filing bankruptcy and put the money in something else? Generally, if you file bankruptcy, the Court will ask you about your sales of assets in the months prior to filing. They will attempt to see if you have made any fraudulent sales or transfers in an attempt to avoid paying a creditor, during this time and they mainly check to see if you received fair market value for your assets. So, if you sell your stock, you will need to disclose that sale and will need to list the proceeds as an asset.

Further, the court may view your sale as fraudulent in certain circumstances. For example, in Florida there exists an exemption under bankruptcy plans for your homestead. In other words, creditors cannot use the equity in your home to satisfy debts. However, if you have a second home, creditors may use the equity therein to satisfy your debts. Thus the question arises: what if you sell your second home and use the proceeds to pay some (or all) of your mortgage on your primary home?

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA) largely prevents these practices. The statute now says you might lose your ability to discharge debts if you transfer property solely to hinder, delay or defraud creditors. Courts are left to determine what constitutes hindrance, delay, or fraud, so lawyers are cautious in encouraging such practices. If you are thinking about filing bankruptcy, contact a Ponte Vedra Beach Bankruptcy Attorney at 904-685-1200 to discuss your options.

Yes. Your father is an "insider". (So is a friend or other relative.) To analyze property transferred to an insider, the trustee will look back one year. If you have transferred property to an insider within a year prior to filing, the trustee might try and undo the transaction. For creditors that are not insiders, the trustee will look back six months from the time of filing to analyze property transfers.

Contact a Jacksonville bankruptcy attorney today to assess your individual situation to see whether a trustee is likely to undo an insider transaction.

In recent weeks bankruptcy courts and the associated United States Trustee Program have begun to increase the scrutiny with which they are looking at requests to proceed with foreclosures and requiring the foreclosing lender to prove that they are the proper party to foreclose on the property. Bankruptcy courts in New Jersey and Georgia have denied to remove the automatic foreclosure stays that are put in place when a court confirms a debtor's bankruptcy repayment plan because banks have been unable to satisfactorily prove they were the parties that actually owned the mortgages.

In order for the lenders to foreclose on a home once the homeowner has an approved repayment plan, the lender must file a motion to remove to stay and prove they are entitled to foreclose. Spokeswoman for the U.S. Trustee Program Jane Limprecht verified the Program's increased scrutiny by stating it "is engaged in an enhanced review of mortgage servicer filings in bankruptcy cases to help ensure the accuracy of the claim to repayment."

This is a positive step for those homeowners facing a Florida Foreclosure Lawsuit and are considering bankruptcy. Contact a Jacksonville Foreclosure Lawyer or a Florida Foreclosure Lawyer today to explore your foreclosure alternative options.