Jacksonville Bankruptcy Lawyer Blog

Twenty-two years ago Patricia Kluge divorced her husband of nine years and was given one of the largest divorce settlements in history at one billion dollars. The annual interest rate as predicted by People Magazine was $1.6 million a week. Even so, the former actress of, "The Nine Acres of Nakedness" managed to deplete those assets to less than $2.6 million in real and personal property in a little more than two decades.
Mrs. Kluge and her husband listed $123,000 worth of personal property as exempt on their petition including a $5,000 wine collection and a $80,000 wedding/engagement ring set. §34-26 of Virginia's exemptions allows for wedding rings and bands of any value.
Perhaps shedding some light as to what caused Kluge to plunge financially, I would note that her mansion, once listed for £62 million, finally sold for £9.3 in mid-2011.
I do wonder how she and her husband qualified for Chapter 7 bankruptcy when their Schedule I income was reported as $188,376 a year when Virginia's median income is $64,288 per year, but that's between them, the courts and the U.S. Trustee.

Tenancy by the Entireties, only permitted in a few states, is a term unknown even to many attorneys. The lack of knowledge of it's existence helps to illustrate the stupidity of it's application: Spouses must intend to hold property as "Tenants by the Entireties" to be afforded it's protection, yet nearly no one knows that this system (or any system) of ownership exists.
There are several ways people can hold property. Tenants in Common is fairly frequent. Another is Joint Tenants with Rights of Survivorship. Each of these open a different can of worms in different areas of law. What Tenancy by the Entireties (TBE) can do, is allow a bankruptcy filer to keep their property provided that the property is held by a non-filing spouse provided that the property is held by TBE and that the property is not under-secured. Fortunate for Florida debtors, the inherit flaw of requiring the owners to intend TBE is overcome by the courts now presuming that TBE is intended if the couple is married and the property is acquired pursuant to the requirements of TBE. TBE requires that property be acquired at the same time for both spouses, they must have the same title, same interest in the property, have the same right to possession and, of course, be married.
If you have questions about TBE, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

Many of those considering bankruptcy wonder if they too must file bankruptcy if their spouse does. In truth, they do not. Although it's sometimes a good idea for both spouses to file on a joint petition, it is not always necessary. For instance, a joint filing means paying only one filing fee and will allow both parties to get on with their life (there may be some special property exemptions available in this situation as well).
In some circumstances, all or most of the debt will be in one spouse's name. In that case, it may make sense to file one spouse and not the other. Any joint debts (debts that are in both names) can be discharged as to one party, but will leave the non-filing spouse solely responsible for those debts.
Once in a while, I meet a person who hasn't spoken to or seen their spouse in years. They no longer have joint debts and are in every sense (other than legally), divorced. The courts recognize that this sometimes happens and allow married couples to file bankruptcy individually and allow them to maintain separate homestead exemptions. All that the court requires to do this is that the debtor filing bankruptcy swear that the separate households are maintained for some other reason other than to defraud the bankruptcy court.
If you are married, considering bankruptcy and would like a free analysis of your options going forward, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

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

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

Jacksonville bankruptcy filers are required to take a credit counseling course before filing bankruptcy as well as a "debtor education" course during their bankruptcy before they can obtain a discharge of their debts. When George Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, there was a feeling that those filing bankruptcy must be doing so because they do not know how to properly budget money. This feeling lead to the creation of 11 U.S.C. §109(h) and 11 U.S.C. § 727(a)(11) which require the counseling and education courses.

In the past, the primary reasons for filing bankruptcy were varied, the Chicago Tribune states that the primary drivers of bankruptcy are illness, divorce and loss of employment. While this used to be true, it seems that the vast majority of the people I consult with have only one issue, what to do with a home that is more underwater than it is worth and a bank that won't budge when it comes to modification.

When an underwater home is the reason for bankruptcy, no amount of budget knowledge is going to help, yet it is still required. Fortunately, there are Debtor Education providers like Dave Ramsey, who give more useful tips on growing wealth than how to simply balance a checkbook.

Contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation to discuss credit counseling, debtor education and other options.

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.

Married Jacksonville residents seeking to defend wage garnishments may have a unique opportunity over unmarried debtors. Section 222.11 of the Florida Statutes allows any Head of family to exempt all of their disposable earnings from garnishment. Section 222.11(1)(c) defines "Head of family" as any natural person who provides more than one half of the support of a dependent.

Based on this definition, it would make sense that a husband and wife could both exempt their wages from garnishment as long as they were each providing more than 50% of the support for a child from a prior relationship.

Similarly, in a bankruptcy case, having a non-filing spouse can protect all titled marital property from liquidation by filing that property as, "Tenancy by the Entireties". This trick is commonly used in the bankruptcy arena.

Usually, we bankrupt married couples in a single document called a, "Joint Petition", which only requires a single filing fee. However, joint petitions don't allow for the "Tenancy by the Entireties" defense, so personal property above state exemption amounts would be lost. A unique possibility for married couples would be to file one spouse, claim the entireties exemption and then file the second spouse claiming the entireties exemption after the first case is closed.

Whether bankrupt or defending garnishments there are unique strategies that we can help you with. Come see a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation and we'll explore how those strategies can work best for you.

A gay couple was permitted to file a joint petition for Chapter 13 despite the Trustee's argument that the Defense Against Marriage Act (DOMA) made their marriage illegal. Only legally married couples can file joint bankruptcy petitions.

On June 13, 2011 a California court ordered that a joint Chapter 13 case would not be dismissed for the sole reason of the debtors being a homosexual couple. 11 USC 302(a) permits a single petition for a debtor and such debtor's spouse.

The court stated:
"In this court's judgment, no legally married couple should be entitled to fewer bankruptcy rights than any other legally married couple."

The In re: Balas decision, signed by twenty judges (decisions are customarily signed by just one judge) makes it clear that in California's Central District there is little doubt about whether homosexual couples married under California law can file joint petitions for bankruptcy.

If you have entered into a homosexual marriage that was legal in the state in which you filed it and would like to consider your options in bankruptcy, please contact a Jacksonville Bankruptcy Lawyer or call (904) 685-1200 for a free initial consultation.

A finalized divorce may not be enough to protect you from marital debts. Just because a divorce decree states that your ex will "hold you harmless' from a creditor does not mean that the creditor can no longer attempt to collect from you.

The division of property in a divorce is called "property division". Often, one party gets an upside down house in exchange for not being 'liable' for a different debt. Each party is ordered to pay their allocated debts and to 'hold harmless' the other party. This order is enforceable in county court as a "Contempt Action" and can give such remedies as court fines, attorney's fees and even imprisonment, but it can't remove your name from that debt. Because your name is still on the debt, the creditor can attempt to collect from you if your ex stops paying. The most common ways to remove your name from a debt is to have the collateral refinanced or to remove your personal liability by bankrupting on the debt.

When the ex-spouse gets the home they often don't have sufficient income to refinance. They often didn't have sufficient income to refinance because they didn't have sufficient income to make the payments on their own. Eventually, they get to the point of foreclosure or bankruptcy- sometimes without the other party's knowledge. Many debtors don't get notice of their ex's non-payment until the house is in serious arrears. When this happens, they have the option of suing their ex for contempt, but even the threat of imprisonment will rarely solve the problem -you cannot get blood from a stone.

Because home mortgages often extend as long as thirty years, the risk of liability continues for a long duration. In these cases, a house left unpaid for decades after a divorce can still fall upon the credit of an otherwise innocent ex who simply wishes to move on with their life. When this happens the only ways to avoid foreclosure are often paying off the note in full or bankruptcy.

Continue reading "An Ex-spouse Filing Bankruptcy May Effect You." »

Many people wonder what effect their spouse's prior bankruptcy will have on them and their relationship. First and foremost it is important to remember that these people are not, "deadbeats". Unexpected illnesses, job losses and underwater mortgages are all common reasons for filing bankruptcy. With 46% of Jacksonville homes under water, there are at least half a million Jacksonville residents with a good reason to file bankruptcy.

It is also important to consider how long ago their bankruptcy filing occurred. A bankruptcy stays on a debtor's credit history for ten years, but is only supposed to have an effect for seven. If your fiancé filed for bankruptcy several years ago, the bankruptcy may have no effect on your new credit relationship at all. However, if the bankruptcy was recent, it is possible that it could effect your ability to purchase a home as a couple with a prime rate mortgage.

While it's not something most people want to think about, your spouse's prior bankruptcy may limit your own options were you needing to file a bankruptcy. 11 U.S.C. 727 prevents a debtor from getting a discharge in Chapter 7 if they had a previous discharge in a case that commenced within eight years of filing the new petition. Or, in the case of Chapter 13, a case that commenced six years before the date of filing the new petition unless they paid 100% of the claims in the old case or paid at least 70% of the claims in that case and proposed it in good faith with best efforts.

What does this really mean? You won't lose your independent right to file bankruptcy by virtue of your spouse's prior filing, but if you think there's a remote chance that you might need to file bankruptcy with your spouse within eight years of the end of their prior bankruptcy, call a consumer bankruptcy attorney and see what the facts are. It's possible that your prior spouse filed a case, but didn't get a discharge. If that's the case, it may not have an effect on either of your rights in bankruptcy going forward. If you'd like to speak with me about this issue or would like to schedule an appointment to review your options in bankruptcy, please call us at 904-685-1200.