Friday, July 31, 2020

Impound: Can I Get My Car Back If I File Bankruptcy?

The following question has been posed to the Supreme Court of the United States in City Of Chicago v. Robbin L.Fulton, et. al.:

Whether an entity that is passively retaining possession of property in which a bankruptcy estate has an interest has an affirmative obligation under the Bankruptcy Code’s automatic stay, 11 U.S.C § 362, to return that property to the debtor or trustee immediately up-on the filing of the bankruptcy petition.

A filed bankruptcy petition does 2 things. First, it creates a bankruptcy estate which holds all of the debtor's rights to property, or as the bankruptcy code states, all legal or equitable interests in property. Secondly, an automatic stay automatically operates to automatically stop creditors from collecting debts. including “any act … to exercise control over property of the estate,” referring to the bankruptcy estate. Because this automatically operates, it does not require a court order, and a creditor violating this stay provision may be subject to sanctions.

However, there is a competing code provision providing turnover of property of the bankruptcy estate requires a court order, and is not operate automatically like the automatic stay. An action call an adversarial proceeding has to be filed with the Court requesting the turnover of property. This allows for the debtor to provide a defense. The creditor can also be sanctioned, but only after the Court has ruled.

The Courts are divided. There are five courts of appeals—the Second, Seventh, Eighth, Ninth and Eleventh Circuits—align with the first position of the automatic stay imposing a duty to automatically turn over property, while the Tenth and District of Columbia align with the second position of requiring a court order.

In this case, the City of Chicago lawfully impounded a vehicle because of unpaid fines and penalties after the debtor was caught driving on a suspended license. When the city initially filed its claim, it was filed as unsecured, then amended after confirmation of the Chapter 13 Plan to reflect a secured claim.

So, the question before the Court is fairly straight forward; when must turnover occur? Immediately upon the filing of the bankruptcy petition, or after an adversarial proceeding?

Status of case: Currently awaiting the Court's decision as to whether to it will grant the petition for writ of certiorari.

Thursday, July 30, 2020

Bankruptcy Automatic Stay: Stopping Eviction, Foreclosure and Collection Efforts

As we near the end of the month of July, in the middle of this pandemic year of 2020, with Florida dividing their attention between the weather that comes with hurricane season and the spread in Covid 19, Florida is also looking at the possible end of the moratorium on foreclosures and evictions while waiting to see if congress passes another stimulus package. While people have been out of work, with mounting debt from credit cards, doctor's bills, utility bills, mortgage payments or rent, and vehicle payments, things are starting to come to a head.

While bankruptcy is something that should be turned to after exhausting other options, bankruptcy should be kept on your radar screen when considering alternatives. You can try to negotiate with creditors, in that many would prefer to limit the expenses of having to file a law suit to get their money or goods. If negotiation fails, the creditor may be open to allowing a third party to negotiate, such as a mediator. Of course, you have the trump card (no pun intended in this election year), the card of bankruptcy.

What can bankruptcy do? When one files a petition for bankruptcy, it causes certain provisions of the bankruptcy code to automatically kick in by operation of law. One very important provision is something called the “automatic stay” under 11 USC § 362 that provides for a “stay” regarding many things pertaining to the commencement or continuation of an action or proceeding against the debtor if it was for something that happened prior to filing bankruptcy.
If you have a question about whether or not this provision of the bankruptcy code will stop a proceeding in your particular case, you should seek the advise of a competent local bankruptcy attorney. Because of the pandemic, some attorneys, such as myself, are offering virtual consultations, either by phone or by internet video conferencing through platforms such as Google Team or Zoom.

If you think you may need the help of something like bankruptcy, you should seek the advise of a local bankruptcy attorney sooner rather than later. I am located in Middleburg, Florida, which is located in the Middle District of Florida; as such I am familiar with the local rules and traditions of the courts in my area.  Rules and traditions change from jurisdiction to jurisdiction, so you should seek the advise of a local bankruptcy attorney.  I highly recommend you DO NOT try to plan for filing bankruptcy based on intuition, that is, without speaking with a bankruptcy attorney. Bankruptcy is complicated and does not necessarily operate the way many people think it does. In preparing for bankruptcy, going at it alone could cause you to unintentionally put yourself into a position of either not being able to file bankruptcy, or running into unintended consequences from doing so. Bankruptcy usually takes planning, and when done properly, can be an uneventful experience.

Wednesday, July 29, 2020

Covid 19: Tsunami of Evictions, Foreclosures and Bankruptcies

WE ARE about to see a tsunami of bankruptcies and foreclosures as the result of Covid 19 pandemic.

Over the past couple of months, the legal profession throughout the United States has been forecasting a tsunami of clients running to attorneys.  One of the consequences of the current pandemic is very simple.  People are out of work, either temporarily or permanently, at least with their most recent employer.  And of many of the people back to work, there hours have been cut, as employer's businesses, especially in the hospitality industry, is only at a small percentage of what it should be.  This is a result of the pandemic as a substantial portion of the population is staying at home.

Lately the government, both nationally and locally, has taken action to provide relief to debtors and renters, to the dismay of mortgagees and landlords, in putting a moratorium on evictions and foreclosures.  So debtors out of work would not have to worry about being evicted or foreclosed on.  However, with a landlord not receiving rent, and being unable to evict a tenant, the landlord involuntarily gets behind on mortgage payments.

So, what is the result of the end of the moratorium on legal actions involving real property?  I predict we will see a mountain of foreclosures and bankruptcies like we have not seen in a long time.  The end of the moratorium will be the equivalent of opening the flood gates.  Numerous agencies will be hit hard, including those public and private agencies dealing with the homeless.

Of the limited avenues of relief available to debtors, the Federal Government has Title 11 of the United States Code available, more affectionately known as "Bankruptcy".  There are currently 4 chapters of bankruptcy under which an individual can file, known as a Chapter 7, 11, 12, and 13.  Each chapter is unique and serves several purposes.  While one can research these on their own, I recommend setting up a consultation with an local bankruptcy attorney to get advise concerning your particular situation, as the provisions of the bankruptcy code are complicated.  I also recommend setting an appointment sooner rather than later, as you may have trouble getting in to see someone if you wait too long.

Tuesday, June 30, 2020

Florida Moratorium On Foreclosures And Evictions To Expire J̶u̶l̶y̶ August 1, 2020

UPDATE:  The information is modified in respect to Governor DeSantis extending the moratorium on evictions and foreclosures until August 1, 2020.
Florida Gov. Ron DeSantis issued a moratorium on foreclosures and evictions through the end of May, 2020, which he extended to the end of June, 2020.  That means the moratorium is set to expire on July 1, 2020.

If you think you might be evicted or foreclosed upon, and you wish to remain in your property, it is important you seek the advise of competent legal council, and the sooner the better. Procrastination rarely, if ever, works in your favor. If you delay, you could lose rights you may otherwise have been able to use.

There may be defenses to eviction such as a violation of the Florida Landlord Tenant Act or breach of contract. There may be any host of defenses that could arise as in a foreclosure action I have previously listed in an earlier blog post. Should these not work out, a bankruptcy proceeding under Chapter 13, which is a form of reorganization, may be an alternative; however, this is usually a last case alternative for most.

Remember, from an attorney's perspective, every case is different. No 2 cases are the same. I would not recommend trying to self analyze your case unless you are well versed on the laws in these areas.
Seek out a competent attorney in your area that can give you legal advice. If you have a family attorney, this may be a good place to start. If you do not, ask friends and relatives for advise on finding a competent attorney. Remember, you are essentially looking for a good coach, meaning you may not want to pick your attorney based on price. I recommend picking your attorney based on experience and ability to handle these areas of the law.

Friday, May 8, 2020

Pandemic or Disaster: Opportunity for Scammers and Criminals

Why is this pandemic a ripe opportunity for scammers and criminals?

A: It has been widely publicized in the news lately to watch out for and increase in scams.  Criminals are very opportunistic. They see a vulnerable population and prey upon them. Scared people are looking for help.  People are trying to protect themselves.

People looking for medical attention and medical equipment may fall for a scam that falsely promises to deliver something that to meets a victim's needs.  They also may be unemployed and looking for work. There may be an extra level of desperation right now that may cause someone to make an emotional decision that they otherwise would not make.

You can learn more about scams to watch out for at

Wednesday, April 29, 2020

COVID 19 and Bankruptcy; TOOJAY'S

As has been recently mentioned upon many news outlets, it appears the filings of bankruptcies has begun in Florida.  As of today, TOOJAY'S has filed for protection under Chapter 11.  This is a restaurant chain in Florida with $50M to $100M in assets, and their bankruptcy filing is a direct effect of the COVID 19 order shutting down restaurants.  While many restaurants, including Toojay's, offer To Go meals during the crisis, they are still struggling financially.  Even after restaurants are allowed to reopen in Florida, distancing guidelines and limitations on the number of customers allowed within establishments will limit income, and because of the continued Coronavirus threat, it is not clear how fast customers will return to eating in restaurants.  Also, many people, especially people now out of work, no longer have the disposable income they had prior to the COVID 19 event, and will no longer have the luxury of being able to eat out.

Even with emergency funding through the SBA, it appears there may be a title wave of Chapter 11 filings that will emerge in the near future.  It also appears there may be a large uptick in the filing of Chapter 7 bankruptcy filings from people that have lost their jobs, and are either re-employed in a lower paying job or remain unemployed for an extended period of time.

UPDATE: Florida Governor DeSantis just announced the reopening of restaurants with outdoor seating while observing social distancing, and inside limiting to 25% capacity.  This is for the reopening scheduled for May 4, 2020.  CDC guideline must continued to be observed.

Monday, April 13, 2020

Garnishment Order and Your Stimulus Check
Many Americans are awaiting the deposit of their stimulus checks there are issued according to the CARES Act as a result of the economic devastation created by the pandemic, stay at home orders, and business closings.  According to news reports, these checks are paying people to stay at home.  Checks are also being sent out to those for which the government does not have account information.

Hopefully, I am telling you something you already know.  But guess who else knows this money will hit your account.  That is correct:  Creditors and Debt Collectors.  Hence, expect an increase in collection activity, and if your account is subject to a garnishment order, those trying to collect a debt may seek court order intervention to go after the funds.

If you are in a bankruptcy proceeding, chances are your account is safe from garnishment.  You should check with your bankruptcy attorney to insure there the account is protected under the bankruptcy code by something called an automatic stay.  If you don't know what an automatic stay is, you should ask your attorney.

If you are not in bankruptcy, you should contact a local attorney practicing in your state to find out how you can protect the funds.  In some states, your financial account may to subject to a continuing writ of garnishment, whereby there may be a freeze put on the funds until there is judicial intervention.  And trying to get before the Court could be a challenge in and of itself, and in many areas of the county, the judicial system, to some extent, is shut down.  You should also check to see if there is a order put in place within your jurisdiction temporarily putting a hold on garnishments because of the national emergency.

So, what happens if your account has been garnished?  That again depends on the state.  Different states have different exemptions.  So again, you should check with an attorney.  Some states have wild card exemptions, or exemptions related to a percentage of Federal funds received.  So the stimulus check may fall within this exemption amount.  Another possibility is to see if your state has an exemption for public assistance.

If you are the subject of a garnishment, whatever you do, do not delay in getting with an attorney as soon as you can, as any delay may negatively effect your rights to recovery of the funds.