Wednesday, August 31, 2011

Advantages and Disadvantages of Filing Bankruptcy -- Disadvantage: Part 5

This is part 5 of the 5 part series on disadvantages of filing bankruptcy, which is following a 5 part series on the advantages of filing.

Failure To Provide Ultimate Relief. Some people file bankruptcy thinking that it is the ultimate relief, and then everyone lives happily ever after. This is not always the case. Many people end up filing bankruptcy again at some point. 

So, what does bankruptcy not provide? First, if the major source of the underlying problem is not addressed, then bankruptcy may be of little benefit. This could be in the form of needing to discharge debts that are simply not dischargeable. For example, if a debtor was in an accident, found at fault, found guilty of DUI, and restitution is owed, the restitution may not be dischargeable, and if this is a major source of the debtor's financial troubles, bankruptcy may not help.

Another underlying problem could be spending habits. The filing of a bankruptcy does not necessarily change spending habits, thereby placing a debtor in a position of getting into financial trouble again. The current bankruptcy code, which underwent its latest major revision in 2005, attempts to resolve this problem by requiring debtors to participate in a personal financial management class prior to receiving a discharge. It is still too early to evaluate whether or not these classes have resulted in any significant positive impact.

Some debtor also seek relief, not realizing they may have non-exempt valuable assets. That is to say, generally, the bankruptcy code does not provide for a debtor keeping non-exempt assets, while discharging their debts. Debtors filing a pro se Chapter 7 bankruptcy are often surprised when they find out some of their assets have become property of their bankruptcy estate, and the trustee plan to liquidate the assets for the benefit of creditors. Therefore, if the relief sought was to keep assets while discharging debts, such a debtor will not realize the relief he or she sought.

It is important that prior to filing bankruptcy, to realize the bankruptcy process, with the code, rules, and case law can be complex. People filing without a firm understanding of the legalities of filing bankruptcy, or without the use of a competent local bankruptcy attorney, could easily run into unexpected consequences.

Tuesday, August 30, 2011

Advantages and Disadvantages of Filing Bankruptcy -- Disadvantage: Part 4

Cost. Yes, you need to have money in order to file bankruptcy. It starts with a filing fee that ranges between $274 and $299, the cost of credit counseling, and the cost of the personal financial management class. For people that are poor, these fees may be reduced or waived. Then there is the attendance requirement at the Meeting of Creditors; unless you are walking distance from where this meeting takes place, you need to figure in the cost of transportation. Other cost you also need to consider are cost for amending certain schedules after the case is filed, legal fees if you are represented by an attorney, the cost of conversion should you need to change to a different chapter of bankruptcy, copying fees, and postage. These fees should be weighed, as in a cost/benefit analysis, to see if you should file bankruptcy or not. In the case of only a few small debts, you might find it more advantageous to simply pay your creditors.

Monday, August 29, 2011

Useful Links for Bankruptcy

CLERK -- Bankruptcy Court - Jacksonville Division

Real Property Search
Real Property

    Public Records

    Vehicle Valuation


    Bankruptcy Organizations
      Paycheck Calculator
      Creditor Lookup
       Lawyers For Bankruptcy Advise

            Advantages and Disadvantages of Filing Bankruptcy -- Disadvantages: Part 3

            Discrimination. Discrimination is a realistic concern for those that have filed bankruptcy. In fact, it is also a concern address by congress in the passing of the bankruptcy code. This part of the code is divided into two parts that, for the most part, mirror each other, with few exceptions; one part addresses the government, and the other addresses non-governmental.

            A recent court case highlighted the difference between the two section of the law. Generally, private employers may discriminate against the hiring of individuals that have filed bankruptcy, whereas governmental employers may not. Yes, that's the only major difference in the two sections. Neither allow the discrimination of individuals by employers, that is, employees may not be discriminated against by their employers.

            I have not run across this as being a major issue, though there are several court cases that address these issues. In my experience, there is a far greater likelihood of one being discriminated against because of excessive debts, than the filing of bankruptcy. In fact, some people have obtained a discharge in bankruptcy in order to be eligible to maintain their employment, or receive security clearances.

            If you are concerned about discrimination, you should contact a local bankruptcy attorney and discuss this with him or her, as this can only be properly addressed on a case-by-case basis.

            Sunday, August 28, 2011

            Advantages and Disadvantages of Filing Bankruptcy -- Disadvantages: Part 2

            Credit and Reputation Concerns. Although on the surface they appear to be very collateral concerns, the filling of bankruptcy will effect both ones credit and reputation. The extent to which these will be effected differs on a case by case basis. First, lets look at credit. The filing of bankruptcy will be reported by credit reporting agencies, under current law, for 10 years. Anytime one pulls your credit report during the time it is reported, the bankruptcy will be disclosed. The effects of this could actually, theoretically, last longer than 10 years, if you have need to transacting business with someone that had previously pulled your credit report during that 10 year period. 

            This does not mean you can not rebuild your credit prior to waiting 10 years; such rumors are not true. In fact, you can start rebuilding your credit immediately after your bankruptcy. In many cases credit is actually improved upon completion of the bankruptcy, because debts are discharged; the person obtains a fresh or new start. Bankruptcy is only one of many factors creditors consider when choosing whether or not to extend credit.

            As for reputation, this is more of a concern some than for others. Well known individuals that file bankruptcy usually end up in the news. But for the vast majority of people that file bankruptcy, only your creditors have any reason to know that you have filed. This, of course, is on a case-by-case basis, as individuals that live in smaller communities may be affected differently. In that case, one must weigh the advantages of filing bankruptcy with the possible impact on ones reputation. Always remember, that even if a creditor is discharged in bankruptcy, the debtor may voluntarily repay a creditor, at the debtors discretion.

            Saturday, August 27, 2011

            Advantages and Disadvatages of Filing Bankruptcy - Disadvantages: Part 1

            While people many people, including attorneys, may concentrate on the positive aspects of filing bankruptcy, there are some important disadvantages that need to be taken into consideration, on a case by case basis, before filing. This is the first in a 5 part series of a few of those considerations. Before filing, you should consult with a local bankruptcy attorney.

            Property At Risk Of Being Lost. While it is true people file bankruptcy to discharge debts, congress never intended for people to be able to keep a lot of stuff while discharge debts. So, what assets can a debtor keep? This will vary somewhat based on what chapter of bankruptcy you are filing, and what state and district you are filing in. Most states have elected to use state exemption laws to determine what one is able to keep, while other states have not elected such laws and use the Federal exemptions. And, if the paperwork you file with the court is not properly filled out, you can loose assets.

            If you file a Chapter 7 bankruptcy and have more assets than what the exemption laws allow, then the non-exempt assets will either be administered or abandoned by the Trustee. What does this mean? Well, if the asset is administered by the trustee, it will most likely be sold, while property abandoned by the Trustee will simply be kept by the debtor. When the property is sold, often the buyer is the debtor. That's right, the debtor simply repurchases his or her property in order to retain ownership of their assets. In other cases, the assets are sold to a third party. The trustee then takes the proceeds, pays expenses of administering the estate and distributes the rest for the benefit of creditors.

            So, what happens if there is too much stuff to repurchase, but want to keep everything? In this case, often people consider a Chapter 13 bankruptcy. They generally take 3 to 5 years to complete, and in the long run can cost more out of the debtors pocket, but the amount of payments to the trustee to repurchase assets in a Chapter 7 can be spread over 3 to 5 years. So, why not just do a Chapter 13? Well, the debtor also has to pay a trustee's fee, attorney fees are usually higher, and you are in the bankruptcy for a much longer period of time.

            Friday, August 26, 2011

            Advantages and Disadvatages of Filing Bankruptcy - Advantages: Part 5

            This is the last of a 5 part series on advantages of filing bankruptcy.  This will be followed by a 5 part series on the disadvantages of filing bankruptcy.

            Other Protections Provided For Through Bankruptcy. While some of the direct advantages have been mentioned in the previous entries, there are some indirect benefits associated with the completion of a bankruptcy, and the entry of a discharge order by the court. They are too numerous to mention all of them, but they include being able to get a driver license back in good standing, where it may have been suspended because of financial responsibility (a Florida term); debt associated with a motor vehicle accident, and liability associated with being a co-signer on a note or loan. If the debts were not discharged in bankruptcy, they could lead to problems that could include things such as employment, security clearances, inability to pay domestic support obligations, and medical bills associated with the stress of having outstanding debts.

            Fortunately, the bankruptcy code also protects employed individuals from being discriminated against by their employer because of filing bankruptcy.

            Thursday, August 25, 2011

            Advantages and Disadvatages of Filing Bankruptcy - Advantages: Part 4

            This is part 4 of a 5 part series on the advantages of filling bankruptcy.  This 5 part series will be followed by a multi part series on the disadvantages of filing bankruptcy.

            Stay Relief.  When you file your bankruptcy petition, there is something called an automatic stay that is put in place.  This is often referred to as stay relief, or simply a stay. The stay prohibits collection efforts from commencing or continuing, and tends to be liberally construed by some Courts.  It stops garnishment of wages and financial account, phone calls and letters from anyone attempting to collect, foreclosures, evictions (if an eviction order has not already been issued by the court), repossessions, and the shutting off or disconnecting of utilities.  Some collection efforts will be temporarily suspended, while others will cease permanently.  In fact, you may stop receiving bills for payments on things you intend to keep paying, like a mortgage payment on a house you intend to keep.  You may still receive a notice from time to time as to the balance of an account, or general actions concerning accounts within an institution, and usually these notices will have a clear disclosure printed within the materials stating it is for informational purposes only. 

            Creditors or collection agencies who violate the automatic stay may be subject to being found in contempt to court, which could lead to damages and other penalties the violating party would have to pay.  For people experiencing stress from the continuous collection efforts of debt collectors and creditors, the stay provides much needed relief.

            Wednesday, August 24, 2011

            Advantages and Disadvatages of Filing Bankruptcy - Advantages: Part 3

            Eliminating or Modifying Secured Debts. As you already know, many people file bankruptcy to eliminate unsecured debts. But what about secured debts? Well, secured creditors normally retain a lien on secured property even after the discharge is entered by the Court. However, the Bankruptcy Code provides for ways handle secured creditors.

            In a Chapter 7 bankruptcy, secured property may be surrendered, reaffirmed, or redeemed. If surrendered during the bankruptcy, then the debtor usually does not owe a deficiency balance. If reaffirmed, you would still have to pay for the item as though you had not filed bankruptcy, except you now, after filing bankruptcy, would have to wait a period of time before being able to file again. And if you reaffirm, you are paying the creditor in one lump sum the current value of the secured item.

            In a Chapter 13 bankruptcy, many secured liens may be able to be modified or eliminated, especially in the case of a lien being an impairment to exemptions. In a Chapter 13, the payments on the secured items could be lowered, and if there is any money in arrears, it can be paid during the bankruptcy so at the end of the bankruptcy, you would be current on the payments. This could allow you to keep secured property, such as a car, house, boat, furniture, or jewelry, that would otherwise be lost to the creditor.

            The options available will vary somewhat on a case by case basis, and if you have any questions regarding the treatment of specific secured property in your case, you should seek the advise of a local lawyer that files bankruptcies for his or her clients in your area.

            Tuesday, August 23, 2011

            Advantages and Disadvantages of Filing Bankruptcy - Advantages: Part 2

            The filing of bankruptcy has its advantages and disadvantages. This is the second part of a 5 part series on the advantages of filing filing bankruptcy.
            Protecting Assets from Legal Process. Bankruptcy provides protections for many of one's assets from garnishment and initiation or continuation of collection efforts. The result would be having your checking account, savings account, automobile, and all other assets protected from collection efforts, such as garnishment, for debts you owe prior to the filing of the bankruptcy.
            The amount of assets that can be protected will vary from state to state, depending on the laws enacted within that particular state. For example, in Florida, homestead has an unlimited exemption, whereas most states have a limited homestead exemption, however, personal property may be somewhat limited, depending on the circumstances of that particular case. But in either case, bankruptcy provides the advantage of only having to claim the exemption one time, instead of having to repeatedly apply exemptions in response to collection efforts.

            Also, by having bankruptcy serving to protect collection efforts, such as garnishment, it can also have the indirect effect of protecting ones employment.  If you are considering bankruptcy, you should seek the advise of a local bankruptcy attorney in your area.

            Monday, August 22, 2011

            Bankruptcy Advantages and Disadvantages - Filing Advantage 1 of 5

            The filing of bankruptcy has its advantages and disadvantages. This is the first part of a 5 part series on the advantages of filing filing bankruptcy, which will be further followed by a multiple part series on the disadvantages of filing bankruptcy.

            Most Debts are Discharged. Usually, the primary goal of filing a Chapter 7 bankruptcy is to have unsecured debts discharged. Unsecured debts are usually in the form of credit card accounts, medical bills, and signature loans, though there are numerous forms of unsecured debts. Obtaining the discharge in the bankruptcy eliminates these debts from creditors ever being able to collect on them.

            As for secured debts, they may be able to be paid off at a reduced rate through a Chapter 13 bankruptcy; in the case of a second mortgage on homestead property, if the amount owed on the first mortgage exceeds the value of property, there is a process whereby not only will the second lien be discharged, but can be removed as a lien on the property. This may sound odd, but normally secured property continues to have a lien attached to it, although the debt against the debtor has been discharged.

            This provides for a quick relief from the stress and anxiety associated with having overly burdensome accounts with creditors, and harassing collection calls and letters, which can lead to health problems, mental stress, and marital stress.

            Sunday, August 21, 2011

            Assistant AG Resigns

            An attorney, Andrew Bennett Spark, working in the Tampa Economic Crimes Division of the Attorney General's office unexpectedly resigned after writing a 16 page letter criticizing the department.   His division is responsible for, among other things, prosecuting fraudulent activities of foreclosure mills.  His entire 16 page letter is available by clicking on the following link:

            Based on this letter, it will be interesting to see if the Tampa office of the Attorney General is investigated.  I would hope that they would at least conduct their own internal investigation.

            Saturday, August 20, 2011

            Filing a Chapter 7 - What To Expect

            A Chapter 7 bankruptcy is know as a liquidation bankruptcy, or a start over again bankruptcy. It is designed to provide individuals with a fresh start. The filing of a Chapter 7 involves the filing of a petition, together with other required documents, with the Clerk of the Bankruptcy Court. Thereafter, the case is assigned to a bankruptcy judge and a trustee, and a date is set for the Meeting of Creditors. A notice is sent out to all interested parties in the case letting them know your case has commenced. The notice provides some general information about your case, such as the date of the commencement of your bankruptcy case, the case number, name and address of the Clerk of Court, the name of the judge, the name and address of the trustee assigned to your case, and the date of your 341 meeting, otherwise known as the Meeting of Creditors.

            After the case is filed, you will usually receive correspondence from the trustee assigned to your case asking for certain documents, and usually giving directions for contacting the trustee prior to the meeting of creditors. This scheduled conversation with the trustee in designed to make the scheduled meeting of creditors more efficient. Typically, cases filed in Jacksonville, Florida, where I practice, will have the 341 meeting scheduled between 30 and 40 days after the case is filed. The name of this meeting is misleading, as creditors rarely show up, although they certainly can. It is usually a meeting with the trustee, where at the meeting you are placed under oath and asked questions related to the documents you filed with the court, and documents provided to the Trustee.

            The role of the trustee is to oversee the case, and determine if there are any non-exempt assets that may be available for distribution to creditors. Although most cases do not have any assets, it is not uncommon for a bankruptcy estate to have assets which are liquidated. The good news is, usually these assets are simply sold back to the debtor who filed the bankruptcy.

            Between 3 and 4 months after the 341 meeting, baring anything unusual happening, you will receive a discharge order from the Court. This discharge is the magic paper you are looking for; it prevents discharged creditors from being able to collect any money from you.

            While the actual filing of a bankruptcy is a little more complicated than this, this provides a general overview of the Chapter 7 bankruptcy process. For a more detailed explanation of how this process works, and what to expect, you should get a consultation from a bankruptcy attorney in your area. Most attorneys that assist people with the filing of bankruptcy provide free consultations.

            Friday, August 19, 2011

            Can a Chapter 7 Trustee Force You Out Of Your Home?

            There are numerous properties in Florida that have market values less than their respective mortgages, otherwise know has being "upside down" or having "negative equity". In this case, when one files a Chapter 7 bankruptcy, the filer has the option of not claiming the property as homestead, and taking an additional $4,000 wild card personal property exemption pursuant to Florida Statute Section 222.25(4).

            Recently a debtor filed a Chapter 7 bankruptcy in Jacksonville, failed to exempt the home as being homestead property, and took the additional wild card exemption. The Chapter 7 Trustee then sent a letter to the debtor telling him he had to move out of the house!  This was an apparent attempt to coerce the filer into claiming the homestead exemption, thereby increasing the value of the bankruptcy estate for the Trustee to administer by $4,000.

            Fortunately, this particular debtor hired a bankruptcy attorney to fight the Trustee in Court.  The bankruptcy code has provisions for the trustee to abandon or administer assets, however, in this case, the trustee did not indicate he would do either.  The is also a provision in the bankruptcy code for cooperating with the Trustee.  However, if the debtor were to just abandon the property, as the trustee's letter suggest, it could expose the debtor liability pursuant to city ordinance. The abandoning of upside down property in Jacksonville has been a problem, resulting in some recently passed city ordinances. 

            The debtor's attorney filed a motion with the Court asking the Court for force the trustee to either administer or abandon the real property.  The Court agreed, and the Trustee was given time within which to decide whether the property would be abandoned or administered.

            The trustee also has a duty to maximize the bankruptcy estate for creditors. In administering the estate, the Trustee would be responsible for expenses associated with maintaining the property and selling the property. Which means, if the Trustee administers the property, he had better have someone willing to purchase it for more than what is owed on the property, which is above market, or the Trustee must abandon the property.

            Thursday, August 18, 2011

            Florida: A Top 10 Foreclosure State

            According to RealtyTrac, a California-based firm that tracks foreclosures, Florida had one of the highest rates of foreclosure in June, with foreclosure filings being up 4 percent nationally from May to June. Nationally, 1 in every 611 housing units received a foreclosure filing in July. So, how did they break down? How did Florida stack up? Let's take a look.

            1) Nevada: 1 in every 114 housing units; average sale price: $119,414.
            2) Arizona: 1 in every 205 housing units; average sale price: $126,960.
            3) California: 1 in every 248 housing units; average sale price: $242,444.
            4) Utah: 1 in every 294 housing units; average sale price: $242,444.
            5) Idaho: 1 in every 344 housing units; average sale price: $145,441.
            6) Michigan: 1 in every 352 housing units; average sale price: $67,165.
            7) Florida: 1 in every 372 housing units; average sale price: $177,569.
            8) Georgia: 1 in every 418 housing units; average sale price $124,214.
            9) Illinois: 1 in every 480 housing units; average sale price: $128,899.
            10) Colorado: 1 in every 497 housing units; average sale price: $164,269.

            So are our courts swamped with foreclosures?  Absolutely.  Who would have ever guessed that Utah and Idaho would have a higher foreclosure filing rate per capita than Florida.

            Wednesday, August 17, 2011

            National Association of Consumer Bankruptcy Attorneys Responds to Property Dump Proposal

            The National Association of Consumer Bankruptcy Attorneys issued a response to a plan by the Obama administration to sell abandoned and vacant properties owned by Fannie Mae, Freddie Mac, and the Federal Housing Administration. According to the press release, the association recognizes there may be a need or value in reducing their inventory of properties, however, they should be concentrating on preventing the foreclosures to begin with. Then the article sites the failed HAMP plan, and then ask them to please consider another alternative or plan to foreclosure.

            I believe this misses the mark. Our governmental agencies want to dispose of vacant and abandoned houses in their inventory. While I agree with the NACBA in that we should be concentrating on how to keep people in their homes, I think that could be better addressed in a different forum. Whereas, here, the government wants to dump properties into a real estate market that is moving at a snail's pace. I believe the dumping of properties into the market would further depress an already depressed market, further driving down the value of peoples homes.

            There again, as stated, I do not disagree with the cleaning of governmental inventories, but perhaps it could be done in such a was as to not further depress the market. One suggestion would be to place the property on the market at 105% of market price, pursuant to an appraisal done within 120 days of placing it on the market. If the property does not sell within a specific number of days, lets say 180 days, then any structures on the property would be removed, and the property would be sold as vacant land for development.

            Absurd, I think not. Why place the property for sale above market price? Well, the alternative is to either further depress the market, or create more competition in a market that is already saturated with inventory, or both. And by raising the structures on the property, the undesirable properties would have a chance for new life, to help stimulate the economy, and stop the continued decline of real estate values.

            So, by this logic, a desirable property would sell with the possibility of stimulating property values, and if it doesn't sell, a plan is in place to allow breathing room for improvement, and stimulation of real estate values. While I will admit this plan is far from perfect, it is a huge improvement to simply dumping properties into a bad market.

            Tuesday, August 16, 2011

            Bankruptcy Filings Down for First Half of 2011

            Bankruptcies during the first half of 2011 dropped compared to the same time last year by approximately 8%. During the first half of 2010, 770,117 were filed, compared to the 709,303 filed during the first have of 2011. Also, according to the National Bankruptcy Research Center, the American Bankruptcy Institute reported 11,768 bankruptcies were filed in 2011 during the month of June. This is approximately a 5% drop from the same month of 2010.

            While some I'm sure are jumping to the conclusion that this is a further sign of a recovering economy, this was reported prior to the recent downgrading of U.S. Treasuries by the S&P, which has contributed to violent swings in the stock market. Just as more and more people are starting to feel like they can finally see themselves situated in a posture of being able to pick themselves up slowly out of these times of heavy unemployment, Congress starts playing games with the economy. The President is blaming Congress, and Congress is blaming each other.

            On a positive side, gas prices are slowly moving down, as the price of oil is down. Hopefully this trend will continue to allow people to have enough disposable income to get the economy moving again.

            While bankruptcy filing are down, there are still many people needing relief, and seeking bankruptcy as a solution. Consumers continue to look at Chapter 7 and Chapter 13 bankruptcies as vehicles to allow them to tread water again. We will have to wait and see if this trend of lower bankruptcy filings continues. If you are thinking of filing bankruptcy, you should call a local bankruptcy attorney in your area for a consultation.

            Monday, August 15, 2011

            Number 1 Reason For Filing Bankruptcy, of Top 10

            Wages About To Be Garnished, or Are Already Being Garnished.  When you think of Garnish, one normally thinks about taking something plan, sprucing it up, and making it delectable. In fact, a meal in a fancy restaurant isn't so fancy without being garnished with exotic flowers, artfully designed vegetables and fruits, and perhaps a bit shaved or grated item with some color; something to give it that wow factor.

            But when one is in financial trouble, you won't be asking for "a little garnish please", as the meaning of garnish has a different meaning altogether. It means taking of something that belongs to you. It could be an item, such as a vehicle or jewelry, but most often, unfortunately, it probably refers to your bank account or wages. This is something that is guaranteed to get your attention faster than a fancy meal.

            Pursuant to some federal laws, ones wages cannot be garnished by more than 25%, and that does not mean ones wages will be garnished for that amount. Is bankruptcy ever an option when one is looking at the possibility of having wages garnished? Yes. Then, is it also an option when one is already having their wages garnished? Absolutely. Will it always help? No, not necessarily.

            While bankruptcy is a viable option to having wages garnished in most situations, there are exceptions to this rule. For example, if your wages are being garnished because of being behind on child support, then bankruptcy might not directly help you, but could still eliminate other debts to make the paying of child support payments manageable. There are several exceptions to this general rule, and if you are having wages garnished, or anticipate having them garnished, you should call a local bankruptcy attorney to discern to what extent bankruptcy may help you.

            Wednesday, August 10, 2011

            Attorney for Filing Bankruptcy

            Are you looking for an attorney for filing bankruptcy?  Well, there are several ways to find one.  Of course, you can search the internet, or the local phone book.  That is a start, in that you can retrieve names and phone numbers, and see who is within reasonable driving distance. 

            Next, you should see how long they have been doing bankruptcies.  There are a lot of attorneys that jumped into doing bankruptcies when the real estate market went south. 

            Next, you may want to inquire as to what organizations they are a member of.  Some notable organizations are the National Association of Consumer Bankruptcy Attorneys that represent consumer debtors, and the American Bankruptcy Institute, that is geared towards business bankruptcies.  There may also be local bankruptcy organizations within your area.  For example, in Jacksonville, Florida, where I am from and practice, there is the Jacksonville Bankruptcy Bar Association.  Membership in these organizations reflects ones commitment to professionalism and education when it comes to bankruptcy matters.

            I hope this is of some help in assisting you in locating a competent bankruptcy attorney in your area.

            Top 10 Reason for Filing Bankruptcy – #2

            Frozen Checking Account. I'm sure you've heard the phrase that goes something like, “The most fun you can legally have....” when someone is trying to get your attention to sell you something. Well, I cannot think of anything that can, legally, get ones attention faster than a frozen checking account. And fun? I don't think so. If your checking account has been frozen, there is a good chance someone is trying to garnish the account. So, the first thing you do is call your friendly attorney, and try to understand how anyone could freeze your account without notifying you first. Obviously, if the law mandated you be notified first, freezing an account would not mean much, as there wouldn't be any money in the account by the time the creditor got to it.

            Problems? You bet. Not only can you no get to your money, any checks that are outstanding will probably bounce. Then you have an whole new problem. In Florida, the act of bouncing a check can lead to criminal prosecution problems.

            Bankruptcy, how can it help? Under Section 362 of the Bankruptcy Code, one is prohibited from commencing or continuing collection efforts upon the filing of your bankruptcy petition. This means the plaintiff in the case which has garnished your account will probably have to release the funds back to you. Please note, this is a general rule, and does not apply in all situations. To find out more about this as it applies to your particular situation, please contact your local bankruptcy attorney.

            Tuesday, August 9, 2011

            Bankruptcy – Top 10 Reasons To File – #3

            Debts you need relief from are primarily unsecured debts. While there are indeed many reasons why people file bankruptcy, I believe you will find a great majority of the bankruptcies filed are for the purpose of discharging unsecured debts, such as credit cards and medical bills. This has been a primary reason for filing bankruptcy sense the beginning of bankruptcies as we know them today, which are a result of our Constitution wherein Congress is allowed to enact “uniform laws on the subject of bankruptcies throughout theUnited States.”

            Unsecured debts may also include debts that were, at one time, secured, but now have become unsecured. How can this happen? It could be you no longer have the item. For example, if you purchased furniture with an agreement to start paying in 12 months, but after 10 months of abuse by kids and pets the furniture fell apart, or for some other reason, became totally unusable, usually one would toss it in the trash. The furniture is no longer furniture, but pieces of wood. The loan is still there, but it is now unsecured because the secured interest is no longer there. This loan would be dischargeable as an unsecured loan.

            Another example, through a Chapter 13 bankruptcy, could be a second mortgage, and no, the property does not have to fall apart. The way this works is the property has 2 mortgages. The property value has diminished to where the property is worth less than the principle balance of the first mortgage. In this case, there is no property value that can be attributed to the second mortgage, and it becomes unsecured. The means of discharging each of the forgoing examples is very different from the other, but the logic of having an unsecured debt discharged is the same.

            Monday, August 8, 2011

            Court Website Available in Spanish

            The court's website for the Middle District of Florida is full of a wealth of information.  It includes links to things that may otherwise be hard to find, like the local rules of the bankruptcy court.  The Court now has the site also available in Spanish at  Hopefully the Latino community  will find it to be a very useful tool.

            Top 10 Reason To File Bankruptcy – #4

            Total debt is more than you can repay even over a long period of time.  This reason, like many of the others, may sound obvious. Of course people file bankruptcy that have too much debt. But the leaves the question of, how much debt is too much debt? The bankruptcy code does a very poor job of addressing this issue. However, it does address abuse. Should the court find that your seeking relief from having to pay creditors is abusive, then you may be in a position of either having your case dismissed, or the Court refusing to enter a discharge; the discharge is an order from the Court that says you do no longer owe any money on your dischargeable debts.

            As a general rule, if based on your current and projected income you will be able to repay creditors a significant portion of the amount due over 3 to 5 years, the Court may require you to enter into a Chapter 13, or repayment plan, bankruptcy, and not allow the debts discharged in a Chapter 7. However, if the debt is such that you would not be able to pay the debts over 3 to 5 years, then you may be in a position of filing bankruptcy.

            What's strange about this rule is, it seems to run against public policy. A debtor is actually being rewarded for having too much debt. There are court cases that recognize this, and it is in keeping with the current bankruptcy code. Of course, this does not mean one can simply go out and accumulate a lot of debt for the purpose of filing bankruptcy; this runs into another problem that falls under the category of fraud. Yes, the bankruptcy code does definitely address fraud.

            Sunday, August 7, 2011

            Top 10 Reason To File Bankruptcy – #5

            Harassment by Creditors and Debt Collectors at Home and at Work. This might sound a little obvious, but more often than might believe, there are people that end up filing bankruptcy simply because of the stress and depression that is associated with the intimidating collection tactics that are being used by creditors and debt collectors. The stress leads to physical and emotional problems that eventually become unbearable. If fact, the actual amount of the debt might be manageable if the person doing the collecting would agree to work out an amicable payment arrangement with their customer.

            Unfortunately, more often than not, the person making the calls has no authority to arrange any kind of agreement over the phone. In fact, the caller will pretty much agree to anything, verbally, over the phone, to get you to send them some money. Somehow, the agreement fails to get recorded into their computer, and the company will later deny any such agreement existed.  At time, the debtor might have a cause of action against the debt collector under the Fair Debt Collection Practices Act.  The only problem is, at times, when a person comes in to see me, they are so emotionally torn up, the last thing they want to do is be involved in a law suit; they just want to be left alone.

            In fact, I know of a case where the company agreed to a payment arrangement and confirmed it in writing. The money was sent to the creditor as agreed, only to be returned. The debt was transferred to a third party, and they sued. So much for agreements.

            It's harassment, such as this, that eventually leads to one having a nervous breakdown, or filing bankruptcy. I take the position that it is the creditors and debt collectors that push people into filing bankruptcy, as they most probably would not have otherwise filed.

            Saturday, August 6, 2011

            Top 10 Reasons To File Bankruptcy – #6

            Threatened with a law suit, or a law suit pending against you.  As people start becoming late on paying their bills, and become overwhelmed with the idea that they will not be able to make all their payments timely, they usually find this becomes more than just a simple financial setback. It becomes emotionally draining, causing a great deal of stress. And then, as if things weren't already bad enough, creditors and collection companies start calling. Some can be nice, but some try to use intimidation to get you to send them some money. If you are behind on paying bills, then you know what I am talking about. This stress can create havoc in ones life, lead to depression and cause or contribute to other physical problems.

            As part of their intimidation tactics, sometimes they either mention sending the matter to their attorney, and sometimes they just flat out say they are going to sue you. This alone is usually enough to get one to think of various alternatives to providing debt relief. If this doesn't create enough intimidation, then receiving of the law suit usually is. Then, of course, there is the small percentage of people that wait until their bank accounts and wages are being garnished.

            Some people turn to organizations advertising debt consolidation before contacting an attorney, which usually, according to my clients, is a big mistake. The Federal Trade Commission has also commented on these organizations. You can see some of their comments by going to and scrolling down to “Debt Settlement Programs”.

            There are also companies, or organizations, that advertise credit repair. Unfortunately, depending on what the company is asking you to do, this can lead to some very problematic consequences. Again, the Federal Trade Commission has published a paper about companies offering credit repair. It can be found at If you have been the victim of one of these schemes, believe me, you are not alone.

            Fortunately, most people simply call for a free bankruptcy consultation, as they know it could be a big mistake hooking up with debt consolidators or credit repair businesses. My consultation includes a review of various alternatives, including bankruptcy.

            Friday, August 5, 2011

            Top 10 Reasons For Filing Bankruptcy - #7

            Taxes more than 3 years old. Filing bankruptcy is usually about becoming current on secured obligations while discharging dischargeable debts in a Chapter 13, to surrendering, redeeming, or reaffirming secured debts while discharging unsecured debts in a Chapter 7. So, the obvious question is, what is dischargeable?

            Normally, moneys due to a governmental agency, such as taxes, are still owed after your bankruptcy is over, or discharged. However, generally, if personal tax returns were properly and timely filed, but the taxes were not paid, and no provision was agreed to with the IRS for the payment of these taxes subsequent to the tax return being filed, then those taxes which became due at least 3 years prior to filing may be dischargeable through bankruptcy. In some cases, even though the debtor does not owe a significant amount of other debt, could amount to the reason for need to file. As stated, this is generally applicable, and if you think this might apply to you, you should seek the advise of a local bankruptcy attorney in your area.


            Thursday, August 4, 2011

            Top 10 Reasons For Filing Bankruptcy - #8

            Not much money or value in assets.  One of the relevant factors one must look at when contemplating bankruptcy is whether they have assets outside of a retirement plan, and if so, how are those asset situated. Ideally, the assets are exempt, or be in a posture to where they are not subject to administration by the trustee, and one could obtain debt relief while keeping their assets in tact. For example, you may have valuable property, like an antique light, that actually belongs to you and your wife, and because is was purchased by the two of you after you were married it is exempt as tenants by the entirety property; this presumes only one spouse is filing.

            So the assets are divided up, as to exempt assets and nonexempt assets. Based on the nonexempt assets, including money in savings (but not a retirement account), one may choose to have the benefit of the use of those assets prior to filing bankruptcy. As a general rule, individuals with nonexempt assets that are too high may choose to file a Chapter 13 bankruptcy instead of a Chapter 7.  And sometimes the level of ones assets might determine when, rather than if, they file bankruptcy.

            A detailed explanation of what assets are exempt or not exempt, and how they obtain that status, is far beyond the scope of this article, and you should seek the advise of a bankruptcy attorney in your area for legal advise.

            Wednesday, August 3, 2011

            NACBA Members Only Meeting

            The mid-year member only educational session of the National Association of Consumer Bankruptcy Attorneys is now open for registration through their web site.  The session is from October 28th through the 29th.  It is being held at the Broadmoor in Colorado Springs, CO.  There is also a train ride to Pikes Peak on the 27th for those that arrive early.

            The NACBA website is

            Top 10 Reasons For Filing Bankruptcy - #9

            Behind on secured payments. From time to time, there are some people get behind on payments on a mortgage payment, car payment, or some other secured item like furniture, computers, or jewelry. Eventually, they start receiving unwelcome letters from the creditors demanding they bring their account current. If they are unable to bring the account current, and have reason to believe the matter will be referred to an attorney for legal action, the debtor may choose to jump into a Chapter 13 bankruptcy to put a stop to any fees that may be associated with collection efforts, such as attorney fees, filing fees and process fees. If this involves real property, there may also be title search fees and inspection fees.

            The filing of the bankruptcy puts a stop to collection efforts, so if the matter has not already been sent to an attorney, the debt may be able to be paid off, or brought current, during the course of the Chapter 13 bankruptcy. If the debtor was to wait to file the bankruptcy until after collection efforts are initiated, it could be much more difficult to become current because of the extra fees would have to be paid back to the creditor; if the debts are too much to be repaid, then he or she may be looking at having to file a Chapter 7 bankruptcy and surrender the property.

            Tuesday, August 2, 2011

            Top 10 Reasons For Filing Bankruptcy - #10

            There are a variety of financial and emotional reasons people make the choice to file bankruptcy.  The choice is almost never an easy one.  Over the next several post, I will list what I determine as being the top 10 reasons people make the leap into asking for debt relief though our bankruptcy code.  They are not presented in any particular order, but as a matter of tradition, I will start with #10.

            #10: Anticipatory Repossession and Garnishment: You anticipate having property repossessed and the creditor will be, or is, trying to collect a deficiency balance against you.  This can present a very stressful situation, as it not only hits you directly in the pocket book, but through the garnishment process, your employer will ultimately find out you have had a repossession.  This, at a minimum, is embarrassing.  For some people, it could possibly lead to affecting your job.

            Bankruptcy provides for several protections.  One, if bankruptcy is filed prior to the creditor initiating garnishment proceedings, it is possible that your employer will never find out.  Also, if you are privately employed, as opposed to government, there are protections against your employer discriminating against you because of having filed bankruptcy.

            Monday, August 1, 2011

            Free Consultation - What to Bring

            Many attorneys offer free consultations regarding bankruptcy.  Why are they free?  Well, some attorneys are simply looking for business.  But more often, attorneys are offering this as a public service to people they know are financially strapped.

            You will also find that consultation range in time and amount of information the attorney is willing to disclose.  Some attorneys use this as a vehicle to get the client in the door and quote a price.  On the other end of the pendulum, there are attorneys that chose to educate and empower their potential client.  Of course, this also leads to clients having anywhere from a 10 minute consultation to an hour or longer consultation.

            What to bring to the consultation?  Well, as you might imagine, this will also vary according to the attorney.  I believe you will find, if you called all the bankruptcy attorneys in your area, some require no documents, some will require extensive documents, and everything in between. 

            For example, in my office, for an initial consultation, I am one that is in the in between category.  I ask that they have an understanding on generally how much is owed and to whom it is owed, how much has been received in gross income over the past 6 months, the balance owed on secured items and the approximate number of payment left if less that 5 years of payments are left, and the make, model, and number of miles on their vehicles.

            I do not require a lot of documents for an initial consultation.  The consultation is for the purpose of empowering the person by understanding where he or she stands as it relates to the bankruptcy code.  Before attending a bankruptcy consultation, contact the attorney's office and ask what documents you should bring with you.