J. Dinkins G. Grange is an attorney in Northeast Florida, helping his clients find solutions to their financial problems, which in some cases includes bankruptcy in some cases. This Blog contains general bankruptcy relevant information. His practice includes representing clients in various areas of civil litigation including Fair Debt Collection Practices Act, Chapter 7 and Chapter 13 bankruptcies, foreclosure defense and probate.
The letter “Y” is for Yacht.
That's right! Can I keep it? Am I off my rocker? After all, we are talking about
bankruptcy right? Well, some people, though admittedly not many,
have boats, or a yacht, that end up filing a personal bankruptcy.
One of the questions I ask at every
consultation is whether or not he or she has any cars, boats, planes,
or recreational vehicles. Most, including me at times, think this
question is overkill. However, being in Florida, it is not uncommon
for debtors to have boats.
trustee recently won court permission to hire real-estate and yacht
brokers to sell the assets of Frederick Darren Berg. Berg’s mansion
in Mercer Island, Wash., is listed at $8.2 million, according
to the Seattle Business Journal. Located on Lake Washington, the
5,400-square-foot house has four bedrooms, six baths, six fireplaces,
a hot tub, wine cellar, wet bar and two kitchens. That’s not to
mention its city and mountain views, boat dock and covered parking
for four vehicles.
Also up for
grabs is Berg’s 70-foot Holland yacht, the Screaming Cora,
which Berg says is worth $800,000. Sale proceeds will pay off Berg’s
creditors, including Sun Trust Bank (owed $797,450 on a boat loan
secured by the yacht) and Commerce Bank of Washington (which holds
the $4.38 million home mortgage). [emphasis added]
So, yes, there is at least this bankruptcy proceeding that
included a yacht. Normally, boats and planes in the name of the
debtor are not exempt from the bankruptcy process. The trustee would
take the asset and sell it (assuming there is equity in the asset) in
order to distribute the proceeds to creditors. Of course, in that case, the Trustee is thinking of Y as meaning "yield".
In Florida, however, if someone was living on there boat, or in
there RV, they might be able to claim the asset as their homestead
property. You see, the Florida Constitution provides for unlimited
homestead protection, and though there are not many cases involving
yachts being claimed as homestead property, there are a few cases
involving boats. Unfortunately, there is not a bright line as to
what can be claimed as homestead property, and what can not be
claimed as homestead, though the cases provide some very useful
insight into how the courts will rule.
So, if you have a yacht, or RV, that you live in, and are curious
about whether you will be able to keep the asset after filing
bankruptcy, you should consult with a bankruptcy attorney in your
Zero. When you think of zero, what do you think of? Is zero a verb, noun, or adjective?
Obviously, the word zero can mean many different things. However, when one is contemplating bankruptcy, the field of meanings may be narrowed a bit. It could refer to a zero balance in the bank, or perhaps the amount you are eligible to barrow, or the number of creditors continuing to extend credit.
What one may not think of is zero-rate, referring to a value added tax, or zero-sum whereby gains equal losses. If you were to ask a bankruptcy attorney what zero means, you might find he or she refers to a zero percent plan.
So, what is a zero percent plan?
The filing of a Chapter 13 bankruptcy includes something called a Plan. The Plan, once confirmed, or approved by the Bankruptcy Court, controls many aspects of the case as an agreement between creditors, debtors, and the Trustee assigned to your case. It will include how much money is to be paid to the bankruptcy estate, how often, and for how long; it also includes how those funds are to be distributed.
So, how does zero apply to the Plan? No, it does not mean No Plan. It refers to the amount, or percentage of the payments in the plan paid to unsecured creditors, such as credit cards and medical bills. So, for instance, in the typical Chapter 13 bankruptcy, priority creditors, like the IRS, the Trustee, your attorney, and support payments, would be paid first; then secured creditors, like mortgagees, would be paid. After they are paid, any additional disposable income is paid to unsecured creditors. When there is nothing left to pay unsecured creditors (or less than 1%), then you have what is sometimes referred to as a zero percent plan to unsecured creditors.
While some courts allow such treatment of unsecured creditors, others do not. If you are contemplating filing such a plan, you should check with a bankruptcy attorney in your area to see if this is permitted within the division you are filing in.
Most bankruptcy continuing education
classes list recent cases, including those in which parties to the
case may have done something wrong. Of course, some of the
information we are inundated with sticks, while other information
needs to be reviewed later. I recently ran across an email with a
link to a video. It's only about 7 minutes long, and believe its
entertainment value exceeds its educational value. The link to the
video is http://www.dailymotion.com/video/xmq5n7_vts-01-1_music
Hope you enjoy it. If you run across
other bankruptcy, or trustee, videos you consider a “must see”,
please mention them in the comment section below.
New Forms. That's right; as of December 1, 2011, Rule 3001(c)
requires additional information be included in the filing of a proof
of claim. More specifically, if the secured property is the debtor's
principal residence, an Official Form must be attached to the Proof
Of Claim. Additionally, if the claim includes an escrow account,
then an escrow account statement, as of the date of the filing of the
petition, must be attached.
A failure to include the information
has remedies under 3001(D), which states:
If the holder of a claim fails to provide any information required by
this subdivision (c), the court may, after notice and hearing, take
either or both of the following actions:
(i) preclude the holder from
presenting the omitted information, in any form, as evidence in any
contested matter or adversary proceeding in the case, unless the
court determines that the failure was substantially justified or is
(ii) award other appropriate relief, including
reasonable expenses and attorney's fees caused by the failure. [emphasis added]
So, according to the rule, the remedies are at the Court's discretion.
New Rule 3002.1(b) (effective as of
December 1, 2011), deals with payment changes on claims that have the
debtor's principal residence as a security interest in Chapter 13
cases. The change must be served no later than 21 days before the
new payment is due. However, Rule 3002.1(c) requires an itemized
notice to be given, within 180 days of incurrence of any postpetition
fees, expenses, or charges that the holder of the claim asserts are
recoverable from the debtor or against the debtor's principal
residence. This might include, for example, inspection fees, late
charges, or attorney's fees.