Friday, June 26, 2015

Debtor Bankruptcy Noticing From The Court for Middle District of Florida, Jacksonville Division

Effective Monday, June 29, 2015, the Court will begin implementation of a new beneficial and free program titled, Debtor Electronic Bankruptcy Noticing, also known as DeBN. Debtor's wishing to receive electronic notification of court generated notices and orders the same day they are entered on the docket, will be able to do so by simply filing out a request form. Attorney's may file the request form electronically for their debtor's.

DeBN is a voluntary service, which does not require the debtor to have a PACER login and does not require an enrollment fee.

Click here for more specific information on the DeBN program, or visit the Court's website at

Click here to review the Debtor Electronic Bankruptcy Noticing Request Form.

Click here for simple steps to docket the request form.

Thursday, June 25, 2015

How To Surrender Property in Bankruptcy

Bankr MD Fla: How does a Debtor SURRENDER Real Property in bankruptcy? 

I received an email from another attorney in Jacksonville, Florida, Bobby Wilbert, that states, in part:

This is a big issue here in Florida when debtors just wanna walk away and be done with it. At a minimum, "surrender" under Bankruptcy Code §§ 521 and 1325 means a debtor cannot take an overt act that impedes a secured creditor from foreclosing its interest in secured property. Although "surrender" is not defined in the Bankruptcy Code, the First and Fourth Circuits have interpreted that term to mean a debtor must relinquish any rights in the secured property—including the right of possession—and make it available to the secured creditor.  

The rub in all this is, you can not make a creditor take the property.  

This becomes most relevant with properties that have homeowner association fees, which the debtor will be responsible for, post discharge.

However, fortunately, most property surrendered is by a mutual agreement between the creditor and the debtor.

Monday, June 15, 2015

Can A Lien Still Be Stripped Off In A Chapter 13?

Well, the answer is, as of today, we do not know.  We have yet to see how the courts will react to Bank of America vs. Caulkett.  Below is one attorneys analysis of the situation regarding Chapter 13 cases:

The court explained that the anti-modification protections provided to secured creditors by 11 U.S.C. § 1322(b)(2) apply only when the creditor's lien actually has some value, drawing a distinction between under-secured liens and liens without any value whatsoever. "'Section 1322(b)(2) protects a creditor's rights in a mortgage lien only where the debtor's residence retains enough value — after accounting for other encumbrances that have priority over the lien — so that the lien is at least partially secured under Section 506(a).'" Id. at 881-82 (quoting Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122, 126 (2d Cir. 2001)). When "the creditor's claim is wholly unsecured, then the reasoning of Nobelman [v. American Sav. Bank, 508 U.S. 324 (1993) (prohibiting stripping of partially secured liens)] does not preclude modifying the creditor's rights under § 1322(b)(2)." Id. at 882. A wholly unsecured creditor does not hold a claim secured by the debtor's residence, so the anti-modification [4]  provision does not apply. Id. (citing McDonald v. Master Fin'l, Inc. (In re McDonald), 205 F.3d 606, 612 (3d Cir. 2000)). Accordingly, Chapter 13 debtors may strip off the lien of a junior lienholder where there is no equity securing the security interest in the property.

If you have a different analysis, please enter it below.


Thursday, June 4, 2015

Bankruptcy: Can I End Up In Jail?

Can someone end up in jail for filing bankruptcy?  Well, consider the following announcement I received today regarding a Hillsborough County resident indicted on bankruptcy fraud, mail fraud, and aggravated identity theft charges:
From Tampa Florida -- United States Attorney A. Lee Bentley, III announces the return of an indictment charging David W. Griffin (44, Lutz) with one count of mail fraud, nine counts of bankruptcy fraud, two counts of making a false statement under oath during a bankruptcy proceeding, and one count of aggravated identity theft. If convicted, he faces up to 20 years in federal prison for the mail fraud charge, and up to five years on each of the bankruptcy fraud and false statement charges. A mandatory term of two years’ imprisonment for the aggravated identity theft charge would run consecutive to the other penalties imposed. 

According to the indictment, Griffin operated a foreclosure rescue scheme through his companies, Bay2Bay Area Holding, LLC and Business Development Consultants, LLC. The purpose of the scheme was to obtain quitclaim or warranty deeds from distressed homeowners facing foreclosure in return for false promises to rescue their homes from foreclosure by negotiating with creditors, renting the property back to the homeowner to obtain rental income, and falsely promising that the homeowner could repurchase the property from Griffin. To maximize his rental income, it was also a purpose of the scheme to prevent creditors and guarantors, including the Federal National Mortgage Association (“Fannie Mae”) and the Federal Housing Administration, from pursuing lawful foreclosure and eviction actions against homeowners who had defaulted on their mortgages. This was accomplished by filing, or causing to be filed, fraudulent bankruptcies in the names of the homeowners without their knowledge or consent. These fraudulent bankruptcies generated mailings sent from the bankruptcy court to the victim homeowner via the U.S. Postal Service. 

The indictment also alleges that Griffin lied under oath in sworn testimony before the Office of the United States Trustee and the bankruptcy trustee. Under penalty of perjury, Griffin stated that he had no knowledge of a bankruptcy petition filed in the name of his company, Bay2Bay Area Holding Group, when in fact, he prepared the petition and directed an individual to sign his name and file the petition with the United States Bankruptcy Court for the Middle District of Florida. 

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty. 

This case was investigated by the Federal Bureau of Investigation, the U.S. Postal Inspection Service, the Federal Housing Finance Agency - Office of Inspector General, and the U.S. Department of Housing and Urban Development – Office of Inspector General. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

Wednesday, June 3, 2015

Second Mortgage in Chapter 7: Bank of America, N.A. v. Caulkett

After the Eleventh Circuit determined it to be OK to strip off totally unsecured mortgages, the Supreme Court sent a message that they decided this one incorrectly.

The U.S. Supreme Court, on June 1, 2015, unanimously held in Bank of America, N.A. v. Caulkett, a chapter 7 debtor cannot "strip off" a mortgage, even if it is totally underwater, under § 506(d); the Court reversed the Eleventh Circuit decision.  The Court based its decision on Dewsnup v. Timm, 502 U.S. 410 (1992), in which the Court had held that a chapter 7 debtor cannot "strip down" a partially underwater mortgage under § 506(d).

Writing for the Court, Justice Thomas concluded that "Dewsnup's construction of "secured claim" resolves the question presented here." The Court's decision in Caulkett now indicates that mortgage liens are sacrosanct in chapter 7, without regard to whether they are partially or totally underwater.

It is yet to be seen how this will effect mortgages in Chapter 13 cases, but mortgagees have a plausible argument to extend Caulkett there as well.