Bankruptcy Consultation: What To Expect; What To Bring

 Last Updated: September 8, 2020.

So you set up an appointment for a bankruptcy consultation. What next?

First of all, relax. People tend to get nervous, or anxious, when needing to speak with an attorney. Remember that any attorney that agrees to represent you will be your advocate. The consultation is so the attorney can understand you particular situation, and advise you as to what your various options are regarding the filing, or not filing, of bankruptcy.

I know what you are thinking, “not filing”? Make sure you ask the attorney if he or she practices under the Fair Debt Collection Practices Act. Yes, there are some alternatives to filing bankruptcy you may want to try.  You should discuss this with your bankruptcy attorney.

What to Bring:

1. 7 months pay advises (Gross Earned Income and Net Income).
2. Payoff figures on secured assets (approximate)
3. Value of secured assets (approximate)
4. Number of payments left on assets, if less than 60.
5. Year, Make, Model, and mileage of vehicles and motorcycles.

Generally, my consultations last approximately an hour, with some being a little longer. It is helpful to have the items on the above list. A short discussion of each is as follows:

1. 

   Pay advises, such as pay stubs, or other document reflecting the gross income and withholding you have had during the past 7 months, for you and your spouse (even if the spouse is not filing). If you and your spouse live in separate households, make sure to let the attorney know, as special rules may apply to your situation.
2. Payoff figures are needed to determine how much longer you have to pay, and how much, if any, equity you have in the property.
3. Value. This is need in many situations to, again, determine how much equity is in the property. The equity is important because is helps determine what assets you have from a bankruptcy perspective.
4. Number of Payments. This is important should your income be more than the median income for a household of you size in the state in which you live, to determine which form of bankruptcy you may be able to file. It may also be useful in advising you what to expect depending on when you file.
5. Year, Make, Model and mileage. This is useful in determining value and other useful information, such as deductions, when filing. Again, it can help in being able to advise you as to what to expect through the various forms of bankruptcy, or in some cases, what to expect if seeking other forms of debt relief.

While a consultation can still be done without these items, being the documents ask for often helps in facilitating the consultation and enables the client to receive much more accurate information regarding their particular case.

Exemptions: Florida Retirement

 

 A Chapter 7 Bankruptcy is a process one goes through regulated by the Federal Code, Federal Bankruptcy Rules, State Laws, Local Rules, and Court decisions. This chapter of bankruptcy allows one to discharge most debts, however, it does not allow one to keep a lot of stuff while discharging their debts. What one can keep is usually referred to as exempt property.

The exempt property for cases filed in Florida is composed of items according to Federal Law and State Law. Traditionally, the property exempt in Florida would have to be specifically waived in order for the property to lose its exemption status, including retirement funds such as 401(k) accounts. There recent case law that could significantly effect these exemption rights on a case by case basis.

If you are planning on filing Chapter 7 or 13 in Florida, I highly recommend you seek the advise of a local bankruptcy attorney regarding your exemptions, and possible complications that could arise.

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.

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.

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.

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 September 1, 2020.

In Florida, while evictions and foreclosures (sales) have been stayed through October 1, 2020, legal actions can be commenced.
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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.

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 https://www.fbi.gov/news/stories/protect-yourself-from-covid-19-scams-040620

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.

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. 

Coronavirus and Fraud

Criminals are taking advantage of the opportunity presented by the Coronavirus and the resulting vulnerable population.  Some of the most common sources of fraud fall into the following categories:

1.  Government Impersonators 
2.  Fraudulent Cures or Medical Equipment
3.  Work-from-Home Fraud 
4.  Investment Fraud

Hopefully each of the above categories is self explanatory as these are not new forms of fraud, however some perpetrators have become very good at scamming, and seek opportunities to prey on vulnerable people.

Scams include the following:

• Individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud.
• Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention.
• Malicious websites and apps that appear to share virus-related information to gain and lock access to your devices until payment is received.
• Seeking donations fraudulently for illegitimate or non-existent charitable organizations.

Be especially vigilant regarding any emails you receive, and any calls you receive from anyone asking for any financial information, and protect yourself from becoming a victim of fraud.

ZOOM Consultation Warning

As you know, we are in the middle of a pandemic.  This is a very unique situation, and one in which very few organizations or people were prepared for.  As everyone quickly found out, this is different than a hurricane or earthquake in many ways.  For one, COVID 19 can not be seen, and there is little information on how long it will last.

One of the ways schools and courts have adjusted is by using internet platforms that allow for video conferencing.  This is a great way to relay information among others when it is not advisable or you can not meet face to face.

While Zoom is the preferred encrypted video conferencing platform for many, it should be noted the platform has some drawbacks.  One, it appears to be prone to attacks by others that acquire the correct credentials to join in on a meeting.  Apparently, hacking software has been developed that allows one to take control of a meeting by redirecting the audio and video to the hackers control.

It has also recently been reported on the news that Zoom has a flaw in its encryption, allowing others to be able to hear and see conversations among others.  Hence, if you have sensitive information to convey to others, including legal consultations, you should probably avoid using Zoom to convey that information until Zoom can improve the security of its platform to be secure.

UPDATE WILLS

I have had several calls about doing Last Will and Testaments, and reviewing ones that have already been done.  Yes, I do more than just bankruptcies. 

The governor has issued an order to stay at home.  The daily news outlines county by county how many positive cases of COVID 19 have been discovered, both total numbers and new cases in the past 24 hours.

This gives one pause to reflect with everything going on in the world right now.  It could also bring one peace of mind to know you have a properly drafted will.  Should you need a will reviewed, or need other testamentary documents drafted and reviewed, you should contact your attorney, or an attorney in your area competent in drafting and executing such instruments.  While I am happy to draft these documents for Florida residence, these documents are state specific, so I would recommend you have an attorney within your state draft these documents.

Bankruptcy: NON ESSENTIAL BUSINESS CLOSED

CORONAVIRUS: WORK FROM HOME, Safer from Home.

We are currently under an order from Governor Desantis to close all non-essential businesses in Florida.  Law offices, depending on their practice and status of cases, could be an essential business. 

However, in an effort to conform with the spirit of the law, I am seeing clients by internet or telephone conference.  The current technology is such, that allows attorneys to consult with clients using one of several video meeting platforms.  I have recently been using a platform called ZOOM, which has a free application and is similar to Skype.  This allows me to further conform with the wishes of state authorities in being able to work from home, and still being available to consult with clients.

So, should you know anyone needing a bankruptcy consultation, please don't hesitate contact me at 904-652-0060, or by email at dgrange@grangelaw.org to arrange for a video conference.  I am also offering consultations for a wills, probate, bankruptcy, or any other consumer advocacy matters.

Coronavirus Update regarding Meeting of Creditors

 

NEW PROCEDURES FOR MEETING OF CREDITORS (341 Meeting)

In light of the recommendations of the CDC regarding the spread of the COVID-19 virus, effectively immediately and until further notice, the United States Trustee for Region 21 has directed that all Meetings of Creditors under 11 U.S.C. § 341 in all bankruptcy cases, and all Initial Debtor Interviews in Chapter 11 and Subchapter V cases, be conducted by telephone conference.

For cases in which the initial § 341 meeting was postponed (generally, cases in which the initial § 341 meeting was scheduled between March 17, 2020 and April 10, 2020) and until further notice in all newly filed cases, the Court will issue Notices of Case Filing that include information regarding the telephonic § 341 Meeting. The Notices of Case Filing will include the "dial in" telephone number for the appointed trustee or the U.S. Trustee's Office, a participant passcode, and the time of the telephonic meeting. This information will also be provided in notices of the Initial Debtor Interview in Chapter 11 and Subchapter V cases.

The U.S. Trustee's Office requests that all attorneys and their clients cooperate in making this process work as smoothly as possible under these difficult and unprecedented circumstances.

What Happens To Repossessed Property Upon Filing Bankruptcy

So, you had some personal property repossessed.  Now what.  Can you get it back?  If so, what do you have to do?  When do you have to do it?  Do you need an attorney?

Well, the answer is, like in so many cases, "It Depends."  I know that response may sound outdated, but in the bankruptcy world, it is anything but outdated.


How does this work with bankruptcy?

When one files bankruptcy, there is something that automatically comes into play without the need for a court order, referred to as an "automatic stay".  It stays creditors from initiating collection efforts or proceeding with collection efforts.  Some appellant courts have interpreted this as meaning repossessed property had to be returned to the debtor (with some exceptions) automatically, or the creditor could face sanctions for violating the automatic stay.  This is the holding in the Second, Seventh, Eighth, Ninth and Eleventh Circuits.

To the contrary, the Tenth Circuit and the District of Columbia have interpreted the code provision as meaning the property may have to be returned, or face sanctions, only after a court order has been entered.

So, which of the courts are correct?

Hopefully we will soon find out.  This is a question that is before the Supreme Court of the United States, for which has been granted a Writ of Certiorari in December of last year, in City of Chicago, Illinois vs. Fulton (19-357).


This issue has been extensively written about for over a decade.  If you have property that has been seized by a creditor, I highly recommend you seek the advice of a competent bankruptcy attorney in your area for advise ASAP, as your rights may be negatively effected with the passage of time.