National Association of Consumer Bankruptcy Attorneys 2012 Fall Workshop

The National Association of Consumer Bankruptcy Attorneys 2012 Fall Workshop (for members only) is scheduled to be held November 1 through November 3 at the Ritz-Carlton on Amelia Island in Florida. This is just north of Jacksonville, Florida, and close to the historical town of Fernandina.

As in previous years, there will be a new member orientation on Thursday, November 1, at 7:00 p.m. followed by a with a beach party starting at 8:00 p.m. For those that remember the workshop held in Puerto Rico, this will be even better. After all, this is being held at the Ritz-Carlton.

The real workshops, together with the Plenary Session, will be held Friday from 8:00 a.m. (breakfast at 7:00 am) till 5:30 p.m. with a reception following. On Saturday, from 8:00 a.m. (breakfast at 7:00 am) till 5:00 p.m.

To get the early bird rate, registration must be received by 5:00 p.m. On September 28, 2012.

To view a copy of the brochure, go to http://nacba.org/Portals/0/Documents/Amelia%20Island/Amelia%20Island%20Brochure%20pages%207.pdf and a copy of the registration form can be found at http://nacba.org/Portals/0/Documents/Amelia%20Island/4Pages%20from%20Amelia%20Island%20Brochure-registration-form.pdf

Home Owner Association Fees: Should I Pay Them?

SO, you filed a Chapter 7 bankruptcy, and you are surrendering your home which is located in a subdivision with home owner association fees. If you are surrendering the house to the mortgagee, should you continue to pay home owner association fees?

At first glance, you might think if the house is being surrendered in the bankruptcy, why should I need to continue to pay home owner association fees? After all, after the bankruptcy, I will not own the house anymore, right?

Well not necessarily. Sometimes the mortgagee does not want the property, for any number of reasons. The property could be contaminated. Guess who would be responsible for cleanup. That's right, the owner. The property could also have problems, like being in the bottom of a sink hole. The mortgagee could end up with property there is very little, or no market for, but just be obtaining liability. Another reason has recently come to light, related to home owner association fees. In Florida, the owner is personally responsible for the payment of the fees.

How does this apply to bankruptcy?

Although one can list within their Statement of Intentions for real property to be surrendered, the Courts have said one can not make the mortgagee to take the property. Hence, until the bank owns the property, they are not responsible for the homeowner association fees. Just as you do not want to have to pay the home owner association fees, the bank does not want to be stuck with them either.

So, obviously your question would be, how can one make the bank take the property? Well, I, along with numerous other attorneys, are trying to find an answer to that question. As of now, as far as I know, you can not. In Florida, the transfer of real property requires both delivery and acceptance. The problem is, although you can give something to away, you can not make one take it.

The home owner association fees, generally, are discharged up to the date of the filing of the bankruptcy. Association fees incurred post petition (after the filing of the bankruptcy) are not discharged, and are personally assessed to the property owner(s). What does that mean? Well, it means the owners are personally responsible for the fees, even after home owner association foreclosures on the property, that is, unless the association can satisfy the amount due to them from the sale of the property though the foreclosure proceeds.

In short, one can loose their real property through foreclosure, and still be stuck with being responsible for the payment of home owner association fees. You should consult with your attorney concerning this.

Phishing and Bankruptcy

Can I fight the law suit? Of course. But what happens if I loose? The plaintiff will allege I made payments on the card. Even though I did not make the payments, how can one prove a non-event? Well, the answer is, it can be proven. What is not known is what it will cost to prove this. This can get expensive. For example, to prove a document does not contain your signature might require the hiring of a hand writing expert. That's right, an expert witness.

Any number of various things can lead one to having to consider bankruptcy as a means of relief. The most common include credit card debt and medical expenses. Not as common are people that have had their identity stolen. I know what you are thinking. Identity stolen? Bankruptcy?

Identity theft can totally disrupt ones life. I know. I have had it happen to me. I unknowingly and unwillingly had a credit card placed in my name. The first I knew of the credit card was when I received a law suit for the credit card not being paid. I looked at my credit report and discovered the card had been out for a couple of years!  The holder of the card somehow actually made payments on the card until the card was maxed out.

Then you have to ask, is is cheaper to file bankruptcy?

I recently received an email warning of a new phishing email that has been distributed to online stock trading customers. Apparently the email states your account statement is available online, and prompts you to click on a link that will potentially download unwanted software to your computer. 

This leads me to the realization that something as simple as clicking on a link within an email can lead one to having to consider bankruptcy as a source of relief.

What Do I Need To List When Filing Bankruptcy?

Filing Bankruptcy; do you need to list everything? What if you don't want to bankrupt your favorite credit card? Those questions are generally followed by not wanting to disclose a transaction recently consummated. After all, how will they (bankruptcy court) know?

I promptly, and directly, explain to my client:

1. the bankruptcy code requires complete financial disclosure, and
2. the bankruptcy papers filed with the court are signed under penalty of perjury.

If you get caught, the Federal Court will ruin your day!  That's right, they will make an example out of you.  I do not want my name associated with such activity.  This can lead to criminal sanctions; perhaps you have heard of something called "Fraud"; this is in addition to penalties provided within the bankruptcy code and rules.  Sometimes proper planning can accommodate my client's goals, but proper disclosure is a must.

Case in point. United States v. Turner (11th Cir., 2012).

In this case out of Alabama, Mr. Turner failed to disclose the receipt of an insurance check he deposited into a solely owned LLC, of which he was the only signatory on the account. He also failed to disclose his LLC.

A jury convicted Mr. Turner of one count of bankruptcy fraud, and four counts of making false entries in his bankruptcy filings with the intent to impede, obstruct or influence his bankruptcy case.

He was sentenced to 27 months incarceration, followed by 3 years of supervised release, and payment of $28,500 restitution and $500 special assessments.  As of the writing of this blog, one count, Count 6, was vacated on appeal, and the case has been sent back to the lower court for resentencing.

Bankruptcy: Can My Taxes Be Discharged?

Can Taxes owed to state or federal entities be discharged in bankruptcy? Well that depends. The bankruptcy code outlines what taxes may be discharged. For a brief overview, there are six requirements (you must meet all six requirements):

1. THREE YEAR RULE: The three year rule: for the tax year in question, the most recent due date for filing the return is more than three years old;
2. TWO YEAR RULE: A tax return has been filed at least two years preceding the filing date of the bankruptcy;
3. TWO HUNDRED AND FORTY DAY RULE: The tax claim was assessed at least more than 240 days preceding the filing date of the bankruptcy;
4. TAX IS ASSESSABLE BUT NOT YET ASSESSED;
5. NON-FRAUDULENT RETURN; and
6. NO WILLFUL TAX EVASION.

Obviously, the above is only a preliminary test to see if you need to look further to see is a tax due to a state or federal entity may be discharged. If you think taxes you owe might be dischargeable, you should seek the advise of a bankruptcy attorney.

Scams: Memorial Day

Scams do not take a holiday, they look for a holiday.  According to a recent article in the Los Angeles Times (May 6, 2012)  entitled "Scam Watch: Memorial Day, Foreclosure Rescue, Investment Scheme", Memorial Day has become an active day for criminals.  It appears both active duty military, veterans, and their families are targeted by scammers.   

 

According to the article, the scams include criminals soliciting money over the phone for military charities, as well as calls from people alleging they are from the Veterans Administration, and asking for credit card, bank account, or other financial information.

The article also notes some recent scams, including one committed by Frederic Alan Gladle from Austin, Texas, who delayed foreclosure for a fee.  He would submit false documents in bankruptcy court, thereby delaying the foreclosure proceedings.  Earlier this month he received 61 months in federal prison.

Another person was able to raise money by alleging his company was about to be acquired by Microsoft.  He received 22 years in federal prison.

Eleventh Circuit Rules On Allowing Lien Stripping in Chapter 7

UPDATE: Since the posting of this blog, the Supreme Court has reversed the Eleventh Circuit: 

See http://jacksonville-bankruptcy-grange.blogspot.com/2015/06/second-mortgage-in-chapter-7-bank-of.html

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Lien Stripping in a Chapter 7 case?  The 11th Circuit Court of Appeals says it is OK, which is a minority decision.

The 11^th Circuit Court of Appeals recently interpreted a Supreme Court ruling differently than most other courts in other jurisdictions. If you have been studying bankruptcy, then you know the courts require a discharge in a Chapter 13 as a prerequisite to stripping off of a lien to real property. So, what does this mean. Essentially, if you have a second mortgage that is completely unsecured (the balance of the 1^st mortgage is more than the value of the property, so the second mortgage is unsecured), the only way to get rid of the second mortgage is to obtain an order from the court allowing a strip off of the lien upon receiving a discharge in a Chapter 13.

 

Most courts around the country have interpreted the Supreme Court ruling as disallowing the strip off of a lien when it disallowed the cram down of a lien in a Chapter 7. Well, the 11^th Circuit (the Middle District of Florida is in the 11^th Circuit) court of appeals has just ruled a mortgage can be stripped off in a Chapter 7 bankruptcy. (In Re: Lorraine McNeal). The court said, for the most part, the Supreme Court has never ruled on a strip off of a lien, just a cram down, and as such, they are free to interpret this part of the bankruptcy code.

So, will the local bankruptcy courts follow the 11^th Circuit? We do not know. This case just came down. You see, even though the 11^th Circuit ruled, this is actually a persuasive ruling the local bankruptcy court should consider. Of course, all cases have to be decided by the Court on a case by case basis.