Jacksonville FL #1 in Distress Accounts

 A recent article in Wallethub.com reports Jacksonville, Florida as being the number 1 ranked city in the United States out of 100 cities.  While this might sound like great news, it might not be as great as it sounds, unless you are a bankruptcy attorney.  The #1 ranking is in "people with accounts in distress," and has an overall ranking of #3 of cities with the most people in financial distress.  Jacksonville also ranks as #1 in average number of accounts in distress.

 <iframe src="https://cdn.wallethub.com/wallethub/embed/133346/geochart-distressed-cities-2025.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe><div style="width:556px;font-size:12px;color:#888;">Source: <a href="https://wallethub.com/edu/cities-with-the-most-people-in-financial-distress/133346">WalletHub</a></div>

The site states, "Jacksonville City has the third-most financially distressed residents in the country, this is evident from the fact that nearly 16% of its residents are having accounts in distress, the highest percentage in the nation, along with the highest number of distressed accounts per person.

"In addition, due to financial strain residents of Jacksonville were allowed to defer payments in 2024, as the city saw the biggest change in the share of people with accounts in distress between Q4 2023 and Q4 2024, marking a nearly 87% increase."

For more information on Wallethub's 100 cities, see https://wallethub.com/edu/cities-with-the-most-people-in-financial-distress/133346

 

Delinquency Rate For Auto Loans On Rise For 2023-Q4

 

Wallethub.com is reporting the delinquency rate on automobile loans is up in the 4^th quarter of 2023, as compared to the 3^rd quarter of 2023. This applies to all 50 states. In Florida, where I practice, the state ranks 31^st, with the delinquency rising from 7.88% in Q3 to 12.36% in Q4. Mississippi had the highest Q4 delinquency rate at 23.49%, with Iowa having the lowest at 8.77%, while the largest Q3 to Q4 increase goes to the state of Washington, where they saw a 12.89% increase. For more specific information on each state, see Wallethub.com's website.

Specific to Florida, generally, if your vehicle is repossessed because you are behind on payments, ownership of the vehicle passes to the lien holder, and while bankruptcy may be able to help you regarding the debt owed to the lien holder, it will probably not allow you get your vehicle returned to you. In many other jurisdictions, there may be avenues through the filing of a Chapter 13 bankruptcy that will allow you to get your vehicle back.

There may still be avenues available in Florida to getting your vehicle back through negotiations with the creditor. If you find yourself in this predicament, or are behind on vehicle payments, I highly suggest being proactive and seek the advise of a competent bankruptcy attorney in your area.

 

Latest Scam - Smishing

 So, the latest scam craze seems to be smishing.  Sounds like a new teenage dance, doesn't it?  However, it is anything but an innocent dance floor move.  The term is a scam, and its name is derived from "SMS" and "phishing".  Yes, the scam uses text messaging to your cell phone to get information, and will appear to be from a legitimate source.  To read more about this latest trend, see https://www.yahoo.com/lifestyle/thats-immediate-red-flag-being-044602921.html

Discharge of Student Loan New Guidelines

 

The Department of Justice, in close coordination with the Department of Education, announced a new process for handling cases in which individuals seek to discharge their federal student loans in bankruptcy. The new process will help ensure consistent treatment of the discharge of federal student loans, reduce the burden on borrowers of pursuing such proceedings and make it easier to identify cases where discharge is appropriate. The Associate Attorney General outlined the new process to all U.S. Attorneys.

See https://www.justice.gov/

If you have student loans, I suggest you speak with a competent bankruptcy attorney in your area regarding having it discharged in bankruptcy, or entering into an income based repayment program whereby the balance after 20 years will be forgiven.

The above information is based on a press release from the US Department of Justice dated November 17, 2022.

Thinking of Filing Bankruptcy: Questions You Should Ask

 Are you thinking of filing bankruptcy.  Many people think they need to file bankruptcy based on things their non attorney friends tell them, or things they have heard in the media.  Bankruptcy is a very important decision, and should not be made without competent counseling and research.

To assist you in educating yourself as to whether bankruptcy is a remedy you should pursue, here are a list of questions and topics for your consideration. 

Initial questions

• What is bankruptcy?
• Why might someone file for bankruptcy?
• Why might someone NOT file for bankruptcy? 
• What are the alternative to filing for bankruptcy?
  

What are the types of bankruptcy for individuals?

• Chapter 7 bankruptcy
• Chapter 13 bankruptcy
• Chapter 11 bankruptcy
• Chapter 12 bankruptcy
  

The bankruptcy process

• What happens when you file for bankruptcy?
• What are the benefits of bankruptcy?
• What are the drawbacks of bankruptcy?
• What are the financial considerations?
• What are the personal considerations?
• What are the latest developments related to bankruptcy?
  

Filing for bankruptcy

• How to choose the right type of bankruptcy
• How to prepare for bankruptcy
• How to file for bankruptcy

Professionals

• Should you hire an attorney?
• What does the attorney include?
• What does the attorney exclude?
• Other questions for the attorney?
  

After Bankruptcy 

• How to rebuild your credit after bankruptcy

Conclusion

• What happens after you file for bankruptcy?
• Should you file for bankruptcy?
  

This is is not intended to be an exhaustive or comprehensive list.  This is simply intended to give you initial guidance towards a logical decision making process related to bankruptcy.

Should you have any questions about bankruptcy, you should contact a competent bankruptcy attorney in your area.

J. Dinkins G. Grange, Esquire

Fraudulent Debt and The Innocent Spouse; Bartenwerfer v. Buckley

Can the fraud of one spouse be imputed to an innocent spouse, thereby making the debt nondischargeable to both in a bankruptcy?  

The law has been well established that the fraudulent acts of one spouse cannot be imputed to a spouse that did not know, or should not have had a reason to know, of the fraudulent conduct.  However, when it comes to discharging debts in bankruptcy, it may not be quite as clear.

Recently the case of Bartenwerfer v. Buckley presented an unexpected finding.  The case involved a husband and wife that sold real property with defects that were not disclosed.  The husband was found to have committed fraud, which is a specific intent cause of action, in the sale of real property.  While the wife did not know, and had no reason to know, of the defects, with both the husband and wife signed disclosure agreements concerning property defects.  

Both husband and wife filed bankruptcy.  As expected, the creditor filed an appropriate pleading to find the fraudulent debt nondischargeable as to the husband, which was granted.  However, as to the wife, while the trial Court found the debt to be dischargeable, the Supreme Court found otherwise, and as  nondischargeable under the strict language of 11 USC 523(a)(2)(A) using the key parced language, "does not discharge an individual debtor from any debt … obtained by … false pretenses, a false representation, or actual fraud."

Florida Amends F.S. Section 222.25 Increasing Vehicle Exemptions - Vetoed by Gov. DeSantis

If you are filing bankruptcy in Florida and have nonexempt equity in a vehicle, you may want to wait until July 1, 2022 to file.

The Florida Legislature recently amended F.S. 222.25, in pertinent part, adding a section, section 5, that amends the $1,000 vehicle exemption in section 1 to $5,000 for bankruptcy purposes.  

As of today, the state's website indicates it is on the Governor's desk for his signature.  I believe the time for vetoing has passed.  

Assuming there is not a veto, the bill becomes effective July 1, 2022.

For a copy of the bill, see HB265

 UPDATE:  Gov. DeSantis vetoed the bill.

Assets: Disclose ALL Assets

 When an attorney is preparing bankruptcy documents to be filed with the Court, he or she will most likely ask you what assets you have.  When asked, they asking for all assets, whether legal or illegal, whether in your or someone else's possession, and whether readily apparent or hidden.

On March 21, 2022, Heather Lynn Pratt, a Fort Myers, Florida resident, was sentences for "Fraudulent Concealment of Bankruptcy Assets."  For more information about this case, see the press release "Florida woman sentenced for bankruptcy fraud."

How to Discharge a Student Loan

You may have heard bankruptcy is good for discharging all your debts with a few exceptions.  Among these exceptions are student loans. Well the common thought is student loans are not dischargeable in bankruptcy, there are exceptions to this rule as found in 11 USC Section § 523(a)(8) which says a student loan is only dischargeable if it is an undue hardship. The problem is "undue hardship" is not defined within the Bankruptcy Code.

Fortunately we have a court case from 1987 (in re: Brunner) which attempted to define undue hardship through a test.  This case has been followed by a majority of the courts, and the Brunner Test has been further honed through court cases around the country.  The Brunner Test requires the debtor show by a preponderance of the evidence that:

(1) the debtor cannot maintain, based on current income and expenses, a minimal standard of living if forced to repay his or her student loans;

(2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period for the applicable student loans; and

(3) the debtor has made good faith efforts to repay the loans.

 The test above presents its own challenges. It does not define current income and expenses. For example, it may or may not include income from family or charity, and while many would consider expenses to include shelter, food, utilities, transportation, and healthcare, expenses are not defined in the Brunner Test.

Within the second prong of the test, it doesn't outline what happens if the original payment period has expired.

The third prong fails to establish what happens if the debtor's income is not sufficient to make a good faith effort to repay the loan.  This actually seems to come full circle back to the first prong that includes income, because one's income directly effects ones ability to make "a good faith effort" to repay.

So if you have a student loan you think might be dischargeable under the Brunner Test, you should seek the advice of a competent bankruptcy attorney in your area, as this area of the law is constantly changing.