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."

In re: O'Steen: Debtor not denied 727 Discharge

Lafayette State Bank, Plaintiff,
v.
John Riley O'Steen, d/b/a Riley O'Steen Dairy, Ashley Koon O'Steen, Defendants.

Case No. 3:14-bk-4766-PMG, Adv. No. 3:15-ap-393-PMG. United States Bankruptcy Court, MD Florida, Jacksonville Division.

Bank seeked a judgment denying the Debtors' discharge pursuant to § 727(a)(2), (a)(3), (a)(4), (a)(5), and (a)(6) of the Bankruptcy Code, and determining that the debt owed by the Debtors to the Bank was not dischargeable in the Chapter 7 case pursuant to § 523(a)(6) of the Bankruptcy Code.

A fundamental goal of the Bankruptcy Code is to provide a debtor with a fresh start. Consequently, denial of a debtor's discharge is an extraordinary remedy, and exceptions to discharge should be construed in favor of the debtor and against the objecting party. The burden is on the objecting party to prove the objection by a preponderance of the evidence. In re White, 568 B.R. 894, 909-10 (Bankr. N.D. Ga. 2017).

http://scholar.google.com/scholar_case?case=1285041256689425433&hl=en&lr=lang_en&as_sdt=4,10,253,254,255,262,263,264,265,266,267,325&as_vis=1&oi=scholaralrt

OBJECTION to Discharge: Who Has The Burden

A fundamental goal of the Bankruptcy Code is to provide a debtor with a fresh start. Consequently, denial of a debtor's discharge is an extraordinary remedy, and exceptions to discharge should be construed in favor of the debtor and against the objecting party. The burden is on the objecting party to prove the objection by a preponderance of the evidence. In re White, 568 B.R. 894, 909-10 (Bankr. N.D. Ga. 2017).

Official Bankruptcy Rule Changes Effective December 1, 2017

Rule 1001: “These rules should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

Rule 1006: requires that an individual debtor’s petition must be accepted for filing so long as the debtor submits a signed application to pay the filing fee in installments. Rule 1017 (b) (1) allows for a dismissal of the case for the failure to pay any installment of the filing fee only “after a hearing on notice to the debtor and the trustee.”

Rule 1015(b): Husband and wife is replaced with spouses.

Rule 3015 and 3015.1(NEW): Requires use of an appropriate official form for chapter 13 plans. Objections to plan confirmation are to be made at least 7 days before the date set for confirmation hearing, and valuation of a secured claim is binding on the holder of the claim.

Rule 2002: notice of time to object to confirmation of Chapter 13 plan is 21 days, notice of confirmation hearing is 28 days.

Rule 3002: Holder of secured claim must file proof of claim to have an allowed secured claim. Bar date in Chapter 12 and 13 cases is 70 days, with an additional 50 days for mortgage holders to provide supplemental documents. The court may extend the time to file proof of claim for insufficient notice.

Rule 3007: Service of claim objection on most claimants is by mailing notice to the person listed on the proof of claim. Rule 7004 governs service on depository institutions.

Rule 3012: Request to value in the Chapter 13 Plan governed by Rule 7004(b), and service for claim objections and motions to value are governed by Rules 3007(a) and 9014(b).

Rule 4003: Lien avoidance can proceed under the chapter 13 plan, or by motion.

Rule 5009: Debtor can obtain an order declaring that a secured claim has been satisfied, and lien released under the terms of the Chapter 13 Plan.

Rule 7001: Rule 3012 valuation and lien avoidance do not require an adversary proceeding.

Rule 9009: The rule allows deviations from an Official Form if permitted by the national instructions for the form in addition to those deviations permitted by the Bankruptcy Rules or the form itself. It also allows “minor changes not affecting wording or the order of presenting information” on a form.

How To Pick a Bankruptcy Attorney

 I, along with all bankruptcy attorneys in Northeast Florida, receive calls on a regular basis asking what our fees are for filing bankruptcy.  I suspect these people essentially don't know what they don't know.  If the caller is planning on filing bankruptcy, he or she is asking the wrong question. 

Bobby Wilbert, a bankruptcy attorney in Jacksonville, Florida, recently posted a link on his website to a concise blog page I thought was very good concerning picking an attorney, posted by Cathy Moran.  She relates the hiring of a bankruptcy attorney to picking a coach, not calling around for the cheapest price or looking for the attorney that shows up first in search results on the internet.  The link to the article is 

https://www.bankruptcyinbrief.com/selecting/

Midland Funding LLC v. Johnson: OK to file Proof of Claim on Time Barred Debt

Today, May 15, 2017, the Supreme Court of the United States decided Midland Funding, LLC v. Johnson, 581 U.S. ___ (2017).

Holding: The filing of a proof of claim that is obviously time barred is not a false, deceptive, misleading, unfair or unconscionable debt-collection practice within the meaning of the Fair Debt Collection Practices Act.

Midland Funding filed a proof of claim in Johnson’s Chapter 13 bankruptcy case. It asserted that Johnson owed Midland debt on a credit card. The last time any charge appeared on Johnson’s account was more than 10 years ago. The relevant statute of limitations under Alabama law is six years. Johnson objected to the claim, and the Bankruptcy Court disallowed it.

Johnson sued Midland, claiming that its filing a proof of claim on an obviously time-barred debt was “false,” “deceptive,” “misleading,” “unconscionable,” and “unfair” within the meaning of the Fair Debt Collection Practices Act, 15 U. S. C. §§1692e, 1692f. The District Court held that the Act did not apply and dismissed the suit. The Eleventh Circuit reversed. The Supreme Court reversed, holding the filing of a proof of claim on a time barred debt is not a false, deceptive, misleading, unfair or unconscionable debt collection within the meaning of the Fair Debt Collection Practices Act.

While the decision has not been published yet, the Syllabus containing the decision can be viewed at https://www.supremecourt.gov/opinions/16pdf/16-348_h315.pdf

Means Test Number For Household Income Effective 4/1/2016 for Florida

A requirement with all Chapter 7 and Chapter 13 bankruptcy filings includes the completion of the Statement of Your Current Monthly Income (Form 122A-1 for Chapter 7 and Form 122C-1 for Chapter 13).  The Means Test numbers for household income are updated each November 1 and April 1.  Here are the latest number, including the numbers effective April 1, 2016.

Household Size	Before November 1, 2015	Effective 4/1/2016
1	$43,085	$43,136
2	$53,590	$53,654
3	$57,012	$57,080
4	$66,509	$66,588

Add $8,400 for each individual in excess of 4.

New Revised Forms For Bankruptcy Effective December 1, 2015

 

This is a reminder that revised Official Forms went into effect December 1, 2015.





All filers should use the new revised forms on and after December 1, 2015 for all newly filed cases and any initially filed schedules and statements. For additional information, please consult the forms update web page at http://www.flmb.uscourts.gov/forms/december-form-changes/

     I recently read an article on the internet concerning a debtor inquiring as to whether they could keep their $31,000 car if the person filed bankruptcy; the car was paid off. The article is fair in its analysis. It mentions the debtor being able to keep the exempt value of the vehicle, and the exempt amount will vary according to what jurisdiction you are filing in. For example, if the debtor was filing in a jurisdiction that allows for a $15,000 automobile exemption, upon the sale of the automobile by the Trustee, the debtor would be able to keep the first $15,000 of the sale proceeds. The balance would be distributed to creditors.

The article mentions the availability of three options:

1. Surrender the vehicle. As mentioned above, the car will be sold, and the proceeds distributed.
2. Settle with the Trustee. Within my jurisdiction (Florida), this is the most common, as the trustee would prefer to settle and distribute proceeds without the time and expense of selling the vehicle, and the debtor would prefer to keep the vehicle. In this case, the debtor simply pays the to the Trustee an agreed amount to repurchase the portion of the non-exempt vehicle from the bankruptcy estate.
3. File a Chapter 13. In this case, you are still repurchasing the non-exempt vehicle from the bankruptcy estate, but you are able to do so in 3 to 5 years. Payments are simply made to the Trustee.

      While this is a very good simplified analysis of what can be done, you should check with a competent bankruptcy attorney in your area to find out your available exemptions, and any other alternatives that may be available. This is an area of bankruptcy where the attorney's experience may be able to greatly benefit you.  There may be additional available exemptions you can use to increase the amount of the vehicle you can keep when filing, or there may be some appropriate pre-filing planning that will result in either increasing the amount of available exemptions, or reducing the amount of vehicle available to the bankruptcy estate.

What Does A Chapter 13 Cost?

It seems the #1 question from some clients is, how much will a Chapter 13 cost. I personally don't think an attorney should be picked based on price. The feedback I have received from people picking attorneys based on price is along the lines of “I guess I got what I paid for”. OK, enough of my soap box. As for attorney fees, within the Jacksonville Division of the Middle District in Florida, as in many jurisdictions, there are presumptively reasonable fees. Today, the Chapter 13 Trustee in the Jacksonville Division disseminated the following email:

“Please be advised that effective March 1, 2015, the Chapter 13 Trustee considers the presumptively reasonable fee for Mortgage Modification Mediation to be $1,850.00 and the presumptively reasonable fee for Chapter 13 Debtors engaged in and operating a business to be $4,000.00. Accordingly, no fee application is necessary for these services in these amounts and no objection will be filed. The increase for cases where a Chapter 13 Debtor is engaged in and operating a business is intended to compensate for the collection and production of profit and loss statements, bank accounts and tax returns for debtors engaged in businesses. This is not an increase for 1099 employees or contract employees who do not operate a business. All other presumptively reasonable fees regarding non business debtors, post confirmation services, administrative fees for collection and review of tax returns, and adversary proceeding fees shall remain unchanged.”

 
"The increase for cases where a Chapter 13 Debtor is engaged in and operating a business is intended to compensate for the collection and production of profit and loss statements, bank accounts and tax returns for debtors engaged in businesses."
If you are considering the filing of a Chapter 13 bankruptcy, you should contact a local bankruptcy attorney in your area for a consultation.

St. Johns County Bankruptcy Attorney

I did a quick search on Google of bankruptcy attorneys in St. Johns County, Florida. This is because I recently opened an office in Green Cove Springs (GCS), Florida. While Ponte Vedra Beach and St. Augustine are in St. Johns County, there is a large population that resides in the county, outside of any city limits.

How would a person in the country pick a bankruptcy attorney. For those unfamiliar with GCS, it is walking distance from St. Johns County.  Both Clay County (where GCS is located) and St. Johns County have few attorneys practicing in the area of bankruptcy. This caused me to peruse the question of how would someone would pick a bankruptcy attorney?

When searching for the best attorney for filing bankruptcy, you should look at more than just price. In fact, price is probably the last thing you should look at. 

Have you ever shopped for a good bottle of wine. Quite often price has nothing to do with the quality of the wine. Of course, I am not talking about the gut buster cheap stuff. But of the moderately priced wines, you need to know your wine to select one that meets your expectations. You could get an overpriced wine that has you walk away with a bad taste in your mouth.

Attorneys are not unlike wine in many ways. I suggest you should look at

1. the attorney's experience,
2. continuing education, and
3. organization affiliations.

The experience has to do with the number of years of practice before sitting judges and familiar with case law within your jurisdiction. The law is always changing in every field of law, and bankruptcy is no exception. This is why continuing education is so important. That is also why membership in local bar associations and national associations is important.  It is easy to search for national organizations that cater to fields of law.  For consumer bankruptcy, it is the National Association of Consumer Bankruptcy Attorneys.

Also look at surrounding counties, or nearby cities. Sometimes a short drive will reward you with an attorney with more experience, more individualized attention, and a better price. This is not just relevant to bankruptcy, but also probate, criminal law, family law, or any other practice of law you can think of. When you get into areas of practice that are highly specialized, like an attorney that specializes in zombi nuclear holocaust law (imagine that might be a specialty somewhere), you might want to look a little further than just your nearby county.

If you have some ideas of how to pick a good ... no, Great Attorney, please let me know.

Price Increases Set For June 2014

OK, it appears the Court is increasing fees again.  Recently the Court raised fees, followed by a shifting of having Debtor's attorneys mailing Orders (ultimately an extra expense for Debtors), to the Court cutting back on staff.  Now the fees are again being increased.

Please see the email correspondence I recently received.  
(PLEASE REMEMBER, I'm just the Messenger)

 ---
The Judicial Conference of the United States met on March 11, 2014, and approved changes to the Bankruptcy Court Miscellaneous Fee Schedule effective June 1, 2014. A summary of those changes follow: 

The fee for filing a complaint increases to $350.00.
The following administrative fees are increased to the totals noted:
- For the filing of a petition under Chapter 7, 12, or 13, $75.00.
- For the filing of a petition under Chapter 9, 11, or 15, $550.00.
- When a motion to divide a joint case under Chapter 7, 12, or 13 is filed, $75.00.
- When a motion to divide a joint case under Chapter 11 is filed, $550.00.

As a consequence the increases effective June 1, 2014, the full fee for filing a -
Chapter 7 will be $335.00
Chapter 9 will be $1,717.00
Chapter 11 will be $1,717.00
Chapter 12 will be $275.00
Chapter 13 will be $310.00
Chapter 15 will be $1,717.00
 ---
So, what is the change for Chapter 7 and Chapter 13 Filers?

For Chapter 7, the fee is increased from $306.00 to $335.00.
For Chapter 13, the fee is increased from $281.00 to $310.00.

That's right, a $29.00 increase.

If you feel like giving me your feedback on this, I certainly understand.  Do you think there should be a limit as to what the filing fees should be to file bankruptcy?

 

Retirement Funds:A Look At The Solo 401(K) For The Self Employed

TAXES -- OK, don't stop reading now, and don't start getting teary-eyed.

Of course, taxes are relevant to bankruptcy.  But, I am actually going to take a different approach than what you might be thinking concerning bankruptcy.

There are but few places where one can maintain assets in a secured place, free from the threat of creditor's claims.  One place is created by everybody's best friend, the IRS (yes, love your enemies!).  If you have a retirement account, recognized by the Internal Revenue Service, in most instances, those funds are probably protected.

OK, so now for retirement accounts.  While everyone has heard of many of the more popular retirement plans, such as an IRA, and a 401(k).  But there are actually many types and varieties of retirement plans, including one I only recently heard of referred to as a Solo 401(k).

That's right, this blog is really about something you might be interested in reading if you are self-employed and looking for a way to put aside some money.

If you are looking for a way to put aside some money for retirement, a Solo 401(k) may be just the thing for you. As you probably already know, there are limited places you can put funds to where they are protected from creditor's claims.  While it appears most self-employed individuals have an IRA as a retirement vehicle, a Solo 401(k) allows you to put away a significant chunk of change that’s protected from taxes and creditors.  It’s all in the name of retirement and long-term financial well-being.


Freelancers, self-employed professionals and others are used to the “feast or famine” routine.  Good years can be spectacular, but they’re largely balanced out by the not-so-good ones.

Solo 401 (k) – A Better Bet For Self-Employed

The Solo 401(k) allows much larger annual contributions than the typical IRA account.  If you (or you and your spouse) are the only employees, you get to skip all of the fairness rules that make running a 401(k) plan so expensive. For 2013, you can put away more than three times the IRA limit if you are over 50.  You can also defer some of your earnings for later years, too.  Total contributions in a year can be as much as $50,000.  That will fund lots of leisure in retirement, if you contribute regularly.

Read more: Solo 401(k) Do’s and Don’ts

Solo 401(k) Must Be Opened By December 31. In order to take advantage of the Solo 401(k) for this year, you must open and fund your plan by December 31.  This is in contrast to the normal deadline of April 15 for opening and funding an IRA.

Contact any of the discount brokerage houses to open up your Solo 401(k) Plan.  Your future self will thank you.