Category Archives: Bankruptcy Planning

Beware Home Office Income Tax Deduction

The home office income tax deduction has formed the basis for a denial in part of the Florida homestead exemption.   More specifically, there is now case authority that the exclusive use of a portion of a Florida homestead which in part can be evidenced by the home office income tax deduction and depreciation of the home  justifies apportioning the residence to homestead and non- homestead.  The idea is as follows:  Suppose 25% of the home is exclusively used for business such as an office.  Or assume that 25% is exclusively used by a tenant who is paying rent for one room in the home.   The trustee can sell the home, 75% of the equity belongs to the debtor, and 25% of the net proceeds would be retained by the trustee. Sounds contrary to the whole idea of the liberal protections for a Florida homestead? Sounds contrary to the…
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Social Security and Bankruptcy

Social Security income in bankruptcy should be a well-settled issue now in bankruptcy court.  Social Security benefits do not count as income.  Several US Circuit Courts of Appeals have held that the debtor does not have to use Social Security income to pay creditors during a chapter 13 plan.  Social Security income does not count as “projected disposable income”. I have filed several chapter 7 cases even though the debtor’s actual budget shows that he or she could make payments to creditors.   I have not received any objections until recently in one case.  The US Trustee claimed that the ability to pay was a basis to contest in a chapter 7 even though the ability was based on social security.  Ultimately, the US Trustee withdrew its motion to dismiss.  There remains a possibility the US Trustee could object in a future case.  There have been no rulings in the…
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11th Circuit Says No Chapter 20 Lien Strip: Binding Authority?

Suppose a debtor has already filed chapter 7 and discharged his or her debts.  The debtor then files a chapter 13 and attempts to strip off a second mortgage. There have been differing opinions across the country, but locally the judges in the Southern District of Florida have said no.   A debtor who is not eligible to receive a discharge cannot strip a second mortgage. On October 29, 2013 the 11th Circuit held that the lien strip cannot take place in a Chapter 13 after the chapter 7 discharge.  The issue now seems resolved within this circuit which includes Florida-or does it?  See In re Colbourne, 2013 WL 5789159, 2013 US App Lexis 22011.  Colbourne is another unpublished opinion by the 11th Circuit which does not create binding precedent, though should be persuasive.  Also, the case involved non-homestead property.  The court expressly stated that it was not ruling as to junior liens…
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