Robin Weiner, Chapter 13 Trustee in Broward and Palm Beach County, Florida, has announced that, depending on the case, she will not assert that the debtor is over the jurisdictional limit.

At each morning motion calendar and at each 1:30 p.m calendar there are typically over 100 cases scheduled. Special settings are not being scheduled to June. The judicial assistant receives 100 voice messages a day, so do not expect a call back. If a true emergency hearing is needed, come to chambers.

Meanwhile, as reported in the press this week, David Stern is being sued for $60,000,000 for fraud when he took his mortgage processing company public(his law firm was the only client, which is now out of business)

Recent debtors received an amazing holiday present. In re Cook, 2011 Bankr. Lexis 4757 (Bankr. N. D. FL Dec. 7, 2011), the debtors had lost their home that was once worth $5,000,000. The joint debtors received a $185,000 tax refund in 2010, and used this as a downpayment on an $800,000 home. The chapter 7 trustee and a creditor objected to the homestead. Judge Killian held in favor of the debtors. Even though there were some badges of fraud, the Court did not find that there was fraudulent intent and recognized the importance of Florida homestead protection.

Frankly, I might not have filed this case. There is a huge risk for a debtor to file bankruptcy in these circumstances, and a bankruptcy judge in South Florida including Broward County might have ruled against the debtor.

A debtor with equity in a vehicle is subject to the chapter 7 trustee taking and selling the vehicle. The trustee is more than willing to accept a lump sum payment so the debtor can retain the vehicle. The issue is whether the chapter 7 trustee will accept payments over typically 6 months or will the trustee demand lump sum payment. There are three new trustees for Chapter 7 Broward County bankruptcies. Two of them who practice in that far and away location of Palm Beach County will require a lump sum payment. (They are concerned about liability if the debtor is in an accident during a payment plan. The trustee, they fear, could be considered as the owner).

Debtors must be aware of the risk of losing the vehicle with equity prior to making the decision to file chapter 7 bankruptcy. They need to be prepared to either pay the trustee from non-exempt assets or surrender the vehicle. Note that the trustee’s approach could be self-defeating. More debtors will file chapter 13 because they can have a 3-5 year payment and retain the vehicle.

Garner held the creditor was entitled to contract interest rate post-petition until confirmation, but was only entitled to the cram down interest rate of 4.25% post-confirmation.

The court held that the Statement of Intention pertains only as to the secured creditor, not to the trustee. The trustee could not sell the property despite the surrender language in the Statement of Intentions. The case is under appeal by the trustee.

So what really happened here? We know that husband and wife can own property as tenancy by the entireties. This means that a creditor of one spouse cannot reach or split the asset held as tenants by the entireties. But the tenancy ends upon death or divorce. So if one spouse passes away, the surviving spouse becomes the 100% owner of the asset which is now subject to that person’s creditors.

In Quaid, Mr. and Mrs. Quaid transferred over $300,000 from a tenancy by the entireties bank account into a trust. Only one party had control of the trust, causing a loss of tenancy by the entireties protection, the court observed. Tommie, the wife, had set up the trust originally and was the only person who could withdraw or revoke funds. Upon her death, the debtor and his son became co-trustees. A $3,000,000 judgment was entered against the surviving spouse, Mr. Quaid. If he had been the sole owner of the funds, the assets would have been subject to his creditors. Since the funds were not in a self-settled trust, the district court held that the bankruptcy trustee could not reach these funds. The court reviewed Florida law and discussed the characteristics to determine whether or not a trust is self-settled.

Note there was no discussion of a fraudulent transfer issue, but under Florida law cannot fraudulently transfer property held as tenants by the entireties.

Judge Olson is one of the two bankruptcy judges based in Fort Lauderdale, FL. In a consolidated case, with lead case name and number In re MacFarland, Case No. 11-13345, Judge Olson sanctioned several chapter 13 bankruptcy attorneys suspending them from practicing in bankruptcy court from 30-60 days. The court concluded that attorneys acted either in bad faith or with concerted conduct amounting to fraud on creditors and the court by engaging in a pattern of filing baseless objections to claims.

Attorneys here and across the country have attempted to help their clients by objecting to claims to help meet chapter 13 jurisdictional limits or to reduce the amount debtors would have to pay during a chapter 13 plan to meet a “liquidation” test. Without advance warning, Judge Olson entered Orders to Show Cause which led to the order. According to the court, “The orders to show cause entered in these cases have a singular aim-to address what was become a pervasive problem within this district stemming from wholesale unjustified claim objections, and to stop that practice.” The sanctions were expressly imposed not just as sanctions against the “offending attorney”, but also to deter other attorneys from taking the risk of engaging in this conduct.

In other words, the Court concluded: don’t object to claims unless you really have what the court considers a basis to object.

Based on my experience, this really is not that surprising based on the situation that many of my clients confront. Mortgage servicers are taking forever to review modifications with excuse after excuse that they need the same documents over and over again. Foreclosures were put on hold with the closing of foreclosure mills and the robosigning fraud issues. Many lenders don’t want the properties back, especially condominiums with association fees. And it is generally understood that banks don’t want to write off all the loans so that their capital requirements are not met, and that they don’t want too many homes on the market which would further depress prices. On the other hand, some lenders are increasing their interest in short sales and deeds in lieu even to the extent of offering cash incentives to the homeowners to move.

The foreclosure delays have had a great impact on the slowdown of bankruptcy filings. Perhaps nothing motivates a debtor to proceed to file bankruptcy and clear up debt issues then a pending foreclosure sale(not to mention service of a writ of garnishment)