Ft. Lauderdale Bankruptcy BLOG

Can you surrender and retain homestead?

November 27th, 2011

In Re Gentry, 2011 Bankr. Lexis 4283(Bankr. M. D. FL Nov 15, 2011), Judge Delano held that the debtor could claim on the Statement of Intentions that he was surrendering the property and still claim the home as exempt. The debtor wanted to retain the home until the bank finished the foreclosure. The chapter 7 trustee wanted to sell the property based on the Statement of Intention.

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.

The issue of how to handle a debtor’s Florida homestead in bankruptcy remains as an important issue for any Fort Lauderdale bankruptcy lawyer.

Posted in Bankruptcy Cases and Laws | 1 Comment »

Self-Settled Trust

November 20th, 2011

In Re Quaid, 2011 US Dist Lexis 132299, (D. Ct. M.D. FL Nov 15, 2011) the United States District court reversed the decision of the bankruptcy court, Judge Briskman. Debto’s spouse had set up a trust. Funds were later transferred from a tenants by the entireties account to the trust. Non-debtor spouse died. The district court held that the trust was not a self-settled trust and the spendthrift clause shielded the asset from the bankruptcy trustee. The deceased spouse had the right to withdraw funds and revoke the trust, so the debtor was not the settlor, so the spendthrift clause controlled.

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.

Posted in Bankruptcy Cases and Laws, Bankruptcy Planning, Bankruptcy: Probate and Estate Planning | No Comments »

Court Order Sanctioning Attorneys on Objections to Claims

November 15th, 2011

Chapter 13 attorneys must understand this case.

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.

This is a warning to any Fort Lauderdale chapter 13 attorney

Posted in Bankruptcy Cases and Laws, Chapter 13 | 1 Comment »

Stunning Statistic on Foreclosure Delinquencies

November 12th, 2011

An article by Kimberly Miller of the Palm Beach Post, published today in the SunSentinel, reflects what may seem to be a stunning portrait of ortgage delinquencies in Florida. A report shows that 56% ofFlorida foreclosures involve homeowners who are more than 24 months behind on their payments.

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)

Contact Fort Lauderdale foreclosure attorney

Posted in Foreclosure News | No Comments »

Filing Fees Increase November 1

November 3rd, 2011

Bankruptcy filing fees increase on November 1. Chapter 7 filing fees will be $306.00, and chapter 13 filing fees will increase to $284.00. The costs to individuals to have access to the bankruptcy court system have steadily increased.

Posted in Bankruptcy News | No Comments »

Florida Means Test Figures Change November 1

October 30th, 2011

Florida bankuptcy attorneys must use new median income figures as of November 1.The median income for the State of Florida for a household of one was increased slightly to $40,766. However, the other income figures have decreased: for a household of 2, $49,729; for a houshold of 3, $52,840; and for a household of 4, $62,742. For a household of 4, this is a $2400 decrease in the median income.

There was a significant change in the means test expenses that may help numerous over median debtors. Debtors who are over median income must complete the balance of the means test which deducts authorized expenses to determine eligibility for chapter 7 (or to determine the amount of required payments to unsecured creditors in a chapter 13) The allowed expenses for renters for Broward County bankruptcies was increased by over $200 per month for each household size. For example, for a household of 1, the allowance is now $1272, and for a household of 4, the allowance is now $1784.

Posted in Bankruptcy and the Means Test, Bankruptcy News | No Comments »

Cars and Bad Faith in Chapter 13

October 22nd, 2011

BAPCPA changed the law and restricted cramming down car values unless the car was financed more than 910 days prior to filing. But a debtor can still extend the term and payoff the note during the chapter 13 plan. Additionally, the debtor can reduce the contractual rate to the so-called Till rate, which has been 5.25% for some time in the Southern District of Florida.

But in a recent case, Judge Olson held that the good faith requirements of chapter 13 to confirm a plan are relevant as to recently financed vehicles. In the case In re Blackmon, , 2011 Bankr Lexis 3619, 2011 WL 4543923(Case NO 10-41452)(September 29, 2011), the debtors had already met with bankruptcy counsel, financed 2 vehicles at high interest, and filed bankruptcy within less than 80 days after obtaining the vehicle. Judge Olson denied confirmation of the plan which reduced the interest rate.

Posted in Bankruptcy Cases and Laws, Chapter 13 | No Comments »

Judge Cristol Scolds Trustee

October 16th, 2011

I have previously discussed how the trustees do not like the $4,000 wildcard personal property exemption when the debtor owns a Florida homestead but elects not to claim it as homestead in the bankruptcy. Trustees do not want to lose out on the collection of funds on personal property while the debtor is effectively still keeping the home that is undersecured. The home is not really sellable so there would be no asset for the bankruptcy estate.

However, in In re Luban, 2011 WL 4344548, 2011 Bankr Lexis 3509, (Case NO. 11-13633)(Sept 15, 2011), the trustee tried to sell the home to, as Judge Cristol described, a vulture investor, so that the debtor would then have to pay rent to the investor. The debtor was still making payments on the first and second mortgage. Judge Cristol found that the trustee’s conduct selling to a vulture investor was “misguided and wholly inappropriate”. The trustee, simply to obtain funds that would primarily pay for the trustee and professionals, would cause mortgage payments to go into default and could lead to the debtor and disabled child losing their home.

However, debtors should still be careful on relying too much on this decision. Judge Cristol found that the trustee’s fiduciary duty applies to all creditors including first and second mortgages. The debtor had been paying the mortgages. In many cases, the debtor is in default and perhaps even in foreclosure. Perhaps there would be a different result in such case. A debtor might still be trying to modify the mortgages, but the fact remains that there is still a risk if the debtor is trying to retain the home and exercise the wildcard personal property exemption. It is imperative to consult with your bankruptcy attorney

Posted in Bankruptcy Cases and Laws | 1 Comment »

Payday Loans in Bankruptcy

September 3rd, 2011

Some banks have recently announced that they are essentially entering the payday loan business. These loans have traditionally led to high costs and abuses greatly jeopardizing the well being of consumers. It may be true that an employee desperately needs immediate funds and an advance on his or her paycheck might be needed for the rent, utility bill, or other necessity. But payday loans have high fees and lead to a need for a loan on each additional check creating a never-ending cycle of high fees and inability to catch up.

Payday loan companies are often the nastiest and toughest trying to call and collect when the loans are not repaid. They often lie threatening criminal prosecution for a bad check. But the checks they hold are post dated; the debt is based on a promise to pay. There is no current exchange of goods and services for a current check.

Payday loans can be discharged in a Fort Lauderdale bankruptcy like any other debt.

Posted in Bankruptcy Information | No Comments »

Do I really have to stay in ch. 13 for 5 years?

August 21st, 2011

Chapter 13 plans are typically from 3-5 years. In Florida, which is bound by decisions of the 11th Circuit Court of Appeals, a debtor who is above median income on the means test must be in a 5 year plan. In re Tennyson. 611 F. 3d 873(11th Cir. 2010). The idea under BAPCPA is that the applicable commitment period for an above median income debtor is 5 years during which time the debtor must pay his disposable income.

What if the debtor is able to pay off the chapter 13 plan early? This could not be from increased income, because the debtor would have greater disposable income and would be able to increase the chapter 13 payments. But what if a family member could make a gift, or the debtor could fund the plan from exempt funds such as an IRA?

In the past, I have obtained early payoffs with the consent of Robin Weiner, Chapter 13 Trustee for Broward and Palm Beach counties in Florida. But Tennyson has caused a concern for the trustee that a chapter 13 case should perhaps remain open for the required term because the debtor could have additional income.

A recent case from the Middle District of Florida expressly authorized the early payoff of a chapter 13 plan when a motion was filed with clear notice to the creditors. In re Smith, 449 BR 817(Bankr. M. D. FL June 6, 2011). The court examined the Tennyson case and concluded it did not prevent an early payoff.

As a Fort Lauderdale bankruptcy attorney, I recognize that the early completion of a chapter 13 bankruptcy is extremely beneficial to clients who are able to obtain an independent source of funds to complete plan payments.

Contact Fort Lauderdale Bankruptcy Attorney.

Posted in Bankruptcy Cases and Laws, Bankruptcy Planning, Chapter 13 | No Comments »

Categories

Recent Posts

Archives