Articles Tagged with tampa bankruptcy lawyer

Bankruptcy is a federal law that allows people and businesses (even cities and municipalities) to manage or eliminate debt.  Bankruptcy is available to most everyone, and you do not even need to be insolvent to file. Bankruptcy is important because it imposes an immediate “automatic stay” on all creditors, and these creditors must stop all collection efforts.  If the creditors continue to call, send letters, file lawsuits, etc., those creditors are in violation of bankruptcy law and could be fined or required to pay sanctions.  This automatic stay gives the bankruptcy filer (or debtor) a breathing spell.

There are different chapters of bankruptcy depending on your needs or factual situation. There are Chapters 7, 9, 11, 12, and 13.  The most common chapters for everyday consumers are Chapters 7 and 13.

Chapter 7 provides a discharge of certain debts if the debtor agrees to give up all of his or her non-exempt property to a trustee for sale for the benefit of the debtor’s creditors.   Most people will find that there are very little to no assets available for creditors after the exemptions.  For example, in Florida, a person’s home can be exempt, retirement accounts can be exempt, up to $1,000 of a person’s vehicle can be exempt, property held jointly with a non-debtor spouse can be exempt, etc.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

Divorce is often the catalyst for bankruptcy.  After divorce, finances are stretched. There are new budgetary constraints.  One partner might lose health insurance or the insurance might become more costly for the ex-spouse.  Alimony and child support become additional expenses to pay.  Some start having to pay new expenses such as child care, and others will find their expenses increased because no longer are they splitting bills and living expenses with their former partner.

A particular trigger for bankruptcy is the former marital home and the mortgage. When a married couple owns a house, typically one spouse keeps possession and the other spouse will agree to make or help out with the mortgage payments.  Unless the couple refinances the mortgage, both partners will remain legally responsible for the mortgage debt.  The problem arises when, for whatever reason, the mortgage goes unpaid and falls into default.  This drags the co-obligor – who doesn’t even live in the home – into a foreclosure lawsuit and starts to severely damage that person’s credit score.  One spouse can file for bankruptcy, leaving the other spouse adrift and fully responsible for the mortgage.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

In a previous blog post, I explained the purpose of a 341 meeting of creditors.  A trustee holds a 341 meeting in every bankruptcy case.  You can access that blog post HERE.  Before a 341 meeting, a bankruptcy trustee usually requests certain documents to verify the information provided in the bankruptcy petition and schedules. Without the production of this information, a trustee may reschedule or adjourn the meeting until the documents are provided.  Below are 5 things that a bankruptcy often requests to review at least one week before the 341 meeting.

1.  Tax returns for the last two years.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

In October 2008, the State of Florida charged Casey Marie Anthony with first-degree murder in the death of her two-year-old child, Caylee Marie Anthony.  The matter was highly publicized and dominated the national news for years.  From May to June 2011, Casey Anthony stood jury trial and was represented by criminal trial lawyer, Jose Baez, in what Time Magazine called the “Social Media Trial of the Century.”  Jose Baez shocked many legal pundits and even most public opinion when he ultimately secured a verdict of “not guilty” for Casey Anthony on her murder charges, along with charges of aggravated manslaughter and aggravated child abuse.

The verdict had a high price, however.  Jose Baez billed $397.431.78 in legal fees for his representation.  Not only that, but Casey Anthony became financially dogged elsewhere with lawsuits associated with her daughter’s death.  For example, she was sued for defamation by a former babysitter, Zenaida Gonzalez, a person whom Casey Anthony initially blamed for the disappearance.  Ms. Anthony was also sued for fraud and unjust enrichment by Texas EquuSearch, a company that spent at least $100,000 in searching for Caylee Anthony even though Casey Anthony already knew that Caylee was dead.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

Only an individual (not businesses) with regular income can seek relief under Chapter 13 of the Bankruptcy Code.  Chapter 13 allows individuals with regular income to propose a plan to repay all or part of their debts. Under Chapter 13, individuals file a proposed repayment plan to pay installments to their creditors over three to five years. If the individual’s monthly income is less than the applicable state median (see U.S. Trustee website, State Median Family Income by Family Size), the plan will last for only three years unless there is “cause” for additional time needed. If the individual’s current monthly income is more than the median, the proposed plan generally must be for five years. Courts will not allow plan periods of over five years. 11 U.S.C. §1322(d). During the plan period, creditors cannot start or continue collection efforts.

There are certain advantages in Chapter 13 over liquidation in a Chapter 7 case. One of the most significant advantages, Chapter 13 offers individuals an opportunity to save their homes from foreclosure. Individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. That said, individuals must still make all monthly mortgage payments on time during the Chapter 13 plan. Another advantage is that Chapter 13 allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also may protect third parties who are liable with the debtor on “consumer debts,” specifically co-signers or guarantors. Last, in Chapter 13, the individual makes plan payments to a Chapter 13 trustee who then distributes payments to creditors. Individuals do not have direct contact with creditors while under Chapter 13.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

Contrary to pop culture belief, bankruptcy existed long before the game show Wheel of Fortune.  Remember when contestants would lose their prize money if they spun the wheel and randomly landed on the ominous black wedge, “BANKRUPTCY”?  Bankruptcy also existed way before celebrities like M.C. Hammer, Billy Joel, Burt Reynolds, and Mike Tyson each filed for bankruptcy protection. P.T. Barnum, a famous American showman and businessman, filed bankruptcy in 1877.  K-Mart filed bankruptcy in 2002.

Bankruptcy in the United States dates back to the United States Constitution itself. Article I, Section 8 of the U.S. Constitution gives Congress the power to enact uniform laws on the subject of bankruptcies. Although Congress had this power beginning in 1787, Congress did not pass a bankruptcy law until about 13 years later in 1800 and, even then, the law passed was short lived and was limited to involuntary bankruptcy proceedings brought against merchant and traders. In 1803, Congress repealed the Bankruptcy Act of 1800, citing excessive costs and corruption.

By Alfred Villoch, III, Esquire, with Savage, Combs & Villoch, PLLC

On November 17, 2014, the United States Supreme Court granted a petition for writ of certiorari in two cases: Bank of America, N.A. v. Caulkett (In re Caulkett), 566 Fed. Appx. 879, 2014 U.S. App. LEXIS 9407 (11th Cir. Fla., 2014) and Bank of Am., NA v. Toledo-Cardona (In re Toledo-Cardona), 556 Fed. Appx. 911, 2014 U.S. App. LEXIS 9035 (11th Cir. Fla., 2014).  In both cases, the United States Court of Appeals for the Eleventh Circuit ruled that a Chapter 7 debtor could strip off a second mortgage when the home’s value fell below the amount owed on the first mortgage.

What that ruling means is, if you file bankruptcy and the second mortgage on your home is completely “underwater,” like many second mortgages after the recent housing bust, then you could keep your house subject to the first mortgage and strip off the second mortgage completely leaving the debt secured by that second mortgage to be discharged in the bankruptcy.  In the Toledo-Cardona case, the debtor kept his home and stripped off the second mortgage that had a value of over $100,000.00.  That is why Bank of America and other lenders are not pleased with the decision.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

So you owe money to a creditor, like a credit card company, and the creditor sues you. Eventually, a court awards your creditor a money judgment, say for $10,000. Can the creditor now garnish your wages in an effort to satisfy that judgment?  Put another way, can the creditor get a court order directing your employer to pay over part of your paycheck whenever you get paid?

The short answer is “yes,” but there are important limitations and exceptions to wage garnishment.  See § 77.0305, Fla. Stat., entitled “Continuing Writ of Garnishment Against Salary or Wages.”  The general rule is that a creditor can continue to garnish your wages under a continuing writ of garnishment until the judgment, or in this example, the $10,000, is paid in full.

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

If you miss car payments, the company that loaned you the money to purchase the car can likely take back your car in what is called “repossession.” The right to take back your car for nonpayment usually comes from the terms of the signed loan paperwork when you buy your car. Usually, a few missed payments and the loan company will start calling you and sending you warning letters. Warning calls and letters will ultimately lead to repossession. Once the loan company repossesses, it can then sell your car at an auction and apply that money to pay down the amount that you still owe. This can also happen with car title loans (e.g., where you receive a loan and agree to give the loan company your car title as security and part of your promise to pay back the loan. This is called a security interest). In situations where the car is part of your promise to pay back a loan, the answer is “yes”: you could lose your car if you don’t make your car payments. Bankruptcy can immediately stop this process.

If you haven’t paid other bills, like a credit card or a payday loan, you could still lose your car, but the situation is a bit different and the company must take a few extra steps. For example, the company must first sue you to get a judgment in court. With a judgment in hand, the company can then apply to the court to have the sheriff take your car and sell it. This process is similar to repossession and is called a writ of attachment. The company would then use the money from the sale of your car as payment down on the amount that you owe. Bankruptcy can immediately stop this process too.

By Alfred Villoch, III, Esquire, with Savage, Combs and Villoch, PLLC

A federal judge recently dismissed a bankruptcy case filed by a marijuana business owner in Colorado, according Tom McGhee of the Denver Post.  Why?  Because marijuana remains illegal under federal law and that causes major impediments in obtaining relief under federal bankruptcy law.  See Dkt #74, In re Arenas, Case No. 14-11406 (Bankr. D. Colo. Aug. 28, 2014); see alsoJudge denies bankruptcy protection to Denver marijuana business.

In that case, Mr. Arenas, the debtor in bankruptcy, produced and distributed marijuana in Colorado at the wholesale level. He possessed all of the required licenses and permits to legally produce and distribute marijuana.  The bankruptcy court even acknowledged that Mr. Arenas’ marijuana business was perfectly legal under Colorado law.  But the court also found that leasing space to a marijuana dispensary and cultivation of marijuana made Mr. Arenas liable for criminal penalties under the the federal Controlled Substances Act, 21 U.S.C. § 801 et seq. (the “CSA”). Because of that, the bankruptcy court dismissed Mr. Arenas’ case upon a motion filed by the United States Trustee.

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