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. Similarly, like the mortgage instance above, another trigger for bankruptcy are joint credit cards in both spouses names. Most couples have at least one joint account when they split. If the debt isn’t paid off right away, it will usually end up being the responsibility of one spouse, and if he or she doesn’t pay it, then both credit reports (and by extension credit scores) will suffer. Many of these issues can be avoided or at least mitigated with a skilled family attorney who can help a couple in divorce anticipate new financial challenges and to legally separate one another from joint debt. Sometimes, however, these financial issues cannot be avoided. In those instances, it is important that you contact an experienced bankruptcy lawyer. At Savage, Combs & Villoch, PLLC, you can speak with a Tampa Bankruptcy Attorney who can help you understand these issues associated with divorce and to let you know if bankruptcy or some alternative is right for you. Contact us now at 813-200-0013 and www.savagelaw.us.

The judges of the United States Bankruptcy Court for the Middle District of Florida are considering new rules and proposed amendments to the Local Rules. The proposals are available HERE for public comment beginning on March 9, 2015. The public comment period ends on April 24, 2015. When promulgated by the judges, the amended and new Local Rules will become effective on July 1, 2015. While many proposed changes are stylistic, some of the proposals will affect daily bankruptcy practice. For instance, one proposed amendment reduces the time during which Electronic Filing Users must retain paper copies bearing original signatures from four years to two years. One new rule requires subpoenas before trial to be filed with the Court in addition to being served on each party to the adversary proceeding or contested matter. Another change involves amendments to lists and schedules. The amendment requires that the Notice of Deadline to File Proof of Claim, if any, be served upon newly added creditors in amended Schedules D, E and F.

No. An employer is strictly prohibited from terminating your employment or discriminating against you in any way solely because you filed bankruptcy. Section 525 of the Bankruptcy Code is entitled “Protection against discriminatory treatment.” Subsection (b) specifically states that no private employer may terminate the employment of, or discriminate with respect to employment against, an individual who filed bankruptcy simply because he or she filed bankruptcy. Similarly, if your employment requires a license or permit, for example, a doctor, nurse, lawyer, or financial adviser, the governmental unit that issues such license or permit cannot deny, revoke, suspend, or refuse to renew such license or permit simply because you filed bankruptcy. 11 U.S.C. § 525(a). By way of further example, a state medical licensing board cannot revoke a doctor’s license to practice medicine simple because the doctor filed bankruptcy. That said, the bankruptcy code does not prohibit an employer for terminating employment or a governmental unit from taking action on a license or permit for reasons other than bankruptcy, for example, tardiness, failing to perform job duties, absences, crimes, etc. Additionally, Section 525 protects people who filed bankruptcy with their current employment, but does not necessarily protect bankrupt debtors with future employment or job seeking. An overwhelming majority of bankruptcy courts have concluded that Section 525(b) provides no protection to those who filed bankruptcy against hiring discrimination by private employers. In Rea v. Federal Investors, 627 F.3d 937 (3rd Cir. 2010), a job applicant sued a prospective private employer and alleged that the employer violated Section 525 when it refused to hire the job applicant because he previously filed bankruptcy. The employer moved to dismiss the lawsuit. The Court agreed with the employer to dismiss the lawsuit and held that Section 525(b) did not create a cause of action against private employers who engaged in discriminatory hiring on the basis of bankruptcy. Specifically, Congress omitted language in Section 525(b) prohibiting a private employer from denying prospective employment to a person that had been bankrupt. In short, federal law prohibits a current employer, whether governmental or private, from terminating employment or discriminating against an employee solely because that employee filed bankruptcy. If you have any questions about bankruptcy and debt relief or are concerned about your current employer and filing bankruptcy, please contact Alfred Villoch, III, Esquire, with Savage, Combs, & Villoch, PLLC. The telephone number is 813-200-0013, and web address is www.savagelaw.us. We look forward to hearing from you today!

For the honest but unfortunate debtor, bankruptcy will discharge your unsecured debts and give you the fresh start that you need to rebuild your life and strengthen your financial well being. But then there are certain debts that are simply inescapable, even in bankruptcy. One inescapable debt is a debt arising from injuring or killing someone while driving, boating, or flying intoxicated. Section 523(9) of the United States Bankruptcy Code states that a person cannot discharge debts “for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.” Before this section, there existed an unconscionable loophole where drunk drivers could evade financial responsibility for the injuries that they caused. By creating this exception to discharge, Congress had three objectives: (1) to deter drunk driving; (2) to ensure that those who cause injuries by drunk driving did not escape civil liability through bankruptcy laws; and (3) to protect victims of drunk driving. Importantly, both compensatory and punitive damages are nondischargeable. A state conviction or even a blood alcohol test are not necessary (although those usually naturally follow). Rather Judgments are nondischargeable upon a mere showing that the debtor was driving while intoxicated without showing that the intoxication was the principal or sole cause of the accident. Contreras v. Dale (In re Dale), 199 B.R. 1014, 1022 (Bankr. S.D. Fla. 1995) (citing State Farm Mut. Auto. Ins. Co. v. Kupinsky, 133 Bankr. 993 (S.D. Ill. 1991)). In short, if there wasn’t enough reasons to avoid intoxicated driving, bankruptcy will not protect you if you injure someone while driving, boating, or flying intoxicated. There is no requirement that intoxication be the principal or sole cause of the accident. So long as you were intoxicated during the accident, the debt arising from that act is nondischargeable. If you or someone you know has any legal questions, including about bankruptcy, please contact Alfred Villoch, at Savage, Combs & Villoch, PLLC. The website is www.savagelaw.us, and the telephone number is 813-200-0013.

On November 12, 2014, the New York Times published an article entitled “Debts canceled by bankruptcy still mar consumer credit scores.” In the article, the author, Jessica Silver-Greenberg, explains that “Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after — sometimes as long as a decade after — federal judges have extinguished the bills in court.” This article was also featured in the Tampa Bay Times on Friday, November 21, 2014. Lawyers with the United States Trustee Program, a group charged with overseeing federal bankruptcy cases, are investigating certain banks, such as JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial (f/k/a GE Capital Retail Finance), because these banks are suspected of violating bankruptcy law and ignoring the discharge injunction. Section 524 of the bankruptcy code provides a “discharge injunction” where creditors are no longer allowed to pursue debts canceled or discharged in the bankruptcy case. The banks allegedly ignore the discharge injunction when they know (or should have known) the debt was canceled but still seek to collect the debt, whether by continuing to report it on the person’s credit report, sending letters, or making telephone calls about the canceled debt. Often times, these are not clerical errors, but debt-collection tactics. In some cases, the banks purportedly refuse to correct the “mistakes,” insisting that the canceled debt be paid. An example cited in the article was The Vogts, a couple in Denver, who paid JPMorgan $2,582 on a debt that was discharged in bankruptcy because they needed a clean credit report to get a mortgage. In Florida, can you sue a creditor when that creditor attempts to collect a debt that you had previously discharged in bankruptcy? The answer is yes. Although there is no private right of action under the bankruptcy code for violation of the discharge injunction, the courts have recognized that a person could sue a creditor for pursuit of a debt canceled in bankruptcy under both the Fair Debt Collections Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA“) and the Florida Consumer Collection Practices Act, Fla. Stat. §§ 559.55 et seq.(“FCCPA“). See Bacelli v. MFB, Inc., 729 F. Supp. 2d 1328 (M.D. Fla. 2010). In the Bacelli case, the debtor filed chapter 7 bankruptcy in 2008. In her bankruptcy schedules, the debtor listed that she owed $459.15 to St. Joseph’s Hospital in Tampa, Florida. An initial bankruptcy notice was mailed to St. Joseph’s Hospital and, later, a notice of the debtor’s discharge was mailed. Nevertheless, the hospital sent two collection letters and hired a debt collector after the discharge. Ms. Bacelli, the debtor, ultimately sued St. Joseph’s Hospital and its debt collector for violations of the FDCPA and its Florida law counter part, the FCCPA. As reported in Bacelli, “[t]he FDCPA provides a civil cause of action against any debt collector who fails to comply with its requirements. Edwards v. Niagara Credit Solutions, Inc., 584 F.3d 1350, 1352 (11th Cir. 2009) (citing 15 U.S.C. § 1692k(a)). The FDCPA prohibits debt collectors from using any false representation as to the “legal status of any debt.” 15 U.S.C. § 1692e(2)(A). A demand for immediate payment while a debtor is in bankruptcy (or after the debt’s discharge) is “false” in the sense that it asserts that money is due, although, because of the automatic stay (11 U.S.C. § 362) or the discharge injunction (11 U.S.C. § 524), it is not.” Randolph v. IMBS, Inc., 368 F.3d 726, 728 (7th Cir. 2004) (dicta); see also Ross v. RJM Acquisitions Funding LLC, 480 F.3d 493, 495 (7th Cir. 2007) (“Dunning people for their discharged debts” is prohibited by 15 U.S.C. § 1692e(2)(A)); cf. Turner v. J.V.D.B. & Assocs., Inc., 330 F.3d 991, 995 (7th Cir. 2003)(“Turner I”) (reversing summary judgment in favor of debt collector on claim under 15 U.S.C. § 1692e(2)(A) in part because a reasonable jury could conclude debt collector’s collection letter implied that the discharged debt was still payable). The FDCPA also prohibits debt collectors from using “unfair or unconscionable” debt collection methods, 15 U.S.C. § 1692f, and (with exceptions not relevant here) from communicating with a consumer in connection with the collection of a consumer debt “if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address . . . .” 15 U.S.C. § 1692c(a)(2).” Accordingly, Ms. Bacelli was allowed to sue St. Joseph’s Hospital and its debt collector for the alleged transgressions of the discharge injunction. In short, a Floridian is entitled to sue a creditor under the FDCPA and FCCPA if that creditor continues to report or pursue a debt after the debt has been discharged or canceled by the bankruptcy court. This cause of action might provide relief to the “Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after — sometimes as long as a decade after — federal judges have extinguished the bills in court,” as reported in the New York Times. If you (or you know somebody who) has been pursued by a creditor after the debt has been discharged in bankruptcy, please contact Savage, Combs & Villoch, PLLC, for a free consultation and to speak about your rights under bankruptcy law, the FDCPA, and the FCCPA. Our number is 813-200-0013 or please visit www.savagelaw.us today!

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. The Eleventh Circuit is the appeals court for all bankruptcy cases filed in Florida, Georgia, and Alabama. This ruling is not the first Eleventh Circuit Court decision on this topic. The Eleventh Circuit previously ruled this way about mortgage stripping in Folendore v. U.S. Small Bus. Admin., 862 F.2d 1537, 1538-39 (11th Cir. 1989); and McNeal v. GMAC Mortg., LLC, 735 F.3d 1263, 1265-66 (11th Cir. 2012). Bank of America seeks to convince the United States Supreme Court that the Eleventh Circuit ruling should be overturned in light of Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), where the U.S. Supreme Court previously held that a chapter 7 debtor could not “strip down” a creditor’s lien on real property where the value of the property is less than what is due to be paid to the creditor. Id. at 417, 112 S. Ct. at 778. The U.S. Supreme Court will likely hear the lien-stripping cases and make its decision in Spring 2015. The ruling will likely unify a split among the Circuit Courts of Appeal. The Fourth, Sixth, and Ninth Circuit Courts of Appeal have previously ruled opposite of the Eleventh Circuit and denied the debtor’s ability to strip off a second mortgage when the second mortgage is completely underwater. The Supreme Court’s decision is one of great importance because it will affect debtor’s rights throughout the country, especially given that many second mortgages are still completely underwater after the housing bust beginning in 2007. If you know someone facing financial difficulties and/or foreclosure, please contact Savage, Combs & Villoch, PLLC, and speak to a qualified attorney who could provide you practical advice on important issues such as stripping junior liens in bankruptcy. Please call for a free bankruptcy consultations today. 813-200-0013 or visit www.savagelaw.us!

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. It is also important to note that Florida offers a $1,000 car exemption. Unfortunately, this exemption is still very low and hasn’t changed in years. It means, if your car is worth less than $1,000, which very few cars are, you get to keep the car and its exempt from attachment. Another scenario where the exemption applies is if your car has less than $1,000 in equity. This often happens when you owe more than the car is worth. If a sheriff takes your car under a writ of attachment, you can apply to the court for recognition of your exemption and request the return of your vehicle if it falls squarely within the exemption. Florida also has a generic, personal property exemption of $4,000, and in certain instances, you can combine the $1,000 car exemption with the $4,000 personal property exemption to claim a total exemption of $5,000 for your car. As you can see, it can be very stressful when you’re unable to pay your bills on time. Depending on your situation, bankruptcy can help you stop the taking of your car and provide you with the relief necessary for a fresh start. For immediate help and more details, call Savage, Combs & Villoch, PLLC, at 813-200-0013.

Consumer bankruptcy filings are down 12 percent so far in 2014, according to Epiq Systems, Inc., and as reported by the American Bankruptcy Institute. See “Bankruptcy Filings Through First Three Quarters of 2014 Fall 12 Percent from 2013, Commercial Filings Fall 22 Percent.” The total consumer filings nationwide this year are 705,452. Commercials filings are down 22 percent over the same period. The total commercial filings are 26,767. The top bankruptcy-filing states per capita are Tennessee, Alabama, Georgia, Utah, and Indiana. Surprisingly, Florida is not in the top 5. ABI Executive Director, Samuel J. Gerdano, believes that “[t]he continued decline in bankruptcy filings corresponds to sustained low interest rates and high costs of filing.” He commented that “[t]otal filings are on track to fall under 1 million for the first time since 2007.” For more information about bankruptcy, please call Savage, Combs & Villoch, PLLC, at 813-200-0013. Also, please visit www.savagelaw.us!

Chapter 7 of the bankruptcy code allows you to discharge certain debts immediately upon order of the bankruptcy court. But to qualify for chapter 7, you must satisfy what is called the “means test.” If you cannot satisfy this means test, you must instead file for chapter 13 (or chapter 11). In a chapter 13 case, rather than the immediate discharge of certain debts, the bankruptcy court determines your monthly disposable income and you are required to pay over that monthly disposable income to the trustee for the benefit of your creditors over a 3 or 5 year period. So what is the “means test” and how do you qualify for chapter 7 for a more prompt discharge of your debts? The initial part of the means test depends on your household income and the number of people in your household. If your current monthly household income is less than the median income for a household of your size in your state, the bankruptcy court presumes that you are eligible to file for chapter 7 bankruptcy. Current Monthly Income is the monthly average of certain income that you (and if you are married, your spouse) received in the six calendar months before your bankruptcy filing. In Florida, the median income for one person is $41,939 for cases filed after May 1, 2014. For two people, the median income is $52,598. You can find more information at: http://www.justice.gov/ust/eo/bapcpa/20140501/bci_data/median_income_table.htm. If your household income is more that the median income for your state, you can still qualify for chapter 7 depending on your “disposable income.” What matters for disposable income purposes is how much money do you have left at the end of every month that could go towards paying off “unsecured” debts. 
In other words, can you afford, after expenses, to pay off at least $7,025 over the next 5 years ($117 per month over 60 months)? If you can, the law will require you to file for chapter 13 instead of chapter 7. As stated above, passing the means test simply gives you a presumption that you qualify for chapter 7. But the means test is just one factor (albeit a primary factor) that courts and trustees consider when reviewing cases for abuse. Even if you pass the means test, section 707(b)(3) allows a judge to refuse a chapter 7 discharge based on a “totality of circumstances,” which can include cases of excessive secured debts for luxury items or fraud in your bankruptcy paperwork, for examples. Whether you qualify for chapter 7 can be a very complicated matter. It is important that you hire an attorney to understand all of your options under state and federal law. If you feel the oppressive weight of debt, please visit Savage, Combs & Villoch, PLLC, at http://54d.d17.myftpupload.com/ for a free consultation!