The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 had a lot to do with increased filing fees. As the process was made more complex, it also became more expensive. Fortunately, tax returns may be helping some people out. It is estimated that nearly 200,000 consumers who do not have the finances available to file will use their income tax refunds this year to cover the necessary fees.
]]> Although filing for bankruptcy is not free, for many people, it is worth the cost. When you find yourself drowning in debt, life can become very stressful. Bankruptcy exists to help those who truly need it emerge from debt and start over.Filing a Chapter 7 petition is a way to decrease or eliminate the hassle of creditor's phone calls and letters and lead to a more stable financial situation. It can also halt a foreclosure. If bankruptcy is handled properly, it can be a successful way to liquidate property and free up cash needed to reach debt settlement safely under the supervision of the court.
Source: CNN Money, "Too broke to go bankrupt," Blake Ellis, May 7, 2012
]]>In filing for Chapter 7 bankruptcy, it is quite possible that many of Suleman's debts will be discharged under the aegis of a court. However, in order to satisfy the claims of creditors, some of her assets may be liquidated. While exemptions do apply, a debtor filing for Chapter 7 typically has to sell most of their assets. In this case, Suleman owes nearly $1 million, including $30,000 in back rent for the house she currently lives in. That stands against only about $50,000 in assets that she holds, meaning that many creditors may be left wanting.
]]> Yet, Chapter 7 bankruptcy may provide her, as it does many others, with the opportunity to set things right and to regain a solid financial footing. Fortunately, it also appears that her future potential income may be quite large, meaning that she may be able to bounce back from a Chapter 7 bankruptcy relatively easily.Of course, most Florida residents who find themselves facing a seemingly overwhelming mountain of debt are not so lucky when it comes to future income and may indeed just be treading water. Nonetheless, Chapter 7 may prove beneficial in removing debts and with putting a person back on the path toward financial independence.
Source: TIME.com, "Was it Smart for 'Octomom' to Declare Bankruptcy?" Martha C. White, May 4, 2012
]]>Wells Fargo Bank is now freezing bankruptcy debtors' accounts on filing of Chapter 7 bankruptcy petitions. Recently, Wells Fargo denied a debtor access to her accounts, including an account shared with an invalid relative, even though Wells Fargo was not a creditor. In a letter to the debtor's counsel, Wells Fargo stated "Wells Fargo is required by operation of Sections 541 and 542 of the Bankruptcy Code to act in good faith to preserve the Estate Funds and must follow the trustee's direction with regard to Estate Funds." Wells Fargo imposed the freeze within 24 hours of the filing of the petition and the debtor and her invalid relative lost all access to their accounts for more than thirty days.
Wells Fargo's statement of the Bankruptcy Code is correct, but freezing accounts claimed as exempt is discretionary. The Code does not mandate that a depository immediately freeze accounts. This practice causes serious disruption to debtors and their families precisely at the time they expect the relief afforded by the Bankruptcy Code. To minimize this possible harm debtors should consider one of the following:
•1. Before filing a petition move all accounts from Wells Fargo to a bank that will agree in advance not to freeze exempt accounts until ordered to do so by the Bankruptcy Court. Debtors should inquire whether the bank will freeze an exempt account when they open the new account. Any bank account closed prior to the petition must be listed on the Statement of Financial Affairs filed with the petition;
•2. Withdraw all funds in any exempt account with Wells Fargo one day before filing the petition. Debtors should make sure, however, that to include the withdrawal amount on Schedule B as an asset and to claim the withdrawal amount as an exemption on Schedule C. If the funds are re-deposited after the day of filing, Wells Fargo should not then freeze the account because of its inability to determine if the funds were "Estate Funds." Exemption laws are specific to each state, so debtors should seek specific legal advice before withdrawing funds prior to filing; or,
•3. If the Wells Fargo account is held jointly with a non-debtor, change the account to exclude the debtor prior to filing the petition.
Of course, any bank can freeze the accounts of a depositor who owes money to that bank. As a rule, debtors (and any one else) should never keep a depository account with a financial institution that has any claim whatsoever against the debtor or the depositor.
This law office now advises clients to terminate all deposit arrangements with Wells Fargo prior to a bankruptcy filing. The bank's policy is legally justified but not necessary. Good treatment of customers seems less important to Wells Fargo than minor inconvenience to its officers and shareholders.
]]>One thing that holds many people back in Florida and elsewhere is a concern about their credit report. After all, the impact to one's credit score can last for many years after the Chapter 13 bankruptcy process has ended. Nonetheless, there are steps that a person can take after filing for bankruptcy to keep their credit score in relatively good standing.
]]> First, of course, is just regularly reviewing one's credit report. It is possible to request one free copy per year, and this can help with not only keeping track of debt but also with ensuring no errors creep into the report. Paying bills on time and knowing your own limits are two other common-sense measures that are easy to take.Less known, however, may be that it is not necessarily a good idea to close a credit account. Part of a credit score is based on how much credit is available to you, and so closing a credit account could be detrimental. It may well be more beneficial to simply tear up the credit card without closing the account.
Overall, though, by simply exercising due diligence in attending to one's credit score, it may be possible to work through a Chapter 13 or Chapter 7 bankruptcy while keeping the impact to a bare minimum.
Source: MSN Money, "7 credit tips for after bankruptcy," Britt Klontz, April 12, 2012
]]>Sapp, who once played for the Tampa Bay Buccaneers, filed for Chapter 7 reportedly after an investment in a low-income housing project went south. The project started in 2005, but building was not supposed to commence until a buyer had received mortgage approval. Nevertheless, Sapp claims that one of his partners went ahead anyways and had three houses constructed.
]]> Unfortunately, the houses went unsold and Sapp along with his partners owed $1 million. The creditors went after him, and according to Sapp, 100 percent of his wages were garnished for 11 months. That eventually forced him to fall into debt totalling $6.7 million, leading him to recently declare Chapter 7 bankruptcy.The filing may come as a surprise to some in Florida as Sapp earned a substantial amount during his time with the NFL -- about $60 million according to him. Yet any household can experience financial hardship due to one or more events that prove costly to remedy. Through a Chapter 7 bankruptcy, though, a debtor can relinquish most or even all of their debt. In this case, Sapp may end up having to liquidate many of his assets to satisfy the claims of creditors, but after he does, he will be afforded the tremendous opportunity of having a fresh start in life.
Source: Tampa Bay Times, "Warren Sapp speaks out on bankruptcy filing," Gary Shelton, April 13, 2012
]]>AFA Foods is one of the largest ground beef processors in the country. It reportedly used the ammonia-treated beef filler as part of its operations but was caught unawares when the media storm caused a severe drop-off in the sale of beef products thought to contain pink slime. The company stated in Chapter 11 bankruptcy documents that it had $219 million in assets and $197 million in debts and liabilities. There was a commitment for $56 million in debtor-in-possession financing in place from lenders as well, according to reports.
]]> The term "pink slime" was first coined by a USDA microbiologist in an email to his co-workers. Reports note that the recent public uproar began after celebrity chef Jamie Oliver brought attention to the meat filler. Since the discussion over the product began, AFA has seen a decline in business.Filing for Chapter 11 bankruptcy will offer the company a chance to streamline finances. The company intends to sell its assets under the supervision of the bankruptcy court. Industry officials doubt that the meat industry will recover fully from this outcry in the near future.
Controversy aside, this situation illustrates that a business' financial situation can change quickly. By filing a Chapter 11 bankruptcy, companies can confront their financial difficulties. Bankruptcy may be the only choice when market conditions change unexpectedly, making the continued operation of a business no longer financially viable.
Source: Reuters, "Pink Slime Bankruptcy: Beef Processor AFA Foods Files For Chapter 11 Amid 'Pink Slime' Uproar," Tanya Agrawal and Andrew Stern, April 2, 2012
]]>The data varies from county to county. For example, Broward County has seen the number of bankruptcy filings increase for four months in a row. In March, that number rose to 866 versus 780 in February. By comparison, bankruptcy filings in Palm Beach County initially fell to 338 in February but rose to 393 in March.
]]> Miami-Dade County saw a similar pattern in which bankruptcies slipped to 1,087 in February from 1,247 in January, but then rose to new heights in March with 1,297 filings. Overall, there were 2,556 personal bankruptcy filings in South Florida in March after just 2,205 such filings in February. However, there may be a couple of reasons for the jump.First, there is of course the ongoing issue many have in Florida and elsewhere with credit problems and with foreclosures. Second, tax time is approaching, meaning many area residents are beginning to receive their tax refunds, and some may have used that extra money to file for bankruptcy. While many fear the idea of bankruptcy, it can prove to be the best approach to some people's financial problems, and it may also prove invaluable in allowing people the opportunity to regain control of their finances.
Source: South Florida Sun-Sentinel, "Personal bankruptcies up in Broward County in March," Arlene Satchell, April 2, 2012
]]>The Golden Hills Golf and Turf Club has been open since 1964 and covers 500 acres. However, in June 2011, two brothers bought the business from its former owners, and took out a $900,000 mortgage on the club. Yet they reportedly still owe over $897,000 on that mortgage. That is in addition to more than $500,000 owed to 19 parties, including $67,000 in sales taxes to the Florida Department of Revenue.
]]> Although court records say that the club is worth almost $2.8 million, the owners were unable to keep their business open. Several employees who once worked there say they were not paid and the electricity was shut off after the owners were unable to provide a security deposit to the electric company. Now that the business has filed for Chapter 7 bankruptcy, though, the assets of the club will be sold off to pay back creditors.As part of the bankruptcy proceedings, the presiding judge over the matter has appointed a U.S. trustee to handle the Chapter 7 case. The trustee will meet with creditors later this month, and presumably help to liquidate the assets of the business. Moreover, by moving forward with a Chapter 7 bankruptcy, the owners will eventually be able to continue on with their lives without worrying about a burden of debt hanging over their heads.
Source: Ocala Star-Banner, "Golden Hills Golf and Turf Club locks its doors," Vishal Persaud, March 21, 2012
]]>When the children go to college, Mom and Dad may decide to pick up part of the expense. Many times, they may co-sign a loan with the child, meaning that they are on the hook to repay the loan in case the child fails to pay. On average, parents picked up about 37 percent of all college expenses in 2011.
]]> Yet in a sign that parents may be beginning to suffer from too many student loans, the average of 37 percent is down from 47 percent in 2010. Moreover, a survey conducted by Fidelity Investments found that whereas 65 percent of parents did not want their children to take out college loans in 2007, and that number has risen to about 75 percent. Instead, parents and children are increasingly finding other ways to pay for college.Unfortunately, those other methods may not be enough for everyone. In a survey conducted last year, four out of five bankruptcy attorneys reported that they had seen an increase in parents and students who are having trouble repaying their college loans. Yet, unlike other forms of debt, it is very difficult to discharge college loans in bankruptcy. Nonetheless, filing for Chapter 13 bankruptcy may enable a Florida debtor to restructure their other financial obligations, making it easier to repay the student loans.
Source: The Arizona Republic, "College debt especially costly for parents," Anne Ryman, March 17, 2012
]]>Under a Chapter 11 bankruptcy, a business or individual reorganizes their debts under the protection of a court. This allows them the opportunity to gain control over their debt and eventually emerge as a fresh entity. However, while there are numerous laws and regulations for dealing with debts, there are no clear instructions on what to do with surplus money. This issue has become more prevalent as of late since more and more companies are choosing to liquidate under Chapter 11 instead of Chapter 7.
]]> The surplus money could be the result of any number of factors. In one incident involving a Florida bankruptcy, a $150,000 insurance rebate check was sent to a company that had gone bankrupt. However, it was not possible to locate the bondholders, and the check was instead sent to a charity. Similarly, money from tax rebates or returned deposits may also trickle into the accounts of a long-bankrupt entity.Without any set of instructions on what to do, many lawyers and judges are choosing to transfer the surplus money to charity. However, that may also create problems both socially and politically. Yet, it may be possible to avoid this uncertainty by including language on what to do with leftover funds in the Chapter 11 bankruptcy plan filed with the court.
Source: Wall Street Journal, "Bankruptcy's Spare Change," Katy Stech, March 11, 2012
]]>Knowing what a debt collector can and cannot do may prove to be of invaluable assistance. In that vein, a local news station covered many of the things that people should watch out for when harassed by creditors. For example, debt collectors must always identify themselves. They also cannot threaten, misrepresent themselves or contact the debtor before 8 a.m. and after 9 p.m. Additionally, if the person informs the debt collector that he or she has an attorney, they can't legally contact that person further.
]]> What many may also not realize is that a debt collector is also required to send a validation letter within the first five days that they first contact a consumer. This validation letter is important as it helps the debtor to determine whether the debt collector is exactly who they say they are. Indeed, it is hardly uncommon for people to receive false debt collection calls, making the need to validate the debt collector's identity all the greater.In some cases, it may be possible to put an end to creditor harassment by filing for bankruptcy. Through bankruptcy, one may be able to restructure debt obligations under the protection of a court, and eventually emerge from the process with no debt. Also, while some forms of bankruptcy involve the liquidation of all the assets owned by the debtor, Florida and federal law have an exemption for necessary items.
Source: WZVN News, "Know your rights when debt collectors call," March 9, 2012
]]>Those steps may well be vital for those who owe credit card debt and are delinquent on that debt. In that vein, readers may be interested to hear that even though credit card delinquencies declined from the fourth quarter of 2010 to the fourth quarter of 2011 by nearly 5 percent, they nonetheless increased by almost 10 percent from the third quarter to the fourth quarter of 2011.
]]> Overall, the delinquency rate is 0.78 percent, and the average credit card debt is $5,204. Often times, those who fall delinquent on their credit card debt do so not necessarily through any fault of their own, but rather due to unforeseen circumstances. Unfortunately, they may be subjected to asset forfeiture in some cases in order to satisfy the debt.Asset forfeiture, though, could put the debtor in a difficult position. Florida residents who find themselves in this situation should consider reviewing their legal options in order to prevent their financial hardship from becoming more severe. Bankruptcy may be a possibility, allowing the debtor the opportunity to restructure debt obligations under the protection of a court.
Source: RTT News, "U.S. Credit Card Delinquencies May Be On The Rise," Feb. 22, 2012
]]>The company, Lainhart & Potter, was founded in 1893 as a lumber company, and its handiwork can be seen across West Palm Beach. The Breakers was built with wood supplied by Lainhart & Potter, as was the Royal Poinciana Hotel. However, the company has experienced tough times as of late, due to a downturn in construction. In July of last year, a bank filed a notice of foreclosure on property owned by the company.
]]> The foreclosure filing prompted the business to file for Chapter 11 bankruptcy protection -- the process of which is still ongoing. Under Chapter 11, a business is allowed to continue operations as it attempts to create a debt reorganization plan that will satisfy its outstanding debt obligations. As part of the bankruptcy filing, the company will be auctioning off three parcels of land that it owns in West Palm Beach in addition to a fourth located in Jupiter. The auction is to be held in a couple of months.In addition to the unpaid mortgage payments that led to the foreclosure filing, the Florida company also owes outstanding debts to computer and office-supply firms. Nonetheless, Chapter 11 bankruptcy affords the company an opportunity to once again set itself on a firm financial footing. Other Florida businesses facing financial hardship may also consider the possibility of filing for Chapter 11, so as to regain control over debt and work toward a healthier financial future.
Source: The Palm Beach Post, "West Palm Beach business dating back to 1893 faces foreclosure," Kimberly Miller, Feb. 23, 2012
]]>In 2010, there were nearly 67,000 bankruptcy filings in the district, but this declined to a little more than 53,500 filings in 2011. The number includes 2,389 business filings and 51,166 non-business filings. Moreover, the 19.7 percent decline is significantly greater than the national average decline of 11.5 percent.
]]> Interestingly, Chapter 7 bankruptcy filings far outnumbered other types of filings, accounting for nearly 40,000 of the petitions filed in 2011. This may be because Chapter 7 allows for the total elimination of debt, which can be attractive to some business owners and to many individuals. However, it does so by liquidating many of the assets owned by the debtor.Chapter 13 bankruptcy, on the other hand, allows self-employed business owners and individuals to reach a repayment agreement with their creditors. For companies that are able to file under Chapter 13, this can be helpful as it allows the company to stay in business and continue operations even as it goes through the bankruptcy process. Likewise, the law typically allows individuals to keep their property in a Chapter 13 bankruptcy.
Despite the improving economic picture, though, it is no doubt true that many continue to experience tremendous financial hardship. After all, the economic recession hit Florida hard. To gain control over one's finances, it may be worth considering filing for bankruptcy.
Source: Jacksonville Business Journal, "Bankruptcy filings drop in Florida's middle district," Feb. 8, 2012
]]>Student loan debt is one of those classes of debt that is not dischargeable in bankruptcy, but it is precisely what is driving most recent grads into seeking protection. In the years between 2001 and 2010, the average law school debt rose 50 percent.
]]> It is not just the student loan debt that is driving these recent grads into financial trouble. It is the large amount of debt combined with the job market that is continuing to decline. Not only are law schools graduating students at an incredibly high rate but law firms are not hiring. In fact, the top 250 law firms laid off approximately 5,900 of attorneys that new grads are now up against in the job market.So why are students continuing to enter seek the higher education even though a Juris Doctorate's average earning power is outweighed by student debt? Law schools all across the country continue to include statistics in their job-placement data that says for example, 90 percent of their recent grads are employed. Although technically that may be true, schools are failing to say how they determine that statistic. Does a job as a waitress count?
The American Bar Association is currently restricting job-placement data rules to require more transparency in reporting the data, but that does nothing for students who have already incurred the debt. The best solution for many is to seek the assistance of a more experienced attorney.
Source: Reuters, "Law grads go to court for bankruptcy protection," Leigh Jones and Moira Herbst, Feb. 3, 2012
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