Archive for the ‘Bankruptcy News’ Category
Monday, May 23rd, 2011
As we all know, when an individual files a bankruptcy case, they are required to disclose all of their assets, and the total value of those assets is the starting point for determining how much (if any) they must pay to their creditors in the case. So, of course, in my work as a consumer bankruptcy attorney in Southwest Florida, I get a lot of questions about how to protect one’s assets before filing a bankruptcy case. Specifically, one of the most common things that people want to know about is protecting their bank accounts. When it comes to bank accounts, it is mainly about organization. There are several specific exemptions, or protections, that can be applied to bank accounts to shield them from the reach of the bankruptcy trustee so that you can keep that money available to support your family after the case is filed. These exemptions are based on the source of the money that was deposited into the bank account, the most popular ones being wages and social security. The key to protecting the specific types of deposits that are specifically exempt in bankruptcy is to keep those deposits separate from the rest of your non-exempt money and to spend those protected monies after all other types of money that you have. That way, there is no question as to the source of the money that is in your bank account on the date that you file for bankruptcy protection.
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Thursday, May 19th, 2011
One of the situations that I see all to often as a Bankruptcy attorney in Southwest Florida, is where a family member or friend has lent money to someone to purchase a vehicle but has failed to protect this loan with a properly perfected lien and security agreement. When lending money to a friend or family member no one wants to ask for a security interest because it makes it seem like you doesn’t think the person will pay the money back or that you are watching over their shoulder as “big brother.”
However, asking for a security interest when loaning money to a friend or family member actually serves to protect not only you the lender, but also protects the family member that is borrowing the money as well, especially if they are forced to file bankruptcy or have a judgment against them from a lawsuit.
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Friday, March 11th, 2011
Two people told me about a St. Peterburg Times article about people who get in trouble and lose their bankruptcy discharge because they tried to hide assets in a Chapter 7 bankruptcy. The author, Susan Taylor Martin, tells the story of bankruptcy debtor Gary K Parker who filed a bankruptcy petition listing few assets. Parker pleaded guilty to criminal act of failing to disclose an account with $35,000. The article states that many, if not most, bankruptcy debtors intentionally undervalue non-exempt assets or fail to disclose very valuable assets such as boats and gold watches. Such bankruptcy law violations are often uncovered, according by to the article, when angry former employees or spouses contact the bankruptcy trustee.
My own experience is that most clients are very honest; they feel badly about having to file bankruptcy and do not want to cheat the system. There are also some clients who I suspect may be less than fully truthful in completing a bankruptcy questionnaire. Sometimes, after a bankruptcy attorney tells a client they have non-exempt assets the client will go to a second bankruptcy attorney and not disclose the same assets.
The newspaper article suggests that the bankruptcy system should, and is, becoming more aggressive in finding fraud. The article explains what many bankruptcy debtors do not understand to be the risk about lying on a bankruptcy petition.
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Tuesday, February 15th, 2011
One of the biggest concerns my clients come to me with these days are 1099s for property surrendered in bankruptcy. Typically, lenders send borrowers 1099s for taxable income representing any debt they have forgiven after taking back a foreclosed property. For example, if you borrow $100,000.00, and the lender is only able to recover $60,000.00 from you on the debt, the lender can cancel the remaining debt and send a 1099 for the remaining $40,000.00. This $40,000.00 is treated as income to the borrower.
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Monday, February 7th, 2011
It’s tax season again. That means people across the country fortunate enough to receive one are starting to think about what they are going to do with their tax refunds. People in bankruptcy are no different. Nothing would be worse than going through your bankruptcy and not getting your discharge because you’ve spent your unprotected tax refund because you didn’t speak to your attorney first.
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Saturday, January 22nd, 2011
The answer to the question: Can a State Declare Bankruptcy? is No. As of today, January 22, 2011, the answer is No. That is the good news. However, I'm sure many people who work in the budget offices in California and Illinois wish they could. A quick fix would be nice for these and other States plagued by debt.
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Wednesday, September 8th, 2010
The Federal Trade Commission has announced that it has reached a settlement deal with a payday loan company that was illegally garnishing the wages of some of its borrowers. Here are the basic facts of the case and some pointers to keep you from getting burned:
- The company offered payday loans. The companies known as GeteCash and LoanPointe reportedly offered consumers payday loans, a type of short-term, high-interest loan considered by many financial analysts to be “predatory.”
- Consumers agreed to online terms and conditions. In order to apply for a loan online, consumers apparently had to check an agreement of terms box. One of these terms, it seems, indicated that the company could garnish a borrower’s wages (that is, take money from their paycheck) if she failed to make loan payments.
- The garnishment was illegal. According to the FTC’s charges, the payday lending company overreached its legal debt-collection abilities. While laws permit federal agencies to garnish the wages of someone who owes the government money, non-government groups aren’t afforded the same privilege.
The FTC apparently took action because the payday lenders not only indicated that they had the same collection rights as the government, but also claimed that their customers knew that they had agreed to the garnishment clause.
Because of the FTC’s actions, those behind the garnishment scam are barred from certain lending practices and responsible for a $38,133 judgment that has been suspended because of their current financial situation.
Don’t Get Burned by Payday Lenders
In recent years, legislators have taken action against the payday lending industry, which can lead struggling consumers into a perilous cycle of debt. Many financial insiders recommend avoiding payday lenders at all costs because of their high cost. Here are some options you might consider before turning to a payday lender if you’re in need of cash:
- Friends and family: Asking to borrow money from a loved one may be hard, so consider this twist: offer to do chores or run errands in exchange for some money. Or, if you’re already swamped, volunteer to write up a formal payment agreement outlining the terms of repayment.
- Your boss: If you have a decent relationship with your boss, consider asking for extra work and/or an advance on pay. This may not work more than once, but if you’re in a serious pinch, an advance on wages will likely hurt your finances less than a payday loan.
- Your credit card: If you aren’t maxed out on your plastic, using it to pay is generally less expensive than taking out a payday loan. Credit cards generally have lower interest rates than payday lenders and offer you more options for paying them back.
If you’ve already turned to payday lenders to keep up with financial obligations, you may want to consider the financial relief that filing for bankruptcy could offer you.
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Thursday, July 29th, 2010
If you file bankruptcy with a checking account at Wells Fargo/Wachovia bank you have a problem. This bank has decided to freeze checking accounts of any customer who files bankruptcy. No, the debtor does not owe the bank or its credit card any money, and the money in the account could be exempt wages, retirement proceeds, or social security. Doesn’t matter; don’t care. If you file bankruptcy your bank account is frozen until the money is released by your bankruptcy trustee. The bank’s position is that they are not violating the bankruptcy stay when the bankruptcy debtor does not owe the bank a debt.
A federal court recently issued an order directing Wells Fargo/Wachovia to stop freezing bankruptcy debtor accounts. The bank is appealing the order and stated it intends to continue freezing the accounts of customers who file bankruptcy. If you are thinking about bankruptcy get your money out of Wachovia/Wells Fargo bank.
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Wednesday, July 7th, 2010
As a bankruptcy attorney in Southwest Florida, many times I see clients who think it is best to withdraw all their money from their bank accounts before filing. This is an incorrect assumption for a couple reasons: (1) any amounts held in cash must be disclosed; and (2) exemptions may apply to protect those funds while in the bank account.
The first reason is a matter of honesty. Remember, bankruptcy is intended to honest debtors a fresh start. Withdrawing your funds and placing them under the mattress or in a cookie jar does not protect it from bankruptcy as it is an asset and good faith requires that it be disclosed. Additionally, the eyes of the bankruptcy trustee are quite sharp and, as we are dealing with money, there is almost always a paper trail and the risk of losing a discharge or worse, criminal charges is not worth the risk – disclose, disclose, disclose.
You may actually be harming yourself by withdrawing the funds. For instance, in Florida, if the funds come from your earnings, all or a portion of the funds are in most instances protectable while in the account. When the funds in the account are traceable to wages, usually at least 75% of the account can be protected. In some instances 100% can be protected. Whether or not all or only a portion can be protected depends on whether the earnings are from the head of household and the amount the earner makes per week. Currently the dividing line is $500 per week or less for 100% but that amount will be raised to $750 in October, 2010 pursuant to a recent amendment.
To protect the funds they must be traceable, i.e. an accounting on the bank statements clearly shows the funds are earnings. Therefore, all other funds received such as gifts, rental income, etc. should be placed into a separate account or simply kept as cash – which we know must be disclosed.
This Blog was written by Attorney David Fineman, Esq. of The Dellutri Law Group, P.A. Mr. Fineman practices Bankruptcy Law, Fair Credit Reporting Act Law, Fair Debt Collection Practices Act Law and in other areas of Consumer Law.
Posted in Bankruptcy News, Consumer Protection, Sign of the Times | Comments Off
Tuesday, July 6th, 2010
Consumer bankruptcy filings are up approximately 14% since the same time last year. The causes of the filings are obviously the recession, unemployment and the housing crisis (the Big Three). In South West Florida, we know the big three all too well. It is expected that over 1.6 million people will file for bankruptcy protection this year.
I have mixed emotions on this issue. First, I think more people should consider the bankruptcy option. I can say this because I understand the bankruptcy process and the benefits it offers. Likewise, I have an open-mind to bankruptcy. I see many people who say that bankruptcy is the worst thing a person can do, and unfortunately, that is not true. Bankruptcy is usually not the worst option.
Second, from a purely economic standpoint, bankruptcy is good for society because it gets the bad money off the books and out of the economy. Second, it allows for a fresh start and gets people, who were formerly shunned from the economy, back into the game.
Third, bankruptcy is merely a form of financial planning. When you get right down to it, that is all it is. All this nonsense about strategic defaults of homeowners is just garbage. People have always made decision on when to cut their losses. If the mortgage companies thought that this would not happen, that was naive. You can only push people so far before they will push back. The mortgage companies and servicers have taken too much, and now the homeowners are saying no more.
Why doesn't someone tell our Elected Officials what is going on in this Country and Southwest Florida? Do you think we are that clueless? I think it's ironic that some of our elected officials are worried about losing their jobs?
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, Naples and Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog, www.faircreditreportingactblog.com and www.fairdebtcollectionpracticesactblog.com, and the firm's mortgage modification blog.
Posted in Bankruptcy News, Bankruptcy Statistics, Sign of the Times | Comments Off
