Blogs

Miami Personal Bankruptcy Lawyer Jordan E. Bublick has over 25 years of experience in filing Chapter 13 and Chapter 7 bankruptcy cases. His office is centrally located in Miami at 1221 Brickell Avenue, 9th Fl., Miami and may be reached at (305) 891-4055.  www.bublicklaw.com

The bankruptcy code's "means test" looks to the size of the debtor's "household." The bankruptcy code does not define what constitutes a "household."

Census Bureau Definition
Some bankruptcy courts hold that the Census Bureau's definition of "household" provides the most appropriate definition of household for use in the means test. The Census Bureau defines "household" as "all of the people, related and unrelated, who occupy a housing unit"such as a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters." These Courts hold that the word "household" and not "family" and did not intend to limit household size to only household members related by blood, marriage or adoption.

Internal Revenue Manual Definition
In some cases, parties argue that the Internal Revenue Manuel's ("IRM") definition of "household"should be used. The IRM does not define "household" but indicates that the number of persons allowed under the national standard expenses should generally be the same as the number of dependents on the taxpayer's latest tax return.

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com

Colonial Bankruptcy Laws
In the American colonial era, many of the states had bankruptcy and insolvency laws. Imprisonment for debt was commonplace.

Bankruptcy Act of 1800
The first federal bankruptcy law was passed by Congress in 1800, eleven years after the ratification of the United States Constitution. This Bankruptcy Act was designed to be a temporary measure and was repealed after only three years.

This act was virtually a copy of the existing English law, which was the 1732 Statute of George II. The English laws maintained a distinction between "bankruptcy laws" and "involvency" laws. Bankruptcy law generally involved involuntary proceedings against business trader while involvency law addressed concerns of debt relief generally, including the release from debtor's prison.

Bankruptcy Act of 1841
Following the financial Panic of 1837, the Bankruptcy Act of 1841 was passed. It provided for both involuntary and voluntary bankruptcy. This act allowed a person some basic exemptions of property, but state exemptions were not available.  Although the act worked well, creditors considered it a failure and it was repealed in 1843.  The 1841 Act though was important in that it established the allowance of voluntary bankruptcy for all debtors.Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com

With certain exceptions, the filing of a bankruptcy petition immediately and automatically puts into place a court order of a stay of collection action applicable to all entities against actions by creditors against the person who filed for bankruptcy relief as well as his property. The bankruptcy stay remain in effect until it is terminated by the bankruptcy court or as otherwise provided by the Bankruptcy Code.

Chapter 13 Co-Debtor Stay
In a chapter 13 case, the automatic stay is also effective against a person who is a co-signer on consumer debt.

Violations of the Automatic Stay
Most court hold that actions taken in violation of the automatic stay are void.

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com

At the end of a contentious legislative session, the Governor signed into law an important piece of legislation strengthening Alabamians’ ability to protect their house and car from being seized by creditors.  The bill (SB 327), sponsored by Sen. Cam Ward (R-Alabaster), Rep. Jim Hill (R-Moody) and passed unanimously by legislative members, was due in large part to tireless consumer advocates like Alabama Appleseed, who recognize the importance of protecting the very assets Alabamians working poor are struggling so hard to maintain.
 
Before the law was changed, a creditor could seize your car, bank accounts, and household goods if the creditor said you were delinquent.  You would only be able to keep these items if the total value of this personal property was less than $3,000.  In practice, this amount may have been sufficient to protect some items from being seized, however, because cars typically are worth much more than $3,000, it rarely protected vehicles from being seized by creditors.  The result left many working poor without a way to work.  If you can’t get to work you can’t pay your debts.
 
Even more oppressive was a creditor’s ability to seize your house if it had more than $5,000 in equity.  Building equity in a home has traditionally been considered a stable investment for the future, providing favorable tax benefits (and one that has been encouraged by generous government backed mortgages) in addition to contributing to a stable and productive environment for the family.   Yet, under the prior law, if you couldn’t pay a medical bill or private school tuition debt, the equity you had built in your home could be the very thing that would allow a creditor to seize and sell it.
 
If you were forced to file bankruptcy to manage your debt, the old law would often force people who could not afford to pay creditors into a sometimes impossible repayment plan just to protect their property.  In my practice, I had to constantly correct the notion that “they gotta leave me with one house and one car, right?” Wrong.  That would have been correct in the age when a house cost less than $5,000 and vehicles cost less than $3,000, however, in today’s world it would be impossible.
 
As an example, suppose you owe $130,000 on your home and you live in a county where the county tax assessor has valued your home at $136,000, meaning you have $6,000 equity in your home on paper and more than the legal limit of $5,000.  If you are sued for an unpaid medical bill, the creditor would be able to sell your home to pay for your debt, even if the debt is more than the equity you have in your home.
 
The old protections (exemptions) were the lowest in the country, making Alabama, already burdened with some of the highest poverty rates, one of the most creditor friendly states as well.
 
The new law signed by Governor Bentley on Thursdayof last week went into effect immediately and increased the protection for personal property (the “personal property exemption”) to $7,500 and increased the protection for residential property (the “homestead exemption”) to $15,000.   These amounts will be adjusted every three years in order to keep pace with the cost of living.  Every state has their own version of exemption laws designed to prevent a creditor from forcing people into financial destitution.  Most states recognize that exemption laws are necessary to allow a person the ability to work productively to support their family.
 
This new law will provide substantial protections to consumers who are constantly being threatened by predatory lenders, medical bills which are not covered by insurance and the rising cost of everyday expenses such as childcare, student loans and utilities.  As a person who sees the devastating effect a creditor friendly environment can have on the working poor, I applaud the efforts of Alabama Appleseed, Senator Ward, Representative Hill and Governor Bentley in moving Alabama out of the dark ages of debtor servitude.