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Being honest when you file bankruptcy can help you avoid making mistakes that lead to bumps in the road as the case proceeds. Bankruptcy is a privilege that deserves your cooperative attention while working with the court to ensure you get a favorable result. The following points are a few common mistakes made by debtors […]
On February 22, 2012, the 11th Circuit Court of Appeals issued its decision in Jennings v. Jennings, 670 F.3d 1330 (11th Cir. 2012). The case involved the issue of whether debt arising from the debtor's active participation with a co-conspirator in performing a fraudulent transfer of real property was excepted from discharge under 11 U.S.C. §§523(a)(6) which provides that a debt for "willful and malicious injury by the debtor to another entity or to the property of another entity" is non-dischargeble. The Court upheld the District Court's decision that the claim was non-dischargeable. It should be noted that this was a chapter 7 bankruptcy case and that this exception from discharge of section 523(a)(6) does not apply in a chapter 13 bankruptcy case, except when the debtor seeks a chapter 13 "hardship discharge."
In the adversary proceeding to determine dischargeability, the debtor argued that the debt was not within this exception from discharge. She argued that because the fraudulent transfer took place before the state court judgment arose, she could not have injured the creditor or his property. The Court rejected this argument and found that an injury to the property of another did take place as creditor did have a judgment that established his right to payment on the property interest at the time he initiated the adversary proceeding in this chapter 7 bankruptcy case to declare the claim non-dischargeable under section 523(a)(6).
The Court found that the evidence showed that the injury was "willful and malicious" and therefore rejected the debtor's arguments. The Court explained that proof of willfulness requires a "showing of an intentional or deliberate action, which is not done merely in reckless disregard of the right of another. In re: Walker, 48 F.3d 1161, 1163 (11th Cir., 1995) The Court further explained that a debtor is responsible for a willful injury when he or she commits an intentional act the purpose of which is to cause injury or which is substantially certain to cause injury. The Court explained that "malicious" means "wrongful and without just cause or excessive even in the absence of personal hatred, spite or ill-will." In re: Walker, 48 F.3d at 1164. The Court noted that to establish malice, "a showing of specific intent to harm another is not necessary."
The Court upheld the District Court's ruling that the debt was non-dischargeable under section 523(a)(6) as it found that the evidence showed that the transfer of the property to keep it out of the hands of this judgment creditor was "willful" as the debtor knew the purpose of the transfer and further held that the evidence showed that the transfer was malicious as the debtor had no just cause to effect the transfer.
(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
In the recent case of Guillermo A. Morales, Case No. 07-16284-BKC-RBR, (Bankr.S.D.Fla. January 2, 2008)(Ray, J.) the Bankruptcy Court was given the opportunity to interpret new section 222.25(4), Florida Statutes which allows a debtor to exempt personal property not to exceed $4,000 if he does not "claim or receive the benefits of a homestead exemption under s. 4, Art. X of the State Constitution." Based on the particular facts of the case, the Court held that the debtor had not proven that he had not received the "benefits" of the homestead exemption and the trustee's objection to the debtor's exemption under section 222.25(4), Florida Statutes was sustained. But the court did state that if a debtor properly abandons his entire interest in his homestead at the start of a case or and does not claim his homestead exemption or does so by proper subsequent schedule amendments, then he would be able to claim the $4,000 section 222.25(4) personal property exemption.
In his chapter 7 schedules, the debtor listed one piece of real property with two mortgages. He did not claim the real property as exempt in his schedule C. In his original statement of intentions, the debtor set forth his intentions to reaffirm the two mortgages. Later he filed an amended statement of intentions where he indicated that his intentions were to surrender the real property to one of the mortgagees and reaffirm [sic] the other mortgage. The debtor claimed the use the $4000 personal property exemption under section 222.25(4), Florida Statutes (2007) and the trustee filed an objection to this claim of exemption.
The issue before the court was the meaning of section 222.25(4)'s phrase "receive the benefits of a homestead exemption." The trustee argued that the debtor was not eligible for the section 222.25(4) exemption as by owning a homestead, the debtor receives the benefit of the homestead exemption whether or not he makes use of it. The debtor contended that he had abandoned his interest in the real property, had not claimed it as exempt in his schedule C, and was not receiving any "benefits" of a homestead exemption.
The court looked to the language of the statute and found that it was written in the present tense. The court stated that the fact that a "debtor may have claimed or received the benefits of a homestead exemption in the past would appear to have no bearing on the application of the statute to a debtor's present situation." The court reasoned that even if a debtor had in the past received the benefits of the homestead exemption, he would qualify for the $4,000 section 222.25(4) personal property exemption if he does not claim it [the real property] as exempt and ceases to receive the benefits of a homestead exemption.
The court noted that in this case, that although debtor did not claim the homestead exemption, it was not clear whether he had derived any "benefits" from the exemption. The debtor argued that his amended statement of intentions to surrender the real property constituted an "abandonment" of the real property and that he was no longer receiving any "benefit" of the homestead exemption.
The court stated that the debtor was correct in his statement that under Florida law, abandonment of a homestead is one way that the protection of the homestead exemption may be lost. However, the court concluded that the debtor had failed to clearly indicate his intention with respect to the real property and that the court could not conclude that he had abandoned his homestead. The court noted that at the beginning of the case, the debtor had filed a statement of intentions indicating his intention to reaffirm the mortgages and retain the real property. The debtor only later changed his mind. The court also found "incompatible" with an abandonment the debtor's stated intention in his amended statement of intentions to surrender the real property to only one of the two mortgage holders and reaffirm the debt owed to the other mortgage holder.
Although the court failed to find an abandonment of the homestead in this case which led to the court's denial of the debtor's claim of exemption under section 222.25(4), the court stated that if a debtor "properly abandons his entire interest in his homestead at the start of a case and does not claim his homestead exemption" then he would be able to claim the $4,000 section 222.25(4) personal property exemption. The court even left open the possibility of a subsequent amendment of the debtor's schedules to indicate an abandonment of all interest in his homestead and to claim the $4,000 section 222.25(4) personal property exemptions.
In this case, the court found that the debtor failed to clearly indicate his intentions with respect to the real property and was denied use of the section 222.25(4) exemptions. Since the rendering of the court's decision, the debtor filed an amended statement of intentions setting forth a surrender to both mortgagees and has moved the court for a rehearing. In his motion for rehearing, the debtor refers to this amended statement of intention and points out that he did not oppose the motion for stay relief filed by one of the mortgagees.(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
On May 31, 2013, the Florida Fifth Circuit Court of Appeals issued it decision in the case of Zlatkis v. All America Team Concepts, LLC upheld the validity and enforcement of spendthrift trusts. In this case, a judgement holder attempted to enforce its judgment against the debtor's interest in a spendthrift trust.
The Court explained that spendthrift trusts are created with the intention of providing a fund for the maintenance of another and at the same time securing it against the person's own improvidence or incapacity for self-protection. Croom v. Ocala Plumbing & Elec. Co., 57 So. 243, 244 (Fla. 1911). The Court further explained that a valid spendthrift clause prevents the beneficiary of the trust from transferring his interest in the trust as well as prevents creditors from reaching any of the trust's funds until they are dispersed to the trust beneficiary. It further noted that spendthrift provision have long been recognized as valid under Florida common law and that sections Florida Statutes sections 736.0501 - 736.0507 additionally provide for the enforcement of spendthrift trusts.
(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
On June 27, 2012, the Florida Second District Court of Appeals issued its decision in Geraci v. Ems, 93 So. 3d 384 (Fla. 2nd DCA 2012). The issue before the Court was whether a person's long-term leasehold interest in his condominium could qualify as a "homestead" exempt from forced sale under article X, section 4 of the Florida Constitution. The lower Court held that it could not qualify as a homestead as it was not a fee simple interest. The Court of Appeals reversed and held that such a condominium may qualify as a homestead.
The Court of Appeals explained that article X, section 4 of the Florida Constitution does not distinguish between the different kinds of ownership interests that are entitled to the homestead exemption against forced sale. Cutler v. Cutler, 994 So. 2d 341, 344 (Fla. 3d DCA 2008). The Court reviewed that the Florida Supreme Court "has long since adopted the general rule that a fee simple estate is not necessary to this exemption." Bessemer Props., Inc. v. Gamble, 158 Fla. 38, 27 So. 2d 832, 833 (1946). The Court further stated that any beneficial interest in land" may entitle its owner to the homestead exemption. In determining a homestead, the Court noted that a court must instead focus on the debtor's intent to make the property his homestead and his actual use of the property as his principal and primary residence.
The Court held that when a lessee's interest in a leasehold estate includes the right to use and occupy the premises for a long-term and the lessee uses the property as his principal and exclusive residence, such an interest is entitled to the Florida homestead exemption from forced sale.
(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
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Bankruptcy fraud is a serious federal offense that can cost you more than just your personal possessions but time in prison. There are various ways debtors try to deceive the court from learning more about personal finances. Many consumers may not realize that by doing one act alone such as concealing an asset can have […]
Follow Advice For A Smooth Chapter 7 If you want a chapter 7 bankruptcy case to go smoothly, then you want to follow all of the advice of your attorney. This advice starts with being open and honest regarding your financial situation. Your attorney is going to want to know everything that you have in+ Read MoreThe post How To Have A Smooth Chapter 7 Bankruptcy? appeared first on David M. Siegel.
Allison Mathis, the ex-girlfriend of Miami Heat star Chris Bosh files bankruptcy protection. She is the mother of a 5-year old child fathered by Bosh. She reportedly receives child support payments from Bosh for their child in the amount of $3,000 a month, but many may see this as mere pennies since the NBA star […]
Much of my practice today consists of consulting with clients who are interested in saving their real estate from foreclosure using Chapter 13 of the Bankruptcy Code. The discussions breakdown into two different categories - real estate that is used as a principal residence and real estate that is not used as a principal residence.
The typical principal residence in South Florida today has two mortgages -- what they used to called 80-20 mortgages. That is, two mortgages with the first mortgage in a amount of 80% of the value of the home and the second in an amount of 20% of the value of the home. As most real estate values in South Florida have dramatically declined, the homeowner is "upside-down" or "underwater." For example, $400,000 is owed on the first mortgage and $100,000 owed on the second mortgage and the real estate is now valued at $375,000. Upon the filing of the appropriate motions in Chapter 13, the Bankruptcy Court may hold that the second mortgage is wholly unsecured by property and therefore is an "unsecured claim" and its mortgage lien "avoided". An order is obtained from the Bankruptcy Court and recorded in the county public records to evidence that the mortgage lien has been avoided. It should be noted, that as to a principal residence, the second mortgage must generally be wholly unsecured in order to be avoidable. That is, there cannot be even one dollar of collateral value to secure its claim. But is it possible that the holder of the second mortgage might reduce its mortgage by agreement due to today's market conditions. In chapter 13, the first mortgage on a principal residence is generally not modifiable, although a homeowner is free to try to reach a voluntary modification with the mortgage company.
The rules are different as to non-principal residential real estate property or investment real estate. As with principal residential property, second mortgages can be wholly avoided. But in addition to being wholly avoided, second mortgage on non-principal residential property can be partially avoided or "stripped down". Usually though in today's market there is no difficulty in wholly avoiding a second mortgage. Although most first mortgages on principal residential real estate cannot be modified in Chapter 13, first mortgage on non-principal residential real estate may be modified. For example, take an investment property valued at $100,000 with a $150,000 first mortgage and $50,000 second mortgage. The second mortgage would be held as wholly unsecured and avoided. The first mortgage could be avoided to the extent the first mortgage exceeds the value of the property in the amount of $50,000. The question would then be how the remaining $100,000 first mortgage would be paid off. There are a few alternatives under the Bankruptcy Code and there are further alternatives that may be reached by agreement with the mortgage holder. The mortgage holder may be especially amenable to an agreement in today's market. One alternative may be to pay interest only on the $100,000 - for say four years - with the property to be sold or refinanced before the four years is over. Another would be to reamortize the the $100,000 secured claim mortgage at a new interest rate over fifteen to thirty years.
We are in a unique situation in South Florida today and the case law and procedures for addressing mortgages in Chapter 13 is dynamic, especially as to non-principal residential mortgages.(305) 891-4055 - Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankrkuptcy Cases.
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