Chapter 7 Bankruptcy

Published on: November 8, 2017

How Can I Keep My Home In a Second or Even Third Bankruptcy Filing?

The automatic stay that normally applies when a debtor files bankruptcy, does not work the same in a second or even third bankruptcy case. This has caught many debtors unaware and may cause the loss of a home.

In a 2nd bankruptcy filing, the automatic stay expires after 30 days. During that time you have to get it extended. We recommend filing a motion to do so when the case is filed to have enough time to get an order entered before the stay expires.

Sometimes debtors find it necessary to file a 3rd bankruptcy. Perhaps a job loss or insufficient paperwork caused the prior bankruptcies to be dismissed. If so, it’s important to know that the automatic stay does not apply at all for a 3rd bankruptcy. As soon as possible, the debtor would want to file a motion to impose the stay, even to the point of filing a request for an emergency hearing if a foreclosure sale is looming. It’s also important to note that you cannot file bankruptcy on the eve of a foreclosure sale because there is no stay until you can get one in place. Typically you would have to identify factors in the motion and at the hearing as to why this third case will be more successful than the prior ones that were dismissed, as well as show the feasibility of any plan to keep the home (which could include a loan modification at an estimated payment of 31% of your gross income).

Continue reading →

Published on: September 30, 2017

Bankruptcy Trustee’s 341 Meeting: What to Expect and Watch Out For

By Christie D. Arkovich, P.A.

All debtors must appear at a meeting called the “341 meeting of creditors”. Creditors may, but usually do not appear, and it is the Trustee asking most of the questions. This 341 must occur for a bankruptcy to be successful and applies in both a Chapter 7 and 13.

The trustee will first verify your identity. While this sounds simple, you must bring an original social security card or an original government issued document that shows your full social security number. You’d be surprised at how many people think they know where they keep their original SSN card, but can’t find it when they are in a hurry about to leave to the 341 meeting. So look for it early. The meeting cannot be held without that documentation.

Also, make sure that your driver’s license has the exact name that is listed on your petition for bankruptcy. If it is different, you’ll likely need to amend your petition to show that name and any other iterations of your legal name that you may use (“a/k/a”).

Continue reading →

Published on: September 15, 2017

What Happens If A Spouse Dies During a Bankruptcy?

By Christie D. Arkovich, P.A.

Property owned by a husband and wife is ordinarily protected in Florida from creditors of only one spouse. There are requirements to being able to use what is called the Tenancy by Entireties Exemption such as the property must have been acquired at the same time etc.

One question that was recently addressed by a bankruptcy court dealt with what happens if a debtor has exempted real or personal property in a Chapter 7 bankruptcy and his or her spouse dies during the bankruptcy. Is the exemption then lost?

The Chapter 7 debtor’s right under Code § 522(b)(3)(B) to exempt real property owned in a tenancy by the entireties with the debtor’s non-filing spouse was not extinguished by the postpetition death of the spouse. The rights of sole creditors against property held by the debtor as a tenant by the entireties are fixed as of the petition date, and the Bankruptcy Code does not provide for those rights to expand or contract upon the postpetition death of the non-filing spouse.

Continue reading →

Published on: June 22, 2017

Who Determines Household Size for Filing Bankruptcy In Florida?

By Christie D. Arkovich, P.A.

The word “household” appears in over a dozen sections of the Bankruptcy Code, but it is not defined in the Code. Household income and size are extremely important in bankruptcy and determine whether someone qualifies for a Chapter 7 or the length and amount of a plan payment in a Chapter 13. A debtor’s median income is determined by their family size.

In a Chapter 7, a bankruptcy debtor’s above – or below – median status determines whether the debtor is subject to the means test.

In a Chapter 13, a bankruptcy debtor’s status as above – or below median determines whether the debtor’s maximum plan term is three or five years. It also determines whether the debtor’s expenses, for the purpose of calculating the debtor’s projected disposable income, are based on the means test or Schedule J.

Continue reading →

Published on: June 8, 2017

What Should a Mortgage Company Do During and Following a Bankruptcy?

By Christie D. Arkovich, P.A.

In a perfect world, a mortgage creditor should:

Timely file accurate proofs of claim for prepetition arrearage;
Properly calculate postpetition PITI payment;

Continue reading →

Published on: June 5, 2017

Non-Eligible Foreign Medical School Debt is Discharged in Bankruptcy in Florida!

By Christie D. Arkovich, P.A.

One of our most successful cases this month was the discharge of private student loans for our client who attended a Caribbean medical school. The key was that the foreign medical school was not listed on the Federal Schools Codes List as being eligible for federal funding. That particular fact allowed us to obtain a full discharge of several hundred thousand dollars in private student loans. The loans were not “qualified educational loans” as that term is defined by the Internal Revenue Code and therefore were dischargeable under Section 523(a)(8) in an adversary proceeding.

This case, In re Lysiuk, Case No. 6:16-ap-00124-CCJ is available here. It was decided by Bankruptcy Judge Cynthia Jackson out of Orlando, Florida.

This case was not brought as a typical undue hardship. I felt it would be exceedingly difficult to prove under the existing Bruner Standard that our client met the burden to discharge his loans based upon hardship. While he was only making $10/hour when we filed the case, he was potentially capable of much more (despite being unable to pass the medical boards) and was young and healthy. So instead we chose to go the route of a more technical argument that was gaining ground in the United States but was still an issue of first impression in Florida.

Continue reading →

Published on: June 4, 2017

How Important is it to Complete Bankruptcy Schedules and Statement of Financial Affairs Accurately?

By Christie D. Arkovich, P.A.

It is very important to correctly reflect the assets of your bankruptcy estate and your intentions as well as meet all the other requirements to properly file a bankruptcy. Documents that appear thorough, accurate and complete when filed, tend to receive far less scrutiny. When in doubt, disclose, disclose and disclose. If the bankruptcy trustee believes a debtor, or even worse, debtor’s counsel, has not fully and truthfully disclosed all of the requested information, that trustee will question the debtor endlessly, and will also request documents from the debtor to prove the information in the petition. It’s important to hire competent and experienced bankruptcy counsel who has a good relationship of trust with the Chapter 7 and 13 trustees for this reason. Proper preparation of a bankruptcy petition is one of the most important things a debtor and debtor’s counsel can do:

It ensures a quick and smooth 341 examination;
The more complete the documentation is, the less questions a trustee needs to ask;

Continue reading →

Published on: May 30, 2017

Bankruptcy and Child Support Obligations

By Christie D. Arkovich, P.A.

According to the US Census Bureau, and their latest full year of researched data on child support payments (2007), of the $34 billion dollars in child support that was owed, nearly 62% of it was reported as received by the end of the year. What does that tell us? Well, it means that the United States Family Court system puts an extremely high priority and value on a parent’s child support obligation. This is a good thing, but if you believe that bankruptcy absolves your child support obligations, then this might be a sobering moment for you. Let me explain what happens with child support during bankruptcy.

Domestic Support Obligation

Child support is classified as a Domestic Support Obligation (DSO), and is therefore not protected under the umbrella of bankruptcy; it is referred to as a non-dischargeable debt. This applies to past, present, and future support payments. In addition, the “automatic stay” technique cannot halt or delay the collection efforts of DSOs. Nationally, you will find the same regulations, even though different jurisdictions have their own terminology for it.

Continue reading →

Published on: May 22, 2017

Consumer Bankruptcy and Tax Debt – How to Discharge your Federal Tax Debt

By Christie D. Arkovich, P.A.

Bankruptcy enables you to write off income taxes more than three-years old. However, bankruptcy cannot get rid of all back taxes. There are many qualifications and stipulations regarding what taxes you can and cannot write off under bankruptcy. Our Florida bankruptcy clients are often able to discharge more taxes than they previously thought – see our website or contact us for a free consultation.

Federal and State

Because there are two different types of income tax: state and federal. The specific bankruptcy guidelines between state and the federal government vary as well.

Continue reading →

Published on: May 17, 2017

Do Married Couples Have to File Bankruptcy Together?

By Christie D. Arkovich, P.A.

The bankruptcy laws do not require married couples to file bankruptcy together. This is one of those things that people do because they just assume they have no choice, and you can bet that one, two, or five knowledgeable people (none of them bankruptcy lawyers) told them they absolutely had to file jointly. If you are going to declare bankruptcy, and you are married, then several circumstances dictate the outcome of your filing.

When One Spouse Has Much Better Credit Than the Other

Credit ratings are as unique as fingerprints, so the odds are good that either you or your spouse will have a better credit rating. If the difference is quite a bit, then it might be a good idea to file the bankruptcy under that person’s name only. However, you can only write off debts under that bankruptcy if the debt account is under that person’s name individually or jointly. So, just for example, if your spouse has old medical bills (in their name only, from before you married them) that would be eligible for discharge under a bankruptcy, the only way to write those debts off is for either them to file bankruptcy alone or jointly with you. Therefore, you alone cannot write those debts off, because your name is not connected to them in any way. In most cases that I handle, married couples file together, simply because the majority of their debts are jointly held, and thus they want to fix both of their credit ratings and protect their jointly held assets.

Continue reading →