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When a person files for chapter 7 bankruptcy relief in Florida, he is allowed to exempt certain property from his bankruptcy estate. Exempt property generally means property that a person is allowed to keep free from liquidation by the chapter 7 bankruptcy trustee for distribution to creditors.
If a person has lived and been domiciled for a sufficient period of time in Florida, a person is allowed to claim the exemptions provided for under Florida and federal non-bankruptcy law. Florida exemptions include the homestead exemption provided by Article X Section 4 of the Florida Constitution. The homestead exemption is limited in size but not in value unless one of the limitations added in the 2005 bankruptcy code amendments homestead value applies.
Personal property is exempt to the extent of $1,000.00 and a further $4,000.00 in cases where a person does claim or received the benefits of a homestead exemption-. A vehicle is exempt to the extent of $1,000.00 in value.
Certain retirement plans and benefits such as IRAs and 401(k) plans are also generally exempt. Other exemptions include social security benefits and worker's compensation benefits.
A chapter 7 debtor claims his exemptions on schedule C of his bankruptcy schedules. If the chapter 7 bankruptcy trustee or other party does not object to the claim of exemptions, they are deemed allowed.Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
If you’re filing for bankruptcy, move your money out of Wells Fargo before you file – even if you don’t owe them any money.
It’s long been the practice of Wells Fargo to place what they call a “temporary administrative pledge” on bank accounts when the account holder files for bankruptcy. At that point, Wells Fargo will contact the Chapter 7 trustee to determine whether the funds are exempt or should be turned over to the trustee.
If the trustee tells Wells Fargo that the funds are exempt then the pledge is released. Until then, however, the funds are locked up and the person filing for bankruptcy has no access to the money.
As you can imagine, that doesn’t sit well with most people who are filing for bankruptcy. It’s not as if they’ve got a lot of extra cash sitting around as is, and locking up a bank account has the unfortunate effect of making it impossible to pay the rent and car loan, among other necessities of life.
In a decision handed down on August 26, 2014, the United States Court of Appeals for the Ninth Circuit held in the matter of In re Mwangi that the bank’s actions were perfectly legitimate.
Here’s a link to the decision (the PDF will open in a new tab).
I’m not going to get into the legal details of the case. If you’re a lawyer, you can read it on your own. If you’re thinking about filing for bankruptcy, all you need to know is that Wells Fargo will freeze your account when you file your Chapter 7 bankruptcy case.
Though the decision deals with a bankruptcy case originating in Nevada, this is now (until some other decision comes down on the other side) the law of the land in California as well because the Ninth Circuit covers California. No word on how other parts of the country will handle the issue.
What’s the fix for people who are filing for bankruptcy?
Largely the same solution as for people who have bank accounts with institutions to which they owe money when the case is filed.
Take your money out of Wells Fargo before your bankruptcy case is filed – even if you don’t owe the bank any money.
If you don’t, just accept that you’ll lose access to your money as soon as your bankruptcy case is filed.
When a debtor files Chapter 7 bankruptcy in California, the debtor will likely be requested to reaffirm their car financing debt. Most consumer credit agreements for cars include a provision that defines filing bankruptcy as an act of default. If the debtor is current on payments, and the only default is filing bankruptcy, this is known as “ipso facto” default. Unlike some states, California does not have a law that prohibits a creditor from enforcing ipso facto default in a consumer credit agreement. So a creditor, like Ford Motor Company, can enforce an ipso facto default in California. In other words, the creditor can repo the car if the debtor files a chapter 7 bankruptcy and does not agree to complete and sign a Reaffirmation Agreement.
If the debtor signs a reaffirmation agreement that is approved by the bankruptcy court, the "ipso facto" default dissolves. To execute a Reaffirmation Agreement in Chapter 7 means the debtor is agreeing that he/she will owe an outstanding balance on the car. The order that discharges the debtor's other debts will not apply to the reaffirmed car loan debt.
A debtor does not have to reaffirm the debt. Sometimes its better to not reaffirm debt, especially when the financing terms are very expensive compared to the present value of the car. For instance, if a car is financed for $15,000 at 5% interest with 4 years of payments remaining, and the car is only worth $8,000, it would be in the debtor's interest to not reaffirm the debt.
If the debtor refuses to timely enter into a reaffirmation agreement, then the automatic stay terminates on day 31, as per 362(h). That means that the creditor would have recourse to repo the car anytime thereafter.
Sometimes, the bankruptcy Judges in Fresno will not let a debtor reaffirm a car loan debt. A judge can find undue hardship to the debtor if the debtor would take on the old car loan debt. If this happens, the car could be repo'd by the car lender, as explained above. Just because the lender has the legal right to repo a car, does not mean that it will. Many times a car lender will hold off on exercising this right so long as the debtor is current with payments. The choice of whether a car gets repo'd in this scenario, is entirely up to the lender. The debtor has no legal right to prevent a repo.
Good News: Fannie Mae Announces New Shorter Waiting Period. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three years after the house […]
The post How Soon After Bankruptcy Can I Get a Mortgage? by Robert Weed appeared first on Robert Weed.
Good News: Fannie Mae Announces New Shorter Waiting Period for After Bankruptcy Mortgage. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three […]
The post How Soon After Bankruptcy Can I Get a Mortgage? by Robert Weed appeared first on Robert Weed - .
Good News: Fannie Mae Announces New Shorter Waiting Period for After Bankruptcy Mortgage. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three […]
The post How Soon After Bankruptcy Can I Get a Mortgage? by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Editor’s Note: Each state has different laws when it comes to enforcement of money judgments, including those relating to private student loans. This article works with the laws of the State of California; if you live anywhere else, talk with a lawyer in your state about your individual situation.
After the private student loan lawsuit comes the judgment. For California residents, this could be better or worse – depending on your situation.
We’ve talked about why a student loan lawsuit may not be a bad thing, but you should weigh your options before allowing the private student loan debt go to judgment.
How Long Is A Judgment Valid?
Under California law, a money judgment is valid for a period of 10 years from the date of entry.
The judgment may be renewed for an additional 10 years, but only if the application for renewal of the judgment is filed before the expiration of the 10-year period of enforceability.
Once the first renewal is made, the creditor can renew again for successive 10 year periods of time.
All in all, the private student loan judgment can be renewed for as long as you live.
The Debtor’s Examination
The first step towards enforcing the judgment is called the debtor’s examination.
This is the private student loan company’s opportunity to call you to court to answer questions about your assets. You may also be required to bring copies of bank account statements, paystubs, and tax returns to show your income.
You may be tempted to throw the Order for Appearance and Examination in the garbage, or to treat it as an optional trip to court. This is a terrible idea, because failure to appear for the examination may result in you being arrested and cited for contempt of court.
Enforcement Begins
Once the debtor’s examination is completed, the private student loan lender’s attorneys have all the information they need to move ahead with enforcement of the judgment.
They know where you live, where you work, where you bank, and how much money you’ve got.
With that information in hand, the private student loan lender can take all of the following actions:
- file a lien on any real property you own in the state of California;
- file a lien on your personal property by filing a notice of judgment lien in the office of the Secretary of State. The lien attaches to all of the following:
- Accounts receivable for a business you own;
- Tangible chattel paper;
- Equipment located within this state;
- Farm products located within this state;
- Inventory located within this state; and
- Negotiable documents of title, located within this state.
- begin a wage garnishment against you;
- levy against your bank account (in other words, take you money out of the bank);
- levy against your automobile; and
- levy against the cash register or the business that you own.
Talk With Your Spouse
Married? If so, you’d better have a talk with your spouse right away.
California is a community property state, which means that the community property of a debtor’s spouse may be subject to garnishment and levy as well.
It doesn’t matter if the private student loan debt was incurred before the marriage, either. Once you’re married, the community property interests of the debtor and nondebtor spouse are usually liable for debts incurred by either spouse.
That means your private student loans, taken out years before you got married, suddenly become your spouse’s problem.
How To Avoid The Problems
Luckily, the judgment may not be the end of the world.
You’ve got exemptions you can claim under state law, so you may be able to protect some of your wages and property.
You may be able to negotiate a deal with the judgment creditor in exchange for leaving your property and wages alone.
In a pinch, you might want to consider Chapter 13 bankruptcy as a way to restructure payment of the private student loans because it will stop a garnishment and levy against you as well as your spouse and any cosigners.
Taking quick action is definitely your best move. Sweeping it under the rug won’t do you, your spouse, or your wallet any good.
The majority of clients we work with in our bankruptcy practice would be considered “consumer” debtors. Credit card debt, home equity loans, car loans, and medical bills often make up the majority of what they owe to creditors. Bankruptcy laws are written to allow consumer debtors to exempt much of the property they have acquired. The ability to retain property is often a major factor in deciding to file bankruptcy. How much property is exempt under the bankruptcy law is also one of the determining factors in deciding whether to file chapter 7 or chapter 13 bankruptcy.The post Property Exemptions in Bankruptcy appeared first on Tucson Bankruptcy Attorney.
The majority of clients we work with in our bankruptcy practice would be considered “consumer” debtors. Credit card debt, home equity loans, car loans, and medical bills often make up the majority of what they owe to creditors. Bankruptcy laws are written to allow consumer debtors to exempt much of the property they have acquired. The ability to retain property is often a major factor in deciding to file bankruptcy. How much property is exempt under the bankruptcy law is also one of the determining factors in deciding whether to file chapter 7 or chapter 13 bankruptcy.The post Property Exemptions in Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Until a private student loan lender decides to file a lawsuit against you, there’s nothing but chaos and uncertainty. That’s all replaced, for better or worse, the instant the case is filed.
There’s a natural order to things. Up is above, and down is below. For every day there is night. That’s the concept of Tao, and it enables us to walk through the world with a sense of certainty.
That certainty, unfortunately, is thrown out the window when it comes to dealing with a past due private student loan. Consider all the points of uncertainty when your student loan goes into default:
- Will the student loan go to collections and, if so, when?
- Will the collectors call you at work?
- Will you get fired because your boss doesn’t want you to get non-work calls during the business day?
- Will the lender sue you, or let it go?
- If there’s a lawsuit, when will it happen?
- Will they settle, or will they play hardball with you?
- When will this all be over?
Wipe Away The Uncertainty
When you’re sued for a private student loan, it’s understandable to feel the rise of panic in your chest. You need to act quickly in order to avoid a default judgment, and beyond that you’ve got to deal with litigation.
But at least there’s certainty. If not of outcome, then at least of, “what happens next.”
Finally, we’re dealing with lawyers representing the private student loan lender. Gone are the cut-rate bottom-feeding collection agents, toiling in anonymity behind glowing computer screens in boiler rooms across the nation, sweating as they contemplate their meager existence and self-loathing between phone calls designed to scare the last few dollars out of your pockets.
Say farewell to the people who have no information about your student loan beyond what’s provided on their screen, powerless to give you copies of your documents or an accounting of how they arrived at the amount they claim is due.
In their place we’ve got lawyers with a direct line to the lender – usually a trust like National Collegiate Student Loan Trust or a “too big to fail” lending institution. They can provide copies of the Note you signed, an accounting of how the balance due is calculated, and proof that the entity suing you is legally entitled to collect the student loan debt.
There is a court system that provides deadlines and procedures for getting to the final decision. A judge to sort through evidence and make rulings.
Certainty.
Accept It – And Deal With It
Now that we’ve got some certainty, we need to accept the reality of the situation. The lawsuit isn’t going to go away, and ignoring it won’t make things better.
Once you’ve accepted that reality, you can deal with it. File a response, invoke the magic words, and be a part of the process.
It may not be fun or easy, but at least you know what’s going to happen next.
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