Miami Chapter 7 and 13 Bankruptcy Law Blog : Miami Bankruptcy Lawyer & Attorney : Jordan E. Bublick : Florida, Ft. Lauderdale, Boca Raton, West Palm Beach, Broward County

A vehicle is exempt in Florida to the extent of $1,000 plus the balance of one's unused $1,000 - $5,000 personal property exemption.

As most people are "upside down" on their vehicle and have little or no equity, most people are able to fully exempt their vehicle.

If a person has substantial equity in his vehicle that will not be exempt, he may consider filing for chapter 13 reorganization bankruptcy where one keeps all property in exchange for making a certain monthly payment plan over 3 to 5 years to pay a dividend to unsecured creditors.

One is usually able to keep a leased vehicle by just continuing to make the payments.

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In filing for bankruptcy, a debtor is required to list all of his or her property of whatever type and wherever located in his bankruptcy schedules. It includes property jointly owned with another person. This includes all real estate and personal property, whether tangible or intangible. Intangible property, such as a potential lawsuit, must be included. It includes property located anywhere in the world.

A debtor may face certain civil or criminal penalties for failing to schedule all of his property.

The valuation of the property must also be set forth. Generally a chapter 7 or chapter 13 debtor sets forth a liquidation or rummage sale valuation for the personal property.

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Child support and alimony arrearages often present a crisis situation in family court when one spouse is in arrears and faces a motion for contempt. Often, this situation can be helped with a chapter 13 bankrutpcy case.

Child support and alimony are generally both considered a "domestic support oligation" in bankruptcy and is non-dischargeable. But chapter 13 reorganization offers an opportunity to payoff the child support and alimony arrearages over a 3 to 5 year period under a chapter 13 plan. Upon the filing of the chapter 13 bankruptcy, proceedings to collect the pre-bankruptcy arrearages are stayed, allowing the debtor the opportunity to propose a chapter 13 plan to pay the arrearages.

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The most typical exemptions used in a Florida bankruptcy case are the following: Florida homestead, $1,000.00 - $5,000.00 of personal property, $1,000.00 of equity in a vehicle, IRA, and other retirement benefits.

If all or most of the property one may be in a position to file for chapter 7 bankruptcy. This would depend on other considerations, including the amount of one's net disposable income.

If a person has substantial property that would not be exempt, he would consider filing for chapter 13. Under chapter 13, one is allowed to keep all of his property, whether exempt or non-exempt, in exchange for the payment to creditors under a chapter 13 plan over 3 to 5 years. The amount required to be paid in the chapter 13 plan depends on the amount of the non-exempt property and the amount of the projected disposable income.

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Many homeowner's struggling to save their home may be able to avoid their second mortgage under a Chapter 13 plan. In many situations, the balance owed on the first mortgage exceeds the value of the real estate, leaving no equity to secure the second mortgage. In this case, the second mortgage would be considered unsecured in chapter 13 and an order avoiding the lien of the second mortgage may be obtained.

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Many South Florida homeowners owe more on their home mortgages than the value of the real estate or are unable to meet the monthly payments. Some of the options a homeowner should consider are as follows.

1. "Making Home Affordable Program" - distressed homeowners should contact their mortgage servicer or lender and inquire as to the availablity of refinancing or modification under the new guidelines of the U.S. Treasury Department's "Making Home Affordable Program." 

2. Foreclosure Actions - homeowners served with a court foreclosure action should appropriately address and monitor the foreclosure action. New statewide programs for Circuit Court mortgage mediation are now being considered or have been implemented in some parts of Florida.

3. Chapter 13 Bankruptcy for Principal Residences - the filing of a chapter 13 bankruptcy stays much creditor action and allows a person the opportunity to reorganize their affairs while under the protection of the Bankruptcy Court.

A second mortgage (as well as other junior liens) that is wholly "underwater" may be avoided and paid on the same basis as other unsecured debt such as credit cards (typically only a small percentage on the dollar). Although a chapter 13 debtor cannot compel the modification of hisor her first mortgages on his principal residence, a modification may be pursued under the "Making Home Affordable Program" or on another basis while in chapter 13.  Defenses to the enforcement of the mortgage may provide a basis for a negotiated modification of a first mortgage.

4. Proposed Changes to Chapter 13 Bankruptcy - proposed changes to chapter 13 bankruptcy law are now pending before Congress that would allow modification of first mortgages (as well as second mortgages) on principal residences.

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The question is often asked as to what extent a spouse's income is taken into consideration when only the other spouse files for chapter 7 bankruptcy due to financial difficulties. It is often asked, "Why should my spouse be responsible for my debt." The recent bankruptcy case of In re Coup, 2008 WL 2388114 (Bankr.N.D.Ohio)(Whipple, J.) addressed this issue. This Chapter 7 case came before the Bankruptcy Court on the U.S. Trustee's (the "UST") motion to dismiss the case an an "abuse." The Court held that a non-filing spouse's income is taken into consideration to a certain extent and found this case to be an abuse and ordered the case dismissed unless the Debtor converted the case to chapter 13.

Significantly, the Court noted that there are differing opinions as to the degree of relevance of the non-filing spouse's income. The Court stated that some of the varying opinions are that the non-filing spouse's income is only taken into consideration only to the degree that it is regularly contributed to the household expenses, that it should be considered only if it is so substantial that it would raise the debtor's standard of living to the excess, and that it should be taken into consideration only to the extent of the debtor's living expenses that benefit the non-filing spouse. The Court decided that the most persuasive approach is that the non-filing spouse's income must be reviewed to determine what degree a debtor's daily living expenses are shared as co-obligations of the non-debtor spouse or are assumed completely by the non-filing spouse. But the Court made clear that although the non-filing spouse's income is not be rendered liable for the debts of the debtor, it is considered in determining whether the debtor has available discretionary income by virtue of the fact that the debtor and non-filing spouse share a joint household. The Court also adopted the position that a court should assume that both parties to a relationship share equally in the family living expenses and that the appropriate measure of a debtor's income for purposes of a determination of abuse under section 707(b) would be the debtor's sole income less one-half of the family living expenses.

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Generally a mortgage secured by a principal residence is not modifiable in a Chapter 13 bankruptcy plan.  One is allowed though to stop foreclosure action and reinstate your home mortgage under a Chapter 13 plan over a period of up to five years.

Due to the continuing deterioration of the residential real estate market in South Florida, the time has come to possibly consider a further approach to saving one's home in Chapter 13.

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You generally do not need to file "bankruptcy" in order to close your Florida corporate business. A chapter 7 corporate bankruptcy liquidation is only necessary or advisable in certain limited circumstances.

Although a bankruptcy case is not generally necessary, the applicable provisions of Florida law, including the corporate statutes, are required to be followed.

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