The Florida Bankruptcy Law Blog

Chapter 7 Bankruptcy Risks Money In Jointly Owned Parent/Child Bank Account

Parents often add their child’s name to the parent’s bank account so that the child will have access to the parent’s fund to pay the parents’ medical care and other support expenses as they grow older. This arrangement causes problems for a child filing Chapter 7 bankruptcy. The bankruptcy estate includes all assets titled in the name of the child. If a child is a joint owner of an asset half of the asset value presumably is part of the child’s bankruptcy estate. When a debtor is a joint owner with his parent of a bank account the presumption is that the child/debtor owns half of the money in the account. The debtor could rebut the presumption by proving at an evidentiary hearing that his parent contributed all the money to the account and that the parent did not intend to make a gift of half of the money to the child/debtor. Proving the ownership of the money is not only expensive, and a bankruptcy judge may not find reason to rebut the presumption that the debtor received title and ownership of half the account. It is better to clear up ownership prior to filing bankruptcy.

Do Large, Irregular IRA Withdrawals Count As Debtor Income In Means Test Calculation?

The definition of income is important in the administration of the "means test" to determine eligibility for Chapter 7 bankruptcy. Some sources of income are specifically excluded from "income" for means test purposes; social security is an example of income received by the debtor but excluded from the means test. Other than money excluded by the bankruptcy law, the means test cast a wide net to capture income available to debtors to pay their expenses and creditors. Almost any regular source of money available to pay household expenses counts as the debtor’s income.

Don't Allow A Mortgage Lender To Invade Your Bank Accounts To Pay Past-Due Payments

People often are driven to file bankruptcy after a creditor has successfully seized their money. Many banks want the borrower to maintain bank accounts as a condition of getting a home mortgage Often prospective bankruptcy clients tell me they have to file bankruptcy because their bank has taken money out of the debtor’s bank account when the debtor missed one or two mortgage payments owed to the same bank.. People usually complain that the mortgage bank has "garnished" their bank accounts.

Chapter 13 Bankruptcy Changes Clear Key Hurdle: Hope For Homeowners

I received a few phone calls today about articles in national newspapers concerning prospective changes to Chapter 13 bankrupcy law. Plan to Cut Foreclosure Rate Clears Key Hurdle - WSJ.com. The proposed new law is intended to help homeowners modify mortgage loans in order to save their primary residence from foreclosure. The newspapers report that the proposed new Chapter 13 law gives bankruptcy courts the power to force changes in the interest rate, principal balance, and monthly payments of mortgages on primary residences. Homeowners can use Chapter 13 bankruptcy to cram-down mortgages on upside down homes to the current home value and change interest rates to current market rates. The newspaper states that legislators hope the homeowners immediately can use the threat of the new Chapter 13 law for convince their mortgage lenders to make voluntary mortgage modifications.

Mobile Home Owner Eligible For "Wildcard" Personal Property Exemption in Chapter 7 Bankruptcy

People who do not claim or benefit from a homestead exemption are entitled to an additional personal property exemption in the amount of $4,000 in Chapter 7 bankruptcy. The $4,000 property exemption can be added to the debtors Constitutional exemptions of $1,000 for all personal property. Bankruptcy debtors who intend to keep their primary residence in bankruptcy do not get the additional $4,000 exemption according to several Florida bankruptcy court decisions. In a recent case, a court considered whether someone who lives in a mobile home situated on a rental lot Mobile homes used as a debtor’s primary residence are exempt in bankruptcy pursuant to Florida Statute 222.05

How Can Chapter 7 Debtors Learn To Properly Value Their Furniture On Their Bankruptcy Schedules

Florida bankruptcy law permits each debtor to exempt $1,000 of furniture and other personal property including cash. This exemption is small compared to personal property exemptions permitted bankruptcy debtors in other states. Fortunately, your personal property is valued for bankruptcy purposes at garage sale or flea market value. Bankruptcy trustees in the Orlando area are accustomed to seeing very low property valuations, and most will not go after personal property that is valued slightly above the $1,000 per-person exemption limit. Most of my clients understand how to value their belongings at garage sale value. Most do not overvalue their property, and few of my clients have been subject to trustee objections over the exemption of their personal property. Occasionally, I find clients who persistently over-value their property and end up paying money to their Chapter 7 bankruptcy trustee. Once a clients files his property schedules with the bankruptcy court it is difficult for him to amend schedules with lower valuations after a bankruptcy trustee insists on payment or surrender of property.