The Florida Bankruptcy Law Blog

Possible Limit On IRA Exemption In Florida Bankruptcy Cases

Someone asked me this week if Florida’s unlimited creditor exemption of IRA accounts applies in bankruptcy court. After looking at the provisions of the 2005 bankruptcy law I concluded that the unlimited IRA exemption may not apply when someone files bankruptcy in Florida. Bankruptcy law has a set of default property exemptions in Bankruptcy Code section 522 (d). These exemptions, however, do not apply to Florida bankruptcy debtors because Florida has "opted out" of the 522 (d) exemptions and substituted its own set of property exemptions including an unlimited IRA exemption. However, another sections of the 2005 bankruptcy law, Section 522 (n) places a cap on IRA exemptions in bankruptcy of approximately $1 million. Florida has not opted out of Section 522(n) so I expect that the $1 million IRA cap would apply even though Florida has chosen to opt out of the default exemptions in 522(d).

Court Makes Bankruptcy Easier For Mobile Home Residents

A bankruptcy court in Tampa made bankruptcy easier for people who live in mobile homes on rented mobile home lots. A recently enacted Florida statute provides a $4,000 "wildcard" exemption for personal property which courts have said can be tacked on to the separate $1,000 exemptions for automobiles and general personal property such as household furnishings. However, courts have held that debtors who claim, or benefit from, the Constitutional homestead exemption cannot use the $4,000 wildcard exemption to protect their cars or their belongings. The Tampa court decisions said that debtor who exempt a mobile home situated on rented property can protect the home in bankruptcy and also claim the wildcard exemption.

Creditor Harassment Claims During Chapter 7 Bankruptcy

I understand some Chapter 7 trustees in Tampa, and maybe elsewhere, are asking some debtors at the creditor meeting if they have been subject to creditor harassment prior to filing bankruptcy. The question is being asked to see if the debtor could assert a claim under the Fair Debt Collection Practices Act. (FDCPA). If the debtor states that he was "harassed" the trustees are sending the information to a consumer attorney to evaluate a potential claim, and if the attorney finds there may be a possible FDCPA claim, the trustee can hire the same attorney to file an adversary complaint against the offending creditor within the bankruptcy court proceeding.

Pre-Bankruptcy Planning: Court Allows Large Cash Investment in Homestead Same Month Bankruptcy Filed

Some people think about protecting liquid assets in bankruptcy by paying advance mortgage payments or paying down mortgage principal on their homestead property prior to filing. Most bankruptcy attorneys will caution clients that paying extra money toward your homestead within two years (and possibly in some cases to 10 years) prior to filing bankruptcy will either forfeit the money paid toward the house or even cause a complete denial of your bankruptcy discharge. A recent court decision from the 8^th Circuit Court of Appeals seems to provide debtors greater leniency to shelter money in their exempt homestead. In this case the court permitted the debtors to exempt approximately $140,000 applied to their homestead mortgage within 30 days prior to their bankruptcy filing.

Does Sending 1099 To Bankruptcy Debtor Violate Automatic Stay?

A bankruptcy attorney called me today with a question. He represents a Chapter 7 bankruptcy debtor who lost a house to foreclosure. The debtor listed the mortgage company on his bankruptcy petition. The debtor received his bankruptcy discharge in 2008. The mortgage company sent the debtor an IRS From 1099 representing imputed income for forgiveness of the mortgage debt. The attorney believes that sending the 1099 may be a violation of the automatic stay, and he asked me if I agree with his argument.

Not A Fraudulent Conveyance To Take Your Name Off Title Of Asset Wholly Paid For By Another Person

I have written occasionally, and recently, about situations where a parent purchases an asset and puts their child’s name on the asset as a joint owner for estate planning purposes. If the child has a creditor problem, or in contemplation of bankruptcy, transfers, or has the parent transfer, the asset to the parents’ name alone the issue arises of whether the transfer to the parent is a fraudulent conveyance as to the child’s creditors or the trustee in the child’s bankruptcy. Today, a blog reader referred me a bankruptcy case from the Southern District of Florida which dealt with this issue.

Car Title Determine's Chapter 7 Trustee Interest In Car Paid For Wholly By Debtor's Parents

Many parents put their children on title to the parents’ real estate, bank accounts, and cars for estate planning purposes. The parents want to give the children access to the assets in the event of the parents’ disability or death. Recent blog posts(see below)  have addressed problems this joint titling causes when the children file bankruptcy. The parents’ assets are subject to inclusion in the child’s non-exempt bankruptcy estate. In the case of jointly owned assets such as real estate or financial accounts the debtor children could take the position, if provable by evidence, that all the money that when in to the jointly owned real estate or financial accounts was the parents’ money so that the debtor child had no "equitable interest" in the property. If the child’s interest is limited to having their name on the account or deed with no financial investment, and the child can asset no rights or control in the asset, they may be able to protect the asset from a bankruptcy trustee.

Chapter 7 Trustee's Discretion To Pursue or Ignore Non-exempt Assets

Chapter 7 trustees have discretion to pursue, or not pursue, a debtor’s non-exempt assets for the benefit of the bankruptcy estate. Just because a debtor files bankruptcy with assets over the personal property exemption limits does not mean he will necessarily lose the assets during the Chapter 7 bankruptcy. For example, this past week I attended a trustee examination at a 341 meeting with a debtor whose bankruptcy schedules showed that he had $2,700 of non-exempt car equity and an expected non-exempt tax refund of approximately $1,800. The Chapter 7 trustee indicated that he had no interest in pursuing the assets or asking the debtor to buy back the assets. The trustee gave the debtor a "free pass" as to his non-exempt assets.