The Florida Bankruptcy Law Blog

Leasing Portion of Homestead Land To Third Party Does Not Impair Exemption

I came upon another interesting court decision concerning Florida homestead. In this bankruptcy case a debtor owned a property in the county less than 160 acres. The debtor placed two mobile homes on the property. He lived in one mobile home and he rented the other mobile home and surrounding land to a third party for about $400 per month. Both mobile homes were attached to sewer and water lines. The debtor claimed the land and both mobile homes as exempt under Florida’s homestead provisions. The bankruptcy trustee objected to the exemption of that portion of the property used by the tenant and his rented mobile home. The bankruptcy judge overruled the objection and sustained the exemption of all of the debtor’s property.

Chapter 7 Trustee Goes After 2009 Prospective Tax Refunds

Bankruptcy trustees may be more aggressively seeking your income tax refunds. Tax refunds are non-exempt money in most bankruptcy cases. If you file bankruptcy during the first four or five months of the calendar year, and you are due or expecting a tax refund for the prior tax year, the trustee will take your tax refund. The asset at issue is the refund that was due the debtor at the end of the prior year, based on the prior year’s income and withholding, to be reported on the income tax return. I have received emails from two attorneys reporting that a Chapter 7 trustee at a creditor meeting has required that the debtor pay the trustee the year-to-date portion of the debtor’s expected tax refund for 2009, even though the tax return is not due until next year and the amount of refund is not set until the end of the tax year.

Bankruptcy Court Exempts Homestead Property Used For Debtor's Business

Homestead protection applies to homes and land occupied by a debtor as his primary residence. Property used for commercial purposes or for the production of income generally does not qualify for homestead protection. A Florida bankruptcy court recently considered married joint debtors who used part of a homestead property for his residence and part of the same property for business and income production. The issue was whether the partial business use disqualified all or part of the debtors’ homestead protection from their judgment creditors. The two debtors owned a five acre parcel of land in the county. They built their residence on a minority portion of the land. The debtors had two more buildings on the same land. One building was a warehouse used exclusively for the debtors’ business. The third building was a second residence rented to an unrelated third party. In other words, two of the three structures occupying most of the property were used commercially.

Resulting Trust Theory Can Protect Asset Titled With Parent For Estate Planning Purposes

In the past week I received similar questions from three prospective bankruptcy debtors about assets owned jointly with their parents. In each instance, the parent had added the debtor/ child to the parent’s deed, bank account, or CD for estate planning purposes so that the child would immediately have access to the asset upon the parent’s death. I have written previous posts that discussed the problems with joint ownership between parent and child. My guess is that most bankruptcy attorneys tell their clients that when a parent adds a child’s name to the parent’s asset for estate planning the child will lose at least part of the asset if the child files Chapter 7 bankruptcy because the child will be deemed to own part of the land or financial asset. This is not always the case. One of my clients had me research the issue where the parent purchased a house, paid off the mortgage, and then added her child to the title for estate planning purposes.

The Effect of Bankruptcy Or Foreclosure On Your Ability To Qualfiy For Your Next Home Mortgage

One of my recent clients works as a supervisor in the mortgage lending department of a national bank. Many people asked me about the impact of bankruptcy and foreclosure on their credit. I asked this client how many years does someone have to wait to get a new mortgage after either filing Chapter 7 bankruptcy or a foreclosure judgment. My client said that during the real estate boom a bankruptcy or foreclosure meant no mortgages for two years. In today’s lending environment, mortgage companies are not giving new loans to anyone who either filed bankruptcy in the past four years or who had a foreclosure judgment in the prior five years. It does not matter how much cash the debtor can invest in the new home- no mortgages are available during these periods regardless of the down payment and loan to value ratio.  She expected that these requirements will be relaxed somewhat when the real estate market stabilizes.

HOA Fees Liability After Bankruptcy

I read an interesting blog post about liability for homeowners association fees after filing Chapter 7 banrkuptcy.I still owe HOA Fees after I filed Bankruptcy and Surrendered my Home? : Bankruptcy Law Network. The new bankruptcy law does not discharge the debtor's liability for debts to an HOA. The author states that as a practical matter debtor's have little to worry about. His reasons and advice to clients is explained in the blog post.

Bankruptcy's Effect On Credit Score: Lender Rebuts Common Myths

Bankruptcy debtors often worry about the effect of a bankruptcy on their credit rating and their ability to finance new cars and homes after filing bankruptcy. The consensus opinion of my clients is that a Chapter 7 bankruptcy ruins your credit and that a Chapter 13 bankruptcy has less adverse impact on credit. One of my clients this week owns a company that buys automobile finance contracts. This client is not filing bankruptcy. His company purchases debt from other companies making sub-prime auto loans, companies such as buy-here-pay-here lots and payday loan businesses. He says that the debt packages he buys always includes loans made to people with prior bankruptcies. He knows the effect of bankruptcy on credit ratings. He told me there are two prevailing myths about bankruptcy and your credit score.