Category Archives: Chapter 11

Defenses to Collection Lawsuits

If you are one of the thousands of consumers that is facing overwhelming credit card debt, it may be time to consider filing a personal bankruptcy case. Filing a Chapter 7 or Chapter 13 can allow you to eliminate or discharge your credit card debt and obtain a fresh financial start. However, if filing for bankruptcy protection is not an option for you and collection lawsuits are being filed against you, it is important to confer with an experienced attorney regarding the defenses that may be available to you. Below are a few defenses to a collection lawsuit that might be available to you:

Bankruptcy Attorney serving Cocoa, Florida

Bankruptcy Attorney serving Cocoa, Florida

  • Improper service. If you are not validly served with the summons and complaint, you have an effective defense (if timely alleged).
  • Statute of Limitations. The plaintiff seeking a monetary judgment against you must file the lawsuit by a certain deadline or it is time barred. You have a defense if the debt has gone “stale” and the creditor has lost its right to sue you to collect it.
  • Improper plaintiff. The party suing you must have the right to sue you. In other words, the plaintiff must be owner of your debt. This means that if your account was sold to a collection agent and the original creditor failed to properly transfer the documentation evidencing your debt, it may be possible to get the suit against you dismissed.
  • Wrong defendant. If you can prove that you did not incur the debt and that it does not belong to you, the court may dismiss the lawsuit.
  • Debt discharged. If you filed a prior personal Chapter 7 or Chapter 13 case and included the debt in your filing, proving the debt was discharged will prevent the creditor from proceeding with the lawsuit against you to collect it.
  • Identity theft. If the debt was incurred as a result of you being the victim of identity fraud, it is a valid defense to the lawsuit.
  • Accounting errors. You may have a partial or full defense if the plaintiff failed to correctly credit your account with payments or made some other accounting errors.
  • Unlawful debt collection. If the plaintiff used illegal debt collection practices against you, we can help you allege a counterclaim in the lawsuit. This means that you file a claim against the plaintiff seeking money damages which can be used to offset the amount you owe the plaintiff.

If you are interested in learning whether one or more of the above defenses are available to you, please contact us to schedule an appointment. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.


Will my bankruptcy halt all lawsuits?

If you are facing collection lawsuits, filing a Chapter 7 or Chapter 13 bankruptcy can be an effective way to stop the litigation from proceeding. However, there are certain types of lawsuits that are not halted by a personal bankruptcy filing. Generally speaking, a suit that is seeking the recovery of money is stopped when your case is filed.

Bankruptcy Halt Lawsuits | Melbourne and Palm Bay, Florida

Bankruptcy Attorney serving Palm Bay, Florida

Below are a few examples of proceedings that are not stopped by your bankruptcy:

Family law matters

If you are involved in a lawsuit regarding child custody, child support, spousal maintenance, or to establish paternity, a bankruptcy filing will not stop the proceedings. It should be noted that you cannot discharge or cancel your obligation to pay child support in a bankruptcy case.

Criminal law proceedings

If you have been arrested or convicted of a crime, any criminal actions against you will proceed. However, if there a monetary claim in relation to the criminal matter, it may be halted by your bankruptcy filing.

Tax proceedings

The Internal Revenue Service (IRS) is allowed to continue with conducting an audit, issuing tax deficiency notices, making demands for tax returns, or issuing tax assessments against you while you are in bankruptcy. The IRS cannot issue a tax lien, seize your assets, or seize your income while your personal bankruptcy case is pending.

If you have a litigation or other forms of legal proceeding filed against you and you are interested in learning how filing a Chapter 7 or Chapter 13 could impact them, contact our knowledgeable bankruptcy lawyers for the advice and guidance you need. We will review your individual circumstances and help you understand what the automatic stay will halt and what it will not stop.

Contact a Bankruptcy Attorney at Faro & Crowder, PA today

Call us today to schedule your free initial bankruptcy consultation. Our office is located in Melbourne, Florida on Sarno Road. We proudly serve individuals and businesses in Palm Bay, Viera, Cocoa, Rockledge, Cocoa Beach, Merritt Island and other parts of the Space Coast and Brevard County.

What is the Co-Debtor Stay in Bankruptcy?

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Faro & Crowder, PA Bankruptcy & Foreclosure Attorneys

When you file a bankruptcy case, you obtain the benefit of the automatic stay. If you file a Chapter 13 bankruptcy, you are also given the “co-debtor stay.” The automatic stay prevents creditors from taking collection actions against you, while the co-debtor stay prevents collection against your family, friends or others who co-signed loans with you. The automatic stay and the co-debtor stay can remain in place while your Chapter 13 is pending.

It is important to note that the co-debtor stay does not change or eliminate your co-borrower’s liability to pay the loan. Their financial obligations remain intact, but the creditor cannot use collection efforts against him or her while your Chapter 13 case is active (without court approval). Additionally, a Chapter 7 case does not provide you with the co-debtor stay.

As with most general rules, there are some exceptions to the application of the co-debtor stay. If a debt was incurred in the “ordinary course of business” by the debtor, the stay does not prevent collection efforts against the co-debtor.

Pursuant to 11 U.S.C. §1301, the co-debtor stay applies if (i) the primary debtor files a Chapter 13 case, (ii) the debt is a consumer debt (not a business debt), (iii) the co-borrower is an individual, (iv) the co-borrower did not become liable on the debt in the ordinary course of business, and (v) the Chapter 13 case was not dismissed, closed or converted to a Chapter 7 or Chapter 11 case.

If the above criteria are met, the co-debtor stay can be effective for the full term of the Chapter 13 plan (which is three to five years).

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

The information on this blog or any blog is not intended as, and should not be taken as, legal advice.

 

What Collection Activity Does a Bankruptcy Stop?

Car Accident1

The automatic stay is a powerful benefit of filing a bankruptcy case. As soon as the stay is effective, your creditors are prohibited from taking further collection actions against you. As a result, a bankruptcy filing can be helpful when you are facing financial emergencies, including:

  • Foreclosure. The foreclosure process is a collection activity halted by your bankruptcy filing. At a minimum, your filing can buy you some time to negotiate with your mortgage lender or at least remain in your home for a few additional months.
  • Collection lawsuits. If a creditor, such as your credit card company, has filed a lawsuit against you, your bankruptcy filing will halt the litigation. In many cases, the debt underlying the collection lawsuit can be discharged in your filing.
  • Garnishment. Garnishments against your wages or your bank account will immediately halt when your Chapter 7 or Chapter 13 case is filed. You may also be able to discharge or eliminate the debt linked to the garnishment action, which means you are no longer liable to pay it.
  • Eviction. Depending on whether your landlord has obtained a judgment for possession against you, the eviction process may be halted by your bankruptcy filing.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

The information on this blog or any blog is not intended as, and should not be taken as, legal advice.

Bankruptcy Discharge: What does it really mean?

The primary goal of filing a personal bankruptcy is to eliminate debt or obtain a “discharge of debt.” A discharge order cancels your liability to repay the debt. As a result, many people save thousands of dollars by filing a Chapter 7 or Chapter 13 case, which is often referred to as obtaining a fresh financial start.

When you file bankruptcy, you are required to disclose ALL of your debts, assets, expenditures, income and other financial information. You must file a complete list of your creditors (anyone you owe money to) which is called the “creditor matrix.” The court uses your creditor matrix to mail notice of your filing to all of your creditors. This benefits you because all of the creditors who receive notice of your filing will be bound by your discharge order.

At the conclusion of a successful bankruptcy case, you will receive your discharge order. Once you obtain your discharge, creditors are prohibited from taking any collection activity against you regarding the discharged debt. This means you will no longer receive harassing telephone calls, demanding letters, or have collection lawsuits filed against you for discharged debts. If a creditor ignores the discharge order and take action to collect a discharged debt, you may be able to recover a monetary judgment or sanctions against that creditor.

Contact Faro & Crowder, PA to discuss your individual circumstances with an experienced personal bankruptcy attorney. If you have questions regarding filing a Chapter 7 or Chapter 13 case, contact us for a free consultation.


Understanding the “Meeting of Creditors”

All debtors are required to attend a meeting of creditors, as required by Section 341 of the Bankruptcy Code. It is normal for you to feel nervous about appearing before the trustee and your creditors to answer questions under oath about your finances, but a seasoned bankruptcy attorney will make sure you are fully prepared and walk you through each step of the process. Below are a few helpful tips for getting prepared for your meeting of creditors:

Financial Records

As your bankruptcy lawyer, we will provide you with a list of the documents you must bring to the meeting of creditors. Examples of the paperwork you will need to provide to the trustee include:

  • Driver’s license (or other government from of ID) and social security card
  • Proof of mortgage on home
  • Title and liens on all vehicles (autos, motorcycles, boats, motor homes, 4-wheelers, tractors, etc.)
  • Bank statements
  • Pay stubs

The trustee assigned to administer your case may also provide you with a list of records to bring. Failure to provide the requested documents could result in your meeting of creditors being postponed to a later date. Continued failure to provide the records could result in your case being dismissed.

Questions You May be Asked

The meeting of creditors is a time for the trustee (and any creditors who appear) to ask questions and make sure the court has a full understanding of your financial situation. Below are examples of questions commonly asked:

  • Have you reviewed your bankruptcy pleadings? Is everything correct?
  • Did you list ALL of your assets and your debts?
  • Do you expect any kind of windfall (like an inheritance) in the near future?
  • Do you have any claims against anyone (like a lawsuit)?
  • Confirm your current address
  • Do you own any real property other than your home?

The most important piece of advice is to tell the truth. If you have concerns regarding any of your assets or debts, be sure to discuss it with your lawyer before your meeting of creditors.

If you are considering filing for bankruptcy, contact our office for a free consultation with attorneys who help you get a fresh and fair start.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

The information on this blog or any blog is not intended as, and should not be taken as, legal advice.

Chapter 11 Bankruptcy Can Benefit Individuals

Many individuals believe that a Chapter 7 or 13 is the only bankruptcy relief available to them. However, a Chapter 11 isn’t only used for corporate restructures, it can allow an individual debtor to take advantage of a meaningful debt restructuring as well.

Chapter 11

When to Consider Chapter 11

You may be ineligible to file a Chapter 7 case because you have too much disposable income after paying your necessary living costs, which means you cannot pass the means test. Additionally, the debt limit for filing a Chapter 13 may be insufficient for you if you have borrowed a significant amount of money. A Chapter 11 provides a good option for dealing with your debt and managing your finances.

Benefits of a Chapter 11

The Chapter 11 process allows a debtor to handle even the most complex issues and a large amount of debt. Other advantages include:

  • A Chapter 11 debtor is not required to pass the means test.
  • You can propose a repayment plan, which allows you to pay less of your disposable income to unsecured creditors. Additionally, plan payments may be delayed until the plan is confirmed, but adequate protection payments must still be paid to secured creditors until confirmation.
  • You can modify your secured loans, including mortgages and vehicle loans. Unlike Chapter 13, however, a debtor does not have a time requirement for how long the vehicle had been originally financed before the loan can be reduced to the value of the vehicle.
  • Typically, a Chapter 11 debtor keeps possession of his/her assets and manages his/her own finances under supervision of the trustee.
  • Chapter 11 can be advantageous for individuals with substantial tax debt.

Downside to Chapter 11

The Chapter 11 process can be complex and it can be costly. However, in many cases, the time and expense involved is outweighed by the amount of debt the debtor is allowed to eliminate.\

Contact a Chapter 11 Bankruptcy Attorney at Faro & Crowder, PA

To learn more about how a Chapter 11 bankruptcy can benefit an individual, contact us for a free consultation.

We provide individuals, families and businesses with debt relief and foreclosure services in Brevard County included the areas of Palm Bay, Melbourne, Viera, Eau Gallie, Titusville, Satellite Beach, Cocoa Beach, Cocoa and Cape Canaveral.

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

We are a debt relief agency. We help people file for bankruptcy under the bankruptcy code.

Sbarro Proves Bankruptcy Works

Pizza

Sbarro, the popular pizza chain, filed Chapter 11 bankruptcy three months ago and has shown that the process can work. The company’s pre-packaged Chapter 11 plan, which reduces Sbarro’s debt by approximately 85%, has been approved and it took effect on June 2, 2014.

Sbarro will be moving its company headquarters from Melville, New York, to Columbus, Ohio. This will allow Sbarro to reduce its expenses and it also means its headquarters will be closer to its new fast-casual Pizza Cucinova concept, where the customer can create personal pizzas cooked in a wood-fired oven. The concept was launched last year and there are locations already in Ohio. The move will also result in Sbarro cutting nearly 40 employees at its old location, but the company’s other 2,700 employees across the country will keep their jobs.

Sbarro’s financial troubles were attributed in large part to the severe decrease of mall traffic and decline in food court sales. The pizza company had closed more than 100 of its stores in North America prior to seeking bankruptcy protection, which saved it millions of dollars per year.

Although Sbarro sought a buyer who would make an offer that was better than the debt for equity deal offered by the company’s lenders, it received no bids. Thus, Sbarro moved forward with its pre-packaged Chapter 11 plan. Sbarro’s plan of repayment provides that lenders, including investors Apollo Global Management, Babson Capital Management LLC and Guggenheim Investment Management LLC, will exchange $148 million in debt for control of the new business. Vendors, landlords and other unsecured creditors will have an estimated $1.25 million to share under the plan.

“We want to thank our stakeholders for their steadfast support,” the company said in a statement. “The company now can move forward with its plans to invest in and grow the business. We will be announcing progress and further plans for the business in the near future.”

If you have questions regarding the Chapter 11 process or how it could benefit your company, contact us for a free consultation.


South Florida Multispecialty Associates Files Chapter 11

Bankruptcy

South Florida Multispecialty Associates, LLC, with offices located in Miami Beach and Aventura, has filed a voluntary Chapter 11 bankruptcy. The medical practice has 50 employees and reportedly sought bankruptcy protection after a medical malpractice plaintiff won a garnishment on its bank accounts.

The medical group was apparently unable to make its first $100,000 payment that was part of a $250,000 settlement reached in May of this year. The medical group was reportedly relying on a large payment due from one of its insurance providers for services rendered in order to meet the plaintiff’s first payment deadline, but it was delayed.

All of the medical group’s bank accounts were frozen due to the garnishment order, so it was necessary for the practice to seek Chapter 11 protection to gain access to the accounts and continue making its own payroll. According to the debtor’s pleadings, the practice has $2.6 million in unsecured claims and $6.2 in accounts receivable.

If your company is facing financial struggles or litigation that has resulted in assets being frozen, it may be time to consider filing a Chapter 11 bankruptcy. Your business can continue to operate during your filing. Chapter 11 bankruptcy is often referred to as a “rehabilitation” bankruptcy for individuals and businesses, but it is most commonly used by companies. The Chapter 11 debtor (called the “debtor-in-possession”) sets forth a plan of reorganization that outlines how the creditors will be paid (in full or in part) and if the debtor intends to cancel any of its contracts. Creditors can also propose a Chapter 11 plan of repayment. The plan must be approved by a certain percentage of your creditors and by the bankruptcy court. A Chapter 11 trustee is appointed to supervise your case and ensure that priority claims are paid and assets or managed properly.

A Chapter 11 bankruptcy can be a complex process that typically requires the assistance of a seasoned bankruptcy attorney, but it can allow your business to manage its finances and emerge stronger. To learn more, contact us for a free consultation.


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