Tag Archives: Cocoa Beach

Are Payday Loans Dischargeable in a Chapter 7?

Payday Loans

Payday loans are generally dischargeable without any arguments in a Chapter 7 Bankruptcy, because these loans are unsecured debts. There are, however, a few special cases.

Fraud

If you borrowed money within 90 days prior to filing bankruptcy, there is a presumption of bankruptcy fraud. Simply stated, the law presumes that you never intended to repay the money and that you used your bankruptcy filing as a sword instead of a shield. In such a situation, the payday lender may file an objection to discharge and a motion to remove the stay.

Many bankruptcy judges do not like payday lenders, believing that these lenders charge usurious rates and take advantage of consumers. Whether that perception is true or false is not the point. Because of this attitude, some judges may require the payday lender to prove fraudulent intent. Intent is particularly hard to prove if the actual loan was originally taken out more than 90 days prior to filing, and the consumer had to keep renewing the loan.

Postdated check

Some payday lenders may require you to surrender a postdated check. After you file, they may attempt to cash the check, arguing that they deposited the instrument in the normal course of business.

But the automatic stay prohibits creditors from taking any action against you, and the payday lender is clearly a “creditor” at that point.

Vehicle title loan

Many people place title loans and payday loans in the same category. For non-bankruptcy purposes, this classification may be appropriate. But, by accepting cash and putting up your car title as security for repayment, the vehicle title loan is a secured debt. The debt itself may be dischargeable, but the lender’s lien on your car title is still valid.

One option is a cram-down. If you borrowed $3000 but your car is only worth $1000, you may be able to pay the $1000 and keep your car. Another option is a conversion to a Chapter 13 bankruptcy, when the automatic stay stays in effect much longer, giving you time to pay off the loan.

To find relief from your creditors, contact us in Melbourne, Florida for your free consultation.


Open Meeting Cancelled

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Recent scheduled meetings of the Bankruptcy Rules Committee were cancelled, apparently due to lack of interest.

There had been two meetings scheduled in January 2014, one in Chicago and one in Washington, D.C. According to federal law, meetings may be cancelled if there is a lack of public interest, the Standing Committee sees a need for expedited rule change that bypasses public comment, or the proposed amendment is so technical in nature that it does not require a hearing.

The Standing Committee also discusses proposed changes in civil rules, criminal rules and rules of evidence. No further bankruptcy meetings are scheduled at this time.

Bankruptcy filing

In 2011, Florida had the second-most bankruptcy filings (94,815) in the country. California held the top spot with a staggering 240,151. Georgia, Illinois and Ohio rounded out the top five.

A cursory glance at these statistics shows the diverse nature of bankruptcy filings. There is no single cause-and-effect relationship. There is no discernible pattern, according to geography or number of filings. People simply get into financial trouble, and bankruptcy is perhaps the best way out.

That being said, a closer look behind the numbers is revealing:

  • The “average” filer is married, has a high-school education and earns less than $30,000 per year.
  • The median filing age is 45; the number of filers younger than 25 is lower than ever.
  • Repeat filers account for 16% of all bankruptcy cases overall.

Chapter 13 Bankruptcy can put you back on the right path, by restructuring some debts and eliminating others. In ten years, your bankruptcy filing will fall off your credit report entirely.

Contact us for a free consultation with attorneys who work hard for you.


Court Stops Lawsuit against Debtor

The Middle District of Florida recently ruled that the automatic stay is a blanket protection that applies to multiple creditor claims, even if there is not a perfect symmetry of parties.

Facts

In Peterson et al v. Avantair et al, Avaintair informed its employees that it could not make payroll almost simultaneously with its bankruptcy filing. Mr. Peterson, along with some other employees, personally sued Avantair’s corporate officers and senior managers for breach of contract, failure to pay minimum wage and several other causes of action.

The defendants argued that the case should be stayed as to the individual defendants while it was stayed as to Avantair under Section 362 of the Bankruptcy code, , while the plaintiffs stated that their case should be allowed to proceed, as the defendants had not technically filed bankruptcy.

Holding

The district court agreed with the defendants and stayed the case. Citing a 1936 case, the court stated that it had broad powers to stay a case to avoid “duplicative discovery, multiple hearings and inconsistent results.”

The court was convinced that, although there may have been some minor differences, the essentials of the case against the defendants and Avantair’s bankruptcy were substantially similar. The evidence would have been the same and the legal arguments for each side would have been much the same as well. The district court issued an order staying the case.

Bringing a business through bankruptcy is complex, and requires an attorney who understands the interplay of the business’s liabilities and the liabilities of its officers, directors, and owners.  We have experience representing small businesses and their owners through the bankruptcy process.

Contact our office in Melbourne, Florida for a free consultation with attorneys who are there to protect you.


Can Bankruptcy Help You Get a Loan Modification?

Investment Real Estate

Distressed homeowners in the Northern District of Florida now have an additional option to try and keep their home.

The court’s Mortgage Modification Mediation service allows homeowners, and lenders, access to experienced Chapter 13 mediators at a reduced cost. Although the parties are not required to reach an agreement, courts are generally much more inclined to enforce agreements between the parties as opposed to imposing their will in a given situation.

The plan is designed to streamline the process, reduce time and, above all, get the parties talking.

Mediation success

The normal loan modification process can be frustrating, to say the least. By most accounts, at least 80% of eligible homeowners are denied mortgage modifications by their lenders. Although there are no hard numbers, and no guarantee of success, these statistics are often reversed in mediation.

There are two primary reasons for the big difference in results:

  • Dialogue: Only about a third of at-risk borrowers are even in regular contact with their lenders. Although an open dialogue is no guarantee of success, a nonexistent dialogue is a guarantee of failure. You don’t get anything unless you ask.
  • Good faith negotiation: The largest single reason for denial is failure to timely submit all required documents. While a bank may very well deny a loan modification because one form was one day late, such a stance is not a “good faith” denial under the law. The rule of thumb is that if the bank cannot issue a denial based on anything other than a technicality, there is no good-faith basis for the denial.

Mediation may be available in other cases and in other districts. Speak with your attorney about some ways that bankruptcy can save your home.


Court Upholds Bankruptcy Rights

In a boon for debtors, a federal court recently interpreted Section 523(a)(6) very narrowly.

Facts

In Communitywide Federal Credit Union v. Laughlin, Mr. Laughlin purchased a new car, with an $18,000 loan from CFCU. Ms. Laughlin was awarded the car in their divorce. A short time thereafter, Ms. Laughlin returned the car to Mr. Laughlin, asserting that she had paid off the note. The car was in very poor condition. Mr. Laughlin had the car repaired, and then sold it to a local dealership, unaware that the CFCU lien had not been paid off or otherwise extinguished.

CFCU sued Mr. Laughlin and obtained a default judgment against him. When the credit union garnished his wages, Mr. Laughlin filed Chapter 7 Bankruptcy. When CFCU filed an adversary proceeding, the trial judge held that the underlying debt was dischargeable, since Mr. Laughlin did not act in bad faith.

Holding

Mr. Laughlin apparently took his ex-wife’s story at face value, although it would have been reasonable to do a quick title search and verify that the lien had indeed been paid off. But the appeals court looked instead to the plain language of the statute to determine if the debt was dischargeable. Under Section 523 (a)(6), an otherwise dischargeable debt is nondischargeable if a debtor’s actions “1) caused an injury to the property interest of the creditor; 2) the action causing the injury was willful; and 3) the action was done in a malicious manner.”

While Mr. Laughlin definitely impeded the value of the property by selling it, it did not appear, based on the record, that he had any malicious intent towards the creditor.

Application

Although this decision is not binding in Florida, it is instructive that a court should not draw its own conclusions based on the evidence, but rather base its findings on the evidence itself. Malicious intent is very difficult to prove, so there is a good chance that you may receive your fresh start even if the circumstances are less than 100% in your favor.

For a free consultation with bankruptcy attorneys who fight for you, contact our office in Melbourne, Florida.


When the Spotlight Dims

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A group of former NFL players recently filed a lawsuit against the league, claiming that it exposed them to probable brain damage.National Football League players aren’t the only footballers who struggle with life after retirement.

According to a charity set up for former English League soccer players, 33% of players are divorced within one year of retirement, 40% file bankruptcy within five years, and 80% ultimately suffer from osteoarthritis. While the average salary in the Premier league is about 23,000 £ (38,000 USD) per week, that salary drops to 5,000 £ (8,000 USD) per week in the Champions league.

Causes of bankruptcy

While it is difficult to have sympathy for some professional athletes on both sides of the Atlantic, there is a connection between their bankruptcy and your bankruptcy. They each emerge from common causes:

  • Divorce: One of the most common marital stress factors is money, so it is little wonder that couples who are in divorce court sooner or later wind up in bankruptcy court. After divorce, the two new families must often try to survive on drastically reduced incomes, which makes these problems even worse.
  • Medical bills: Even if you have insurance, the cost of long-term rehabilitative care is staggering, to say the least. Medical bills can eat away your savings almost before you know what’s happening.

While bankruptcy cannot eliminate child-support payments and alimony, bankruptcy can eliminate many of your other unsecured debts to free up your limited cash for other obligations. Bankruptcy can eliminate medical bills, in most cases, giving you the financial fresh start that you need so desperately.

Contact us for your free bankruptcy consultation.


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