In the past week I have been confronted with a couple clients who were concerned about losing their social security settlement monies if they were to file for bankruptcy.  Social Security Settlements if properly exempted can be kept free and clear from the Bankruptcy Trustee in a chapter 7.

Because Social Security payments are not governed by bankruptcy law, but rather by a separate federal statute, Section 407 of the Social Security Act or 42 U.S.C. § 407(a). The relevant part of the act is as follows:

(a) The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution . . . or to the operation of any bankruptcy or insolvency law.

After dissecting the language in Section 407 of the Social Security Act, social security payments are not property of the estate whether lump sum or in installments.  It would be advisable for the debtor to have a separate bank account for the social security payment(s) so as not to commingle any funds.  Debtors would be wise to NOT use exemptions 11 USC 522(d)(10) as previous cases have held that this section does NOT exempt accumulated social security benefits.  In re Eunice LAZIN, 217 B.R. 332 (M.D. Fla 1998).

For most of our Chapter 7 and Chapter 13 clients, the only time they must appear is at the 341 hearing.  The 341 hearing is not with a judge and not in a courtroom.  There will be other people there who have also filed for bankruptcy.  You can arrive earlier if you like to watch some other 341 hearings.  An attorney from our office will also be there with you.  Your creditors could appear to ask you questions, but most of the time they don’t, but if they do DON”T sign any agreements with a creditor at the hearing.

The main purpose of the 341 hearing is for the Trustee to ask you questions and to take sworn testimony. In this testimony, you must affirm under oath and penalty of perjury that the information you have relayed to the Trustee via your petition and the statements you will be making at the hearing is complete and truthful.

Here, we list the questions that are listed in the Chapter 7 trustee handbook. Our experience is that the Tampa and Orlando Chapter 7 trustees follow these questions almost verbatim.We also notice that many attorneys do not prepare their clients in advance for these hearings, but we take as much time as necessary to prepare our clients for the questions the Tampa and Orlando bankruptcy court’s Trustees will ask.

A client is typically sworn to tell the truth and then asked the following:

1. State your name and current address for the record.
2. Please provide your picture ID and Social Security number card for review.
   1. If the documents are in agreement with the § 341(a) meeting notice, a suggested
      statement for the record is:
      “I have viewed the original State of ________ drivers license (or
      other type of original photo ID) and original Social Security card
      (or other original document used for proof) and they match the
      name and Social Security number on the § 341(a) meeting notice.”
   2. If the documents are not in agreement with the § 341(a) meeting notice, a
      suggested statement for the record is:
      “I have viewed the original Social Security card (or other original
      document used for proof) and the number does not match the
      number on the § 341(a) meeting notice. I have instructed the
      debtor (or debtor’s counsel) to submit to the court an amended
      verified statement by [date], with notice of the correct number to
      all creditors, the United States Trustee, and the trustee; and to file
      with the court a redacted copy of the notice, showing only the last
      four digits of the Social Security number, and a certificate of
      service.”
   3. When the documents do not match the petition, the trustee shall attempt to
      ascertain why and shall report the matter to the United States Trustee.
   4. If the debtor did not bring proof of identity and Social Security number, the
      trustee shall determine why.
3. Did you sign the petition, schedules, statements, and related documents and is the
   signature your own? Did you read the petition, schedules, statements, and related
   documents before you signed them?
4. Are you personally familiar with the information contained in the petition, schedules,
   statements and related documents? To the best of your knowledge, is the information
   contained in the petition, schedules, statements, and related documents true and correct?
   Are there any errors or omissions to bring to my attention at this time?
5. Are all of your assets identified on the schedules? Have you listed all of your creditors
   on the schedules?
6. Have you previously filed bankruptcy? (If so, the trustee must obtain the case number
   and the discharge information to determine the debtor(s) discharge eligibility.)
7. What is the address of your current employer?
8. Is the copy of the tax return you provided a true copy of the most recent tax return you
   filed?
9. Do you have a domestic support obligation? To whom? Please provide to me the
   claimant’s address and telephone number, but do not state it on the record.
10. Have you read the Bankruptcy Information Sheet provided by the United States Trustee?

Depending on the circumstances of the case, a Trustee may also ask a client any of the following questions:

1. Do you own or have any interest whatsoever in any real estate?

If owned: When did you purchase the property? How much did the property cost? What
are the mortgages encumbering it? What do you estimate the present value of the
property to be? Is that the whole value or your share? How did you arrive at that value?
If renting: Have you ever owned the property in which you live and/or is its owner in
any way related to you?

2. Have you made any transfers of any property or given any property away within the last
one year period (or such longer period as applicable under state law)?

If yes: What did you transfer? To whom was it transferred? What did you receive in
exchange? What did you do with the funds?

Any transfers within this time as a gift or not for substantially similar value may be considered a fraudulent transfer and may be recoverable by the trustee.

3. Does anyone hold property belonging to you?

If yes: Who holds the property and what is it? What is its value?

4. Do you have a claim against anyone or any business?

If there are large medical debts, are the medical bills from injury?

Are you the plaintiff in any lawsuit?

What is the status of each case and who is representing you?

5. Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death?

If yes: Please explain the details.

If you become a beneficiary of anyone’s estate within six months of the date your
bankruptcy petition was filed, the trustee must be advised within ten days through your
counsel of the nature and extent of the property you will receive. FRBP 1007(h)

6. Does anyone owe you money?

If yes: Is the money collectible? Why haven’t you collected it? Who owes the money
and where are they?

7. Have you made any large payments, over $600, to anyone in the past year?

8. Were federal income tax returns filed on a timely basis? When was the last return filed?

Do you have copies of the federal income tax returns? At the time of the filing of your
petition, were you entitled to a tax refund from the federal or state government ?

If yes: Inquire as to amounts.

9. Do you have a bank account, either checking or savings?

If yes: In what banks and what were the balances as of the date you filed your petition?

10. When you filed your petition, did you have:

a. any cash on hand?

b. any U.S. Savings Bonds?

c. any other stocks or bonds?

d. any Certificates of Deposit?

e. a safe deposit box in your name or in anyone else’s name?

11. Do you own an automobile?

If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?

12. Are you the owner of any cash value life insurance policies?

If yes: State the name of the company, face amount of the policy, cash surrender value, if
any, and the beneficiaries.

13. Do you have any winning lottery tickets?

14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a
divorce or separation proceeding?

15. Regarding any consumer debts secured by your property, have you filed the required
Statement of Intention with respect to the exemption, retention, or surrender of that
secured property? Please provide a copy of the statement to the trustee. Have you
performed that intention?

16. Have you been engaged in any business during the last six years?

If yes: Where and when? What happened to the assets of the business?

Finally, in cases involving debts from a Florida business, the bankruptcy trustee may ask these question:

1. Who was responsible for maintaining financial records?
2. Which of the following records were maintained?
   1. Cash receipts journal
   2. Cash disbursements journal
   3. General journal
   4. Accounts receivable ledger
   5. Accounts payable ledger
   6. Payroll ledger
   7. Fixed asset ledger
   8. Inventory ledger
   9. General ledger
   10. Balance sheet, income statement, and cash flow statements
3. Where are each of the foregoing records now located?
4. Who was responsible for preparing financial statements?
5. How often were financial statements prepared?
6. For what periods are financial statements available?
7. Where are such financial statements now located?
8. Was the business on a calendar year or a fiscal year?
9. Were federal income tax returns filed on a timely basis? When was the last return filed?
10. Do you have copies of the federal income tax returns? Who does have the copies?
11. What outside accountants were employed within the last three years?
12. Do you have copies of the reports of such accountants? Who does have copies?
13. What bank accounts were maintained within the last three years?
14. Where are the bank statements and canceled checks now located?
15. What insurance policies were in effect within the last year? What kind, and why?
16. From whom can copies of such insurance policies be obtained?
17. If the business is incorporated, where are the corporate minutes?
18. Is the debtor owed any outstanding accounts receivable? From whom? Are they
    collectible?
19. Is there any inventory, property, or equipment remaining?

There is a common misperception among consumers that if they don’t qualify for a “straight” chapter 7 bankruptcy, that they will have to pay back most or all of their debts under a chapter 13 plan. If this were true, then there would be no point in filing for bankruptcy to improve your financial situation. If you were unable to afford your debt payments before, how could you ever afford them if you only had 60 months to pay all your debt back? The good news is that this myth about repaying all of your debts, is just that, a myth.

It is important to understand that under a chapter 13 plan, your monthly plan payments are based on what you can afford after paying all of your reasonable living expenses. The less disposable income that you have, the less your payments will be, and in turn, the less you will repay on your debts (unsecured).  You should be happy to know that the remainder of your debts at the end of you plan with be discharged similar to debts in a chapter 7 case. After all, chapter 13 is still a form of bankruptcy relief and is meant to help debtors.

So, filing a chapter 13 is not such a bad idea after all. There is no means test to worry about, you can get rid of more debts in a chapter 13, and your case is often subject to less scrutiny by creditors or the bankruptcy trustees than in a chapter 7.

If you are a Florida resident, and live in Hillsborough, Pasco, Pinellas, or Sarasota counties, and you would like to speak about filing a chapter 13 bankruptcy, you may call our offices at 813-413-1300 to set up a free initial consultation.

If you have been sued by a creditor who has obtained a judgment against you, filing for bankruptcy may discharge the underlying debt, however, when the creditor records the judgment in the public records, the judgment creates a lien on the debtor’s homestead residence or other real property, and such lien may not be discharged through the bankruptcy, absent special procedures.

There are two ways a debtor can remove a lien from a homesteaded property. The debtor’s attorney can Motion the Bankruptcy Court for an Order removing the lien from their homestead residence, if such residence can be claimed as exempt. Hence, if a house with $15,000 of equity in excess of a mortgage is claimed as totally exempt, all judgment liens on that house can potentially be avoided. Similarly, if the debtor owns a house with $100,000 worth of equity and is entitled to a homestead exemption in excess of $100,000 you can petition the court and have a judicial lien removed. An alternative method for removing liens involves Florida Statute 222.01, which provides a method to clear a lien from a homestead when the owner wants to sell or refinance the home.

It is important to note that only judicial liens may be subject to removal under the Bankruptcy Code. The debtor will not be able to avoid consensual liens (mortgages and the like) or statutory liens such as tax liens.

If you are a Florida homeowner who has been sued and had a judgment declared against you, please call The Pikramenos Law Group at 813-413-1300 for a free initial consultation regarding your options.

Florida Bankruptcy and Tax Attorney Explains How Bankruptcy Affects Tax Refunds and the Earned Income Tax Credit

When filing for personal bankruptcy, the right to receive a tax refund usually becomes property of the estate. In some instances, the debtor may have a property interest in excessive withholding by an employer, which will become part of a refund due after the filing of the bankruptcy. Such refund is prorated over the entire year, with the pre-bankruptcy portion considered property of the estate.  There might be a way to protect your refunds though – Talk to a bankruptcy and tax attorney in the know!

Certain other tax credits also become part of the bankruptcy estate, however, there is some precedent for distinguishing the earned income tax credit. The Earned Income Tax Credit (EIC) is ax credit for certain people who work and have low wages. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EITC may also give you a refund.  This tax credit is excluded from the estate because a debtor can have no legal or equitable interest in the credit prior to receiving it. Hence, the child tax credit can only be considered property of the estate after a full tax year ends.

The simplest way to ensure that a debtor will be able to retain control over a tax refund, whether or not it includes as earned income tax credit, is to wait for the refund to be received before filing for bankruptcy. Such refunds can then be used for living expenses of the debtor, including attorney’s fees or property that can be exempted once the bankruptcy is filed.

The delay of filing may not be appropriate if the tax return is subject to interception by the IRS on a government claim. In some situations, the government can seize both an overpayment of withholding taxes and the earned income tax credit. One way of protecting the right to a tax refund may be to elect to apply it to the following year’s taxes.  Bankruptcy might even be the solution to getting rid of those tax problems – see if your taxes are eligible!

In many cases, a debtor can assert an exemption to protect a tax refund or the earned income tax credit based on federal or state wild card exemptions, or other state exemptions. The earned income tax credit may also qualify for exemption based on state or federal exemptions for public assistance benefits. Long story short – you should definitely talk to a qualified Florida Bankruptcy Attorney about these issues and PLEASE PLEASE PLEASE make sure that attorney has some knowledge about taxes too.

How Debt Collectors Operate in Clearwater Florida

Consumer Credit in the U.S.

With outstanding consumer debt in the United States having doubled over the last twelve years to $2.5 Trillion in 2009, the collection industry has grown significantly. While the extent of serious delinquencies fluctuates with business cycles and unemployment, the typical default rate on unsecured credit issued by banks, retailers, credit unions, and finance companies is around 2-3%.  However, at the onset of the current financial crisis, the delinquency rate went from 2.21% in 2006 to 6.52 % in 2009 for consumer credit cards, and 1.12% for residential loans rising to 9.1% in 2009. These numbers are consistent with the delinquency rates in Florida and in particular, the Tampa Bay Area of Florida, which includes the likes of Clearwater and Saint Petersburg.

Financially Distressed Consumers

The major causes of serious consumer delinquency have been shown to correspond with an increasing incidence of unemployment, illness, and marital problems.  A contributing factor has also been the credit industry’s overextension of credit and accordingly, predatory lending practices among unwary consumers.  The federal Fair Debt Collection Practices Act (FDCPA) and other state consumer protection laws, such as the Florida Consumer Collection Practices Act (FCCPA) have been enacted to protect debtors from abuse and harassment by collectors. Often, the targets of debt collectors are lower-income, minority consumers who are unable to afford the fee to retain a lawyer and file for bankruptcy to obtain bankruptcy’s promise of a fresh start.

Abusive Debt Collection

The objective of Debt collectors is to first identify the portion of delinquent consumers who can afford to repay some or all of their debts, and second to convince consumers to pay the particular collector before paying other creditors or even the consumers’ own living expenses.  These efforts often include extreme measures to coerce consumers into paying on the delinquent debt.

Common abusive and illegal collection tactics include:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language meant to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency.

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) The placement of telephone calls without meaningful disclosure of the caller’s identity

If you reside in Tampa Bay, St. Petersburg, or Clearwater and have been contacted by debt collectors, please contact The Pikramenos Law Group at 813-413-1300. Under the FDCPA and FCCPA, you may be eligible to avoid your debts and/or receive money as a result of unlawful collection tactics. We also offer personal bankruptcy services, which may serve to forgive your debts and give you a fresh financial start!

In the face of the current economic recession, debt settlement companies have sprung up throughout the Tampa Bay are and all over the rest of Florida and the nation, offering financially distressed families a reduction of their personal consumer debt. These companies, and occasionally less reputable law firms, say they will negotiate lower pay-offs by offering creditors lump-sum payments from consumers. However, many of these businesses rarely deliver on their promises of debt reduction, which if often attributable to the high fees they charges and how they apply payments.

How It Works

Solicitation of debt settlement services to Tampa Bay consumers can usually be heard on the radio. When consumers sign up, the company advises consumers to stop paying on their unsecured debt (credit cards, etc.,), implement a savings plan which the client pays into every month, and wait for the debt settlement company to work out a payoff with the creditors using the customer’s savings. It’s a very straightforward process, and settling a consumer’s debt can be as simple as making a few phone calls to the creditors.

Why It Hurts More Than Helps Consumers

Investigations by the Federal Trade Commission (FTC) have found that debt settlement companies rarely have a 100% success rate in settling their customers’ debt, and typically only 10% of their customers complete the program. One of the major problems with the success of these programs is that they collect upfront fees before settling the debts. This makes it more difficult for the customer to save funds to settle. The advance fees are usually calculated as a percentage of the consumers’ total debt, with figures that range between 10%-18%. Moreover, once the fees are collected upfront, there is no guarantee at what rate the debt will settle, if at all. The consumers’ problems are often compounded when the debt settlement program requires them to stop paying on all credit cards, even if they are current. This may cause creditors who refuse to settle with the debt settlement company to file lawsuits and pursue claims to judgment often resulting in the consumer’s wage and/or bank accounts being be garnished, and liens placed on their real or personal property. Unfortunately, many debt settlement companies are rarely willing to give refunds, leaving consumers worse off than when they initially started the debt settlement program.

Dear Debtors, Fear Not the 341 Meeting of Creditors? 341 Hearing Address

Debtors who are considering filing for personal chapter 7 or chapter 13 bankruptcy in the Tampa Bay area are often concerned about their involvement at the required section 341(a) Meeting of Creditors. This article helps to address some of those concerns by providing a description of how the hearing is conducted, and what debtors should expect.

A debtor who files a personal bankruptcy petition will be required to attend a section 341(a) meeting of creditors, which is typically scheduled between twenty-one and forty days after the filing of the debtor’s bankruptcy petition. Debtor’s can be relieved to know that this is the debtor’s first, and often only appearance at any kind of hearing during the entire bankruptcy process. Moreover, it is often an informal hearing, held at a location other than the courthouse, and does not require the presence of a bankruptcy judge. The hearing is conducted by a U.S. trustee, and will last anywhere from three to thirty minutes. At such time, the trustee will ask the debtors a series of routine questions regarding their income and assets as disclosed in their petition. The following is a list of all of the locations for Florida 341 Hearings (341 Meeting of your Creditors):
Jacksonville, FL (3-40) – Suite 1-200, 300 North Hogan Street

Ocala, FL (3-62) – Grand Jury Hearing Room, 2nd Floor – 207 NW 2nd Street

Viera, FL (6-76) – Florida Room, 3rd Floor, Building C

Viera, FL (6-77) – Courtroom 3D, Moore Justice Center

Orlando, FL (6-60) – SouthTrust Building, 135 W. Central Avenue, 6th Floor, Suite 600

Ft. Myers, FL (9-92) – #2-101 U.S. Courthouse, 2110 First Street

The ultimate purpose of the hearing is to give the debtor’s creditors a chance to examine the debtor and his/her affairs, however, despite the name of this hearing, creditors rarely appear. In rare instances, creditors may attend to ask questions for discovery purposes, or to coerce debtors to re-affirm the debt that they owe to that particular creditor.

Before attending this hearing, the debtor’s attorney should prepare the debtor with information regarding the contents of the final petition, so that the debtor can respond appropriately to the trustee’s questions. Although, if the debtor expresses a lack of awareness in response to the trustee’s inquiries, there usually are not apparent consequence so long as the debtor is being truthful. Debtors should also be comforted by the fact that their attorney will be by their side during the entire length of the hearing.

Payday loans are usually sought out by consumers in Tampa Florida who have an immediate need for cash and whose payday is far away. There are many companies that do payday loans, but think Amscot, Advance America, even some pawn shops around the Tampa Bay area have been seen to do Cash Advances and Payday loans. These types of loans do not require a credit check, however, the fees associated with them can be dangerously high, ultimately leaving many consumers unable to repay. Typically, these types of loans spell big trouble for consumers as they tend to not repay these debts, the amount snowballs and then the consumer begins receiving harassing phone calls throughout the day. Fortunately, there are ways to stop the creditor harassment by seeking the advice of a qualified Tampa Florida Creditor Harassment Attorney. .You can even get money for the collection agencies BAD BEHAVIOR (up to $1000 per violation)!

Alternatively referred to as “cash advance” or “deferred deposit” loans, payday loans are usually short-term, and the amount borrowed is often small or modest. Typically, the consumer writes a post-dated check for the amount borrowed plus the lender’s fee. This fee can sometimes be a percentage of the face value of the amount borrowed, or simply a fixed fee. For example, if a consumer obtains a 2-week loan of $200, he/she would write a post-dated check for $240 ($40 lender’s fee). If the loan is not repaid upon its due date, the lender may use the post-dated check to electronically transfer the entire balance to payoff the borrower’s loan, or extend the initial term of the loan. If the consumer decides to “roll over” the balance for another term, an additional lender fee is imposed.

Unfortunately, this Tampa Florida Bankruptcy and Creditor Harassment Attorney sees many consumers and debtors who obtain payday loans that are often unable to repay their loans when they come due, and resort to rolling over their balances for an additional term. This leads to an accumulation of fees and a greater loan balance, which makes it difficult for consumers to pay. Many don’t pay at all, thinking that ignoring the problem will make it go away.

Lenders who are otherwise unable to collect the money owed to them, will often assign the collection of their debts to collection agencies who will contact the consumer to repay. These debt collectors can harass the consumer by making repeated calls, using profane language, threatening to sue, serve process, or file criminal charges, all in an effort to convince the debtor to pay on the debt. They may also call consumers’ friends, relatives, or places of employment.

Fortunately, under the Federal Debt Collection Practices Act (FDCPA), such inappropriate and extreme collection efforts can be unlawful, and consumers have a right to sue unscrupulous collectors. If successful, the consumer can be awarded actual damages, statutory damages (up to $1000), as well as their attorney’s fees and costs.

If you have been inappropriately contacted by a debt collector with regard to repayment of a delinquent payday loan, you may be eligible to seek compensation and possible relief from your debt. Many attorneys will help consumers pursue these types of claims on a contingency basis (meaning you only pay if your case prevails).

OFTEN OVERLOOKED EXPENSES

• Bank charges (monthly checking account fees, ATM fees, overdraft fees, new check orders, online bill-pay fees, etc.)
• Home office supplies (computer, printer, toner, ink, paper, software, general office supplies, etc.)
• Tax return preparation fees
• Postage
• Other accounting fees
• Work expenses (including lunches and snacks)
• Ongoing legal fees and costs
• Parking, tolls
• Medical/hospital/vision/dental/specialist/physical therapy/chiropractor/mental health visits
• Job hunting (resumes, mileage, postage, fees, stationery)
• Medical equipment (canes, crutches, wheelchair, brace, oxygen, etc.)
• Home alarm system maintenance and fees
• Eye glasses (care and replacement)
• Home landscaping and lawn care (lawnmower, trimmer, gas, mulch, etc.)
• Contact lenses and solutions
• Home maintenance (pressure washing, painting inside/outside, etc.)
• Dental hygiene products (toothpaste, whiteners, brush, floss, mouthwash)
• Pool care
• Physical therapy products (TENS unit, weights, strengthening aids, etc.)
• Motor vehicle oil changes
• Batteries for hearing aids and other health care devices
• Tires
• Non-prescription medications, antacids
• Car washes
• Pain killers (Tylenol, aspirin, Excedrin, etc.)
• Other motor vehicle maintenance (brakes, tire rotation, washer fluid, etc.)
• Cold, allergy and sinus medications
• Annual registration cost for Motor Vehicles
• Vitamins
• Inspection, preparation costs
• Humidifier, neti pot, dehumidifier (and supplies)
• OnStar System payments
• Weight loss programs and aids
• EZ Pass costs
• Hair care and personal grooming products
• Pet food
• Beauty/barber shop
• Veterinary visits (including regular shots)
• School meals (lunches, breakfasts at school)
• Pet grooming and care
• School uniforms
• Dry cleaning, laundering
• Books and school supplies
• Shoe shines
• Musical/band/orchestra instrument (purchase or rental, repairs and maintenance, piano tuning, strings, etc.)
• Clothing alterations
• School fees (book fees, music fees, sports fees, field trips, etc.)
• Monthly magazine and/or newspaper subscriptions
• Before/after school care
• Monthly website subscriptions
• College expenses (dorm furnishings, fees, books, laundry, etc.)
• Church tithes
• Boy/Girl Scout programs
• Charitable donations
• Music lessons
• Office and school contributions for gifts, charity, projects
• Music books
• Christmas, birthday, anniversary gifts
• Dance lessons/classes/recital fees/competition fees
• Cigarettes
• Dance shoes, attire, costumes, make-up
• Beer, wine, alcohol
• Sport participation fees
• Life insurance
• Sporting equipment, clothing (cleats, bats, balls, gloves, rackets, helmets, etc.)
• Children’s allowance
• Summer camp and summer activities
• Babysitters
• Gym/YMCA fees
• Pre-paid cell phones
• Other membership fees Emergency cell phone notification system for a senior citizen or anyone with a major disability