Bankruptcy Planning
Some individuals and companies need some well thought out planning before filing bankruptcy.
WhatsNew:
Dealing With This Economy
December 3, 2011
We have been busy at the firm helping our clients deal with this difficult economy. We have had some success recently filing Chapter 11's for a few individuals with multiple properties. A recent court ruling from the Middle District of Florida eliminated a major challenge to this type of bankruptcy. We have seen a drop in the number of Chapter 7 cases compared to last year but have been advised by the foreclosure attorneys that the next waive of foreclosures in coming soon. We expect to see a corresponding increase in Chapter 7 filings. Let us know if we can help you with your financial issues.
CurrentNews:
American Airlines Files Chapter 11
December 2, 2011
The parent company of American Airlines filed for bankruptcy protection in late November, seeking relief from crushing debt caused by high fuel prices and expensive labor contracts that its competitors shed years ago. For most travelers, though, flights will operate normally and the airline will honor tickets and take reservations. American said its frequent-flier program would be unaffected.
Recent Events:
The Local Bankruptcy Scene
November 28, 2011
In the Southern District of Florida, our firm has seen an increase in the unwillingness of Chapter 7 trustees to forgo the collection of potential funds. In Florida, an individual's exemptions in bankruptcy are guided by reference to state-not federal-law. An individual is entitled to certain exemptions of personal and real property. Generally, if an individual was over their exemption limit, i.e. having certain property not entitled to exemption, trustees would generally forfeit their right as administrator of the bankruptcy estate to sell the non-exempt asset if the asset was of little value or considered "unsellable." However, our firm has observed a recent uptick in the willingness of the trustee to sell non-exempt assets worth little, seemingly because trustees do not want to lose out on the potential collection of funds. Often, the sale generates funds in an amount that does little more than pay for trustee and professional fees. If you are considering filing for bankruptcy protection, it is imperative to consult with a bankruptcy attorney who can explain your options and offer pre-bankruptcy planning to avoid these common pitfalls.
Planning for Bankruptcy
Not all people and companies facing overwhelming debt can immediately file for bankruptcy protection. Occasionally some planning is required. Taking advantage of available property exemptions and protections is not improper if handled in an appropriate way. Our office can guide you through this difficult process.
One key factor for an individual to consider is the homestead protection. Most states offer some form of homestead protection from creditors (not to be confused with the homestead real estate tax exemption offered in many states). Florida is one of a hand full of states that offer an unlimited homestead exemption. That is often a focal point of bankruptcy planning. For more information on exempt assets see our page on Asset Protection.
Other factors to consider before filing for bankruptcy filing include payments to creditors, particularly family and business associates. Payments to general creditors within 90 days of filing for bankruptcy protection may be considered preferential and may be taken back from the creditor and redistributed to all creditors. The 'preference period' for insiders (family, business associates, partners, etc.) is one year. Inadvertent preference payments may justify a delay in filing.
Planning and Bankruptcy Reform
Bankruptcy planning has changed as a result of the new bankruptcy reform laws. Responsible planning should be conducted with an eye towards the effect of these new laws. With appropriate planning most people can still file for bankruptcy protection.
One aspect of the new legislation limits the homestead exemption. Five states (including Florida) now offer their residents an unlimited homestead exemption. This has lead to numerous abuses. Many people facing large money judgments have moved to states like Florida, purchased a home with their available funds, waited an appropriate time period (usually one year) and filed for bankruptcy. Several provisions of the new bankruptcy laws were designed to limit this form of planning.
One new provision limits the homestead protection available in bankruptcy if the Debtor has not owned his or her home for a period of 1215 days. This may dramatically increase the time period some individuals must wait before filing. A second provision prevents a debtor in bankruptcy from claiming as exempt any equity fraudulently transferred into the home within the past ten years. This may lead to an unusual situation where an individual's home may be protected from creditors as long as the debtor steers clear of bankruptcy for the ten year period. Bankruptcy planning must then take into consideration the possibility that a creditor may file an involuntary bankruptcy. Competent planning must take into consideration all of these factors and many others. Call us for a free initial consultation to see if bankruptcy planning may benefit you.
David W. Langley
8551 West Sunrise Blvd.
Suite 303
Plantation, FL 33322
954-356-0450
dave@flalawyer.com
David W. Langley is licensed to practice only in the State of Florida and handles bankruptcy cases in Miami, Hollywood, Fort Lauderdale, Plantation, Pembroke Pines, Pompano,Coral Springs, Deerfield, Boca Raton, Delray and West Palm Beach.