Chapter 7 Bankruptcy

Published on: June 2, 2012

When is the best time to file bankruptcy?

Our Tampa, Florida bankruptcy law firm is small enough that we are able to help time our clients’ bankruptcy case for maximum results. Without proper timing, a bankruptcy can feel more like a trap than a remedy for financial ills. We are often able to save our clients several hundred dollars a month by simply correctly timing their case. A high volume mill firm won’t do this, their business model is based upon touching their clients’ files a minimum number of times and getting it filed asap.

However, the timing can be critical. Both in terms of assets that our clients can keep and the type of case or relief they qualify for. Most of our clients have something to lose. Our goal is to help ensure they come out ahead when their bankruptcy is filed.

Simple things to keep in mind. It is not wise to file a bankruptcy if you anticipate large expenses in the future, such as an upcoming surgery where there could be uninsured medical costs. It will be another 8 years before you can file Chapter 7 again so choose your timing wisely.

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Published on: May 19, 2012

Surrendered your house in Florida and still getting letters?

By Christie D. Arkovich, P.A.

chained to house.jpg Many bankruptcy debtors in Florida are understandably confused when they surrender their home in the bankruptcy, but are still receiving various dunning letters.

First, it is important to understand that the Bankruptcy Code does not have a mechanism in place to provide for the actual transfer of the real estate to the mortgage company, at least not in a lien theory state like Florida. So in order for the home ownership to transfer legally to the mortgage company, one of three things must occur; 1) a foreclosure sale; 2) a short sale; 3) a deed in lieu is signed by the debtor and accepted by the mortgage company; or 4) a quit claim to another party which is recorded.

So a homeowner may still receive letters and remain liable for certain things even after a bankruptcy is filed:

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Published on: March 9, 2012

1099C Debt Cancellation: Tampa Florida Channel 13 Interviews Attorney Christie Arkovich

By Christie D. Arkovich, P.A.

Creditors are busily sending out more 1099C’s then ever before according to a story by Jeremy Campbell of Channel 13 in Tampa, Florida this week. The news story “How the IRS taxes debt” explains that debt settlements while good, come with a penalty. Consumers are taxed on the forgiven debt sometimes months or years after the settlement. More than 6 million consumers are expected to receive 1099C’s this year, double last year.

One important point that the story did not address. Cancelled debt is not taxed in a bankruptcy. Just saying.

Published on: February 21, 2012

Debt Settlement vs. Bankruptcy

By Christie D. Arkovich, P.A.

I often sit with my clients in Tampa, Florida and perform a simple test: I make two columns on a piece of paper and list the pros and cons of filing bankruptcy versus trying to settle their debt.

More often than not, the bankruptcy column has many more pros, while the debt settlement column has more cons. For instance, in a Chapter 13, the monthly payment is usually much less. In a Chapter 7, the monthly payment is zero if there is no disposable income.

Debt settlement on the other hand usually requires the client have lump sum amounts available to offer to get any kind of substantial reduction. So they have to save up. The client has to reach satisfactory agreements with each creditor, or they still have leftover debt. Finally, in debt settlements the cancelled debt is taxable by the IRS. Not so in bankruptcy.

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Published on: February 14, 2012

Choosing a Bankruptcy Attorney: Service vs Price

By Christie D. Arkovich, P.A.

price v value.jpg Quotation of the Day:

“The fundamental issue is that law schools are producing people who are not capable of being counselors. They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.” Jeffrey W. Carr, General Counsel.

At my Tampa, Florida law firm we pride ourselves in our abilities to counsel clients as to their options and help make decisions that may impact the rest of their lives. We don’t take that responsibility lightly. We don’t just file bankruptcy for everyone who contacts us. It is not one size fits all. We don’t mandate that our bankruptcy clients file according to our schedule when simple timing and planning achieves a much better result. We don’t suggest every client defend their foreclosure or maintain a scorched earth policy. We are able to advise our clients regarding both bankruptcy and foreclosure or civil defense. I have 20 years legal experience in areas of bankruptcy and civil litigation (including foreclosure defense).

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Published on: February 12, 2012

No End in Sight to Your Debt? Use Your Tax Refund to File Bankrutpcy this Year.

By Christie D. Arkovich, P.A.

If you are like most Florida consumers overloaded with debt, by not considering bankruptcy, you are continuing to just throw money away on debt servicing. Once you get behind, it can be nearly impossible to catch up especially now with the costs of living rising higher than wage increases. You have options rather than see your money continue to go down the drain: speak with a bankruptcy attorney. Quit delaying. Make a decision now. Bankruptcy may or may not be the answer. But you owe it to your family and yourself to find out if it is.

debt whirlpool.jpg Nationwide bankruptcies by consumers declined approximately 10% last year. Is this a sign the economy is improving? In part perhaps. But mostly, it may be from indecision, and the inability to pay up to $2,000 to file bankruptcy. The debt is still there and getting bigger in most cases.

The general need for bankruptcy is still present, but the financial ability of clients to pay the fees has decreased. The availability for credit is diminished. In the past, as long as you were breathing, you were able to secure a car loan and probably even a home loan. Not anymore. Costs of food and other essentials have skyrocketed leaving less disposable income. The availability of funds to pay one-time fees for a bankruptcy attorney or other unexpected expenses is non-existent for some clients.

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Published on: February 8, 2012

Tampa Florida Channel 13 Interviews Christie Arkovich about the “Student Loan Debt Bomb”

By Christie D. Arkovich, P.A.

student loan debt hat.jpg Tonight at 10:00 p.m. the lead story on Channel 13 inTampa is about the National Association of Consumer Bankruptcy Attorneys’ survey that came out today warning of an emerging student loan debt bomb. News Reporter Jeremy Campbell interviewed me about this study and the future impact of student loan debt.

It is very difficult to discharge a student loan in bankruptcy. A debtor has to show an undue hardship that will likely persist for the majority of the repayment period (which runs from 10 to 25 years). They have to show they have minimized their expenses and maximized their income. They also have to prove they have made a good faith effort to repay. Partial discharges of debt are possible and often a favored result for both parties.

The NACBA study shows that four out of five bankruptcy attorneys say that potential clients with student loan debt have increased significantly or somewhat over the last three-four years. Approximately 95 percent determine that few student loan debtors have any chance of obtaining a discharge as a result of an undue hardship.

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Published on: January 15, 2012

Avoid the Cancelled Debt and 1099-C Minefield

By Christie D. Arkovich, P.A.

I speak with many clients in the Tampa Bay, Florida area who have heard of cancelled debt and 1099-C forms but they do not really understand the impact of the taxable events that occur in a short sale. An understanding of how a 1099C works in a short sale is especially important at this time of the year.

Whenever a creditor cancels or forgives debt following a debt settlment, short sale or even a foreclosure, the creditor must report the amount of the cancelled debt to the IRS on a Form 1099-C. Under Section 108 of the IRS Code, the IRS imputes the cancelled debt as additional income to you. So if you make $50,000 in annual salary, but your house was sold at a short sale where the loss to the lender was $100,000 (not an uncommon fact pattern in Florida), you will be deemed to have earned $150,000 that year or the next – depending upon whatever year the lender files the 1099-C.

There are three exceptions to this rule. First, you file bankruptcy prior to the issuance of the 1099-C. If debt is discharged in bankruptcy, it is not attributable to you as income. Even if you receive a 1099-C, you can respond by filing your own Form 982 to remove its taxability because of the bankruptcy.

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Published on: October 19, 2011

Can Florida Homeowners Reduce Their Mortgage to What the House is Worth?

By Christie D. Arkovich, P.A.

Our Florida clients have recently been asking me if there is a new law allowing them to reduce their mortgage balance to the value of their home. This is not accurate and I am not sure where this is coming from. My guess it may be from somewhat misleading and overly optimistic advertisement flyers that are sent to people who have a foreclosure filed against them.

In bankruptcy, specifically a Chapter 13, we can strip a second mortgage. But the court cannot require a first mortgage company on a primary home to reduce the principal balance on their home. Implying otherwise, is simply misleading and inaccurate.

There is also no federal or state law that requires a first mortgage to be reduced to the value of the home.

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Published on: October 15, 2011

Mortgage Modification Success Often Determined by HAMP participation and TARP bailout funds

By Christie D. Arkovich, P.A.

Mortgage modifications are often determined by whether the owner (not servicer) is either a participant in HAMP or a recipient of TARP bailout funds.

Here’s how to check on your lenders:

First, use our Resource page on our website to look up who likely owns your loan by doing a Fannie, Freddie or MERS lookup search.

Second, see if the owner of your loan is a HAMP or other governmental program participant.

Third, see if the owner of your loan was a recipient of TARP funds in the 2008 bailout.

If your loan passes the above tests, your lender is required to run you through a HAMP analysis (even if they would prefer a short sale). You can qualify for a HAMP modification whether or not you file bankruptcy, although you might find the success rates are higher in a bankruptcy. The Tampa Division bankruptcy courts just established a formal mediation program in October 2011 for homeowners who have experienced difficulty in obtaining mortgage modifications.
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