Both Chapter 7 and Chapter 13 bankruptcy have eligibility requirements which can prevent individuals from being able to file under that particular chapter.  The most well known of which is the mean-test requirement under Chapter 7.  Basically if an individual earns above a certain amount, that person might not be eligible for Chapter 7 protection, and may only be eligible to file for Chapter 13.  Unlike Chapter 7, however, Chapter 13 has debt restrictions which have increasingly caused more and more people to not be eligible to file.

Section 109(e) of the Bankruptcy code places limitations on the amount of debt that an individual may have in order to file for Chapter 13.  In order to be eligible to file for Chapter 13, an individual must have less than $360,475 of unsecured debt, and must have less than $1,081,400 of secured debt.  Since these numbers on first glance seem very high, many of our clients are usually surprised when they discover that they might not be eligible because they exceed those debt limits.

The reason why more and more of our clients are having issues with exceeding the debt restrictions of 109(e) is due to the lack of equity in their homes.  The collapse of the housing market hit Southwest Florida as hard as anywhere else in the country.   A direct consequence of the housing market collapse is that many people in Southwest Florida now owe more on their home than it is worth.  The amount that a homeowner is underwater on their home counts towards the $360,475 unsecured debt limit.  Also, if a homeowner is underwater on their first loan and they also have a second mortgage, that entire second mortgage would be considered unsecured.  Since so many homeowners are underwater on their homes, many of them are finding out that they might exceed the unsecured debt limit even if their other debt is minimal.

Recent Florida cases have eased these restrictions somewhat, at least for married debtors who file jointly.  In In Re Scholz and In re Hannon the bankruptcy court held that married couples can “stack” their debt limits so long as each spouse would be able to file his or her own individual Chapter 13.  In In Re Scholz, a married couple filed a Chapter 13 petition with $386,221.31 of unsecured debt and the Chapter 13 Trustee moved to dismiss the case for exceeding the unsecured debt limitation.  The Judge overruled the Trustee’s objection and allowed the couple to proceed with their joint Chapter 13 because as individuals, each debtor was below the $360,475 limit.  It was only when their debt was combined that they exceeded the debt limits.  If married debtors are each eligible to file individual Chapter 13 Petitions, they may file a joint Chapter 13 petition notwithstanding a combined debt total which exceeds the 109(e) limits.

See In re Scholz, no. 6:10-bk-08466-ABB (Bankr. M.D. Fla. 2011) and In re Hannon, 23 Fla. L. Weekly Fed. B132 (Bankr. S.D. Fla. 2011).

Jonathan Bierfeld is an attorney with Martin Law Firm, P.L., whose practice focuses in Bankruptcy Law and Civil Litigation.  He is admitted to practice law in the State of Florida and the Federal Court for the Middle District of Florida.  He primarily practices in Lee County Florida in Cape Coral and Fort Myers, Florida.

One of the purposes of the probate process is to manage debts owed to creditors of the deceased andto see that creditors are paid – to the extent that is legally and financially possible. The legal procedurefor probate provides a process to manage and cut off claims against the deceased that are filed morethan three months after the publication of a Notice To Creditors in the newspaper, or more than thirtydays after service of the Notice on a creditor, if that is later. Most debts of the deceased are barred andunenforceable after two years from the date of death. Recently the Second District Court of Appeals inFlorida issued a ruling that emphasizes the need to properly follow the claim procedure if you are owedmoney by the deceased. Watch the dates as you read the following paragraph.
Edward Caulfield died on December 18, 2006. A probate administration was started and on November16, 2007, a Notice To Creditors was published. The court opinion dos not explain why so much timewent by before publication. Under Florida law the end of the creditor claim filing period was February16, 2008. A creditor, Mr. Lubee, filed a late claim on December 18, 2008, ten (10) months after theclose of the claim filing period. Note, this is the point after which the two year bar on collection of adecedent’s debts also takes effect. Then Mr. Lubee sued the estate on February 5, 2009, no doubtbecause payment had not been forthcoming. Judgment was entered in favor of the estate at the CircuitCourt level and affirmed on appeal. Why? Because Mr. Lubee didn’t file a claim within the three monthsand never asked the probate court for permission to file a late claim within two years of the death ofMr. Caulfield.
What can we learn from this case? First, if a deceased person owes you money, get legal advice about how to enforce that claim. Second, as a creditor, time is your enemy. You can even file a caveatwith the court to get notice when a probate administration is started, before a Notice To Creditors ispublished. If you are filing late, you must first ask for the Court’s permission. Third, if Mr. Caulfield hada revocable trust based estate plan and the trustee saw no need to file a probate and if Mr. Lubee fileda suit within two years of Mr. Caulfield’s death, he might have been able to collect. Trusts do not bnefitfrom the two year cutoff in probate law.

In 2005 Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act(BAPCPA) which greatly overhauled existing bankruptcy laws.  One such provision in the code seemed to be a direct response to some high profile debtors who would relocate to Florida and shortly thereafter become eligible for Florida’s Homestead Exemption.   In short, many of these debtors were basically converting non-exempt assets into exempt assets in order to protect as much property as possible from their creditors.   OJ Simpson is one such example.

In response Congress enacted Section 522(o)(4) in order to to preclude Florida’s “virtually limitless” homestead exemption in instances of fraud.  See In re Osejo, 447 B.R. 352, 354 (Bankr. S.D. Fla. 2011).  Under this section, Florida’s homestead exemption may be denied or reduced to the extent a debtor, acting with the intent to hinder, delay or defraud his creditors, converted non-exempt assets into exempt assets within ten years of filing his bankruptcy petition.

The conversion of non-exempt property into exempt property prior to filing is not necessarily fraudulent.  This is still especially true when it comes to Florida’s Homestead Exemption.   Courts have repeatedly held that a debtor’s homestead claim is presumptively valid.  This means that an objecting party would need to establish by a preponderance of evidence that the debtor acted with intent to hinder, delay, or defraud creditors.   The mere conversion of non-exempt assets into exempt assets is not enough to prove intent without extrinsic evidence of fraud.

See In Re: Cook, 23 Fla. Law Weekly B190 (Bankr.N.D. Fla 2011).

Jonathan Bierfeld is an attorney with Martin Law Firm, P.L., whose practice focuses in Bankruptcy Law and Civil Litigation.  He is admitted to practice law in the State of Florida and the Federal Court for the Middle District of Florida.  He primarily practices in Lee County Florida in Cape Coral and Fort Myers, Florida.

The Florida Department of Revenue may intervene in child support cases to ensure that a minor child is receiving the care and support he or she is entitled to by law. Paternity is presumed when a husband and wife have a child within the bonds of marriage. However, if the parents are not married, the Department of Revenue may still collect child support from a father who may or may not be the actual biological father of a child.

A father may contest paternity, but the courts will always look to what is in the best interests of the child “[T]he courts require a determination of the child’s best interests. Some circumstances require specific procedures to be followed in evaluating a child’s best interests. For example, if paternity is contested, the child’s legitimacy is at issue, and the legal father has not had notice or an opportunity to be heard, the trial court is required to appoint a guardian ad litem and hear from the guardian and all the parties before proceeding.”

“A trial court may consider the child’s need for support. If the court determines that there is no compelling interest in overcoming the presumption, it must dismiss the paternity action against the putative father.”

The state has an interest in preserving parental rights, but also in ensuring that children are supported. Because of this, the court will look to the best interest of the children in any case involving minor children and family law.

See Dept. of Revenue on behalf of Garcia v. Iglesias & Garcia, 37 Fla. L. Weekly D160.

Patricia Dills is an Attorney with Martin Law Firm, P.L., whose practice
focuses in Divorce, Child Support, Family Law, and Civil Litigation. She
primarily practices in Naples, Collier County, and Fort Myers, Lee County Florida.

In a typical divorce one of the major issues is “equitable distribution.” In Florida equity generally means a 50/50 split.  Although the courts do not have to evenly divide the property, the court must have legal justification for deviating from this standard. 

In a recent case the Husband had used an investment account worth approximately $50,000 to live on during the divorce case.  By the end of the case the account had no money left in it.  In ordering the equitable distribution the trial court ordered that account credited to the Husband.  However, the court did not make any provision for the fact that the Husband has literally spent the wife’s half of that account. The appellate court reversed the trial court stating:

the trial court’s attempt to offset Dan’s unauthorized expenditure by awarding him the worthless account was insufficient because Dan spent Ava’s half of the TD Ameritrade proceeds.”

Absent specific statutory reasons to deviate from an equitable distribution the trial court must order a near even split of the assets and liabilities.

See, Bryne v. Bryne, 37 Fla. L. Weekly D190 (Fla. 3rd DCA 2012).

Dustin Michael Butler is an Attorney with Martin Law Firm, P.L., whose practice focuses in Family Law and Civil Litigation.  He is admitted to practice law in the State of Florida and the Federal Court for the Middle District of Florida. He primarily practices in Lee County Florida in Cape Coral and Fort Myers, Florida.