Florida bankruptcy law

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Bankruptcy in Florida is made under title 11 of the United States Code, which is referred to as the Bankruptcy Code. Although bankruptcy is a federal procedure, in certain regards, it looks to state law, such as to exemptions and to define property rights. The Bankruptcy Code provides that each state has the choice whether to "opt in" and use the federal exemptions or to "opt out" and to apply the state law exemptions. Florida is an "opt out" state in regard to exemptions. Bankruptcy in the United States is provided for under federal law as provided in the United States Constitution. Under the federal constitution, there are no state bankruptcy courts. The bankruptcy laws are primarily contained in 11 U.S.C. 101, et seq. [1] The Bankruptcy Code underwent a substantial amendment in 2005 with the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", often referred to as "BAPCPA". [2] The Bankruptcy Code provides for a set of federal bankruptcy exemptions, but each states is allowed is choose whether it will "opt in" or "opt out" of the federal exemptions. In the event that a state opts out of the federal exemptions, the exemptions are provided for the particular exemption laws of the state with the application with certain federal exemptions.

Contents

Bankruptcy Courts in Florida

There are three districts of bankruptcy courts in Florida, each of which is divided into divisions.

Southern District of Florida

The Bankruptcy Court the Southern District of Florida [3] covers the southern portion of State of Florida, including, Miami-Dade, Broward, Palm Beach, and Monroe Counties. Bankruptcy Judges sit and hear cases in Miami, Ft. Lauderdale, and West Palm Beach. The Clerk of the Bankruptcy Court also maintains offices in Miami, Ft. Lauderdale, and West Palm Beach.

Middle District of Florida

The Bankruptcy Court of the Middle District of Florida [4] covers the middle portion of the State of Florida, including Tampa, Orlando, and Jacksonville. Bankruptcy Judge sit and hear cases in various locations, including Tampa, Orlando, and Jacksonville. [5]

Northern District of Florida

The Bankruptcy Court of the Northern District of Florida covers the northern portion of the State of Florida, including Tallahassee. There is only one bankruptcy judge in the Northern District and he sits and hears cases in Tallahassee.

Filing for Bankruptcy

Filing Fees

The filing fees for bankruptcy are determined by the federal government and are adjusted periodically. People below a certain income level may be eligible to pay the filing fee in installments.

Attorney Representation

Most people file for bankruptcy relief represented by an attorney due to the complexity of the bankruptcy laws. There are lawyers who specialize in bankruptcy law and there are those that practice bankruptcy law as a part of their general practice. Filing for chapter 13 bankruptcy has become so complex over the years, especially due to the 2005 Bankruptcy Code, that very few person are able to successfully file and complete a chapter 13 case.

Pro-Se

Some individuals file for bankruptcy without the assistance of an attorney. [6] Filing for bankruptcy without an attorney is called in the law, filing pro se. The bankruptcy court highly recommend that you only file for bankruptcy with the assistance of an attorney. [7] Many people file pro se to stop a foreclosure sale and do not intend to complete the bankruptcy case. In fact its estimated that about one third of the chapter 13 cases filed in the Bankruptcy Court for the Southern District of Florida are filed pro se and are not pursued after the filing of the case and the imposition of the automatic stay, and the cases are dismissed within about a month after their filing. In some instances, volunteer bankruptcies lawyer are available to assist low-income people in filing for bankruptcy relief. [8]

Bankruptcy Forms

Official forms are used in filing a bankruptcy case. [9] A bankruptcy case is begun with the filing of the official form B1 bankruptcy petition. [10] The filing of a chapter 7 or chapter 13 personal bankruptcy case also requires the filing of schedules A through J, the statement of financial affairs as well as the form B22 means test.

Personal Bankruptcy

Chapter 7

The Bankruptcy Code's provisions for chapter 7 bankruptcy relief are generally found in chapter 7 of the Bankruptcy Code. Sometimes chapter 7 bankruptcy is referred to as "straight bankruptcy" or "liquidation bankruptcy", but these terms are basically a holdover from the past and are not helpful and are misleading. Basically, chapter 7 bankruptcy provides for the discharge of dischargeable debt, which does not include non-dischargeable debt, such as most student loans, alimony, child support, and some taxes. In most cases, filers under chapter 7 incur no liquidation of their property as all of their property is "exempt." Instances of the liquidation of property under chapter 7 is generally only found when the person wrongfully files under chapter 7 when they should have filed under chapter 13 or should not have filed for bankruptcy at all.

Chapter 13

The purpose of chapter 13 is to reorganize a person's financial situation while under the protection of the bankruptcy court. The reorganization is based on a chapter 13 plan proposed by the debtor which is effective when approved by the bankruptcy court.

Chapter 11

Chapter 11 bankruptcy is available to both individuals and businesses, but there are very few individual chapter 11 cases filed.

Business Bankruptcy

Generally

Almost all of the chapter 11 cases filed in Florida are by businesses, such as corporations and LLCs. Many of the businesses located in Florida, though may file in another states, such as Delaware or New York, due to various reasons. One of the first significant occasions was the filing of the Eastern Airlines chapter 11 case in New York which was based on the fact that one of its small subsidiaries was located in New York.

Chapter 7

A business may file for chapter 7 bankruptcy liquidation. There is a misunderstanding among many people that a business is required to file for bankruptcy when it is closing for financial distress reasons. Actually in the vast majority of cases, a business may close and wind-down the business informally or formally under the applicable entity's provisions in Florida Statutes. When a business files for chapter 7 bankruptcy, A bankruptcy trustee is appointed who steps in and takes control of the business and its assets.

Chapter 11

A business may file for chapter 11 bankruptcy relief for a variety of purposes. Although chapter 11 is generally regarded as being for the purposes of reorganization, many businesses file for chapter 11 to effectuate a sale of the business or an orderly liquidation of the business.

Exemptions

Generally

Upon the filing of a bankruptcy case, generally all of the debtor's property becomes property of a bankruptcy estate. A bankruptcy estate is defined broadly in the Bankruptcy Code to includes all of the debtor's rights to property. [11] The use of exemptions is generally only in personal bankruptcy case and not in business cases, such as those filed under chapter 7 and chapter 11, filed by an entity, except by business operated as a sole proprietorship. Bankruptcy exemptions that apply in Florida are generally set forth in several locations, including the Bankruptcy Code, Federal Statutes, Florida Constitution, Florida Statutes, and Florida common law.

Real Property

Homestead

Article X, section 4 of the Florida Constitution [12] provides for the Florida Homestead exemption. [13] This type of "homestead exemption" should be distinguished from the homestead exemptions provided related to property taxation [14] and inheritance purposes. [15]

Personal Property

Certain personal property is exempt from the bankruptcy estate in Florida. [16]

General Personal Property, Household Goods

Article X, section 4 of the Florida Constitution [17] provides for the exemption of $1,000 of personal property, which is doubled if the bankruptcy case is a joint filing with a spouse. Florida statutes provides for an additional $4,000 exemption for personal property if the person does not have the benefit of the Florida homestead exemption.

Wages

Florida Statute section 222.11 provides for a limited exemption of wages. [18]

Vehicles

Florida Statutes provides for the exemption of $1,000 in value of a vehicle. This is applied to the equity in the vehicle in the event there is a lien on the vehicle for a loan.

Intangible Personal Property

Life Insurance

Florida Statutes provides for a certain exemption of life insurance in section 222.13 [19] and in section 222.14 [20]

Annuities

Florida Statutes 222.14 provides for a certain exemption of annuities. [21]

Retirement Benefits

Most retirement benefits, including IRAs, 401(k) plans, and social security, are exempt in Florida.

Workers' Compensation Benefits

Florida Statutes provides for a certain exemption for workers' compensation benefits.

Unemployment Benefits

Florida Statutes provides for a certain exemption for unemployment benefits. [22]

Property Excluded from the Bankruptcy Estate

Tenants by the Entireties

Real or personal property held among spouses as tenants by the entireties [23] is not owned solely by the individual but is owned by the marriage. Due to this status of ownership, property held as tenants by the entireties is generally exempt or not subject to the claims of the creditors of one of the spouses in Florida. This common law exemption is generally applicable to real property as well as personal property, but must be relied upon with caution as it may be difficult to prove that the property is actually held as tenants by the entireties, especially as to personal property, and as the application of this exemption various among different bankruptcy judges.

Spendthrift Trusts

Spendthrift trusts are technically not "exempt" from the bankruptcy estate, but are "excluded" from the bankruptcy estate pursuant to section 541(d) [24] of the Bankruptcy Code. A spendthrift trust is a creature of Florida state law and must meet is requirements in order to be considered a spendthrift trust. [25]

Property in which the debtor only holds bare legal title, is not part of the bankruptcy estate under section 541(d) [26] of the Bankruptcy Code.

Creditors

A creditor [27] is a person or entity that holds a claim against the debtor or the property of a debtor. The claim may have the status of an administrative claim, priority claim, a secured claim, or a general unsecured claim. There are various procedures that a creditor must follow in order to protect their interests. [28] In most instances, a creditor must file a proof of claim form with the clerk of the involved bankruptcy court. Such proof of claim form generally must be filed before the "bar date" set in each case.

Involuntary Bankruptcy

Although almost all bankruptcy cases are filed voluntarily by the debtor, the Bankruptcy Code also provides for the filing of an involuntary bankruptcy case against a person or business entity by creditors. The purpose of the filing of a petition for Involuntary bankruptcy case is usually as a means by creditors to collect on debts.

Appeals from the Bankruptcy Courts

United States District Court

The first level of appeal from a Bankruptcy Court is normally to the United States District Court for the same district of the bankruptcy court. Sometimes, appeals are allowed to be taken directly to the 11th Circuit Court of Appeals.

11th Circuit Court of Appeals

The 11th Circuit Court of Appeals hears appeals from the United States District Court. It also hears appeals directly from the bankruptcy court in certain circumstances. The 11th Circuit Court of Appeals is headquartered in Atlanta, Georgia, but has several local locations.

United States Supreme Court

Appeals from the 11th Circuit Court of Appeals are taken to the United States Supreme Court in Washington, DC. Throughout the history of the bankruptcy laws in the United States, the U.S. Supreme Court has made very important decisions regarding the nature of the bankruptcy courts and other issues of bankruptcy law. Among the most extremely Important cases are Northern Pipeline v. Marathon Pipel Line [29] and Stern v. Marshall,. [30] These cases related to the power and jurisdiction of bankruptcy courts under article III [31] of the United States Constitution to render judgment in certain types of cases.

Other Chapters of the Bankruptcy Code

Chapter 12

Chapter 12 of the Bankruptcy Code provides for bankruptcy relief for family farmers and fisherman. Chapter 12 is somewhat of a hybrid of chapter 13 and chapter 11 bankruptcy. There are somewhat few chapter 13 cases filed in Florida, except in the Bankruptcy Courts for the Northern District of Florida.

Chapter 9

Chapter 9 of the Bankruptcy Code provides bankruptcy relief for certain types of governmental entities.

Chapter 15

Chapter 15 of the Bankruptcy Code provides for the coordination of bankruptcy cases in the United States with bankruptcy and insolvency cases filed in other countries.

Bankruptcy Court Rules of Procedure

The rules governing procedure in bankruptcy courts are the Federal Rules of Bankruptcy Procedure. [32] Many sections of the Federal Rules of Bankruptcy Procedure adopt general Federal Rules of Civil Procedure. [33] Bankruptcy Courts in Florida also have local rules of procedure.

As bankruptcy courts are federal courts, the Federal Rules of Evidence. [34]

Research

Personal Bankruptcy

Information for filing for personal bankruptcy relief under chapter 7 [35] and chapter 13 [36] is provided on the website of the federal courts and various organization, such as the National Association of Consumer Bankruptcy Attorneys, [37]

Business Bankruptcy

The website of the American Bankruptcy Institute provides much information about business bankruptcy law. [38]

Case Law

The case law regarding bankruptcy law is primarily to be found in the decisions of the bankruptcy courts, the district courts, the courts of appeals, the bankruptcy appellate panels, and the U.S. Supreme Court. Case law is available on some Bankruptcy Court's websites. [39] [40]

Current Issues

There are many blogs on the internet that provide many article on current bankruptcy law issues. [41]

Related Research Articles

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Chapter 11 of the United States Bankruptcy Code permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, though liquidation may also occur under Chapter 11; while Chapter 13 provides a reorganization process for the majority of private individuals.

Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the U.S. In contrast to bankruptcy under Chapter 11 and Chapter 13, which govern the process of reorganization of a debtor, Chapter 7 bankruptcy is the most common form of bankruptcy in the U.S.

Title 11 of the United States Code sets forth the statutes governing the various types of relief for bankruptcy in the United States. Chapter 13 of the United States Bankruptcy Code provides an individual with the opportunity to propose a plan of reorganization to reorganize their financial affairs while under the bankruptcy court's protection. The purpose of chapter 13 is to enable an individual with a regular source of income to propose a chapter 13 plan that provides for their various classes of creditors. Under chapter 13, the Bankruptcy Court has the power to approve a chapter 13 plan without the approval of creditors as long as it meets the statutory requirements under chapter 13. Chapter 13 plans are usually three to five years in length and may not exceed five years. Chapter 13 is in contrast to the purpose of Chapter 7, which does not provide for a plan of reorganization, but provides for the discharge of certain debt and the liquidation of non-exempt property. A Chapter 13 plan may be looked at as a form of debt consolidation, but a Chapter 13 allows a person to achieve much more than simply consolidating his or her unsecured debt such as credit cards and personal loans. A chapter 13 plan may provide for the four general categories of debt: priority claims, secured claims, priority unsecured claims, and general unsecured claims. Chapter 13 plans are often used to cure arrearages on a mortgage, avoid "underwater" junior mortgages or other liens, pay back taxes over time, or partially repay general unsecured debt. In recent years, some bankruptcy courts have allowed Chapter 13 to be used as a platform to expedite a mortgage modification application.

Personal bankruptcy law allows, in certain jurisdictions, an individual to be declared bankrupt. Virtually every country with a modern legal system features some form of debt relief for individuals. Personal bankruptcy is distinguished from corporate bankruptcy.

<span class="mw-page-title-main">Bankruptcy in the United States</span> Overview of bankruptcy in the United States of America

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

<span class="mw-page-title-main">Insolvency</span> State of being unable to pay ones debts

In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

<span class="mw-page-title-main">Bankruptcy Abuse Prevention and Consumer Protection Act</span> 2005 American bill

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) is a legislative act that made several significant changes to the United States Bankruptcy Code.

The homestead exemption in Florida may refer to three different types of homestead exemptions under Florida law:

  1. exemption from forced sale before and at death per Art. X, Section 4(a)-(b) of the Florida Constitution;
  2. restrictions on devise and alienation, Art. X, Section 4(c) of the Florida Constitution;
  3. and exemption from taxation per Art. VII, Section 6 of the Florida Constitution.

A fraudulent conveyance or fraudulent transfer is the transfer of property to another party to prevent, hinder, or delay the collection of a debt owed by or incumbent on the party making the transfer, sometimes by rendering the transferring party insolvent. It is generally treated as a civil cause of action that arises in debtor/creditor relations, typically brought by creditors or by bankruptcy trustees against insolvent debtors, but in some jurisdictions there is potential for criminal prosecution.

A bankruptcy discharge is a court order that releases an individual or business from specific debts and obligations they owe to creditors. In other words, it's a legal process that eliminates the debtor's liability to pay certain types of debts they owe before filing the bankruptcy case.

<i>Bankruptcy and Insolvency Act</i>

The Bankruptcy and Insolvency Act is one of the statutes that regulates the law on bankruptcy and insolvency in Canada. It governs bankruptcies, consumer and commercial proposals, and receiverships in Canada.

An unfair preference is a legal term arising in bankruptcy law where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee in bankruptcy as an unfair preference or simply a preference.

Asset protection is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. The goal of asset protection planning is to insulate assets from claims of creditors without perjury or tax evasion.

Toibb v. Radloff, 501 U.S. 157 (1991), was a case in which the United States Supreme Court held that individuals are eligible to file for relief under the reorganization provisions of chapter 11 of the United States Bankruptcy Code, even if they are not engaged in a business. The case overturned the lower courts ruling which restricted individuals to chapter 7.

The insolvency law of Switzerland is the law governing insolvency, foreclosure, bankruptcy and debt restructuring proceedings in Switzerland. It is principally codified in the Federal Statute on Debt Enforcement and Bankruptcy of 11 April 1889 as well as in ancillary federal and cantonal laws.

Bankruptcy in Irish Law is a legal process, supervised by the High Court whereby the assets of a personal debtor are realised and distributed amongst his or her creditors in cases where the debtor is unable or unwilling to pay his debts.

<span class="mw-page-title-main">Commercial insolvency in Canada</span> Business insolvency in Canada

Commercial insolvency in Canada has options and procedures that are distinct from those available in consumer insolvency proceedings. It is governed by the following statutes:

Law v. Siegel, 571 U.S. 415 (2014), is a ruling of the Supreme Court of the United States that describes the extent of the powers of bankruptcy courts in dealing with the bad faith of debtors.

Bank of America, N. A. v. Caulkett, 575 U.S. 790, 135 S. Ct. 1995 (2015), is a bankruptcy law case decided by the Supreme Court of the United States on June 1, 2015. In Caulkett, the Court held that 11 U.S.C. § 506(d) does not permit a Chapter 7 debtor to void a junior mortgage on the debtor's property when the amount of the debt secured by the senior mortgage on that property exceeds the property's current market value.

References

  1. ↑ "Bankruptcy Code, Section 101". August 30, 2014. Retrieved August 30, 2014.
  2. ↑ "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". August 30, 2014. Archived from the original on December 20, 2012. Retrieved August 30, 2014.
  3. ↑ "Bankruptcy Court of the Southern District of Florida". August 30, 2014. Archived from the original on September 25, 2014.
  4. ↑ http://www.flmb.uscourts.gov/ . Retrieved September 1, 2014.{{cite web}}: Missing or empty |title= (help)
  5. ↑ "Locations of Bankruptcy Courts of the Middle District of Florida". September 1, 2014. Retrieved September 1, 2014.
  6. ↑ . September 1, 2014 https://web.archive.org/web/20140924061513/http://www.flmb.uscourts.gov/filing_without_attorney/. Archived from the original on September 24, 2014. Retrieved September 1, 2014.{{cite web}}: Missing or empty |title= (help)
  7. ↑ . September 1, 2014 https://web.archive.org/web/20140924061513/http://www.flmb.uscourts.gov/filing_without_attorney/. Archived from the original on September 24, 2014. Retrieved September 1, 2014.{{cite web}}: Missing or empty |title= (help)
  8. ↑ "Volunteers from the Tampa Bay Bankruptcy Bar Association" (PDF). September 1, 2014. Archived from the original (PDF) on April 1, 2014. Retrieved September 1, 2014.
  9. ↑ "Official Bankruptcy Forms". August 30, 2014. Retrieved August 30, 2014.
  10. ↑ "Official Form B1" (PDF). August 1, 2014. Retrieved August 1, 2014.
  11. ↑ "11 USC Section 541(a)". September 1, 2014. Retrieved September 1, 2014.
  12. ↑ "Florida Constitution". Archived from the original on December 8, 2008. Retrieved August 30, 2014.
  13. ↑ "Florida's Unlimited Homestead Exemption Does Have Some Limits, Part I". September 1, 2014. Retrieved September 1, 2014.
  14. ↑ "Florida Department of Revenue, Individual and Family Exemptions". September 1, 2014. Retrieved September 1, 2014.
  15. ↑ "The Florida Homestead – Three Different Contexts". September 1, 2014. Archived from the original on September 4, 2014. Retrieved September 1, 2014.
  16. ↑ "Florida Personal Property Exemptions". September 1, 2014. Retrieved September 1, 2014.[ permanent dead link ]
  17. ↑ "Florida Constitution". August 30, 2014. Archived from the original on December 8, 2008.
  18. ↑ "Florida Statute 222.11" . Retrieved August 30, 2014.
  19. ↑ "Florida Statutes 222.13". August 30, 2014.
  20. ↑ "Florida Statutes 222.14".
  21. ↑ "Florida Statutes 222.14".
  22. ↑ "Florida Exemption of Workers' Compensation Benefits". September 1, 2014. Archived from the original on September 4, 2014. Retrieved September 1, 2014.
  23. ↑ "Florida Tenants by Entireties Exemption". September 1, 2014. Archived from the original on September 4, 2014. Retrieved September 1, 2014.
  24. ↑ "11 USC Section 541(d)". September 1, 2014. Retrieved September 1, 2014.
  25. ↑ "Florida's New Trust Law". September 1, 2014. Retrieved September 1, 2014.
  26. ↑ "11 USC Section 541(d)". September 1, 2014. Retrieved September 1, 2014.
  27. ↑ "11 USC Section 101 (10)". September 1, 2014. Retrieved September 1, 2014.
  28. ↑ "Creditor Claim Guide" (PDF). September 1, 2014. Retrieved September 1, 2014.
  29. ↑ "Northern Pipeline v. Marathon Pipe Line, 458 U.S. 50 (1982)". September 1, 2014. Retrieved September 1, 2014.
  30. ↑ "Stern v. Marshall, Slip Opinion, decided June 23, 2011" (PDF). July 1, 2014. Retrieved July 1, 2014.
  31. ↑ "Article III, United States Constitution". September 1, 2014. Retrieved September 1, 2014.
  32. ↑ "Federal Rules of Bankruptcy Procedure" (PDF). Archived from the original (PDF) on 2014-12-22.
  33. ↑ "Federal Rules of Civil Procedure".
  34. ↑ "Federal Rules of Evidence". August 30, 2014. Retrieved August 30, 2014.
  35. ↑ "Chapter 7 under the Bankruptcy Code". September 1, 2014. Retrieved September 1, 2014.
  36. ↑ "Chapter 13 of the Bankruptcy Code". September 1, 2014. Retrieved September 1, 2014.
  37. ↑ "National Association of Consumer Bankruptcy Attorneys". August 30, 2014. Archived from the original on September 27, 2014. Retrieved August 30, 2014.
  38. ↑ "American Bankruptcy Institute". August 30, 2014. Retrieved August 30, 2014.
  39. ↑ "Case Digest Data Base". September 1, 2014. Retrieved September 1, 2014.
  40. ↑ "Bankruptcy Court Decisions". August 30, 2014. Archived from the original on September 25, 2014. Retrieved August 30, 2014.
  41. ↑ "Farsad Law Office" . Retrieved March 22, 2021.
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