Court Decisions

There is some confusion about the automatic stay; some debtors don’t anticipate exceptions to the effect of bankruptcy upon their creditor actions. Bankruptcy stops collection of debts, but bankruptcy does not always stop creditor’s ongoing lawsuits to establish a judgment and their right to collect money from the debtor.

If the debtor and his attorney screw up the debtor’s exemption on his bankruptcy schedules the attorney usually can fix the problem by amending schedules. A bankruptcy court found that the right to amend can expire at some point in the bankruptcy case where the debtor and his attorney wait too long to amend.

 The particular case involved a Chapter 7 bankruptcy in which the debtor claimed the $4,000 wildcard exemption as to his personal property.

I have previously written posts on the subject of bankruptcy and employment. How bankruptcy can effect your employment depends upon whether you are concerned about a current employer or employment. The bankruptcy code clearly prohibits your present employer from firing you because you filed bankruptcy while employed. Whether your bankruptcy can affect future hiring is not specifically dealt with in the bankruptcy law, and at least one bankruptcy court had permitted discrimination against bankruptcy debtor by new employers in their hiring process.

Some bankruptcy trustees have been trying to force  debtors’ to turn over possession of  real property even when the property appears to be under water. It seems that these bankruptcy trustees want to see if they can find a buyer and/or negotiate concessions or payment from the mortgage lender.

 A recently decided district court case in the Middle District of Florida considered a Chapter 7 bankruptcy case wherein a trustee wanted debtors to surrender and move out of their upside down homestead so that the trustee can market the property.

Kaufman, Englett and Lynd, PLLC (“KEL”) is a law firm that advertises mortgage foreclosure defense work, among other things. KEL decided to get into the bankruptcy business and is one of the largest volume filers of bankruptcy petitions in the Middle District of Florida. I assume that many of KEL’s clients who could not pay their mortgage are also good candidates for bankruptcy to both protect themselves from deficiency judgments and wipe out other debts related to their financial hardship.