TheFloridaBankruptcyLawBlog

I wrote a blog post a couple weeks ago about Chapter 7 trustees who try to force debtors to pay money or give up title to their upside-down homestead properties which the debtors do not claim as exempt.

I interviewed a married couple wanted to file joint Chapter 7 bankruptcy. Each spouse had separate credit cards and no joint unsecured debt. They have assets owed jointly free and clear of debt. My first thought was that their joint assets would not be protected in a joint bankruptcy. Joint marital assets owned as tenants by entireties are protected from the debts of either spouse provided the spouses do not have joint unsecured debts.

Then, I considered the point that a joint bankruptcy does not mean joint debt.

Many bankruptcy debtor misunderstand what it means to have their name on a family member's bank account.  I usually ask prospective debtors how much cash they have in their bank account. Often the client tells me that they have almost no money in their primary, household account but that “there name is on an account with” their (parent, spouse, child, etc.).

One of my bankruptcy clients owns an upside down investment property. The client listed the property as an asset with no equity and stated his intention to reaffirm the debt. If the trustee does not assert an interest in the property then the client will try to find a tenant and use the rent to pay the mortgage.

Forty five days after the trustee meeting the client wants to know when he can or should look for a tenant.

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.