What to Expect at the Meeting of Creditors

After filing for a Chapter 7 Bankruptcy, the next step in the process is for a debtor to attend the Meeting of Creditors, also referred to as the 341 Meeting. This meeting is mandatory for all debtors, and takes place about 30 days after filing. For many, this is the only “court” appearance in the bankruptcy proceeding, though it is not held in a courtroom nor in front of a judge. Instead, you will sit before a Trustee, who will ask you questions about the accuracy of the Schedules filed with your case. Remember that you must answer all questions truthfully. The Trustee will ask you several questions , which may include:

1. Did you read the schedules before signing?
2. Did you list all your debts and assets?
3. Do you need to make any corrections to the schedules?
4. Have you transferred property in the last two years?

Creditors will also have the right to ask questions, but many do not appear at the meeting. When you arrive for your scheduled meeting, make sure to arrive a few minutes early and have your Driver License and Social Security card with you. Feel free to sit in and watch other cases so that you know what to expect. When you are called, present your identification to the Trustee. If you are represented by an attorney, he or she will sit next to you, but all questions must be answered by you, the debtor.

Remember, if you have any questions regarding the bankruptcy process, speak with an experienced bankruptcy attorney.

New Laws Regulating Credit Card Companies

For many years, credit card companies have engaged in unscrupulous behavior when dealing with consumers. Many of us have experienced unfair increases in our interest rates, or multiple penalty fees in one billing cycle. These abusive practices have paved the way for the federal government to step up its game and enact new laws designed at helping debtors with massive credit card debt. On February 22, 2010, new laws came into effect, and in August 2010, more are set to follow. Some of the major points consumers should be aware of include:

- Companies must send you written notice 45 days before they increase your rate or fees
- There is a cap on all high-fee cards
-For underage credit card users, they will need to show their ability to make payments, or have a co-signer.
- Interest rates cannot be raised during the first 12 months of opening up an account.


Despite the good intentions of the federal government, more needs to be done to alleviate those struggling with credit card debt. For many of these debtors, bankruptcy proves to be the best way to alleviate their high debt. For those individuals that satisfy the means test and qualify under a Chapter 7 filing, the majority, if not all, of unsecured debt is "wiped out" or discharged, including credit cards. As a result, debtors are finally able to take control of their finances, allowing them to begin rebuilding their credit scores immediately.


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Are you in debt? How filing for bankruptcy might be right for you

If the thought of your mounting debt leaves you feeling overwhelmed, filing for bankruptcy might provide you with the relief you desperately need. Even though filing for bankruptcy is never an easy decision, it might just be the right one. Bankruptcy laws are aimed at providing debtors with a fresh start, particularly after devastating events such as the loss of a job or a sudden illness. For those of you contemplating bankruptcy, it is important to understand which filing is right for you. Most debtors file under Chapter 7 (straight liquidation) or Chapter 13 (reorganization). When a debtor files under Chapter 7, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay off creditors. Before filing for bankruptcy, there are certain requirements a debtor must meet. For instance, a debtor must, within 180 days before filing, receive credit counseling from an approved counseling agency. This process doesn't take too long and is relatively inexpensive, but it provides the debtor with a good understanding of their financial situation.

Chapter 13 allows debtors with a regular income to develop a repayment plan in order to pay all or part of their debts. Debtors make installments to creditors through a bankruptcy trustee over a period of three to five years. After successful completion of the repayment plan, debts are discharged. For individuals facing foreclosure, they may be able to temporarily stop the sale of their home by filing for bankruptcy under Chapter 13 (automatic stay). Even though filing for bankruptcy will not get rid of a mortgage debt, a debtor may be able to work out a payment plan to get caught up on missed mortgage payments. Furthermore, filing for bankruptcy will provide a debtor with additional time to look at other options.

Regardless of which chapter you file under, it is important to note that some debts are generally not dischargeable. For example:

- Student loans
- Alimony and child support
- Taxes
- Debts for willful and malicious injuries to person or property

Bankruptcy relief was meant to help debtors resume and take control of their lives. It is important to speak with an attorney and determine whether bankruptcy is right for you.

Are You Renting Property That Has Gone Into Foreclosure?

For many, it is no surprise that the recent economic downturn has led to a significant increase in foreclosure filings. Not only have homeowners felt the devastating consequences of a foreclosure, but so have the tenants renting these distressed properties. Imagine being informed by your landlord that they've been served with a foreclosure suit. Do you immediately stop paying rent and look for another apartment? Not really. It is important to note that up until the actual auction and sale of the property, you and the landlord still hold the same obligations and responsibilities to one another. Another question arises, though, if the residential property is sold at auction, and NOW, a new owner enters the picture. The real issue that remains - does the new owner have the right to force you out immediately? To the relief of many tenants, recent legislation has answered this question.

Protecting Tenants at Foreclosure Act, which became effective May 20, 2009, states that the new owner of a foreclosed residential property is required to take certain steps before forcing a tenant to leave. Specifically, a new owner must give an existing tenant 90 day notice to vacate the property OR allow the existing tenant to remain in the property until the end of their lease term (whichever is longer). The only exception to this requirement is when the new owner will occupy the home as his or her primary residence. In that case, the remaining lease term does not have to be honored, BUT a new owner must STILL give the existing tenant 90 day notice.

So what does this mean? Practically speaking, the law provides tenants at the very minimum 90 days to look for another place to live, and any threats by a new owner asking them to leave immediately is in direct violation of the law.

It is important to note that only bona-fide tenants are protected, which means:

- The pre-existing tenant can't be the debtor of the mortgage debt that is being foreclosed
- The lease must have been the result of an arms-length transaction (a fair deal)
- The rent can't have been substantially less than fair market rent for the property.

For tenants facing this dilemma, it is important to understand your rights. If you are a tenant and feel that your rights have been violated, seek the advice of an attorney.

What Happens to a Security Deposit at the end of a Lease?

For many of you renting an apartment, a security deposit is nothing out of the ordinary. Landlords commonly require it to cover any damages made to the apartment during the life of the lease, or to cover any unpaid rent. What many do not realize, though, is that under Florida law, there are specific restrictions in the way a security deposit is handled.

When a landlord first receives your security deposit, he or she must notify you (in writing) within 30 days of the manner in which they are holding the deposit. For example, if the security deposit is held in a trust account, a landlord must notify you of this AND must pay you either 75% of the interest the money earns or 5% a year on the money.

So what happens to the security deposit AFTER you've packed all of your belongings and moved out? First, a landlord has 15 days to return the money used for the security deposit OR notify you of any claims made against it within 30 days. If a claim is made, you have 15 days to object. If no objection is made, the remaining balance (if any) is returned to the tenant. If an objection IS MADE, and no agreement is reached, a resolution might have to be reached before a court of law.

Many disputes regarding security deposits are fact-specific and vary from one to the other. For example, did the tenant terminate the lease prematurely, or was the tenant given a defective 15-day notice? If you have any concerns regarding your security deposit, seek the help of an attorney.

Thinking of Starting Your Own Business?

Starting your own business can be one of the most liberating decisions you'll ever make. Imagine spending your day doing something you enjoy, setting your own schedule, and enjoying the fruits of your labor. But, before you can picture yourself being your own boss, ask yourself: what does it take to form a business? Besides the obvious, such as deciding on a product or service, there are other factors to consider. One of the most important is deciding on a business entity that is right for YOU. For those of you that have already started your own business and skipped this step, you may have inadvertently chosen a sole proprietorship: a one person business which is oftentimes created quite informally. In fact, because of its simplicity, many have entered into this form of doing business without even knowing it. Florida does not require any formal filings to form this business entity. For example, imagine yourself making and selling jewelry as a "hobby". You run the business by yourself, and pocket all of the profits. Without even realizing it, you have formed a sole proprietorship. Many individuals conducting business this way do not realize that a sole proprietorship is a legally-recognized way of doing business with many legal and tax implications. You might be wondering: if no formal filings are required, then what else might I be responsible for as a sole proprietor? For starters, even though you are not required to file with the Department of State to form this entity, if you are operating your business under a "trade name", such as ABS Jewelers, you may be required to register a Fictitious Name with the State. Additionally, the name must be advertised at least once in a newspaper in the county in which the principal place of business will be located.

What about tax implications? As a sole proprietor, you are responsible for obtaining applicable occupational licenses and paying self-employment taxes. All of this aside, many individuals still view this way of doing business as advantageous, but need to keep in mind that it can have some negative consequences. First, a sole proprietor is liable to the full extent of the proprietor's assets for the debts of the business. In other words, there is NO LIMITED LIABILITY, and your personal assets can be used to satisfy business debts. Second, you are limited to running your business by yourself. If you decide to open a business with someone else, you would no longer be considered a sole proprietorship, but instead a general partnership (and governed by the Revised Uniform Partnership Act).

So what other business entities are there to choose from? There are many business entities, and two of the most common are:

- Corporation - must file Articles of Incorporation with the Florida Department of State; shareholders enjoy limited liability for the corporation's debts; perpetual existence; can raise capital by selling shares; can avoid some of the negative tax implications by applying for Sub-chapter S status with the IRS (if meets certain requirements); other corporate formalities must be followed

- Limited Liability Company - must file Articles of Organization with the Florida Department of State; provides limited liability for its owners; availability of pass-through income taxation; relatively new way of doing business


When choosing a business entity, make sure to evaluate the goals of your business. Whatever entity you choose, make sure to educate yourself about the requirements and obligations of operating a business.

For those of you taking the plunge, good luck on your business endeavors! Remember if you have any questions, consult an attorney for guidance.

Recent Changes Regarding Mediation in Foreclosure Proceedings

Due to the substantial increase in mortgage foreclosure case filings in Miami-Dade County, the Eleventh Judicial Circuit Court has ordered the creation and implementation of the Residential Mortgage Foreclosure Mediation Program (RMFM Program) for all residential mortgage foreclosure actions. The new court-mandated mediation program replaced the CHAMP program as of March 29, 2010, and it is aimed at providing a forum for both lenders and homeowners to discuss alternatives to foreclosure. Unless a homeowner decides not to participate in the program, specific conditions and requirements must be complied with before a lender can apply for a default judgment, a summary judgment hearing, or a final hearing for foreclosure.

So what does the RMFM Program really mean for homeowners? First, lenders must now seriously consider alternatives to foreclosure, such as loan modifications, short sales, and deed in lieu of foreclosure. Second, homeowners are entitled to ask a lender to make certain disclosures, such as:
- Documentary evidence that the lender is the owner and holder in due course of the note and mortgage.

- A history showing the application of all payments by the borrower during the life of the loan.

- A statement of the lender's position on the present net value of the mortgage loan.

- The most current appraisal of the property available to the lender.

All of the costs incurred by the program are paid for by the lender. In order to participate, a homeowner must meet with an approved mortgage foreclosure counselor, and provide the Program Manager (the Collins Center for Public Policy, Inc.) various financial disclosures prior to mediation, such as their monthly income and expenses. At mediation, the Program Manager will preside over the meeting, facilitating the possibility of a settlement.


This article does not create an attorney-client relationship. Any information provided is general information only and does not constitute, nor should it be construed as, legal advice.