I Stopped Paying My Bills… What Can Creditors Do to Me?

Common Question: I can’t pay my bills. What happens if I don’t seek bankruptcy protection and just stop paying?

Answer: It depends on your income and assets. Creditors can file a lawsuit against you. Once they win, they might seek to garnish your wages, seize your bank account, or go after other assets in your name. They can subpoena you for a deposition in which they swear you in and ask you a lot of detailed questions about your work and property. People that fail to comply with court orders may be subject to contempt of court sanctions.

Assuming a debtor qualifies for bankruptcy and does not have assets that are unprotected, then seeking bankruptcy protection may be a way to wipe away past debts forever so people can get a fresh start. Many people are pleasantly surprised at how simple the bankruptcy process can be–especially for those with low income and few assets. Speak with a bankruptcy attorney to determine whether you should file a bankruptcy.

Is it Better to do a Short Sale or Just Allow Bank to Proceed with Foreclosure?

Common Question: My property is in foreclosure, should I seek a short sale or let the bank take the home in foreclosure?

Answer: It all depends on your situation. Foreclosure can take a long time, especially if you fight it and don’t allow the bank to win by default. So if your income is not currently enough for the rental market, it may be a good idea to stay in the property longer. On the other hand, if you have a job lined up somewhere else, leaving the property in your name longer exposes you to some liability, if the house is sitting empty. Of course, if your income is increasing, it may be advantageous to file a bankruptcy while you still qualify.

Many people believe that achieving a short sale will “save” their credit as long as it happens before the end of a foreclosure. There is no literature that supports this view. If a representative of the bank says something of this sort, have them put it in writing. Once a foreclosure is filed against you, it is a public record, regardless of the disposition. A short sale, a foreclosure, a deed in lieu of foreclosure all represent the same thing: a default by the borrower. In other words, one’s credit is typically ruined before the foreclosure lawsuit by the bank even begins.

FL Bankruptcy: Claim Homestead Exemption & Protect Less Personal Property…Or Lose Your Home?

In Florida, when people file a bankruptcy, they can either elect NOT to claim homestead exemption on their home and utilize up to $5000 of wild card exemptions on personal property, OR they can claim homestead exemption, protect their interest in their home, and opt for only $1000 of wild card exemptions on personal property. For the lucky few who have equity in their home, the choice is obvious: protect up to $125,000 of home equity and surrender other personal property that exceeds $1000.00 (speak with a bankruptcy attorney for more details on retirement funds, autos, and other types of personal property that may be protected).

These days, however, many people are in homes that have no equity. They owe more than the homes are worth. Many of these people continue to live in their “underwater” or “upside down” homes, and many are still making payments. Others are not making payments, but continue to reside at their home while seeking a modification or going through foreclosure.

When such people file a bankruptcy, should they elect to utilize the homestead exemption to protect non-existent home equity, or should they opt for $5000 in personal property and not exempt their homestead? For a long time, Floridians with no equity could take the $5000 in personal property exemptions, not exempt the home, but not fear that they would lose the home to the trustee in the bankruptcy. Sadly, those days are over.

When a bankruptcy is filed, the trustee becomes the owner of non-exempt assets of the debtor. Recently, the trustees have found that they are able to sell their interest in a property (sometimes referred to as “bare title”) to investors that rent out the home while lengthy foreclosure proceedings linger in the court systems. Eventually these investors lose the home back to the bank that holds a note against the property–but not before they’ve rented it out for a profit for months. That means that people who are planning to stay in their homes, even if there is no equity, need to claim homestead exemption and protect their right to live in the property–otherwise they may be evicted and their home rented for the benefit of an investor. That means that bankruptcy filers claiming the homestead exemption will only be given up to $1000.00 of  wild card exemption to exempt other personal property, with an additional $1000 that may be used to exempt an auto. Retirement accounts are 100% protected.

Be sure to speak with a bankruptcy attorney prior to filing your case, so that you know what assets may be at risk if you file.

Occupy Protesters Shut Down a Brooklyn, New York Foreclosure Auction… Could it happen in Florida?

Most people have heard of the protests against bank corruption and corporate greed in New York City, Chicago, Washington, D.C., Denver, Houston, San Diego, and Orlando, Florida.

Believing that banks have corrupted the proper functioning of government, protesters have taken their concerns about the economic crisis directly to banks and banking officials. On October, 13th, 2011, community members in Brooklyn shut down a foreclosure auction to prevent the loss of housing to more American families in their community.

Watch the video here.

Could protesters disrupt auction in Melbourne, FL, Palm Bay, FL or Deland, FL?

Do you have thoughts or comments? Please share them.

Why File a Palm Bay, FL Bankruptcy? Why Seek Bankruptcy Protection? Just Keep on Going and Hope for the Best?

For many people, the word “bankruptcy” has an ugly connotation. It is something to be avoided at all costs. However, filing bankruptcy is actually a way to recover from financial problems. After all, no one files for bankruptcy if they are able to pay their bills–so what is the purpose of doing it? Bankruptcy allows people to escape old debt and start over.

Many people have fallen on a variety of old bills, whether they are credit cards, old business loans, medical bills, or even creditor financial judgments. Year after year, they limp along, paying what they can–with their credit in a permanent state of wreckage. Essentially, they have already defaulted on their creditors–not because they don’t want to pay, but because they don’t have the money to pay.

One of the worst hit areas is Palm Bay, Florida. For many years, it was one of the fastest growing cities in Florida. A lot of Palm Bay, FL residents bought houses and worked in construction, real estate, and other supporting industries. Then the bottom fell out. A lot of hard working people could no longer pay their debts. I remember tracking phone calls of prospective bankruptcy filers and realizing that nine different households on the same Palm Bay, FL street had called for advice about overwhelming unpaid bills. That was all in a two month period.

If the entire street is unable to pay their bills, it means that people should look beyond the personal shame of needing to consider a bankruptcy, and think about what a bankruptcy really is: start fresh and wipe away old debts. With a bankruptcy, people can wipe away credit card debts, medical bills, bad mortgages, foreclosure debt–and start over. After a bankruptcy, people finally have the chance to rebuild their credit and build their savings. When people don’t file a bankruptcy, yet are unable to pay their bills, their credit NEVER recovers. When they are able to save, pay off their cars, and so on, their old creditors always loom in the background, ready to strike with a lawsuit, garnish wages, freeze bank accounts, and so forth.

Filing a bankruptcy allows people to focus on their future and not worry about financial threats from the past. Do you live in Palm Bay, Florida and have questions about foreclosure, bad debts, creditor lawsuits, or garnishment? Please call us at Morgan Law, P.A., a Palm Bay, FL bankruptcy and foreclosure defense firm. We can be reached at 321-253-6223.

If I File a Bankruptcy, Will They Take All of My Property?

One of the most common fears people have about filing a bankruptcy is that all their possessions will be sold in an auction and creditors paid with the proceeds.

The truth is that although bankruptcy is a legal process that occurs in the federal court system, state laws control what types of property and how much is protected when a bankruptcy is filed.

In other words, if you have lived in a state for more than the past two and a half years, the laws of that state will control what property is protected and which assets may be at risk. If you have not lived in your state for at least the past two and a half years, the laws of the state where you previously resided will typically be applied.

Different states have different strategies regarding what should be protected in a bankruptcy.

In Florida, homestead equity is given great protection. Retirement accounts are protected. Other types of personal property are protected to a dollar value of $1000.00 per person, with an additional value of $1000.00 available to protect equity in a car. If a person is not claiming the homestead exemption, an additional $4000.00 is available to protect personal property.

So a couple filing a Florida bankruptcy that has no equity in their home might be able to protect up to $12,000 of auto equity and other personal property, if they are filing jointly, and depending on whether autos are jointly owned.

Thinking of filing a Melbourne, FL bankruptcy? Considering a Deltona, FL bankruptcy? Call (321) 253-6223 or (386) 218-4973 for a free consultation! Visit us in Melbourne, Florida at SpaceCoastBankruptcy.com. Visit us in Orange City, FL and Deltona, FL at VolusiaBankruptcyLaw.com.

Facebook and Other Social Media Sites Are Used by the Police & Other Authorities

A hunter in Florida was recently arrested for hunting out of season and hunting an alligator without a permit. Police would never have known about the hunter’s activities if he had not posted an account of his activities complete with pictures on Facebook.

Both Florida criminal charges carry a maximum sentence of 60 days in county jail or a $500 fine.

Needless to say, only a day or two of jail plus the expense of paying bond, court costs, fines, and hiring a lawyer is enough to ruin most people financially. That means that in addition to not breaking the law to begin with, people should carefully consider what they want to say and what they want others to see before they post to social media sites.


Bankruptcy attorneys have recently commented on the likelihood of FB photos or other social media content being exploited by creditors to discover inaccuracies in a debtor’s Chapter 7 or Chapter 13 bankruptcy petition and schedules of assets.

Man Forecloses on Bank for Failing to Respond to His Queries

According to the Huffington Post, a Philadelphia man took advantage of an old law and sued Wells Fargo for failing to “acknowledge written requests within twenty days.”  When he filed his complaint against the bank, it did not respond and he won a default judgment for $1173.00.  He then initiated foreclosure proceedings at Wells Fargo’s 1341 N. Delaware Ave. offices, to collect on his judgment, placing a sheriff’s levy against the office.

A similar law would be very welcome here in Florida, where homeowners are unable to get banks to respond to their letters, modification requests, and other questions.  Visit www.SpaceCoastBankruptcy.com to learn more about how people deal with banks and other creditors.