Florida Ch7 exemption questions.

[2Bshinyandnew]

i think I found my issue. I originally intended to surrender my primary residence. I was keeping the rental unit only, so I claimed the "unused" homestead exemption under F.S. 222.25(4).

However, I changed my mind later after considering the affects of being a landlord with a tenant moving out and having to find a new tenant, which failed miserably.

I do now enjoy my residence, and no one ever questioned my change in position.

I have read the cases where the intent is established upon the filing of the petition. This appears to be a Florida specific issue. I think the legislature got it wrong, but that's just me.

I can clearly see the issue if you intended to keep your homestead, and stated as much in your petition.

I'm assuming then that when you originally intended to surrender the homestead there was no equity? If there was equity and you ALSO were able to claim the $4000 "unused" homestead exemption under F.S. 222.25(4) by changing your intent, well, there is another loophole right there. I suspect that much of the controversy surrounding this is because of that issue...and furthermore, even though there was no equity when a debtor files, if he keeps the residence and gets the the "unused" homestead exemption under F.S. 222.25(4), the unrealized future equity that will possibly accrue makes it so the debtor received double exemptions. In your case, the time for objections has passed, but I think you got very, very lucky. Unless the process s different with a 13?

[justbroke]

I'm assuming then that when you originally intended to surrender the homestead there was no equity? If there was equity and you ALSO were able to claim the $4000 "unused" homestead exemption under F.S. 222.25(4) by changing your intent, well, there is another loophole right there. I suspect that much of the controversy surrounding this is because of that issue...and furthermore, even though there was no equity when a debtor files, if he keeps the residence and gets the the "unused" homestead exemption under F.S. 222.25(4), the unrealized future equity that will possibly accrue makes it so the debtor received double exemptions. In your case, the time for objections has passed, but I think you got very, very lucky. Unless the process s different with a 13?

No, I think I was just lucky, and it's res judicata now (can't be challenged anymore).

I had no equity at the time and was under by $130K+.

Very interesting though, as I have seen several cases questioning the homestead exemption but they were all centered around TBE (tenants by the entireties) reasoning.

Wish me more luck.

[PoorGrammyinBK7]

i think I found my issue. I originally intended to surrender my primary residence. I was keeping the rental unit only, so I claimed the "unused" homestead exemption under F.S. 222.25(4).

However, I changed my mind later after considering the affects of being a landlord with a tenant moving out and having to find a new tenant, which failed miserably.

I do now enjoy my residence, and no one ever questioned my change in position.

I have read the cases where the intent is established upon the filing of the petition. This appears to be a Florida specific issue. I think the legislature got it wrong, but that's just me.

I can clearly see the issue if you intended to keep your homestead, and stated as much in your petition.

I agree that the legislature got it wrong. 2Bshinyandnew (love that name) is right: Florida's generous unlimited homestead exemption means little to the majority who have little/no/negative equity. And those are the people who really need the help! I have no sympathy for the rich who are using this to hide multi-million dollar assets!

In our case, continuing payments on our "homestead" with no (or negative) equity was still cheaper for us than having the expenses of moving, paying deposits, and most likely having even higher rent than our mortgage payments!

So, in effect, you are penalized for simply continuing to live (and pay) for a home that you were buying, and are upside down on - versus renting.

It should be a HUGE issue - and should be brought up in the legislature, because it is unfair.

For us, it didn't matter because we didn't have much in the way of household goods anyway, but I can see where it would matter for many, if not most people in that situation.

[2Bshinyandnew]

No, I think I was just lucky, and it's res judicata now (can't be challenged anymore).

Thank goodness you are res judicata! See below from the Southern District:

http://www.flsb.uscourts.gov/opinions/JKO/pdf/08-16859OLIVER.pdf

I had no equity at the time and was under by $130K+.

In the above case, the debtor was in the same position as you, but unlike you she did state an intention to reaffirm on her original petition.

Very interesting though, as I have seen several cases questioning the homestead exemption but they were all centered around TBE (tenants by the entireties) reasoning.

Wish me more luck.

Sending wishes for more and continued luck!!!

[justbroke]

I'm not trying to bring this all back up, but all of the cases I've read from Florida, where the ruling was that the homestead exemption is automatic if you intend to stay in your homestead property, were from Chapter 7 cases.

I'm now really interested in this topic.

The court also reasoned that the eligibility of a debtor
to exempt property is fixed at the time the bankruptcy petition is filed and that to the consideration of whether property retains its exempt status.

That's just harsh!

I also found this nugget

However, it is clear from practice that exemptions serve very different purposes in Chapter 7 as opposed to Chapter 13. The Court notes that the purpose of exemptions in Chapter 7 asset liquidation and in state debtor/creditor law is the protection of certain assets against forced sale. Such protection is not relevant to Chapter 13 cases, where a Chapter 13 debtor keeps all assets and surrenders income, except when conducting a liquidation analysis for confirmation purposes and when preserving objections in case of future conversion to Chapter 7.

[jbrt]

Wow! Thank you so much. I was unaware that BOTH filers got the $1000 exemption and that we BOTH got an additional $4000 if we chose not to include our homestead. IF that's true, then a combined $10,000 MORE than covers any personal property we have.

However, I just want to make sure I'm understanding you all correctly... We are not keeping the house...so, how does that work? Can that debt even be included in the BK or is that something separate i.e. foreclosure (we just want to and need to start all over from the beginning, unfortunately) and how does that affect the exceptions?

As I say, the only thing we think we'd like to walk away with is our basic possessions, which sure as heck won't make much of a dent in a $10,000 combined exception, and our two vehicles, one of which has negative equity regardless of how it's valued...wholesale or retail, and the other has about $2,000 equity if retail valuation is used, but, breaks pretty close to even if wholesale/trade in value is used.

Even if we're stuck with a couple thousand in equity on her car, again, we're still not making a huge dent in that kind of property exception.

Am I understanding this right. We've got an appointment with an attorney in a couple weeks. I just want to learn as much as I can before hand so we can go in with the right questions and the right mindset.

Thanks again.

[jbrt]

Going back over and re-reading everything here, just to be clear...

1. We're giving up the house.

2. All your belongings, furniture, clothing, old TV, beat up lawnmower, etc..any equity in vehicles, and any cash in the bank, wife's wedding set....all has to come within that combined $10,000 of exception...right?

3. Regarding reafirmation....as we'd like to keep our two vehicles, does reafirmation require renegotiating with those creditors? Basically, we're not unhappy with the current terms. Low payments, decent intrest rate, they're in good condition, low miles, and have the balance of a good warranty. Since the payments are so low, I think it's worth trying to keep them. But, if I understand you right, it may not be up to us? The credior on those vehicles may not want to play nicely even though we're willling to continue payments as agreed??

Sorry for so many questions. I'm just trying to get a handle on how this thing really works. All the so-called attorney's website FAQ's are awfully vague regarding this kind of stuff.

Thanks

[StartingOver08]

You have it right on all 3 items.

Everything has to fit within that $10k. Household good, furniture, vehcile equity if any (limited to $1000 ea), cash, ....everything.

Many of the lenders take the word 'reaffirmation' literally and will not allow you to renegotiate the terms. However, if you speak directly to the BK dept, you may find they are willing to change the terms to make the payments affordable to you. I negotiated interest rate, length of term (just added a couple of months), removed cross-collateralization and skipped a month - all written into the reaffirmation. I also had the lender (CU) insert they would send the title to me immediatly upon payoff so there is no misunderstanding.

My other lender did not change anything - including the due date - so naturally I surrendered that vehicle. So it is directly dependant on the banks' policy.

BTW, important part: YOUR ATTORNEY HAS TO SIGN OFF ON YOUR REAFFIRMATION TOO, OR YOU HAVE TO GO IN FRONT OF THE JUDGE TO JUSTIFY WHY IT IS NOT A HARDSHIP.

Also, my attorney did not negotiate the reaffirmation (and he was an excellent attorney). He just forwarded the standard bank reaffirmations directly to me. It was up to me to negotiate my own reaffirmation agreements. I think that most attorney's do not negotiate the reaffirmations....in fact, some attorney's will not sign them. That is a question you are going to want to ask your attorney in the initial consultation. If his policy is to not sign one, then it either costs extra for him to represent you in front of the judge to allow the reaffirmation or you have to do it yourself.

Many people here suggest a ride through - my attorney says there is no ride through in our district, you must reaffirm, redeem or surrender. So please discuss this issue with your attorney if you plan to keep your vehicle(s).

[2Bshinyandnew]

Many people here suggest a ride through - my attorney says there is no ride through in our district, you must reaffirm, redeem or surrender. So please discuss this issue with your attorney if you plan to keep your vehicle(s).

This is off-topic, but, when my ex filed he included the mortgage to the house he is a co-debtor on, he checked off "surrender" on his statement of intentions. It has only been less than 3 months since filing, but all 3 credit bureaus say IIB, but also list "pays as agreed never late" (which is because I'm living in the house and paying the mortgage and I'm also a co-debtor). Is that the same as a "ride through"?

[justbroke]

This is off-topic, but, when my ex filed he included the mortgage to the house he is a co-debtor on, he checked off "surrender" on his statement of intentions. It has only been less than 3 months since filing, but all 3 credit bureaus say IIB, but also list "pays as agreed never late" (which is because I'm living in the house and paying the mortgage and I'm also a co-debtor). Is that the same as a "ride through"?

Technically, no.

What it means is that he is no longer responsible for that mortgage once he gets his discharge. The co-debtor(s) will be responsible for it. In this case, it seems that you're the (or an additional) co-debtor. That makes you and any other co-debtors responsible for the mortgage after his discharge.

That is not a ride-through. I would call that a dump and run.

[2Bshinyandnew]

Technically, no.

What it means is that he is no longer responsible for that mortgage once he gets his discharge. The debtor will be responsible for it. In this case, it seems that you're the (or an additional) co-debtor. That makes you and any other co-debtors responsible for the mortgage after his discharge.

That is not a ride-through. I would call that a dump and run.

well, yes, it is a dump and run, I know that I'll do my own BK in the near future anyway (believe me, this was not the easiest circcumstance to come to terms with!!)

I was under the impression that if my district does not allow ride-throughs, the mortgage would be reported as simply IIB for a debtor who surrendered a property and included the mortgage in a BK...so when I saw the "IIB pays as agreed never late" on my ex's credit report I thought maybe that was what a ride-through was?

[RainMoM]

WoW thank you so much "starting over" and "just broke".. this thread is almost the same situation that I'm in.. I really want to keep both cars, as you already know from my own thread.. I never knew about the homestead.. Regarding reafirmation, must you do that IF you are under the $10,000 for the exception ?? bare with me, I'm trying to learn as much as i can before my meeting with my attorney next week Wednesday ( wish me luck)

[jbrt]

Had appt. with attorney today, and was told, almost word for word, exactly what I've seen, read, or been told here in this forum as well as this thread.

It was very nice to be able to go in there with the confidence of having many answers beforehand. It allowed me to discuss our situation and ask appropriate, educated, logical questions as opposed to hammering away with questions based on a complete lack of knowlage whatsoever. It basically took the fear out of that visit.

Thanks all.

Looks like we're a go to file in a couple months for Ch. 7. We'll get to keep most the assets that we want and lose the financial dead weight. The lawyer did highly recommend we lose the newer of our vehicles (my vehicle ) The high payment and considerable negative equity just really doesn't make sense I suppose. That'll leave us with one vehicle for awhile. But, after awhile, maybe we can put together the cash for some clunker that'll get me to and from work.

This isn't our finest hour, but, we're looking forward to a "fresh start" without all the stress, sleepless nights, collection calls, etc...

Since we're surrendering the home, I guess we have to start packing and shopping for a lease now. Greeaaat!! You have any idea how much I HATE moving!!??!? You have any idea how much junk the wife has??! She's packing all that, that's for sure!!

[justbroke]

jbrt, very nice to hear. I hope you get filed soon and are on the road to your fresh start soon.

[StartingOver08]

....

Since we're surrendering the home, I guess we have to start packing and shopping for a lease now. Greeaaat!! You have any idea how much I HATE moving!!??!? You have any idea how much junk the wife has??! She's packing all that, that's for sure!!

Don't pack too quickly! You may have more time in your home than you can imagine. I surrendered my home too in my Ch 7 BK, but I am still here. There is no final judgement yet and my attorney says not to move until the official notice of sale.

There is some controversy in the BK courts (at least here in the Southern District). Some of the trustees want you out within 30 days of the 341 if you are surrendering. Had that happen to a friend of mine that filed in Oct 2008 - her attorney was not at the 341 to stop the Trustee from making her move out. Her attorney had sent a newly minted lawyer to attend that was scared to death of the Trustee - so my friend lost out on valuable recovery time and of course the house just sits vacant, badly maintained by no one.

My attorney was at the 341 and the issue did not come up at all. Make sure to clear up this issue with your attorney before filing. Just so you have a plan.

BTW, good job on the vehicles - they can weigh you down. Better to get rid of one high payment and buy one after with the $$ you would have used to pay the mortgage!