Tampa Bankruptcy Attorney

Samantha L. Dammer has been practicing law since 1998 (in Illinois) and joined the Florida legal community in 2007. Our firm is prepared to assist individuals and businesses with Chapter 7, Chapter 11, and Chapter 13 bankruptcies.

You’ve worked hard to build your business and your credit rating. Yet oftentimes, through no fault, declaring bankruptcy and obtaining a fresh financial start is the best solution. We are committed to working with you and your particular case to be able to find the best possible solution. In many cases, a bankruptcy alternative such as a short sale, deed in lieu of foreclosure, loan restructuring, or a debt settlement is a better solution.

Bankruptcy is a temporary situation and may not affect your credit score negatively. In fact, many of our clients report increases in their credit scores after filing a Chapter 7 Bankruptcy. This makes sense. Bankruptcy will usually discharge most unsecured debts, resulting in a better debt-to-income ratio.

Rest assured that our Tampa bankruptcy attorney, Samantha L. Dammer, Esq. will explore all available legal options to assist you with your finances before you make a decision.

What Bankruptcy Chapter Is Right For Me?

The United States Bankruptcy Code recognizes several chapters of bankruptcy for individuals and businesses. There are some chapters that pertain to special kinds of entities such as farms and municipalities, but these chapters will not be covered in this article. The purpose of this article is to provide a brief summary of Chapters 7, 11 and 13, in an effort to inform on the basics of each.

Chapter 7 Bankruptcy – Discharge

A Chapter 7 can be filed by an individual or a true business entity, such as a corporation, LLC or partnership. The end result of a Chapter 7 is that all non-exempt assets are liquidated for the benefit of the unsecured creditors. All unsecured debts, with some exceptions (such as income taxes or student loans) are discharged. An individual is allowed certain “exemptions” to protect his assets. A business does not get to keep its assets in a Chapter 7, and the end result is usually that the trustee will take over the business and the business owner will step away. While a Chapter 7 is a great “fresh start” solution for an individual, it’s not a good option for a business owner who wants to keep the business going.

An individual debtor must meet the “means test” which means that his gross household income must fall within certain parameters; otherwise there is a presumption of abuse, and the attorney will not file the case as a Chapter 7. Some individuals, such as disabled veterans, are exempt from taking the means test. There is no means test requirement for a business debtor.

A Chapter 7 bankruptcy usually takes around three months to complete if there are no assets to liquidate, or adversary proceedings. Of course if business or personal assets have to be liquidated, it can take significantly longer. The debtor will usually receive his discharge within a couple of months, regardless of whether the case stays open longer.

In the Middle District of Florida, the filing fee for a Chapter 7 is $338.00, Attorney fees fees usually start at $1,900 and can be up to $6,000 for a business filing. Individual cases usually cost less.

Chapter 13 Reorganization

A chapter 13 bankruptcy can be filed only by an individual. In a Chapter 13, the debtor can attempt to save his home by submitting a payment plan to the court for approval, and making the payments on time through a three or five year period. At the end of the case, the debtor receives a discharge of all unsecured debt that is not paid. The amount of the plan payments are based upon the debt amounts as well as the debtor’s disposable income. Chapter 13 is a good solution for individuals who need the benefit of the automatic stay, but who do not qualify for a Chapter 7 because of the means test. Debtors who have non-exempt assets will often choose a Chapter 13 repayment plan as well.

A debtor cannot file a Chapter 13 bankruptcy if his unsecured debt exceeds $419,000 and secured debt exceeds $1,257,000. A Chapter 13 might allow a debtor to “strip” secondary liens from his home and turn them into unsecured debt. These maximum debt levels need to be taken into account at all times during the case, as a judge might dismiss a Chapter 13 if the “stripping” of a second lien increases the unsecured debt in excess of the jurisdictional amount allowed.

The Chapter 13 bankruptcy will take anywhere from three and a half to five and a half years. Most Chapter 13 plans fail because the debtor overextends himself and is not realistic, or because the debtor loses his job or means of income.

In the Middle District of Florida, the filing fee is $313.00. The court establishes attorney’s fees that are considered reasonable per area. In the Tampa area, the fee allowed $4,500. Most attorneys will take some of the money up-front, and the rest gets worked into the Plan if it is confirmed.

Chapter 11 Bankruptcy

An individual or business entity can file a Chapter 11 to gain the benefit of the automatic stay, and to reorganize debts. There are several reasons for an individual to file a Chapter 11. One would be if he had too much debt to file a Chapter 13. This comes into play a lot with individuals and couples that own a lot of investment real estate. A Chapter 11 has no maximum debt limits or “means test” requirements. A small business can file a Chapter 11, and there is a simplified process for reorganization if a business debtor owes less than $2,490,925.

The Chapter 11 debtor must file a repayment plan for approval by the court. It is a good way for a business to get back on the path to solvency, but it can be very time consuming as there are a lot of reporting requirements. If a business wants to file a bankruptcy and stay operational, Chapter 11 is the only solution. A chapter 7 liquidation would require the business to close, and all employees to be laid off.

In 2020 a new subchapter 5 option became available for small businesses to file a Chapter 11.

A Chapter 11 bankruptcy will take several years, if it is not dismissed. Unlike a Chapter 7 or even most Chapter 13 bankruptcies, the creditors take an active role in many Chapter 11 bankruptcies.

In March of 2020, the legislature changed the bankruptcy code to add a new “subchapter V” small business bankruptcy filing. While the fees are the same, this system is more streamlined.

The fees involved in a Chapter 11 make it an impractical solution for most small businesses. The filing fee alone is $1738, and most attorneys will require an initial retainer of at least $10,000.

The above information is general information, and is not intended to provide legal advice to a specific situation. Bankruptcy laws can be very complicated. So if you or your business is in financial trouble, you should seek competent legal advice immediately. Feel free to call us for a no-cost consultation at 813-221-3759.

What to Expect at a Chapter 7 Bankruptcy 341 Trustee’s Meeting

The 341 Trustee’s Meeting of Creditors is the sole opportunity for the Bankruptcy Trustee, who represents your unsecured creditors, to seek and discover non-exempt assets. The Trustee’s job is to ask you questions and investigate your estate as appropriate in order to find any assets that might be liquidated for the benefit of the creditors. Your creditors are allowed to attend this meeting, but they rarely if ever do. The meeting is held in one of three informal hearing rooms at the Timberlake Center downtown at 501 Polk Street. There is convenient parking on Cass St. which is one block south and the cost is $4.00.

Approximately between two (2) to three (3) weeks before the 341 Trustee’s Meeting your most current documents (bank statements, paystubs, vehicle registrations, etc.) will be requested, these are the necessary documents that I am required to send to the Trustee within a certain amount of time prior to the hearing. It is very important to get whatever documents that are requested because if we do not get the documents to the Trustee in time, we risk the case being continued.

You should remember a couple things for the meeting. You will want to arrive on time and dress nice but modestly. I will meet you in the room. If you happen to get there before me and they call your case, advise them that I am on my way. You will need to bring your driver’s license and social security card to the hearing. If you do not have either of these items, please let my office know immediately so that we can properly advise you on what to do. If you show up at the meeting without either of these documents, the hearing will be rescheduled. Cell phones are not permitted in the building, and of course nor are weapons and other items that you would not normally bring into a courthouse.

You are not expected to bring any other documents to the meeting unless we specifically tell you otherwise. When the case is called, the Trustee will swear you in and tape-record your answers to her questions which mean that everything that you say is under oath, and under penalties of perjury. Federal law allows for criminal penalties should you misrepresent or conceal any assets or other aspects of your case. By this point, you and I have gone over everything and have identified any potential “red flags” or issues which I anticipate the Trustee may raise and question. You should answer all questions honestly and truthfully, but you are not required to volunteer any information or talk in a narrative format. Keep your answers clear and concise. I am not permitted to speak on your behalf at this hearing unless there is a legal basis to do so (i.e. a creditor shows up and gets out of line, or if the Trustee asks me to speak.)

In certain cases, random and otherwise, someone from the U.S. Trustee’s Office appears at the hearing, in addition to the regularly assigned Trustee for your case. If this happens, do not worry, as this does not necessarily mean that they are there for any reason other than a random audit. When this happens, you can expect additional questions from this person. Occasionally a creditor’s attorney may show up. Again, this does not mean that there is anything to worry about. I am your advocate and will monitor the proceedings and act on your behalf in all aspects of this hearing. These folks are also permitted to ask you questions and your answers remain under oath. It is unlikely that there will be a “courtroom drama” in your case, but on very rare occasions a creditor (usually small, private creditors) might show up to make trouble. Do not allow anyone to provoke you if this happens, and remain calm while I work with the Trustee to maintain order and protect your interests.

The entire hearing may last anywhere between 5-25 minutes, depending upon who the Trustee is, and how complex they feel the issues in your case are. You should anticipate the following standard questions:

Have you reviewed your bankruptcy petition prior to signing it?
Have you disclosed all of your assets and liabilities?
Were you explained, by me, the difference between chapter 7 and Chapter 13?
Do you have any personal injury cases or other reasons to sue anyone for money?
Real estate transactions, short sale or otherwise, in the last three years will be examined.
Are you getting a tax refund? Have you filed your most recent tax return? If you got a refund, what did you do with the money?
Have you transferred any assets in the last two years?
Do you have any personal injury cases or other reasons to sue anyone for money?

If the Trustee feels that you have assets which may be non-exempt by law, the Trustee will most likely order an appraiser to go to your home and appraise your personal assets, or she will require me to produce additional documents to her within a certain timeframe, or both. Again, at this point there should be no surprises as we have thoroughly gone over your assets and given you a good idea of what to expect. If there are non-exempt assets in the case, there are several options that you have which we can discuss at that time.

At the conclusion of the hearing, the Trustee will give you your original documents back and we are free to go. At that point, I will answer any questions that you may have, and we can briefly go over any issues that came up at the meeting. I will have a very good idea of what to expect by the end of the hearing. Assuming there are no issues at the hearing, or subsequent adversarial proceedings filed by your creditors, you will receive your bankruptcy discharge roughly two months after the hearing. The courts are extremely backed up right now, and some Trustees are taking several months to complete their files. Some reasons why a file might be kept open are:

Failure to complete the post-filing bankruptcy credit course (you should do this now if you have not already);
The Trustee often times will hold a file open if the debtor has not yet filed a tax return for the year;
If there are issues with non-exempt assets, appraisals, etc. this will keep a case open until resolved;
Creditors have a certain amount of time to file an objection to your discharge, but the reasons are limited.

All in all, the process should be relatively easy. You will be in a rather public room with many other folks all going through the same thing, from all walks of life. The hearing is the hardest part of the proceeding for the debtor, in my opinion… and once you are through this, the rest should be smooth sailing.

Chapter 7 Bankruptcy

“Don’ts”

Try to represent yourself without a bankruptcy attorney
Lie on your petition or to the trustee
Use your credit cards before filing the case (this means no cash advances or “convenience” checks, too!)
Conceal income or assets from the court
Pay back family members or friends before filing
Incur any new debt such as elective surgery or vacation loans
Not respond promptly to your attorney’s request for information or documents
Sell or transfer assets before filing, especially to a friend or family member
Cash out a retirement account or otherwise exempt account before filing
Make large ($600 or more) payments toward any one creditor right before filing
Lie about your residency or how long you have lived in Florida
Volunteer any “unasked for” information to the Trustee
Talk to your creditors when they call, except to tell them that you have retained a bankruptcy attorney
Except to keep your house if you are behind on the mortgage payments

“Do’s”

Disclose all of your assets including bank accounts
Honestly answer all questions on the attorney’s questionnaire and from the Trustee in court
Tell your attorney if you have ever owned a business, even if you didn’t make any money at it
Have six months paystubs and bank statements available, or a Profit & Loss for one year
Provide organized documents and information to your attorney
Continue paying your mortgage if you want to keep your house
Continue paying your car payment if you want to keep your car
List all of your creditors, even if they are family members
Tell your attorney about any foreclosures or repossessions that you may have had so that ALL of the debts may be listed and discharged
Stay in contact with your attorney and make sure that he has your current telephone number and email address
Show up on time to the 341 Meeting of Creditors, and be respectful and cooperative to the Trustee

Who needs to file for bankruptcy, why them?

Whenever a celebrity files a bankruptcy it usually becomes big news. The question is often, “if he makes so much money, why doesn’t he just pay his bills?” This question is simple enough, but the answer is not. This is because the question of “why” a celebrity, or any high-income or high-profile individual would seek federal bankruptcy protection is complex.

First of all, let’s start with the definition of a celebrity. While there is a presumption all public figures are dripping in unlimited money, this is usually not the case. A “celebrity” is defined by Oxford English Dictionary as “A famous person.” There are many types of high-profile individuals that we help on a daily basis. Some are “celebrities” in the entertainment,, sports or news media industry. Others are prominent business leaders in the financial, real estate and banking industries. We represent high ranking military officers as well as noted politicos. Small to mid-sized business owners are also our clients. But while they are all “famous people,” it is incorrect to assume that they are all “high-income.” I’ve had heirs of family fortunes come to me for a Chapter 13 filing when the only source of income is the meager remains of a family trust…insufficient to sustain a $7,000 monthly mortgage. Some of my “famous” clients have not earned any income in years. There are so many variables to what makes up a celebrity financial picture that it’s remarkable to think that the public perception of these folks is that they are all somehow living above the median income.

Secondly, let’s explain briefly the different chapters of bankruptcy. Real simple here…Chapter 7 bankruptcy can be for a person or for a business. It is a liquidation of all non-exempt assets. A business will usually close its doors after a Chapter 7. An individual gets a “fresh start” from his creditors but his income has to be below the median income for his state in order to meet the “Means Test.” To give you a ballpark, an individual’s gross annual income cannot exceed around $63,000. If an individual (or married couple) makes too much money and still needs court protection from creditors then they can file a Chapter 13 bankruptcy. A Chapter 13 is a debt repayment program enforced by the federal court and it is for folks that are trying to save their home, or needing to file a bankruptcy but cannot file a Chapter 7. There is a maximum debt amount for a Chapter 13. A business entity cannot file a Chapter 13. A Chapter 11 is a reorganization, and is commonly used by business entities. An individual can also file a Chapter 11 if he makes too much money or has too many assets to file a Chapter 7, or if his debt amount exceeds the jurisdictional limit for Chapter 13.

Why is this important? Because when a lot of folks think of the word “bankruptcy” they picture the guy from Monopoly with his pockets turned inside out. Or, when their thoughts are redirected, they might think of giant corporations like Radio Shack that are somehow “in bankruptcy.” The term “bankruptcy” has a nebulous meaning which is rarely if ever completely understood by the casual observer. As we start to see, the answer as to why someone, or something, would file a bankruptcy becomes more complicated, right?

Let’s discuss a classic scenario – a Chapter 7 bankruptcy for a high-profile celebrity. In fact, to make this article more interesting we will use an actual celebrity’s bankruptcy. Singer and reality-show star Toni Braxton filed a Chapter 7 bankruptcy in 2010, claiming debts in excess of $10 million. Creditors included everyone from pest control companies to Tiffany & Company, the Actor’s Guild and Neiman Marcus, as well as numerous individual creditors. This was her second bankruptcy (she also filed in 1998). During a 2012 interview with ABC news, Braxton blamed her money woes on business issues and an “addiction to house ware.” Gucci flatware and Faberge eggs were the culprits for Braxton’s overspending. Although her stated average monthly income at the time of filing was $58,550, her stated monthly expenses were $58,230 which left a few hundred dollars each month to pay her creditors. Almost half of Braxton’s monthly “budget” went to the IRS for back-due income taxes.

Braxton’s case is a perfect example of how to not manage one’s finances. Braxton grew up in Maryland as the daughter of a minister in a very conservative home. She was the eldest of six siblings. It is highly unlikely that her parents spent anywhere near $58,000 on monthly expenses. Even subtracting the large monthly income tax repayment in excess of $24,000, it’s hard to spend $34,000 on individual household needs each month. Many of my clients don’t even spend that much in a year. Although the court dockets from Braxton’s 1998 Chapter 7 bankruptcy are not readily available to me on PACER, my guess is that her income and expenses were a “wash” back then as well. It’s so easy to live beyond one’s means…no matter what the income level!

In addition, Braxton’s personal property was over the allowable exemptions so she had to pay $150,000 to the court-appointed trustee in order to keep her personal property. In a Chapter 7, this is called a “buy-back” and is not uncommon for us to see when a Debtor really wants to retain ownership of certain property. In Braxton’s case, this was likely a negotiated amount which would enable the celebrity to retain her creative intellectual property assets.

So what have we learned? I would summarize by bringing up “Parkingson’s Law.” This is a principle which has nothing to do with the horrible disease, but rather to do with time management. To quickly bring this to a point relevant for this article, the Law can be applied to state that an individual (or business) will always ensure that his expenses exceed his income – even as that income rises by whatever exponent! This is precisely why most heirs of tycoons and lottery winners are broke soon after receiving their distributions. This is not Fate. If you are aware of this Law of the Universe, you can take steps to avoid financial failure and the need for bankruptcy. If you consistently live below your income and not above it, you can avoid many headaches.

Next month, we will discuss another classic case of a business that needs protection under Chapter 11. My goal with these articles is to demystify the bankruptcy process. While I’ve had a lot of local captains of Tampa industry come through my law office doors, none of them has been the two-dimensional black & white “Monopoly Guy.” Some may elicit less sympathy than others with their extravagant indulgences, but they are all hard-working men and women who just need a little help through these tough times so that they can get back on their feet.

The above information is general information, and is not intended to provide legal advice to a specific situation. Feel free to call us for a no-cost consultation at 813-221-3759.

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