Header graphic for print
Florida Banking Law Blog Legal developments impacting banking, finance and loan enforcement in Florida

Category Archives: Bankruptcy

Subscribe to Bankruptcy RSS Feed


Posted in Bankruptcy

Trustees, creditors and other interested parties are responsible for reviewing a chapter 13 Debtor’s plan and schedules to determine whether the Debtor’s plan complies with the Bankruptcy Code. This point is illustrated in a recent case out of the Middle District of Florida, Bankruptcy Court. In In re Ford, the chapter 13 Debtor’s schedules reflected… Continue Reading

Ninth Circuit Allows “Chapter 20” Debtors to Lien Strip

Posted in Bankruptcy

In a tough opinion for creditors, the Ninth Circuit has ruled that “Chapter 20” debtors can still take advantage of lien stripping, the bankruptcy tool that effectively bars wholly unsecured junior lien holders from foreclosing on a debtor’s property. Chapter 20 is a colloquial term used for the practice of filing for Chapter 13 bankruptcy… Continue Reading

Southern District Revises Mortgage Modification Mediation Program

Posted in Bankruptcy

Creditors take note; the Southern District of Florida Bankruptcy Court recently revised procedures for its Mortgage Modification Mediation Program. The new changes relate to individual debtors who are unable to settle at mediation with the lender for real property in which the debtor has an interest or is obligated on a mortgage or promissory note…. Continue Reading


Posted in Bankruptcy

As mentioned in previous posts, filing an involuntary bankruptcy petition could subject a petitioning creditor to extensive attorneys’ fees and costs. In the final installment of the “Involuntary Bankruptcy 101” series, this post reviews a recent Eleventh Circuit decision posing major pitfalls for creditors hoping to collect on their debts. Section 303(i)(1) of the Bankruptcy… Continue Reading


Posted in Bankruptcy

In the right circumstances, creditors can utilize involuntary bankruptcy a tool for collecting on its debts. This post addresses the process a creditor must follow after filing an involuntary petition under chapter 7 or 11 of the Bankruptcy Code. Before a creditor can initiate this procedure, it is important to understand the basic requirements of… Continue Reading


Posted in Bankruptcy

Involuntary bankruptcy can be a useful tool for creditors.  Filing an involuntary bankruptcy petition against a debtor can help actualize the value of a debtor’s assets. The following are some basic requirements when considering filing an involuntary bankruptcy petition. Involuntary petitions may only be filed under chapters 7 and 11 of the Bankruptcy Code. A… Continue Reading

Stripping Off Junior Mortgages Now Barred in Chapter 7 Bankruptcy Cases

Posted in Bankruptcy

The Supreme Court has unanimously decided that debtors are prohibited from stripping off junior mortgage liens in Chapter 7 bankruptcy cases. Lien stripping is where a bankruptcy court relieves a debtor of his second mortgage because the value of the property is less than the balance of the first mortgage. The Court’s decision in Bank… Continue Reading

Deepening Insolvency: A Viable Theory of Damages in the Eleventh Circuit

Posted in Bankruptcy

“Deepening Insolvency” is a developing theory of law in cases brought by bankruptcy trustees, litigation trust trustees, receivers, reorganized debtors, or some other plaintiff “standing in the shoes” of an insolvent company. Essentially, the deepening insolvency theory is premised on allegations that the defendants (directors, officers, law firms, accounting firms, or any combination of the… Continue Reading

Holder of Equity Interest in Bankrupt Company not Entitled to Become Shareholder in Reorganized Entity

Posted in Bankruptcy

A recent Eleventh Circuit case examines equity shareholders’ role (or lack thereof) in a reorganized entity.  Vision-Park Properties owned an equity share of Seaside Engineering & Surveying, Inc.  Seaside filed for Chapter 11 protection in 2011, and shortly thereafter proposed to reorganize and continue operations as Gulf Atlantic, LLC. According to the proposed Chapter 11… Continue Reading

Two Sides of the Same Coin: Chapter 11 Reform in the House and Senate

Posted in Bankruptcy

As we discussed in our previous post, in the wake of the financial crisis that began with large financial institutions failing in 2008, practitioners and politicians alike have been calling for Bankruptcy Code reform.  Both the U.S. House and Senate have proposed solutions, yet with the recent midterm election results, the future of these two… Continue Reading

The Lien Stripping Saga Continues in Chapter 7 Bankruptcy Cases

Posted in Bankruptcy

In the latest chapter of “lien stripping,” the Honorable Judge Erik P. Kimball of the Southern District of Florida, Bankruptcy Court, recently grappled with the issue of whether a debtor can strip a completely unsecured junior mortgage on abandoned property.  In Bodensiek, a creditor held two mortgages on the debtor’s homestead property.  However, the minimal… Continue Reading

Commission Calls for Overhaul of Chapter 11 Bankruptcy Code

Posted in Bankruptcy

On Monday, December 8, 2014, the American Bankruptcy Institute’s Chapter 11 Reform Commission, which is tasked with recommending reforms to the nearly 40-year-old bankruptcy regime, released a report which found that the current Chapter 11 system has fallen behind the times.  The Commission’s report urges Congress to provide troubled businesses with a better chance at… Continue Reading

Chapter 13 Debtors Choosing to Retain Residential Property and Not Claim Homestead Are Not Entitled to Wildcard Exemption

Posted in Bankruptcy

In Florida, it is well settled that a Chapter 7 debtor who does not claim or receive the benefit of the homestead exemption on his bankruptcy schedules is entitled to claim the “wildcard” exemption pursuant to Fla. Stat. § 222.25(4).  The “wildcard” exemption provides that a debtor can exempt up to $4,000 in personal property… Continue Reading

Ms. McNeal Goes to Washington

Posted in Bankruptcy

For those of you who have followed our blog since its inception, you will know that one of our most discussed opinions is that of In re McNeal, in which the Eleventh Circuit held that a debtor may strip a wholly unsecured junior mortgage in a Chapter 7 proceeding.  Although the decision is anathema to… Continue Reading

Judgment Debtor in Garnishment Action Has No Vested Right to Compel Strict Compliance With Service of Process Requirements on Garnishee

Posted in Bankruptcy

Garnishments are one of the most effective tools at a creditor’s disposal for collection purposes.  The rules and requirements for initiating a garnishment action are laid out in Chapter 77, Florida Statutes.  Garnishment actions are generally ancillary to the main action brought by a creditor to establish a debt.  However, Garnishment proceedings are still treated… Continue Reading

Recent Decision Creates Split in Middle District Regarding Whether 11 U.S.C. § 707(b)(2) Applies to Cases Converted to Chapter 7

Posted in Bankruptcy

In the last 2 years, three judges of the Middle District of Florida (Judges Funk, Delano and Williamson) have each issued opinions finding 11 U.S.C. § 707(b)(2) inapplicable in cases converted from a Chapter 13 to a Chapter 7.  These Courts have based their findings on the “plain language” of the provision. 11 U.S.C. §… Continue Reading

Bankruptcy Trustee Lacks Standing to Bring Derivative Claim Against Bank’s Directors After Bank’s Closure and Receivership by FDIC

Posted in Bankruptcy, FDIC Related Issues

In April of 2010, the Office of the Comptroller of the Currency closed First National Bank Myrtle Beach, S.C., a wholly-owned subsidiary of Beach First National Bancshares, a bank holding company, and named the FDIC as its receiver.  As a consequence of the bank’s failure, Bancshares filed for Chapter 7 bankruptcy.  Shortly thereafter, the Trustee… Continue Reading

Detroit Bankruptcy Update: Settlements and Feasibility

Posted in Bankruptcy, Debt and Judgment Collection

In Detroit’s ongoing restructuring effort, the city cleared a major hurdle last week by settling with its largest adversary, Syncora Guarantee, a New York based bond insurer.  The settlement was negotiated just a week into the bankruptcy trial and was so significant that Judge Steven Rhodes adjourned the trial for two days to allow the… Continue Reading

Eleventh Circuit Concludes That Filing a Proof of Claim After the Expiration of Statute of Limitations On the Ability to Collect a Debt Violates the FDCPA

Posted in Bankruptcy, Commercial Lending

Recently, the Eleventh Circuit Court of Appeals (the “Court”) ruled whether filing a proof of claim in a chapter 13 bankruptcy case after the statute of limitations on the ability to collect the debt expires violates the FDCPA.  In Crawford v. LVNV Funding, LLC, et. al., Debtor was indebted to a furniture company.  A third-party… Continue Reading

Non-Dischargeable Tax Debt Not Special Class of Unsecured Creditors

Posted in Bankruptcy, Debt and Judgment Collection

In numerous previous posts, we have noted that the purpose of the Bankruptcy Code is to help the “honest but unfortunate debtor.”  Like gerrymandering, certain “creative” debtors have attempted to classify their non-dischargeable debt as a separate, special class of unsecured creditors.  In a recent case out of the Eighth Circuit, In re Copeland, the… Continue Reading

Discharging the Brunner Test: Student Loan Debt in Bankruptcy

Posted in Bankruptcy

Twenty-seven years ago the Second Circuit was faced with a debtor who proposed to use the Bankruptcy Code to avoid her student loan debt – only five months after graduation.  The Second Circuit came down harshly on Ms. Brunner and established an “undue hardship” test, which few debtors have passed since the decision in the… Continue Reading