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Florida Banking Law Blog Legal developments impacting banking, finance and loan enforcement in Florida

Tag Archives: Chapter 7


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

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

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

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

Eleventh Circuit Doubles Down on Lien Stripping

Posted in Uncategorized

When the Fourth Circuit handed down its opinion in the case of In re Davis,[1] which permitted lien stripping in “Chapter 20” proceedings, the stage was set for the Eleventh Circuit to expand debtor’s ability to escape from underwater junior mortgages.  Before the June 18th opinion in In re Scantling,[2] bankruptcy courts within the Eleventh… Continue Reading

Paying Attorney’s Fees Not Reason to File Chapter 13

Posted in Bankruptcy

Of the three most common chapters of the Bankruptcy Code, Chapter 7 offers an insolvent individual the freshest of starts; yet it is not without its pitfalls. Under Chapter 7 a debtor is not permitted to pay his attorney in installment payments, as a debtor may in Chapter 13. Thus, if a debtor does not… Continue Reading

BAPCPA Backfires: Unsecured Creditor’s Returns Decrease in Post-BAPCPA Landscape

Posted in Bankruptcy, Debt and Judgment Collection

A new study published by the American Bankruptcy Institute has found that the aggregate effect of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which was passed in part to improve creditor returns in consumer bankruptcy proceedings, has actually had the opposite effect since the Act’s sweeping changes to the consumer bankruptcy… Continue Reading

A Lesson from the Lumber Yard: Middle District of Florida Raises Particularity Requirement for Trustee Standing in § 549 Avoidance Actions

Posted in Bankruptcy, Commercial Lending

One of the primary roles of a Chapter 7 trustee is to ensure that the bankruptcy estate is preserved prior to liquidation. It is no wonder, then, that the Trustee’s avoidance powers are well defined by the Bankruptcy Code. Nevertheless, a string of recent cases out of the Middle District of Florida has illustrated that… Continue Reading

The Threat of Lien Stripping in “Chapter 20” Bankruptcy

Posted in Bankruptcy, Debt and Judgment Collection

As discussed in the McNeal posts below, junior mortgage holders are increasingly finding that their mortgages are worth less than the paper they were printed on. Especially troubling to lenders, are conflicting decisions that allow liens, which otherwise would have passed through a Chapter 7 bankruptcy, to be avoided in a subsequent Chapter 13 proceeding…. Continue Reading

First Challenge to McNeal Reveals Lien Stripping Challenges for Chapter 7 and 13 Debtors

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

Nearly five months after McNeal was decided by the Eleventh Circuit, a challenge has arisen within the Eastern District of New York, which has historically been fertile ground for bankruptcy law. In Wachovia Mortgage v. Smoot, the court rejected a debtor’s attempt to strip off a wholly unsecured junior mortgage in a Chapter 7 proceeding,… Continue Reading

Liquidating Debtor’s Personal Property to Satisfy Unsecured Claim

Posted in Bankruptcy

These days many lenders are stuck with unsecured claims against debtors who file Chapter 7 bankruptcy. Under certain circumstances, all is not lost, because a creditor may be able to liquidate a debtor’s personal property to satisfy its unsecured claim. In a recent case out of the Ninth Circuit, a mother guaranteed her son’s $13… Continue Reading

Pending Re-Hearing, McNeal is Stripping Away

Posted in Bankruptcy

Recently, in an article published in the American Bankruptcy Institute, we dissected the recent 11th Circuit Court of Appeals decision in the case of In re McNeal. The decision was short, only two pages in fact, but in it the court drastically changed the rights of upside-down debtors with junior mortgages who have filed for… Continue Reading