With home ownership and rental costs on the increase, many people are choosing alternatives such as residing in a mobile home, RV or houseboat. When it comes to filing for bankruptcy we always need to analyze if your property is exempt from the trustee. Ordinarily anything recreational such as an RV, boat, jetski, etc. would be considered a luxury item that would not be exempt.
Florida law has established certain criteria for determining if an RV or boat qualifies as homestead. There is a six-prong test used by the courts to determine the abode is exempt:
Debtor’s intent to make a non-traditional abode his homestead.
Whether the debtor has no other residence.
Whether evidence establishes continuous habitation. Are you going back and forth between a house up north then coming back and using the RV temporarily or is it a permanent home?
Whether the debtor maintains a possessory right associated with the land establishing a physical presence. For example, renting a lot to keep the RV parked.
Whether the non-traditional abode has been physically maintained to allow long-term habitation verses mobility. Is the RV taken on vacations or is it parked and set up with utilities.?
Whether the physical configuration of the abode permits habilitation. If it is set up for full-time use for example, it has a bathroom, kitchen, etc.
Florida has a specific exemption for mobile homes. Please reach out if there is any question on whether your property is exempt.
It is quite a bit of work for both the client and our office to make sure we have all the proper documentation to analyze your case and prepare the bankruptcy petition. The bankruptcy petition is not a “simple” or “basic” form. Clients are surprised to learn that the petition is between 50-60 pages. It has to be filled out accurately and completely.
There is a burden on both you as the client, as well as myself, as the attorney to do our due diligence to make sure we do not miss any information. We need six months of payroll, or if self-employed, you would need to provide six months of profit and loss statements by month; two years of income tax returns; two years of corporate returns if you own a business; vehicle titles and/or car registrations; identification, three months minimum of all bank statements for every account, including retirement accounts such as IRAs, ESOP plans, FRS plans if working for the government.
If you are on social security we need the social security benefits letter confirming your monthly payment. The same is true for pensions, annuities, or veterans benefits to confirm the amount of your monthly payment. Additional information that we may need to review are: a martial settlement agreement if you have been divorced within the last two years, payoff statements for your mortgage and vehicles, paperwork for any lawsuits, deeds to any real property, trust documents, HUD or bill of sale for any home or vehicle sales or trade ins for the last two years.
We also need information regarding the value of all of your assets and we go through questions also to make sure you are an eligible bankruptcy candidate. That is why people hire an attorney. It can definitely be a daunting task without help. There are many aspects of analysis to evaluate if you have non-exempt property, is there anything the trustee could make you pay back such as insider payments to family members, or friends. Having legal guidance will prove to be valuable and make the process go much more smoothly.
A 2004 exam is something you do not want to happen in your case. This is not to be confused with a 341 hearing. A 341 hearing is a 10–15 minute hearing that happens in every bankruptcy case where the trustee asks you questions and clarifies information listed in your petition. A 2004 exam is more like a deposition where any interested party can compel your testimony (deposition) or force production of additional documents.
Typically, this is something that would be initiated by the United States Trustee’s office/Department of Justice in cases where they suspect a debtor has not filed their case in good faith, is hiding assets or income, or did not properly disclose information on their bankruptcy schedules. Once the additional information, such as bank statements, are obtained, you will likely be examined under oath.
The scope is broad. It is very important to always disclose all information to your attorney so they can properly advise you on whether filing bankruptcy is a good course of action or if the timing or circumstances of the filing are ideal. You do not want your attorney surprised with facts after your case is filed. Unlike regular civil state court actions, if the plaintiff no longer wants to pursue their case, they can just dismiss it.
You cannot “dismiss” or get out of a Chapter 7 bankruptcy once it is filed. Once it is filed, its filed and there is no turning back. Your then required to participate. If there is a finding of fraud or lack of good faith, it usually results in one of the following: 1) converting your case to a Chapter 13; 2) paying more money to the bankruptcy estate; 3) being permanently ineligible for a discharge; or 4) having your case dismissed where you are barred from refiling your case for a designated period of time.
While these situations are not routine, every case should be filed by your attorney with the attention to detail required as if it is getting audited. That is why communication and disclosure are so essential between client and attorney.
If you have been living in Florida for over 2 years, the homestead exemption can be used as long as there is less than $189,050 in equity for each person filing. For example, if there are two married people filing a joint bankruptcy, then you can double the exemption amounts so that amount would be less than $371,100 in equity you would be allowed to protect. You can have unlimited equity in your home if you have owned it for 1215 days prior to filing your petition.
This includes another home if you have bought and sold another homestead property within those 1215 days. Typically, this is not an issue since the home equity is usually lower than the allowed statutory amount. If you have moved from another state in the last 2 years, we cannot use the Florida exemptions and would have to perform an analysis on which exemptions apply. Some states allow non-residents to use their exemptions. Other states will require non-residents to use federal exemptions. Most states would not allow you to exempt property in Florida after you have moved from another state.
You must also be residing in your home to be able to claim homestead exemption. The homestead exemption would not protect or apply to an investment property or a property where you are on the deed but are not living in the residence. There are exceptions if you are away from your home temporarily but have full intention of returning. Some examples are being away for medical treatment or being active duty in the military. As long as you intend to return to your home and you are not renting out the property, it can continue to be exempt as your homestead.
Many borrowers are surprised to learn that SBA loans are a dischargeable debt in a bankruptcy even though they are government backed loans unlike a lot of tax debt or federally backed student loans which are not. During the course of the pandemic many businesses took out SBA loans to help keep their businesses afloat.
Others took out loans just before the pandemic and despite efforts to sustain their businesses have been unable to do so. Billions of dollars in loans have been taken out by small business owners. Many type of businesses from gyms to restaurants have suffered decreased business due to COVID, increased costs and supply shortages resulting in the closure of those businesses.
The good news is, you do have the ability to start over again either by finding other employment or starting a new business without having to be saddled with the SBA loan for the rest of your life.
Essentially the government has the same right as any other unsecured creditor. Your business account and most likely your personal bank accounts can be garnished. Most business loans are also personally guaranteed which means you are personally responsible for the debt in addition to your business.
If the loan is secured by collateral, that collateral could potentially be taken if the loan is not paid. Depending on the terms of the loan, there might be a lien on your home. Filing for bankruptcy can be your solution to wipe the slate clean.
For more information and a “Free Initial Phone Consultation” about SBA loans and bankruptcy concerns such as chapter 7, chapter 13, debt settlement and more… Please contact our office today! 813-463-8000