Reaffirmation Agreements in Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, you will either retain or surrender your secured property. You will probably have to sign a reaffirmation agreement if you are going to keep your property, for example, your vehicle and your home. The reaffirmation agreement basically will reaffirm the amount remaining on the loan, interest rate and the monthly payments. Usually the agreement will be that you continue to make the same payments on the balance due. If you owe a significant amount more than the value of the collateral, sometimes you can negotiate with the creditor to reduce the balance due, monthly payments, and/or interest charged.

If you do not sign the reaffirmation agreement but continue to pay the debt, then it is possible that the creditor will repossess the collateral, although it really depends upon the benefit to the creditor of doing so. For instance, if the vehicle is worth much less than the loan, then it is to the creditor's benefit to continue to allow you to make payments. The bankruptcy discharges the debt unless you sign the reaffirmation agreement. Therefore, if you do not sign the agreement even if you say you will reaffirm it in the bankruptcy petition and you stop paying the debt, the creditor can pick up the collateral; however, it cannot come after you for the deficiency. That is why the creditor wants a signed reaffirmation agreement.

If you have a secured debt and an unsecured debt, i.e., a credit card, with the same lender, then often that lender will require you to reaffirm both the secured and unsecured debt to keep the collateral. For example, you want to keep your vehicle as you have equity in it of $10,000.00 so you will want to sign the reaffirmation agreement with the lender; however, you also have a credit card with the same lender with a balance due of $10,000.00. The lender will require that to keep your vehicle, you must sign a reaffirmation agreement that you will pay the balance due on the vehicle as well as the $10,000.00 credit card debt. If you do not sign the agreement, then it is to the creditor's benefit to repossess your vehicle.

By Lynette Silon-Laguna Google

Use of Annuities to Improve How Alimony Works

All Family Law Group, P.A., is collaborating with The Planning Partners* to help our divorcing clients to improve their chances for an alimony settlement beneficial to both parties.  Annuity contracts can provide a combination of either more benefits for the same money or at less cost for the same benefits and they can deal with most contingencies alimony agreements include.

Some of the benefits of having an annuity as opposed to providing alimony payments are as follows:

• The receiving spouse has a certainty of payment as a highly regulated insurance or annuity company provides the payments.  
• There is no necessity of having to motion the court for enforcement of the alimony provisions of a Final Judgment if the ordered or agreed upon payments are not made.
• The payor does not have to make payments or have the payments deducted from his or her income through an income deduction order.
•  If the payor's income goes down because of reduced income from employment, illness, or he or she retires or dies, the annuity payments will remain the same for the former spouse and the payor will not have to seek a reduction modification through the court of the alimony he or she is paying.  Alimony normally terminates upon the death of the payor.  
• Annuities allow the opportunity to obtain more benefits for the same amount of money or to save money to provide the same benefits agreed upon.  This occurs because insurance and annuity contracts provide for interest and other benefits that creates amounts in addition to the principal payment to be paid to the receiving spouse.
• The spouse may receive income for terms of 5, 10, or 20 years, for example, or income for life.  However, the amount received will be more the shorter the term of payment.
• Annuity contracts are exempt from creditors in the event of a bankruptcy, which means that all of the funds survive a bankruptcy.
• Income taxes are deferred on the build-up of interest income in a deferred indexed annuity, including the new 3.8% Medicare Tax on passive income, if applicable.

Annuities are divided between "immediate" annuities and "deferred" annuities. The immediate annuities start paying an income right away. Deferred annuities allow the growth of principal deposits inside the contract. In the future, the deferred annuities become like immediate annuities providing income from the higher Retirement Fund balance that has grown tax deferred over the years.

There is so much more information to be had on annuities and their benefits in a divorce where alimony or other assets are involved. Call us at 813-672-1900 or contact us by email, if you would like more information on how annuities can work for you if you are going through a divorce or otherwise.  

*To offer insurance and annuity products I have arranged a strategic relationship with two very experienced estate planners. Rick D. Miller, CLU, ChFC, RHU and Scott F. Barnett, J.D., LL.M. (Taxation) have a combined 70 years of experience in the field.  They have organized THE PLANNING PARTNERS to offer professional level services to individuals, families, and closely held businesses.  Rick and Scott have taken the Collaborative Law Training Seminar and Scott is now a Certified Divorce Financial Analyst. 

By Lynette Silon-Laguna

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Is an Income Deduction Order transferable to another employer?

Question from AVVO.com:

She quit her last job as a paralegal for a personal injury lawyer to get out of the Income Withholding order. The income withholding order was just done couple months ago with the employers name on it. Can I send that to the new employer even if there name is not on it. She is working for another personal injury lawyer. I don't have much money since I have to take care of whats important first for my daughter which is 3 to even pay for a lawyer to set things right. In the divorce its states she is to pay for health insurance, half of the medical expense and half daycare.

My Answer:

Even though it has the specific name of her prior employer, there is language in the Order which will make it applicable to future employers. You will have to send a copy of the Income Deduction Order to her new employer and send it certified mail/return receipt requested so that you have proof that it was received. It also must be a Certified copy which you can obtain from the clerk. 

You also mentioned that she is to pay for health insurance, half of the medical expenses and half of the daycare expense. I assume this is in your marital settlement agreement and/or final judgment that she is to do so. If she is not doing this, then your only option is to proceed with a motion to enforce the final judgment and schedule a hearing on it. A mediation may be required prior to a hearing. Also, if you attend a hearing you will need to provide proof as to the health insurance, medical and daycare expenses that you have paid and of which she should have paid all or half.

By Lynette Silon-Laguna
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What if a house that my wife and I own is not included in the divorce?

When people are married and they purchase a house together, the house is automatically titled as tenants in the entirety, which means that each party owns the entire house and this is referred to as an undivided interest in the property.  Both have the right to occupy it and use the property and they each have a right of survivorship, so if one of the parties dies then the property would automatically pass in its whole to the other party without the necessity of probate.  In addition, creditors of one spouse cannot force a sale of the property to collect a debt.  Note also that if the house is homestead the creditors cannot force a sale of the property.

When the parties obtain a divorce, normally the marital settlement agreement will include provisions on how the house is to be distributed between the parties and who will be responsible for the mortgage or that the mortgage will be refinanced, etc..  If the property is not included in the marital settlement agreement and the divorce is final, the the parties will continue to own the house together; however, it will become owned as tenancy in common.  This is a type of ownership where each party owns a share of the whole of the property.  In this case, each spouse would own one half of it and this half can be sold to another or if one of the parties dies then that party's one half share will be subject to inheritance laws.  In addition, each party will have the right to full access to occupy the home.  If the parties have a mortgage on the property, then each will continue to be responsible for payment on it and if one party does not pay their share of the mortgage, the other will be responsible for paying it.  There will be no recourse in the divorce court after the marriage is finalized if the parties do not include it in the divorce.

Therefore, in short, if you own a home and you are married, unless you provide for it in the divorce, then both the wife and husband will continue to own it as tenants in common as explained in the paragraph above.

By Lynette Silon-Laguna

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Question: I bought my house 5 mos before I got married, now 18 years later I want to get a divorce, is my husband entitled to 1/2 of house -the house is payed for, and I am divorcing him because he is an alcoholic and spends all his money on drinking - I always bought everything that was needed for the house?

In a divorce, one of the more difficult areas for divorce attorneys may be determining the distribution of the parties' assets.  First it must be determined what assets are non-marital.  Normally, if an asset is purchased prior to the marriage then it would be considered premarital property and the party who purchased it prior to the marriage will receive it, except as stated in Fla. Statute § 61.075 (6)(a)1.b.: "The enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both."

In this case, the purchase of a house prior to marriage would make it non-marital, unless the value and appreciation of the house has resulted from either the contribution or expenditure of marital funds.  For example, the payment of the mortgage from marital funds would mean that the increase in value due to the payments would be marital and subject to division in the divorce.  Fla. Statute § 61.075(6)(a)1.a. defines marital assets and liabilities as those acquired or incurred during the marriage, individually by either spouse or the spouses jointly. So any income, assets that you acquired individually during the marriage are considered marital and likewise for your husband.  Furthermore, if marital funds are used to enhance the value of the house, then the appreciated value would be subject to division.  In addition, if the value of the property increases due to the efforts (i.e. physical) of either party during the marriage than that increase is subject to division.  Note that it is only the appreciation of value which is subject to distribution.  The remainder of the equity in the home would remain with the party who purchased the home prior to marriage.

The court in determining distribution of marital assets and debts begins with the premise that they should be equally divided between the parties; however, the court also looks at the factors listed in Fla. Statute § 61.075(1) to determine if an unequal distribution is required.  You say in your question that you have always bought everything that was needed for the house.  Therefore, it is necessary to  determine whether one of the factors in § 61.075(1) will apply under your circumstances, so that you may obtain a larger division of the marital assets.  It would be beneficial to contact a knowledgeable divorce attorney who can help you get the best division of your assets considering all of the circumstances involved.

Visit our website for more information on property and debt distribution in divorce.

By Lynette Silon-Laguna

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Question: Does the victim of domestic violence win custody of a child?

The answer to the question is that it depends.  First, you need to know that there is civil domestic violence and there is criminal domestic violence and these are treated differently, so the answer would depend on which it is in your case.

 

If there is evidence of civil domestic violence or child abuse or there is an injunction for protection against domestic violence determined in a civil court, then this may be considered by the court as detrimental to the child.  It is one of the factors listed in Fla. Statute §61.13(3), which the court looks at when determining what is in the best interest of the child when establishing a parenting plan, including the timesharing of the children. What is in the best interests of the child is the criteria the court uses in all decisions regarding children.

   

If a parent has been convicted of a misdemeanor of the first degree or higher as defined in Fla. Statute §741.28 and §775, or meets the criteria of §39.806(1)(d), then under Fla. Statute §61.13(2)(c)2) this creates a rebuttable presumption of detriment to the child.  The convicted parent may rebut this presumption; however, unless this presumption is rebutted the court may not give the convicted parent shared parental responsibility, which includes timesharing or any decisions made regarding the child.   If this were to occur, then the other parent would have sole parental responsibility of the child and make all decisions regarding him or her.  The convicted parent may get some timesharing as the court determines would best protect from further harm the child or abused spouse.

 

In Florida, it is public policy that there is shared parental responsibility for the children by both of the parents.  When there is separation or divorce each is encouraged to share in the rights and responsibilities of having children.  There is no presumption for a certain timesharing plan or for or against the mother or father.  If the parents cannot agree on a parenting plan then it will be up to the court to determine the best parenting plan based upon the child’s best interest using the factors of  Fla. Statute §61.13(3).

 

By Lynette Silon-Laguna

 

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The Divorce Process in a Nutshell

The length and what is involved in the divorce process depends upon the parties involved.  Furthermore, if you or your husband or wife is in the military, there may be issues involved such as military retirement, special residency requirements, requirements of service on an active duty spouse. There are those who can agree on a settlement of their issues and so obtaining a divorce is uncontested. Sometimes the parties can enter into an agreement and file it with the petition for divorce.  Or in the alternative, he or she can file the petition with the court and serve the other party with it by process server, who will have 20 days to respond.  Furthermore, if the other party is agreeable he or she can accept service of the petition, rather than being served by a process server.  Upon filing the petition, the court will order that the parties attend a Case Management Conference which is scheduled for 90 days after the petition is filed.  This is a hearing which is essentially a status conference, so that the judge knows what is happening in a case and what needs to be done in it.

Hammering out a divorce agreement!

Even if the parties can come to an agreement, there are still forms which must be completed, some of which are filed with the petition and some are filed prior to the final hearing.  There is mandatory disclosure which is required of both parties; however, they can agree to waive it.  It is required that each party file a Financial Affidavit and this requirement cannot be waived.  If there are children involved, then it is mandatory that a Parenting Plan signed by the parents and a Child Support Guidelines Worksheet be filed.  Child support is mandatory because family law looks at it as it is for the child and cannot be waived by the parents.  

If a marital settlement agreement is not filed with the petition, then the husband and wife will have to come to an agreement thereafter and file it with the court.  If they have attorneys helping them with their divorce, then the attorneys can put the agreement together and the parties will sign it.  If an agreement is reached and  filed, then the parties can proceed to an uncontested final hearing or the final hearing can occur at the Case Management Conference.  At that time, the judge in the case will enter a final judgment which will incorporate all of the terms in the agreement.  It will thereafter be enforceable by the court.

If the parties cannot come to an agreement, then in Hillsborough County, mediation is required prior to the case being heard by the judge.  Mediation can be either through the county or private mediation.  Private mediation may be more costly; however, it can be scheduled earlier in the process, as it usually takes two to three months to schedule a mediation with the county.  Another plus to private mediation is that there is no time limit on the length of the mediation, whereas, county mediation is limited to two hours.  If the case is uncomplicated, then county mediation may be sufficient; however, for more complicated cases it is worth the additional expense to attend private mediation as the parties have more time to settle and are more likely to settle some or all of the issues .  If an agreement is reached, the mediator will prepare the agreement for the parties to sign.  It will then be filed with the court and a final uncontested  hearing will be scheduled.  The final judgment will incorporate the terms of the mediation agreement.

A trial date will be scheduled for resolution of all or the remaining issues if the parties cannot come to an agreement at mediation. This will be a contested divorce action. The parties may also need to attend a temporary relief hearing if there are issues such as child support, child custody and timesharing, alimony and property division, which need immediate resolution.  Trial dates may be scheduled for three months or more after mediation.  The parties will attend the trial with their attorneys and each will present testimony and evidence to support their position.  The judge will take it into consideration and he or she will come to a decision at the trial or more often weeks after the trial date.

It is very costly both financially and emotionally to prepare for and attend trial.  Furthermore, neither party may be happy with the court’s decision.  Therefore, if at all possible, it is advisable to come to an agreement which requires that the parties compromise and understand that it may not be possible to receive everything requested.

By Lynette Silon-Laguna

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UPDATE: Alimony Reform 2013

On May 3rd, the 2013 Legislative Session ended without any reform to alimony laws. Governor Rick Scott vetoed SB718 and announced his decision in a letter dated May 1, 2013, to the Senate President, Don Gaetz. In the letter, Governor Scott concluded that "I cannot support this legislation because it applies retroactively and thus tampers with the settled economic expectations of many Floridians who have experienced divorce." The governor also noted that existing Florida law provides for alimony to be adjusted under proper circumstances. For a full look at May 1, 2013, letter by Governor Scott, click here.

See the April 4, 2013 blog:  Proposed Alimony Reform 2013

Article By:  Lynette Silon-Laguna Google+

Proposed Alimony Reform 2013

Alimony Reform Bill, SB 718 was passed 29 to 11 by the Florida Senate on April 4, 2013. It will move to the House and if passed, it will likely be signed into law by the Governor.  What follows is a summary of the present law enacted in 2010 and highlights of the changes proposed in the alimony reform bill.

Alimony Law Effective July 1, 2010:

The current legislation designates and describes the following types of alimony:

1. Bridge the Gap Alimony
2. Rehabilitative Alimony
3. Durational Alimony
4. Permanent Periodic Alimony
5. Lump Sum Alimony
6. Combination of the above

It also names and defines the periods of a marriage as follows from the date of marriage through the date the petition for divorce is filed:

1 - 7 years - short term
8 - 17 years - moderate term
Over 18 years - long term

Alimony requires a finding that the recipient spouse has a need for the alimony and the payor spouse has the ability to pay alimony. Therefore, the Court cannot award alimony if there is a finding that there is no need by the recipient spouse for alimony. Furthermore, the Court cannot award alimony even if there is finding that there is need by the recipient spouse, if the payor spouse does not have the ability to pay it. Florida Statues 61.08 (2) provides the factors for the court to consider when determining the type and the amount of alimony it is to award.

A short term marriage may require bridge the gap alimony, which term of payment may not exceed two years. A moderate term marriage may require either rehabilitative or durational alimony. Rehabilitative alimony requires a defined rehabilitative plan which can be terminated or modified if there is non-compliance or completion of the plan. Durational alimony can be awarded during a short term or moderate term marriage and cannot exceed the length of the marriage under any circumstances.  Permanent periodic alimony can be awarded monthly for the life of the payee. It may be awarded after a long term marriage and it may be awarded after a moderate marriage if the factors in Florida Statutes 61.08 (2) are applicable. It may also be awarded after a short term marriage if exceptional circumstances such as total permanent disability occurred during the marriage and the spouse can no longer work. Lump sum alimony is infrequently ordered and may be ordered at any length of marriage. It is likely used as an equalizing payment in the distribution of assets.

All types of alimony terminate upon the death of the payee. Furthermore, all types of alimony may be modified if a substantial change in circumstances occurs. The length of durational alimony may be modified only upon exceptional circumstances and it cannot exceed the length of the marriage. The parties to a divorce may agree to non-modifiable alimony. If so, then the Court cannot modify it. Furthermore, the Court does not have the authority to order non-modifiable alimony.

　

Highlights of the Alimony Reform Bill SB 718

In the Alimony Reform Bill, the type and length of marriage, as measured from the date of marriage through the date the petition for divorce is filed, has been proposed as follows:

1 - 11 years -  short-term
12 - 19 years - mid-term
20 + years - long-term

A major change in the proposed law is that permanent alimony is eliminated.  Furthermore, durational alimony cannot exceed 50 percent of the length of the marriage, except for exceptional circumstances, i.e., the spouse became disabled during the marriage and is unable to work.  It will eliminate the standard of living factor the Court considers when determining the amount of alimony to order. 

Other highlights of the proposed change consist of not including, when calculating the amount of alimony, sources of income that are acquired outside of the marriage and which were not relied upon during the marriage.  This contradicts the present law as currently these funds are used in the calculation of the alimony award. 

In addition there are limits on how much alimony can be paid based upon the length of the marriage.  In a short term marriage, the alimony award may not exceed 25 percent of the obligor's gross monthly income as calculated in Florida Statute 61.30(2)(a).  Whereas a mid-term marriage limit is 35 percent and a long-term marriage limit is 38 percent of the obligor's gross monthly income. 

There continues to be the ability to modify or terminate alimony upon a showing of a substantial change in circumstances; however, if modified, the modification must comply with the time limits and percentage restrictions above.  Furthermore, death or remarriage of the party receiving alimony will terminate it as well as it will automatically terminate upon the obligor's reaching the normal age of retirement for Social Security retirement benefits. 

Under the present law, the Court may not order that alimony be non-modifiable; however, the parties can agree to alimony being non-modifiable in their marital settlement agreements.  If the parties do agree to this then the Court cannot order a modification of alimony.  In the proposed legislation alimony cannot be non-modifiable.  Furthermore, if this legislation passes it's provisions will be retroactive.  That is, even those who have agreed to non-modifiable alimony would be able to modify their alimony obligations.  In fact, all those who are presently required to pay alimony would be able to modify their alimony obligations to comply with the new legislation and to do so would not require a substantial change of circumstances.

The proposed revisions to the current alimony law would be sweeping and wide reaching. If they are enacted, some of the provisions are subject to appeal of their constitutionality, particularly the provision that agreements between parties for non-modifiable alimony may be modified by the new legislation. 

Article By:  Lynette Silon-Laguna Google+