This is the first of three follow up blogs to our earlier publication Assignment for the Benefit of Creditors: General Overview. This blog explores ABC’s lack of statutory automatic stay and whether there is a functional and practical equivalent. The next blog will discuss whether a creditor may file a claim after the statutory 120-day deadline. The third blog will examine whether a creditor may file a claim of fraudulent transfer against the estate.
Once a creditor obtains a judgment against a debtor, attempting to garnish the funds, accounts and assets of that debtor held by a third party is an extremely efficient and often successful means for collecting on that judgment. Chapter 77, Florida Statutes, governs garnishment actions within the State of Florida and provides for two main types of garnishment, which have been discussed in previous Blog posts. These include a Writ of Garnishment issued to a bank or financial institution and a Continuing Writ of Garnishment issued to a debtor’s employer. Although a judgment creditor can utilize both forms of garnishment in attempting to collect on the judgment, under Section 222.11, Florida Statutes, a debtor has the right to make claimed exemptions to garnishment actions when the debtor is head of household. However, such claimed exemptions may not preclude a creditor’s attempt at garnishment in certain situations. This Blog post discusses when claimed exemptions for head of household may not apply to garnishment actions when the debtor is an independent contractor, the sole owner of a corporation or an owner of a single member LLC.
Previously we have explored: a) successful defenses to enforcement of personal guaranties, b) unsuccessful defenses to enforcement of personal guaranties, c) language requirements for personal guaranties, and lastly we will explore the obligation of an alleged guarantor when a personal guaranty is forged.
When a person or business loans money to another person or business, it is usually the case that the creditor will require a security interest in the assets of the debtor. Often times, especially these days given the state of the economy in the past five years, the debtor will default on the loan, usually by failing to repay the funds in accordance with the terms of the agreement. Since the creditor has a security interest in debtor’s personal property, the creditor can simply walk in one day and take everything to satisfy the loan right? Not quite…
There are numerous provisions built into the Bankruptcy Code which restrain a debtor from abusing the system by filing for bankruptcy over and over again. This includes periods of time in which filing is barred and an inability to obtain multiple discharges during a specified length of time, to name a few. Further, dismissal of a bankruptcy action may have a negative impact on the debtor and provide some relief for creditors in a future action.