Judgment interest on the rise.

During the last two quarters, there has been an increase in the Judgment interest rate nationwide. This is of course great for the creditor, not so good for the debtors.

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Can a Civil Judgment be Discharged in Bankruptcy?

Filing Bankruptcy in Florida will dissolve your personal liability for the majority types of Civil Judgments you can receive. However, there are of course exceptions. 

What types of Civil Judgments can be Discharged through Bankruptcy?

Whether or not your Civil Judgment will be discharged by filing a Florida Bankruptcy mostly depends on why the Civil Judgment was entered against you. Was the original debt for a credit card, car loan, mortgage, car accident, etc.? Florida Bankruptcy Attorneys mostly see civil judgments entered against clients after a credit card bill has gone unpaid, or the client was evicted from their apartment, and the landlord also received a money judgment against them. Civil Judgments are also frequently entered after a vehicle was repossessed, and the lender sues the client for the difference between the balance of the car loan and what the lender was able to resell the vehicle for. These types of Civil Judgments can most likely be discharged by filing bankruptcy in,Florida, and usually also include debts from medical bills and personal loans.
What types of Civil Judgments CAN NOT be Discharged through Bankruptcy?

As stated above, of course, there are exceptions to being able to discharge a Civil Judgment through bankruptcy, and a Florida Bankruptcy Attorney can help you determine whether or not your Civil Judgment will be dischargeable. If your Civil judgment in Florida arose from child support or alimony, criminal fines or taxes, or a student loan, then the Civil Judgment will most likely not be discharged by filing bankruptcy.

Additionally, if a debt arose through fraud, misrepresentation, or false pretenses, then bankruptcy will not provide you any relief from the debt. Likewise, if you owe a debt that is the result of causing an injury or death while driving under the influence or through malicious or willful actions, then the debt is also not dischargeable through bankruptcy.

How can a Creditor Collect A Civil Judgment?

In Florida, once a court grants a creditor a Civil Judgment against you and you fail to satisfy the judgment, then the creditor can go back to court and ask the court to enforce the judgment. A Florida Court can help a creditor enforce a Civil Judgment in a few ways. The most common and best way a Civil Judgment can be enforced by a court is through a Wage Garnishment Order. However, you must receive W-2 income for your wages to be garnished. If you do not have W-2 income, then another way for a Civil Judgment to be enforced is by having your bank account levied through a Writ of Garnishment Order. The third most common way to enforce a Civil Judgment is by recording it in the public records as a lien against your real property. By recording the Civil Judgment as a lien against your Jacksonville Real Property, you will not be able to refinance or sell the real property without first satisfying the Civil Judgment Lien.

If you file a Florida Bankruptcy, then the Wage Garnishment Order will be stopped, and your wages will no longer be garnished. If your bank account was levied, then you might be able to have the funds collected returned to you. However, if your Civil Judgment was recorded in the public records as a lien on your Florida Real Property, then filing bankruptcy will only remove your personal liability for the debt. Filing bankruptcy in Florida will not remove the lien. This means you will still be unable to sell or refinance the real property without first satisfying the Civil Judgment Lien. By first consulting with an experienced Florida Bankruptcy Attorney or Jacksonville Real Estate Attorney you can determine whether the Civil Judgment Lien will be able to remove after you file bankruptcy. In some instances, you may have to wait up to one year after receiving your Bankruptcy Discharge before you will be able to remove the Civil Judgment Lien.

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The Strongest Asset Protection Laws in the US

The Strongest Asset Protection Laws in the US: Asset protection used to be easy. If you got in trouble, you’d just move to Florida, buy some property there, and then declare bankruptcy. Read more..

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What can I do if the Judgment Debtor moved to another state?

In about every case, you can still go after the debtor even if they moved to another state. "You can run, but you can't hide", the process is not too painful, however you must know the laws of that state regarding judgment enforcement in order to successfully collect on it.

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Huntington fighting big-money judgment tied to con-man customer

More than a decade ago, a Michigan man raised millions of dollars to build a company that sold computer equipment — except they were phony machines with blinking lights.

Although the products weren't real, the mess that the man and his company left behind remain very real to Columbus-based Huntington Bancshares, which continues to battle in the courts over a judgment against it that, with interest, has grown to $81 million.

Huntington was the lead institution that lent money to Barton Watson of Grand Rapids, Michigan, to help continue his fraudulent venture, Cyberco.

The bank should have been aware of the company's illegal activity, given all the red flags Cyberco was creating, a federal court has ruled in a case arising from the company's eventual bankruptcy.

Huntington has contended that it was not aware of what the company was doing as Cyberco continued to try to collect on the line of credit Huntington had extended until just before the fraud blew up.

"There was clearly a fraud. We are a victim as well," said Steve Steinour, the bank's chairman, president and CEO, said last fall when the bank recorded a $38.2 million charge to bolster reserves set aside to cover the verdict. "We're not settling this."

The massive fraud behind the judgment against Huntington was built on a web of made-up customer lists, phony computer servers and false financial documents meant to create the appearance of a strong, rapidly growing company. Cyberco managed to get a $17 million line of credit from Huntington based on money that Cyberco said it was owed by customers. Financial documents that Cyberco submitted to Huntington were meant to give the appearance of a real company.

The fraud unraveled in 2004 — not long after Huntington had collected its debt from the company — when federal authorities raided Cyberco's corporate offices in Grand Rapids. Watson, 44, who was not arrested during the raid, shot and killed himself a week later in an upstairs bedroom of his million-dollar estate.

Cyberco and Teleservices, another company tied to the scam, each filed for bankruptcy weeks later, sticking creditors with tens of million of dollars in unpaid bills and loans.

Those creditors have claimed that Huntington could have limited their losses by putting a stop to the fraud long before the FBI and IRS raided Cyberco. Huntington disagrees and says it is as much a victim of Watson's fraud as anyone else.

Assessing blame

Huntington has asked the 6th U.S. Circuit Court of Appeals in Cincinnati to review a September ruling by a federal judge in Grand Rapids ordering Huntington to pay $71.8 million plus interest. The ruling followed a 2012 decision by a bankruptcy-court judge who found that Huntington, which earned $693 million last year, was responsible for the losses suffered by other banks and finance companies. The bankruptcy-court order was subject to an independent review by a federal judge.

Cyberco did business with Huntington from September 2002 to October 2004.

James Horton, a former Cyberco president who spent several years in prison for his role in the fraud, testified during a bankruptcy hearing six years ago, saying: "I believed then, and I believe now, that had Huntington called their loan and insisted to be repaid, or called their loan and showed up at our offices to seize their collateral, the whole scheme would have fallen apart almost instantly."

The judgment hasn’t raised alarm bells among analysts who cover the bank.

"It is not an anomaly for someone like Huntington to have this type of litigation," said Mark Nolan, vice president of rating agency DBRS. "Where the concern is, is the magnitude of the judgment. Is there enough to have an impact on the capital or earnings to make us dig a lot deeper."

Nolan said that such a fraud typically doesn't get exposed until the end.

"It's one of the harder things for the bank to detect unless you're right there," he said.

Still, banks do get held accountable when they hold the money for those committing the fraud. JPMorgan Chase & Co. paid $2.6 billion in 2014 to the federal government and victims of Ponzi schemer Bernie Madoff to settle allegations that the bank failed to tell authorities about the scam.

"Most Ponzi schemes cannot exist without a bank or a financial institution. ... Typically, that's where all the money flows," said David Meyer, a Columbus lawyer who has built a practice on representing victims of financial scams.

Meyer said banks have far more tools to detect fraud than a typical consumer does.

Also, they might have a conflict of interest because if they report the fraud, they stand to lose money, he said.

"They may look the other way or turn a blind eye when they see these red flags," Meyer said.

One of those flags might have been Cyberco's actions in 2003 and 2004. Bankruptcy-court documents show that Huntington told Cyberco in January 2004 that the company would need to find a new bank because of its actions in the previous the year that included bouncing two checks for more than $1 million each.

On hearing the news, Cyberco began to pay down its loan to the bank, partly by continuing the fraud by getting money from other banks.

Horton, the former Cyberco president, acknowledged that Cyberco lied to Huntington and gave the bank false information about its finances and customers.

"What didn't make sense to me was that Huntington kept asking questions and never really went into the answers and never really pressed us for anything," he said during his testimony in bankruptcy court. "As soon as we ... pressed back at Huntington, they rolled over and didn't pursue things."

"There were over 20 red flags that something was not right," said Douglas Donnell, the Grand Rapids attorney representing creditors of Cyberco and Teleservices, including more than a dozen banks and finance companies. "This was not a legitimate customer."

Securing support

Cyberco also would secure money from banks and other financial institutions that was meant to buy servers and related computer equipment for customers. The vendor for those products and services was Teleservices.

Early in Cyberco's days, it did provide legitimate computer services for clients, but it morphed into a criminal enterprise, Donnell said.

In 2004, the FBI investigation determined that Watson and other Cyberco officials weren't buying computer equipment but using the money to finance a lavish lifestyle of fancy homes, sports cars and expensive wines.

Cyberco was able to extend the fraud by using its relationship with Huntington to get loans from other banks or get companies to extend it credit, Donnell said.

If Huntington had acted then, it would have been out no more than $17 million, the amount of the full line of credit that had been extended to Cyberco, Donnell said.

"They made it infinitely worse, vastly worse," he said.

Horton said Cyberco used its relationship with Huntington to hoodwink other banks to get more money by showing its relationship with a legitimate bank.

"Well, the story that we told the banks was that, you know, we were a large and growing company with operations internationally, financially very strong and healthy, managerially very strong with a very favorable relationship with our primary bank, which was Huntington," he said.

"And a 'X' million-dollar line of credit and some term loans with Huntington. And we were able to access Huntington's West Michigan operations at the highest level because of our good relationship with them."

In spring 2004, Huntington began to press Cyberco to repay the line of credit, Donnell said.

"The bank figured out there was some kind of fraud," he said. "Whether they were aware of all the details, there could be some debate there."

The creditors were able to show that the bank repeatedly violated its internal rules and guidance, Donnell said.

He said he had figured the bank would be eager to settle, given its behavior.

"You would use this as an example of what not to do," Donnell said. "It is surprising that the bank has been unwilling to really engage in what I think are realistic settlement discussions."

mawilliams@dispatch.com

@BizMarkWilliams

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Trump slapped with a $283,000 judgment that was awarded to a small Miami based Paint Store

SOURCE: www.polictususa.com

By Hrafnkell Haraldsson on Sat, Jul 23rd, 2016 at 6:48 pm

The Miami Herald reported Friday that “Circuit Court Judge Jorge Cueto, presiding over a lawsuit related to unpaid bills brought by a local paint store against the Trump National Doral Miami golf resort, ordered the billionaire politician’s company to pay the Doral-based mom-and-pop shop nearly $300,000 in attorney’s fees.”

Yes. Another example of Donald Trump stiffing those who do work for him. Not paying his debts. You know, managing money – the thing of which he says he is the master.

Apparently The Paint Spot did a job for Trump and Trump failed to make a final payment of $34,863 on a $200,000 bill for paint used at the resort. The guy who thinks he is immune to all laws – and indeed, the United States Constitution – figured The Paint Spot had been “paid enough” regardless of the contract his company had signed.

Try that one next time you run up some bills at the store. See how it works for you. As Judge Cueto showed, it doesn’t.

The Herald reports that this led “The Paint Spot to slap a lien on the property and Cueto to order the foreclosure sale of the resort.”

Trump National avoided disaster by placing the $34K in escrow but that only avoided the auctioning off of the property; it did not remove the lien, and so Judge Cueto ruled that Trump had to pay for 500 hours of legal work plus a 75 percent “risk” fee for the paint company’s lawyers, who had taken the case despite risking not being paid at all.

Of course, this is Trump we are talking about. The Herald reports that Juan Carlos Enriquez, owner of The Paint Spot said, “I’m happy I have a judgment. But he [Trump] hasn’t paid yet.”

“You know how he says he’ll surround himself with the greatest people if he is president? In this case, he might not be surrounded by the right people.”

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Would-be lawyer won't have $260K in student loans erased; SCOTUS refuses to hear appeal

The U.S. Supreme Court refused Monday to hear an appeal by a would-be lawyer who has been seeking to discharge more than $260,000 in business and law school debt in bankruptcy.

Mark Tetzlaff, 57, graduated from Florida Coastal School of Law, but has repeatedly failed the bar exam. He said in papers filed in his Chapter 7 case that he could not repay due to alcoholism, depression and a criminal record that have blocked him from getting employment, the Wall Street Journal (sub. req.) reports.

He lives in Wisconsin with his mother, who supports the household with her Social Security payments. He filed the bankruptcy case in that state in 2012.

The refusal of SCOTUS to hear the case leaves in place an arguable circuit split between federal appeals courts concerning the proper standard to be applied to determine whether the requisite “undue hardship” exists when a debtor seeks to discharge student loans.

For federal courts overseeing Tetzlaff’s bankruptcy case, including the Chicago-based 7th U.S. Court of Appeals, his failure to make loan payments over an extended period appears to have played a significant role in determining that he does not qualify to have these student loans erased, according to Above the Law and the WSJ article.

However, if a more lenient test used by the St. Louis-based 8th U.S. Circuit Court of Appeals had been applied to Tetzlaff’s case, the result might have been different, his appeal contended.

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Can Alimony be garnished in the State of Florida?

There is no statutory exemption of alimony or child support receipts. However, Florida courts have not allowed judgment creditors to garnish the debtor’s alimony payments. Garnishment is permitted only where the garnishee (alimony payer) and the debtor have a debtor-creditor relationship. A Florida court many years ago held that alimony was not a “debt” in the traditional sense, and that alimony therefor could not be subject to garnishment. The court also held that public policy prohibited the garnishment of alimony from one ex-spouse to the other. No court has disagreed. The same court also found that alimony is not a form of wages which could be exempt under Florida’s protection of head-of-household earnings.

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What is a Judgment Lien????

How Is a Judgment Lien Created?

A judgment lien can be imposed on your property only after somebody sues you and wins a money judgment against you. In most states, the judgment creditor (the person or company who won) must then record the judgment by filing it with the county or state. In a few states, a judgment entered against you by a court automatically creates a lien on the real estate you own in that county—that is, the judgment creditor doesn’t have to record the judgment to get the lien.

Types of Property Judgment Liens Can Attach To

Judgment liens on real estate. A judgment lien affects real estate you own in the county where the lien is recorded or the judgment is entered.

Judgment liens on personal property. In many states, a judgment lien also applies to your personal property (property other than real estate) for a period of time after the judgment, if certain judgment collection techniques are employed. However, judgment liens on personal property are generally ineffective, because most personal property has no title, and the liens are not recorded. This means that the personal property could easily be sold to a third party who has no idea that the lien existed.

Judgment liens on vehicles. A judgment creditor can also file a judgment with your state motor vehicles department to get a judgment lien on any car, truck, motorcycle, or other motor vehicle you own. You may not know about this type of lien unless you check with the motor vehicles department or the creditor files a proof of claim in your bankruptcy case, describing its interest as “secured.”

Judgment Liens Can Attach to Later Acquired Property

Typically, judgment liens that have been recorded in your county will attach to property that you acquire later. For example, a judgment may be recorded in your county land records office even if you don’t own any real estate. If you buy some real estate a few years later, you’ll discover that it is now burdened by that pesky old lien that was just sitting there, waiting for you to make a move. Most real estate liens expire after a certain number of years (seven to ten in most states), though they can typically be renewed.

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What Is a Confessed Judgment Promissory Note?

A confessed Judgment Promissory note is, when two parties are legally agreeing to the terms listed in the note. If the borrower does not abide by the repayment terms and defaults on the loan, the creditor has the right to a complaint in confession of judgment against the borrower. 
Basically, it's a clause in the promissory note, stating that if the borrower defaults on the loan, both parties agree that a Judgment in favor of the lender. should be entered by the court.

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How Judgments can impact credit

The credit reporting rules for judgments are different from the rules that would apply to the original debt. The Fair Credit Reporting Act (FCRA) states that judgments must be removed from credit reports after seven years from the date of entry "or until the governing statute of limitations has expired, whichever is the longer period."
 A judgment can hang over your head a long time. The statute of limitations for collecting a debt using a judgment varies by state, and varies a lot -- periods of five, 10 and 20 years are common. And it gets worse: Many states allow creditors to renew a judgment, and some allow multiple renewals. State requirements to renew also vary. You may need to consult a lawyer to see which statute applies to your judgment.
 However, the credit report damage may not linger as long as the judgment itself. Although the FCRA states that the judgment can be reported longer than seven years if the statute of limitations is longer, all three major credit reporting bureaus -- Equifax, Experian and TransUnion -- say they remove judgments from your credit report seven years from the date entered.
 Your credit will be affected by the judgment remaining on your credit report. FICO considers a judgment as a negative, whether it is paid or unpaid. However, the judgment will have less negative impact as it ages. A judgment that is now six years old, may not be affecting your credit as much as it did when it was first entered. More recent positive information included on your credit report will help to bump up your credit score.
You should also be concerned with when and how the creditor may use the judgment to collect the $5,000 debt. Some states allow judgment creditors to collect using wage garnishment. It appears your state allows a judgment to be renewed, so the creditor may have many more years to collect on the debt. If you are in a position now to make payments on the debt, you might consider contacting the creditor to see if you can work out payment arrangements on your terms. If you come to an agreement, get it in writing before making payments.
By paying the debt, the judgment will be satisfied and you will no longer have to worry about the creditor eventually using that judgment to collect the debt.

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Do Judgments accrue interest?

The answer is yes.... Just about every state allows the Judgment to collect interest on unpaid monetary Judgments. The interest rates varies state by state, as well as the calculation or new rates and accrue from the date that the Judgment is entered.
So if you have a Judgment that has not been satisfies, it's worth more now, than we the Judgment was entered. If you are not able to enforce and collect on your Judgment, consider consulting with a Judgment Recovery firm like, Sigma Recovery Group. Whether your Judgment was awarded in Florida or another state or if the debtor has relocated to another state than where the Judgment was obtain, all it not lost. The Judgment Specialists at Sigma Recovery Group are keen on locating debtors and their assets. Once both are located, the enforcement can begin, while you just sit back.

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Beware of Deficiency Judgments

 

If you have had a property in foreclosure the lender repossesses your property, the value of the property may not pay off the loan. For example, you might owe $200,000 on your mortgage, but it bank only sells for $150,000. You're $50,000 short, that you still owe the bank, do you have that 50k to pay.. Guessing the answer is no, since you were not able to pay for your home in the first place.
The lender will want full amount paid back, if you can't pay, they may take further legal action against you. Legal action to collect the remaining amount is called a deficiency judgment.

If The Deficiency Judgment is Successful
If your lender successfully is awarded a deficiency judgment against you, you are personally liable for the amount of the judgment. You are legally required to satisfy the deficiency judgment, and the lender can go after you if you don't. They may be able to garnish your wages, levy bank accounts, or take personal items (not necessarily your home, car, or other essential items).

Retirement accounts are generally not at risk in a deficiency judgment, but you should check with a local attorney if you are at risk.
If your deficiency occurred in Florida, in 2013 some important changes were made:


On June 7, 2013, Florida Governor Rick Scott signed into law House Bill 87, now known as Chapter 2013-137,1 which provides for substantial changes in mortgage foreclosures filed in Florida. Although foreclosure defense attorneys are of the opinion that the bill "favors banks,"2 the bill contains "pro-borrower" provisions, as it shortens the time period to seek a deficiency judgment, and provides for more stringent standing requirements for lenders filing mortgage foreclosure complaints on or after July 1, 2013. Below are a few key points:

Foreclosure Complaints-Standing

The most substantial change for lenders is the creation of Florida Statutes § 702.015, which was created to speed up the foreclosure process, but in actuality, requires more paperwork for lenders. A lender who fails to comply with this statute may be subject to sanctions.3 The statute applies to a plaintiff filing a complaint, on or after July 1, 2013, seeking to foreclose upon residential real property (one to four family dwellings), and requires the following:4
Affirmative allegations that the plaintiff is the holder of the original note secured by the mortgage OR specific allegations of the factual basis by which the plaintiff is entitled to enforce the note.5
When a party, such as a loan servicer, has been delegated authority to file a mortgage foreclosure action on behalf of the note holder, the complaint must describe the authority and identify with specificity the document that grants the party to act on behalf of the note holder, such as a power of attorney.6
When the plaintiff possesses the original note, as a condition precedent to and contemporaneously with filing the complaint, the plaintiff must attach copies of the note and all allonges, and certify, under penalty of perjury, that it possesses the original note and provide specific details regarding its physical location and plaintiff's verification of same.7
When the plaintiff seeks to enforce a lost, destroyed or stolen note, it must execute an affidavit under penalty of perjury, and attach it to the complaint. The affidavit must include the following: (1) a chain of all endorsements, assignments or transfers of the note; (2) facts showing plaintiff is entitled to enforce the note; and (3) exhibits including copies of the note and allonges, audit reports showing physical receipt of the original note, or other evidence of acquisition, ownership and possession of the note. The plaintiff must also provide adequate protection as required under Florida Statutes § 673.3091(2) before final judgment.

Deficiency Judgments-Limitations Period and Amount Recoverable
The bill also reduces the statute of limitations period for a lender seeking a deficiency judgment on a note secured by a mortgage on residential property (one to four family dwellings), from five years to one year, for a deficiency action commencing on or after July 1, 2013, regardless of when the cause of action accrued.8 The bill also limits the amount recoverable, in the case of owner-occupied residential property, to the difference between the judgment amount (or with a short sale, the outstanding debt) and the fair market value of the property on the date of the sale.9

Irrevocability of Mortgage Foreclosure Judgments
The new bill also creates Florida Statutes § 702.036, which provides for the finality of mortgage foreclosure judgments. The statute provides that an action to set aside, invalidate or challenge the validity of a final judgment of foreclosure, or to establish or reestablish a lien or encumbrance of property, is limited to monetary damages if all of the following apply: (1) the party seeking relief from the final judgment of foreclosure was properly served in the foreclosure action; (2) the final judgment of foreclosure was entered as to the property; (3) all applicable appeals periods have run and appeals are resolved; and (4) the property has been acquired for value, by a person not affiliated with the foreclosing lender or foreclosed owner, at a time in which nolis pendens regarding the suit to set aside, invalidate or challenge the foreclosure appears in the official records.10

The statute also provides that after a mortgage foreclosure based upon the enforcement of a lost, destroyed or stolen note, a person not a party to the foreclosure, but who claims to be the person entitled to enforce the note, has no claim against the property after it is conveyed for valuable consideration to a person not affiliated with the foreclosing lender or foreclosed owner. The rightful note enforcer may still recover adequate protection given pursuant to Florida Statutes.

Orders to Show Cause
The bill makes several revisions to the show cause process in Florida Statutes § 702.10, applicable to pending causes of action, including allowing a condominium, homeowners' or cooperative association with a lien on unpaid property assessments (or those associations that may file a lien against the property subject to the foreclosure), to request an order to show cause for the entry of a final judgment of foreclosure. Previously only the lender had this ability. The summary judgment standard is used, and at the hearing, defendants will need to claim a specific, allowable defense to prevent the foreclosure. The bill exempts owner-occupied residences from an order to show cause why the court should not enter an order requiring the borrower to make payments during the pendency of the foreclosure or enter an order to vacate the premises.

Adequate Protection for Lost, Destroyed, or Stolen Notes
The bill creates a new statute, Florida Statutes § 702.11, applicable to pending causes of action, and provides that a court may find the following as constituting adequate protection for lost, destroyed or stolen notes:11 (1) a written indemnification agreement by a person reasonably believed sufficiently solvent; (2) surety bond; (3) letter of credit issued by a financial institution; (4) deposit of cash collateral with the clerk of court; or (5) other security that the court deems appropriate under the circumstances. The bill also outlines the liability of a person who wrongly claims to be the holder of a note or entitled to enforce a lost, stolen or destroyed note, and the remedies the actual note holder has against that person.

Magistrate Jurisdiction
Separately, and additionally, the Supreme Court of Florida has recently amended Florida Rule of Civil Procedure 1.490, to help alleviate the residential mortgage foreclosure case backlog. The amendments expand the use of magistrates in residential mortgage foreclosure cases by authorizing referral of those cases to magistrates now based upon implied consent of the parties, while providing an opportunity for the parties to object. Although this amendment was created to alleviate the backlog, it may have the opposite effect, since parties may still file exceptions to the magistrate's report and recommendation, and set same for hearing before a circuit court judge. Therefore, instead of a motion being heard on one occasion before a circuit court judge, two hearings may become common practice: one hearing before the magistrate, and another hearing before the circuit court judge on the exceptions to the magistrate's report.12

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Controversial Florida Case Blocks Creditor from Enforcing Judgment Against Foreign Assets

Source: http://www.bipc.com/

A recent opinion from Florida's Fourth District Court of Appeal held that a Florida court does not have jurisdiction to compel a judgment debtor to turn over stock certificates located outside the state of Florida to satisfy a judgment. Sargeant v. Al-Saleh, 137 So. 3d 432 (Fla. Dist. Ct. App. 2014). While this opinion has been heavily criticized by many in the legal community, the case should serve as a warning to creditors seeking to enforce judgments against debtors in Florida.

In this case, the creditor sued the debtors for breach of an agreement to ship oil across Jordan for use by the United States military in Iraq. At trial in a Florida court, judgment was entered against the debtors for $28.8 million. In order to execute on the judgment, the creditor filed a motion to compel the debtors to turn over all stock certificates memorializing their ownership interest in any corporation. The debtors opposed the motion, arguing that the stock certificates concerned assets located abroad, and therefore, the trial court lacked jurisdiction to compel the turnover. The trial court did not agree with the debtors, however, and entered an order compelling the debtors to turn over the stock certificates. The debtors appealed.

On appeal, the debtors once again took the position that the trial court lacked jurisdiction to compel turnover of the stock certificates. They argued that Florida law does not apply extraterritorially and that in order to execute on the judgment against their foreign assets, the creditor must proceed under the laws of the foreign jurisdictions where the stock certificates are located. The creditor argued that the trial court had the authority to compel turnover of the stock certificates by virtue of its in personam jurisdiction over the debtors.

In reversing the trial court's ruling, the District Court of Appeal began its analysis by examining Florida law which authorizes a judge to “order any property of the judgment debtor, not exempt from execution, in the hands of any person or due to the judgment debtor to be applied toward the satisfaction of the judgment debt.” Florida law further empowers courts to “enter any orders required to carry out” this purpose “to subject property or property rights of any defendant to execution.”

The court continued its analysis by distinguishing two cases relied upon by the creditor in his argument that the trial court had jurisdiction to order the debtors to turn over the stock certificates. In the first case, General Electric Capital Corp. v. Advance Petroleum, Inc., 660 So. 2d 1139 (Fla. Dist. Ct. App. 1995), Florida's Third District Court of Appeal held that “a court which has obtained in personam jurisdiction over a defendant may order that defendant to act on property that is outside of the court's jurisdiction, provided that the court does not directly affect the title to the property while it remains in the foreign jurisdiction.” The court distinguished this case because the creditor in General Electric Capital had a perfected lien on the property that the trial court ordered the debtor to return to Florida.

In the other case, Koehler v. Bank of Bermuda Ltd., 911 N.E.2d 825 (N.Y. 2009), the New York Court of Appeals held that under New York law, a court located in New York may order a bank over which it has personal jurisdiction to deliver to a judgment creditor stock certificates owned by a judgment debtor that are located outside New York. The New York court noted that the applicable New York statute “contains no express territorial limitation barring the entry of a turnover order that requires a garnishee to transfer money or property into New York from another state or country.” Although the Florida District Court of Appeal recognized that Florida law likewise does not contain any express territorial limitation on the court's ability to order a judgment debtor to transfer money or property into Florida, the court declined to follow Koehler because it found that the decision turned on a broad reading of the applicable New York statute. The court further distinguished the case because the trial court in Koehler had personal jurisdiction over the bank holding the foreign assets. The court also noted a lack of Florida statutes or cases that specifically authorized the action taken by the court in Koehler or by the trial court in the present case.

The District Court of Appeal concluded its analysis by discussing its perceived consequences of allowing Florida trial courts to compel judgment debtors to turn over out-of-state assets. The court observed that there could be competing claims to a foreign asset that the court believed should be decided in the jurisdiction in which the asset is located. The court also stressed its belief that domestication of foreign judgment statutes would be effectively eliminated if trial courts were permitted to compel judgment debtors to bring foreign assets into Florida.

Based on the court's inability to find any controlling case law and its policy concerns, the court reversed the trial court's decision and held that the trial court did not have the authority to order the debtors to turn over the foreign stock certificates.¹

If this decision stands, it could cause significant obstacles for creditors seeking to enforce judgments against Florida debtors. Fortunately, other states with similar statutes generally find that so long as the court has personal jurisdiction over a judgment debtor, the court can order the debtor to turn over foreign assets to satisfy a judgment. Therefore, when dealing with Florida debtors, creditors should be careful to ensure that their documents choose, whenever possible, jurisdiction and venue in one of these more creditor-friendly states where they can successfully enforce their judgments.

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¹The creditors recently requested the Florida Supreme Court to review the District Court of Appeal's decision. The request is still pending, and such review is rarely granted.

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Do I Need to Pay Tax on a Vehicle Accident Settlement or Judgment?

Source: www.nolo.com

If you have received a settlement or judgment following a vehicle accident, you're probably wondering, “Do I have to pay taxes on that money?” The short answer is, “In most cases, no.” However, that is not a hard and fast rule, and the answer depends on the nature and circumstances of your settlement or judgment.

It is important to know that only your tax advisor can give you tax advice. The comments in this discussion will help you formulate the appropriate questions to present to your tax advisor. Only by discussing these issues with an expert can you be confident that you are receiving the most current tax information.

Generally, settlements and judgments are viewed the same when it comes to the question of taxes. So, it doesn’t matter whether the money you received is through a settlement at the claim stage, or through a judgment following a trial.

How Does the Tax Code Affect My Settlement?

The applicable language of the Internal Revenue Service (IRS) regulation addressing the question of taxability of settlements and judgments is found at 26 C.F.R 1. It reads in part:

§1.104-1 Compensation for injuries or sickness.

(c) Damages received on account of personal physical injuries or physical sickness—(1) In general. Section 104(a)(2) excludes from gross income the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness. Emotional distress is not considered a physical injury or physical sickness. However, damages for emotional distress attributable to a physical injury or physical sickness are excluded from income under section 104(a)(2). Section 104(a)(2) also excludes damages not in excess of the amount paid for medical care (described in section 213(d)(1)(A) or (B)) for emotional distress.

Money Received for Medical Expenses and Injuries

The vast majority of settlements and judgments are for only "compensatory damages" and "general damages." Those categories of damages are meant to compensate you for your medical expenses, lost wages, and the pain and suffering that arises directly from your injuries.

In a typical settlement where you receive only compensatory and general damages for your physical injuries and medical expenses, most of that amount is usually not subject to taxes. This is because that type of settlement or judgment is meant to reimburse you for your out-of-pocket losses.

Money Received for Vehicle and Property Damage

Any compensation you receive for vehicle damage resulting from a car accident is not taxable. This is true for the costs of repairs that were paid as well as any reimbursement you might have received for a rental car while your vehicle was in the repair shop.

Compensation for Lost Income

Generally speaking, any settlement or judgment amount you receive as compensation for lost income is subject to income tax. The reasoning is that your original income would have been taxable had you not suffered the income loss, so any compensation intended to replace that same lost income should be taxable as well.

If your settlement or judgment includes compensation for other types of losses in addition to lost wages, such as medical bills, you must still pay taxes on that portion of the settlement or judgment that is attributable to the lost wages.

What If I am Awarded Punitive Damages?

It is rare that punitive damages are included as part of a car accident settlement or judgment. This category of personal injury damages is usually intended as just what the name implies -- punishment against the defendant -- and to deter future bad behavior. They are only awarded in pretty extraordinary circumstances where the defendant has engaged in particularly outrageous or egregious behavior. In the rare even that you do receive punitive damages in a personal injury case, know that those damages are almost always taxable.

Your personal injury lawyer should be able to provide basic information on the taxability of your settlement or judgment. But it is important to remember that most personal injury lawyers are not experts in tax law. So, if you've got more complex questions about the tax implications of a personal injury settlement or judgment, it's best to seek out the advice of a tax professional.

by: David Landers

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Court Rules Debtors Can Sue Collectors Under More Onerous State Laws

The West Virginia Supreme Court of Appeals affirmed last week that consumers can sue third party debt collectors under the state’s Consumer Credit and Protection Act (WVCCPA) – a statute that carries greater punitive damages for violators than the federal Fair Debt Collection Practices Act (FDCPA).

The ruling came June 14th in the case of Linda Barr vs. NCB Management Services Inc. and HSBC Bank of Nevada.  It’s the final say on the issue unless the state legislature changes the law, which is not expected. However, if a new law were passed, it would only apply to future complaints.

The case began in the U.S. District Court for the Northern District of West Virginia. Barr alleged that NCB Management Services violated the act by intentionally inflicting emotional distress on her, when over a two month period collection representatives from the Trevose, Pa.- based debt collection agency repeatedly telephoned her with an intent to “annoy, abuse, oppress, and threaten” her in an attempt to collect nearly $7,900 of unpaid debt on a repossessed motorcycle.

NCB asked the district court to dismiss the case, arguing that the WVCCPA only gives consumers the right to sue creditors. After considering some amendments, District Court Judge John Preston Bailey, in September 2010, asked the Supreme Court to decide, citing conflicting language in the statute.

In its ruling, the Supreme Court noted that it had not been previously defined who or what is considered a creditor, and so determined that a debt collector can be included in that definition based on the intent of the legislatures when the WVCCPA was drafted and passed. That applies whether the agent is acting as an agent for a creditor and violates the law or as the new owner of the debt. The court explained that the WVCCPA is a remedial statute intended to provide broad consumer protection from unfair, illegal and deceptive business practices, and must be liberally construed to accomplish that purpose.

“It logically follows that, insofar as the Legislature intended for Article 2 to apply to professional debt collectors, the Legislature likewise intended to allow consumers to utilize the remedy provisions of Article 5 to seek redress from professional debt collectors,” Justice Robin Davis wrote on behalf of the court.

NCB Management did not respond to insideARM’s inquiry regarding the ruling. The company’s attorney had previously said a ruling in Barr’s favor would leave third party agencies more vulnerable to lawsuits, increase their costs and risk of doing business in the state, and impact consumer lending.

Barr’s attorney, Anthony Majestro, says the ruling does not change how the law has been interpreted in the past.

“We are happy that the court recognized this interpretation of the statute, which is consistent with way everyone always has interpreted the law and as the intent of the drafters back in the 1970s,” Majestro said. “We don’t’ believe anything will change.  There should be no additional burden on the [debt collection] industry that should have been following this law and the parallel provisions of the FDCPA.”

The case has been sent back to Judge Bailey who requested the clarification. Majestro said his office resubmitted the complaint on June 15th and will file amendments to provide more details of the alleged violations of the West Virginia law.

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