With the U.S. economy showing only slow signs of growth, consumer debt continues to be a significant issue for many people.

Legal Issue Insights:

Local concert promoter Frank Giglio has filed for bankruptcy petition citing more than $300,000 in debts with $2,000 declared as assets. One of the creditors listed in the bankruptcy petition is the agency representing popular 80’s band Air Supply who are among a list of 28 creditors named in the petition. According to an article in the St. Pete Times, “Air Supply’s talent agency, the Los Angeles-based Agency for the Performing Arts, filed a lawsuit in Hillsborough Circuit Court earlier this month to recover $25,000 from Giglio.”

Former Chicago Bears star Dave Duerson had filed for bankruptcy in Florida last September before committing suicide earlier this month.  As required by bankruptcy law, Duerson listed $34.6 million in assets and $14.7 in liabilities.  However, the majority of the assets were derived from a judgement his company had obtained but not recovered in 2004.  Some of Duerson's financial woes stemmed from an ill-fated business venture. 

Dave Duerson's suicide caught many of his friends off guard.  They believed, according to media reports, that he was handling the pressure of the bankruptcy and the need to start over.  However, this tragic case demonstrates the pressure and stress those who are faced with bankruptcy encounter on a daily basis.  As a bankruptcy attorney, I'm always cognizant of my client's difficulties and try to make the process as easy as possible.  I believe this is part of being a good bankruptcy attorney.  In order to advocate for my clients, I must understand and empathize with their unique life situations.  This can be tough for all concerned.  That's why when I can help someone through a difficult period, it makes my work all that more satisfying.

Perhaps one of the country’s best known upscale furniture stores has filed for Chapter 11 bankruptcy protection in federal court. The Fort Myers-based company has been in business for 96 years but faltered when the housing market took a tumble in 2006.

In spite of the bankruptcy filing, company executives hope to make a rebound as the economy strengthens. In its bankruptcy filing, the company told the court that it was $57 million in debt and needed bankruptcy relief. Seeking comment on the bankruptcy, the News Press published these thoughts by a Florida business consultant:

“Orlando-based retailing consultant C. Britt Beemer said Robb & Stucky is a highly regarded, innovative company, but that when the housing crash hit in 2006, it hurt upscale furniture sales much more than furnishings at the lower end of the market.

“You look at a Robb & Stucky and some other high-end guys around the country, 50 to 60 percent of their business is directly or indirectly tied to new home sales,” he said. “When you lose that pace, it’s a slow death.”

Chapter 7 bankruptcy is also known as “liquidation bankruptcy.”  You are allowed to keep exempt assets, which are those the bankruptcy laws allow you to keep.  Anything above and beyond exempt assets may be liquidated by the bankruptcy trustee and used to pay back your creditors.  Despite its name, in most Chapter 7 cases there are no exempt assets for the trustee to liquidate.  A couple advantages to Chapter 7 bankruptcy are that it is usually completed in a few months and it is relatively inexpensive compared to the amount of debt you are permanently relieved from.  Chapter 13 bankruptcy is a reorganization of your debts.  It allows you to keep those assets which you choose, but you repay a portion of your debts during a 3 to 5 year timeframe.  At the end of your repayment period, the balance of certain debts that were not fully repaid are discharged.  In addition to keeping your assets, another advantage that Chapter 13 bankruptcy has over Chapter 7 is the ability to remove junior mortgages from your home in certain circumstances.  Give me a call to discuss which bankruptcy chapter, if any, is right for you.

The data on this year's bankruptcy filings are in and it's some good news for consumers.  January's personal bankruptcy filings fell 22% from December.  During the month of January, there were 92,669 personal bankruptcies filed in the United States.  The number represents a 2 year low from the last year's numbers which were the highest in five years.  The American Bankrupcty Institute and the National Bankruptcy Research Center have predicted that the number of bankruptcy filings would continue to decline this year as the economy improved. 

However, Florida bankruptcy filings remain high as the Florida economy struggles to overcome weakness in the housing market and the tourism industry.  If you are struggling with consumer debt, call me and we can make an appointment to discuss your financial situation to determine if bankruptcy is a good option.

Attorney Russell Adler, formerly of Rothstein, Rosenfeldt, Adler, has settled a clawback lawsuit that was originally filed last February.  The Rothstein Rosenfeldt Adler bankruptcy trustee had sued Adler for $1.2 million in clawbacks that the trustee claimed Adler had received from former partner Scott Rothstein who is facing 50 years in a federal penitentiary for the Ponzi scheme involving hundreds of millions of dollars.  Originally, Adler and his attorneys had vowed to fight the suit in bankruptcy court by calling famous witnesses Senator John McCain and former Florida Governor Charlie Crist to show the court that Adler was not the only one duped by Rothstein’s fraud.  In the end, Adler agreed to pay $350,000 within 30 days.  If he does’t pay, the amount swells to $500,000.

According to a blog in the Broward-Palm Beach New Times, “It might be seen as a victory for Adler, considering the disparity between the settlement amount and the sum bankruptcy lawyers claim he received from Rothstein. Bankruptcy lawyers wrote in court documents filed moments ago that they agreed to settle because they have little hope that Adler and his wife, Katie, have the financial wherewithal to pay much of anything. Not only is Adler broke, court documents allege, but the IRS, which gets first dibs on his assets, is coming after him for $234,000 in liens “or other action,” court documents allege. On top of that bankruptcy attorneys wrote that they were concerned Adler could face disbarment, which would cripple his ability to pay in the future, and possible criminal charges related to his relationship with Rothstein. Critical to determining settlement was a detailed analysis of the Adlers’ current financial condition, which based upon mediation related financial disclosures revealed that the Adlers have no existing bank, securities or other accounts upon which to execute, no equity in their home, leased vehicles and no other liquid non-exempt assets that could be used to satisfy any potential judgment,” the attorneys wrote. “Further, it appears as if the Adlers may be subject to an IRS notice of lien or other action in an approximate amount of $234,000 and Mr. Adler could be facing other types of exposure in potential Florida Bar or criminal proceedings.”

In a statement released to the Sun-Sentinel, Adler maintains his innocence and wants to put the sordid mess behind him.

After more than two decades serving local diners in St. Petersburg, Dave’s Restaurant has closed its doors and filed for bankruptcy.  The economy really hurt us hard,” Dave St. Amant said. “We go to the grocery store and run into people who used to come in every day, and they say they can’t afford it anymore.”  As a result of the bad economy, Florida businesses have experienced an unfortunate upsurge in bankruptcy filings.  Businesses, especially those that depend upon consumers’ ability to spend disposable income like restaurants, have been hit particularly hard in this bad economy.

If you own a business and are considering bankruptcy, know all your options before you make a decision.  Consult with an experienced bankruptcy attorney who has represented consumers and business owners in these difficult situations.  Call me and I’d be happy to speak with you about your options.