creditor Archives - Wetherington Hamilton, P.A.

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Contract Conditions: How They Can Impact Your Case

March 29, 2018/in Articles, General/by Ted Hamilton

Conditions….life is full of conditions. I might tell my son that I’ll let him go to a party or a hockey game if he will clean up his room or take the trash out; these are conditions that he must fulfill in order to get what he wants. We have, in effect, created a verbal contract whereby each party must comply with certain contract conditions. My son may have to clean his room or take out the trash and in return, if he complies with his promise, I will have to allow him to attend a particular event. This is a simplified example, but the issue can be more complicated when parties are creating and enforcing contracts.

Contracts are full of conditions. A creditor may agree to loan money to a borrower with the condition that the borrower will make monthly payments for a specific amount which includes principal and interest; if payments are not timely made, late fees may be added. Sometimes contract conditions must occur prior to an event in order to create a contract, and sometimes conditions must occur in order for a creditor to sue for breach of contract if, for example, the borrower defaults on the loan by failing to pay as promised.

“A condition precedent is one which must happen or be performed before the estate to which it is annexed can vest or be enlarged; or it is one which is to be performed before some right dependent thereon accrues, or some act dependent thereon is performed.” Black’s Law Dictionary, Sixth Edition.

Some contracts conditions require notices of default be mailed to the borrower before a creditor is permitted to file suit. Debtors may raise failure to comply with conditions precedent as a defense, thereby attempting to prohibit a creditor from enforcing the terms of a contract. The attorneys at Wetherington Hamilton, P.A. can interpret contracts and ascertain whether conditions precedent have been complied with prior to filing suit in order to overcome the defense of failure to comply with conditions precedent. If you have a contract dispute, contact our office at (813) 676-9082 or JoanW@whhlaw.com.

Collections Attorney Tampa

Joan W. Wadler has been a member of the Florida Bar since 1991. Her practice concentrates on Collections and Commercial Litigation, Real Estate Litigation and Associations Law. She can be reached at (813) 676-9082 or JoanW@whhlaw.com

Maximizing Bankruptcy Proof of Claim, Minimizing Objections

March 5, 2018/in Articles, Bankruptcy/by Ted Hamilton

Are you a creditor in a bankruptcy case? Did you receive a Notice from the Bankruptcy Court advising you that there are funds available to pay creditors in a case and alerting you to complete and file a Proof of Claim? If so, then the Notice would have also included a blank Proof of Claim form for you to complete and file with the Bankruptcy Court. The Proof of Claim form is specific and comprehensive and may require detailed attachments depending on the type of claim you have against the Debtor. There are also time constraints involved in the process as well. The Bankruptcy Court will set a deadline for the filing of such claims. The deadline is called the “bar date”. Claims filed after the bar date are not paid except in certain very limited situations and only if the bankruptcy court expressly permits them to be paid—more about this in a bit.

In consumer bankruptcy cases (Chapter 7 and Chapter 13 cases) you must file a claim timely (by the bar date) in order to be paid. The process is somewhat different in Chapter 11 cases. A creditor does not need to file a claim if three conditions are met. First, the Debtor must not have listed the debt on its bankruptcy schedules as “disputed, contingent or unliquidated”. Second, the creditor must agree with the amount that the debtor has listed as due and owing on these bankruptcy schedules. Third, the creditor must agree with the Debtor’s classification of the type of claim—such as secured, unsecured or priority—in the bankruptcy schedules. If any (or all) of these conditions are absent in a Chapter 11 case then the creditor must file a claim for the full amount which is owed by the Debtor and set forth the appropriate classification (secured, unsecured or priority) in the claim.

I’ve been a bankruptcy attorney for over 25 years and I’m aware of several situations where creditors have left “money on the table” by not filing a claims in bankruptcy cases despite receiving notice in Chapter 7 or Chapter 13 consumer bankruptcy cases that the Bankruptcy Trustee is holding funds which are available to pay creditors. In fact, in many of these consumer cases, the Trustee ends up with a surplus case and will often seek to make contact with creditors listed in the bankruptcy schedules to solicit them to get a claim filed. Likewise, in Chapter 11 cases, I’ve seen several situations where only a small number of creditors have filed claims when the Debtor has proposed to make a significant payment to creditors with claims in a certain class set forth in the Chapter 11 Plan.

The Proof of Claim form requires creditors to choose the classification of the claim (secured, unsecured or priority) as well as the amount that the Debtor owes the creditor as of the date of the filing of the bankruptcy case. For secured accounts, such as a mortgage or lien on personal property or a vehicle, this can require some detailed accounting to property set forth interest, late charges, attorney’s fees and other charges as well as accrued escrow items. If this accounting is incorrect, then the Trustee or Debtor can object to the claim. Again, more about that in a bit. The Proof of Claim will also need to include copies of supporting documents evidencing the claim such as the loan documents (promissory notes, contracts), the security documents (security agreements, mortgages) and other documents such as judgments, garnishments and so forth. Failure to include the loan documents will likely result in an objection to the claim by an interested party so it is very important that the Proof of Claim be filed with these documents attached.

Claims that are filed after the bar date will likely draw an objection by the Trustee or the Debtor. Obviously, the best way to avoid this is to make sure that the claim is filed on time. The fact that a claim was filed late may completely invalidate it and prevent it from being paid. However, a creditor with a late-filed claim is not completely out of luck. If a creditor files a claim late and there is an objection filed to it, then the creditor can argue that the failure to timely file the claim was excusable. The burden, however, is on the creditor to show excusable neglect and it this is often a difficult burden for the creditor to meet. There are also differences in the operation of the excusable neglect standard depending on whether the bankruptcy case is a Chapter 7 or 13 consumer case or a Chapter 11 case. A creditor facing this issue will need to discuss how best to address the situation with a bankruptcy attorney.

A creditor’s claim may draw an objection from the Debtor of Trustee for any number of reasons. For example, the objection to the claim might dispute the amount that the creditor alleges is owed or dispute the creditor’s classification of the claim as secured, unsecured or priority. The objection might dispute the validity of the claim if there are no supporting documents to evidence the claim or if the debt is believed to be uncollectable due to being barred by the applicable statute of limitations for the type of claim that the creditor holds against the debtor.

A creditor can minimize the chance of an objection being filed to its claim by taking steps to ensure that the claim lists the correct amount owed, lists the correct classification of the type of claim, contains legible copies of the documents evidencing the claim and is signed and timely filed with the Bankruptcy Court. If a creditor is facing an objection to its claim then it should contact a bankruptcy attorney to develop a strategy for tackling the issue as oftentimes it is possible for a creditor to fight the objection and get its claim allowed and paid in the case.

Brad Hissing is a Bankruptcy Attorney with over 26 years of experience in representing creditors, Trustees and other parties in bankruptcy cases. He has extensive experience in Creditors Rights and Insolvency matters in both consumer and Chapter 11 commercial cases. He can be reached at BradH@whhlaw.com or by phone at (813) 676-9075.

Enforcing a Judgment Through Garnishment

September 11, 2015/in Articles, Debt Collection/by Ted Hamilton

Florida’s garnishment law contains detailed procedural requirements and specific deadlines within which a creditor, debtor and garnishee must file and serve specific pleadings and other documents. A judgment creditor must be aware and alert to these procedures in order to ensure that the creditor does not lose substantive rights, and in order to take prompt advantage of inaction by the debtor and/or garnishee.

A judgment creditor has a right to a writ of garnishment as to any debt due to the judgment debtor from a third person; and any of the debtor’s tangible or intangible personal property in the possession of a third person. In order to be subject to garnishment, a debt owed by a third person to the judgment debtor must be absolute and without contingency. A judgment creditor may successfully garnish a joint bank account to the extent of the judgment debtor’s interest in same, but may not garnish an account held by the debtor and his/her spouse as tenants by the entireties (unless the creditor has a judgment against both spouses).

Prior to October 1, 1993, the State, its agencies and subdivisions were immune from garnishment. Beginning October 1, 1993, however, a debtor’s status as an employee of the State or its agencies or political subdivisions does not preclude a judgment creditor’s right to garnish the debtor’s wages. The garnishment must arise, however, as a result of a contract, a loan, a transaction, a purchase, a sale, a transfer, or a conversion occurring on or after October 1, 1998.

A judgment creditor may obtain a continuing writ of garnishment as to a judgment debtor’s employer, providing for periodic payment to the creditor of a permissible portion of the debtor’s salary or wages as they become due.

The garnishee becomes liable to the judgment creditor for all debts due to the garnishee and any property of the debtor in the garnishee’s control from the time the writ is served to the time the garnishee serves its answer. The garnishee must report any such debt or property in its answer and must retain any deposit, account, or tangible or intangible personal property of the debtor. (Limitation: the garnishee cannot retain assets equal in value to more than twice the judgment amount and/or the amount stated in the judgment creditor’s writ of garnishment). Once a bank account has been garnished the bank must retain the depositor’s funds in compliance with the writ. The bank may not pay certain checks out of the garnished account, regardless of whether the checks predate the service of the writ of garnishment.

Dealing with a judgment and attempting to enforce it through garnishment is a complicated process that is best done with the consultation of an experienced attorney. Call Wetherington Hamilton today to schedule your consultation.

Thomas K. Sciarrino, Jr., Esq.