THE HISTORY OF THE MIDDLE DISTRICT
In 1962, Congress established the Middle District of Florida, which was previously part of the Southern District. Alexander L. Paskay was appointed as the Middle District’s first full time bankruptcy referee and was responsible for the Fort Myers, Orlando, and Tampa Divisions. Another referee, Charles Merrit, served part-time in the Jacksonville Division. Judge Paskay also became the District’s first Chief Bankruptcy Judge.
The United States Bankruptcy Court for the Middle District of Florida is one of the nation’s busiest bankruptcy courts. Last year, over 42,000 cases were filed in the Middle District of Florida – the fourth highest caseload in the nation.
The Middle District of Florida contains thirty-five of Florida’s sixty-seven counties, including four of Florida’s largest metropolitan areas: Fort Myers, Jacksonville, Orlando, and Tampa/St. Petersburg.
The Middle District’s counties are divided as follows:
Fort Myers Division: Charlotte, Collier, De Soto,Glades, Hendry, and Lee.
Orlando Division: Brevard, Lake, Orange, Osceola, and Seminole.
Jacksonville Division: Baker, Bradford, Citrus, Clay, Columbia, Duval, Flagler, Hamilton, Marion, Nassau, Putnam, St. John’s, Sumter, Suwannee, Union, and Volusia.
Tampa Division: Hardee, Hernando, Hillsborough, Manatee, Pasco, Pinellas, Polk, and Sarasota.
THE BANKRUPTCY JUDGES
United States bankruptcy judges are appointed by a majority of judges of the United States Court of Appeals and serve fourteen-year terms. The bankruptcy judges for the Middle District of Florida are appointed by the Eleventh Circuit Court of Appeals. Congress determines the number of bankruptcy judges needed to serve in the court system. As of December 2008, nine bankruptcy judges preside in the Middle District of Florida.
Chief Judge Paul M. Glenn
(Jacksonville and Tampa)
Arthur B. Briskman
Jerry A. Funk
Karen S. Jennemann
Michael G. Williamson
K. Rodney May
Catherine Peek McEwen
Caryl E. Delano
Alexander L. Paskay
(Fort Myers and Tampa)
LOCATIONS OF THE BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF FLORIDA
Fort Myers Division
2110 First Street Fort Myers, Florida 33901
300 North Hogan Street Jacksonville, Florida 32202
135 West Central Boulevard Orlando, Florida 32801
801 N. Florida Avenue Tampa, Florida 33602
Clerk of Court’s Office
801 N. Florida Avenue Tampa, Florida 33602
A HISTORICAL PERSPECTIVE: THE “BROKEN BENCH”
“Bankruptcy” is derived from the Latin words bancus (a bench or table), and ruptus (broken). When a merchant did not pay his debts in ancient Rome, his trading bench was broken, and he could no longer operate his business.
EVOLUTION OF BANKRUPTCY LAW
Bankrupt individuals were treated harshly during the Middle Ages and were subject to varying punishments, including death and prison. These practices continued as colonies were started in the New World.
Eventually, in response to serious economic upheavals, events such as recessions and war, the United States enacted federal bankruptcy laws. The focus shifted away from harsh punishment of debtors to rehabilitating debtors and providing them with a “fresh start.” Under the new laws, Congress introduced the concepts of discharging debts and allowing debtors to keep property away or “exempt” from creditors. A discharge permitted a debtor to rid himself of certain debts. Exemptions permitted a debtor to protect certain types of property from the claims of creditors.
A FRESH START
Congress intended our bankruptcy laws to provide the honest but unfortunate debtor a fresh financial start, while giving creditors a fair distribution of a debtor’s assets. People seeking a fresh start come from all walks of life and income levels. Often, bankruptcy results from sudden, unfortunate circumstances such as illness, unemployment, or divorce. Such hardships may result in large credit card debts or medical bills. These are the types of setbacks Congress intended to remedy with the fresh start provisions of the Bankruptcy Code.
To achieve a fresh start, a debtor in bankruptcy receives a forgiveness of debt, known as a “discharge.” Lifting the heavy weight of overwhelming debt allows an individual to become a productive, contributing citizen and have a positive impact on the nation’s economy. At the same time, creditors receive a fair distribution of a debtor’s assets, where assets are available.
DEBTORS KEEP EXEMPT PROPERTY
Certain assets are protected by state or federal law from claims of creditors. Such assets are “exempt” and are not subject to liquidation by the trustee. In other words, a debtor is permitted to keep exempt property. Non-exempt property may be sold by the trustee to provide a distribution to creditors.
While property qualifying as exempt from administration by the trustee can differ from state to state, such property typically includes some or all of the value of a debtor’s home, and certain annuities and retirement accounts.
THE AUTOMATIC STAY
Creditors’ collection activities often intimidate and overwhelm debtors who face foreclosure of their homes, eviction from their apartments, and repossession of their cars. Creditors call them at all hours at home and work demanding payment.
Bankruptcy provides an umbrella of protection to a debtor, known as “the automatic stay.” The automatic stay prohibits creditors from engaging in certain types of collection activity while a bankruptcy case is proceeding. The debtor gets time to make critical decisions such as which assets to keep and which assets to surrender to a creditor so the corresponding debt may be discharged.
LIQUIDATION – CHAPTER 7
For individuals who satisfy the income eligibility requirements known as the “means test,” a Chapter 7 bankruptcy case permits the discharge of unsecured debts such as credit card and medical bills. A debtor’s unprotected assets are liquidated by a Chapter 7 trustee. Monies are paid to similarly situated creditors who receive a pro rata distribution of the liquidation proceeds. Secured creditors, those holding collateral such as a mortgage on a home or a lien on an automobile, are entitled to timely payments or to the return of their collateral.
REORGANIZATION – CHAPTERS 13 AND 11
Individuals with regular income exceeding the income eligibility requirements of a Chapter 7 liquidation case may elect to file a Chapter 13 reorganization case. Chapter 13 also may be appropriate when a debtor with a regular source of income desires to keep his home and to pay any arrearages owed over a period of time. Chapter 13 also helps debtors who owe income taxes. Rather than paying creditors directly, debtors in a Chapter 13 reorganization case make monthly payments to the Chapter 13 Trustee, who then pays the debtor’s creditors pursuant to a plan approved by the Court.
For individuals with regular income exceeding the eligibility requirements of a Chapter 13 or for an operating business, a reorganization case under Chapter 11 may be appropriate. Chapter 11 permits businesses and individuals with significant debt to restructure the debt over a designated period of time. Chapter 11 cases are usually very complicated.
THE TRUSTEE AND CREDITORS’ MEETING
In all Chapter 7 liquidation and Chapter 13 reorganization cases filed by individuals, a trustee is appointed to oversee the case and to determine whether a debtor has assets available to administer, or liquidate, for the benefit of the debtor’s creditors.
Soon after an individual debtor files a Chapter 7 or Chapter 13 case, the appointed trustee presides over a meeting of creditors. All debtors are required to attend this meeting. Creditors can ask about the debtor’s financial affairs and determine if there are any reasons the debtor should not receive a discharge.
BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005
The biggest recent changes to bankruptcy law in the United States since 1978 occurred in 2005, when Congress enacted into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”). Although the legislation made many changes, its main focus was on bankruptcy cases filed by individual, consumer debtors.
BAPCPA CHANGES AFFECTING DEBTORS
Under BAPCPA, consumer (non-business) debtors now face strict bankruptcy eligibility requirements. For example, a consumer debtor is required to take credit counseling education before filing bankruptcy. In addition, a debtor is required to provide a trustee more documentation than before, such as pay stubs evidencing income, bank statements, and tax returns.
The BAPCPA imposes new restrictions on a debtor’s ability to obtain a bankruptcy discharge, federal limits on homestead exemptions, and other obstacles that make a Chapter 7 filing by individuals more difficult. For example, debtors cannot receive a discharge until they complete a financial education course.
Specifically, debtors seeking to receive a discharge of their debts by filing a Chapter 7 liquidation case, instead of attempting to repay some or all of their debts over time through a Chapter 13 repayment plan, must now pass a “means test” demonstrating, among other requirements, that their income does not exceed their state’s average income. If a debtor’s income does exceed the state median, a presumption arises that the debtor filed the Chapter 7 case with an intent to abuse the system, and the debtor must make payments over time in a Chapter 13 case.
BAPCPA also has limited the protections of the automatic stay where debtors have filed multiple bankruptcy cases.
BAPCPA CHANGES AFFECTING CREDITORS
BAPCPA also expanded certain creditor’s rights. Debtors who repeatedly file bankruptcy cases in order to stall foreclosure, eviction, and collection activity will find creditors now able to more easily protect their rights.
The information provided herein is not intended to be legal advice but a general overview of bankruptcy law. Anyone considering filing bankruptcy is urged to obtain legal advice from counsel knowledgeable in bankruptcy law.