Sarasota Bankruptcy Law Blog

Former students throughout the United States are feeling the pressure of student loans throughout their working lives. Many of them are unaware that student loan debt is difficult to expunge, even after traditional personal bankruptcy proceedings. Even though the graduates may face a harsh economic climate and dismal job market, most will still be held accountable for their student loans, regardless of their financial woes.

Most debts, including those that are accumulated through credit cards, medical bills, homeownership and even gambling debts, can be purged through traditional bankruptcy proceedings. The idea is to give the advantage to individuals who may be "honest but unlucky," allowing them to regain their financial footing through a strenuous restructuring effort that is overseen by legal experts.

A recent settlement with Big Banks JP Morgan Chase, Citigroup, Wells Fargo, Bank of America and Ally Financial means that many homeowners may be expecting a nice mortgage modification offer from their banks. What Venice homeowners may not realize, however, is that mortgage modification may not always be the best option and should be weighed along with Chapter 13 bankruptcy.

Many homeowners have, in recent years, found themselves underwater with their mortgage. What that means is that their home is worth less than the mortgage or mortgages they are or were paying. Some banks are planning on giving underwater homeowners "principal reductions," which reduce the amount the homeowner owes. Bank of America is even considering reducing more than 200,000 underwater mortgages to market value.

Though the battle is over, a former Florida homeowner and a Sarasota real estate agent are still irked about what they see as a vindictive attitude from a bank. The bank, which held a second mortgage, blocked the former homeowner from receiving any money from the holder of the first mortgage.

The man, now 63, and working for a mortgage bank in Sarasota, once made close to $1 million in commissions each year as a loan officer. He'd worked his way up from the bottom, starting in 1995. By 2010, however, he had filed for Chapter 13 bankruptcy protection, listing $426,000 in assets and $722,000 in debts.

A company that had planned to open a sucralose plant in the Midwest has been ordered to file for Chapter 7 bankruptcy. The federal bankruptcy court ruled that Mamtek, the company that intended to open the sucralose factory, must file its bankruptcy papers by March 12. The company went under when it was unable to make bond payments due Sept. 1.

The federal bankruptcy court ruled that Mamtek will go into Chapter 7 bankruptcy, a process that provides debt relief by liquidating assets and dividing the proceeds between creditors. The company previously failed to respond to an involuntary bankruptcy suit that had been filed by UMB Bank and four of Mamtek's creditors, according to a disclosure notice from UMB Bank. UMB Bank is the trustee for the $39 million municipal bonds that Mamtek could not keep up payments on. This particular company is based outside of Florida, yet many businesses right here in the state have been faced with the same financial struggles.