Florida Bankruptcy Attorney Blog

(a) The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process. (b) Notwithstanding subsection (a) of this section, a court may not appoint a receiver in a case under this title.

Section 105(a) and (b) above outline the powers of the bankruptcy court. The powers of the bankruptcy court, as with other federal courts, are largely delineated by statute. As one can see from the statute above, the powers of the bankruptcy court are quite broad, and the court may issue any order necessary to carry out any of the provisions of the bankruptcy code itself. This includes the Bankruptcy Court acting on its own initiative, even without a motion filed by the attorneys (sua sponte).

One particular power the Court does not have is the ability to appoint a receiver over the bankruptcy proceeding. This is logical, since the entire point of a reorganization proceeding is to allow the reorganization to be either overseen by the debtor-in-possession or the United States Trustee. There is no point to having a receiver run the debtor organization in such a circumstance. Additionally, the duty of the receiver is mainly to preserve the assets of the debtor for the duration of a litigation, rather than institute liquidation as in a Chapter 7. The functions of a receiver may overlap with those of the debtor-in-possession during a reorganization.

The promise of a bill to handle delinquent first mortgages through the bankruptcy process died a quiet death. Meanwhile, the government appears to be relying more on the regulatory mechanism to handle the economic malaise that has swept the country since the end of 2007. By most estimates, this recession actually began a long time ago, but the full impact of it has not really been felt by most people until recently. With consumer spending down 1% this past March, any recent optimism may be false hope for the time being. Also, unemployment continues to climb.

Where does this leave you, the strapped homeowner, delinquent on your mortgage payments. It may be that you also took out a second home equity line of credit, which by now has been entirely spent. Depending upon the value of your home, your second mortgage may be removeable, you might be able to both lower your total mortgage payment and pay back your delinquent payments through the bankruptcy process. Don't discount bankruptcy as a possible valid option in your case.

Depending upon the jurisdiction in Florida or elsewhere, it may be better for a client to declare either a Chapter 7 or Chapter 13 for a client to protect his home. For those behind on their payments, a Chapter 13 bankruptcy is often touted as the best solution. But this is not necessarily the case. Sometimes it is better to fight and renegotiate your mortgage and then declare a Chapter 7, even though there is an element of risk doing this. Much of this kind of decision rests upon the amount of income you are generating. Factors to consider include things as minor as Trustee collection fees. For these and other complicated reasons it is always good to consult with a bankruptcy lawyer and not engage in this process without professional help.