Bankruptcy and Foreclosure Attorney Blog

Millions of Americans have filed for bankruptcy since the economic crisis began, shedding or restructuring their debt and moving on with their lives. And most, if not all, were concerned with repairing and rebuilding their credit following a bankruptcy filing.

A recent Wall Street Journal article provided some tips for doing just that:

Check your credit report. Make sure that all the debts you discharged in bankruptcy are properly noted, since it is important for creditors to know that debt is no longer yours.
Keep checking your credit report. You want to ensure you keep your credit report clean, up to date and error-free.

Live on a budget.

Get new credit carefully. Take baby steps at first – pay all your bills on time and don’t utilize most than 50 percent of your credit limit.

Use online banking and automatic payment plans to help you pay bills on time.

If you can’t get a regular credit card, look into a prepaid credit card or secured credit card. Be sure you get one that does not have large annual charges or upfront fees.

Be sure you keep your credit ratio low – when means charge only 30 to 50 percent of your credit limit per month, and pay it off each month.

In its annual report on the economic well-being of American households, the Census Bureau reported that high unemployment has left one in seven Americans of working age in poverty, the highest level in almost 40 years.

The Census Bureau said that the national poverty rate in 2009 was 14.3 percent, which translates to 43.6 million Americans, up 1.1 percent from the 2008 level of 13.2 percent.

In addition, the number of Americans with no health insurance coverage rose to 50.7 million, or 16.7 percent of the population. This is up from 15.4 percent in 2008. The increase is primarily due to out-of-work Americans losing employer healthcare benefits.

Mississippi had the highest percentage of impoverished Americans, at 23.1 percent, followed by Arizona, New Mexico, Arkansas and Georgia. New Hampshire had the lowest percentage: 7.8 percent.

Analysts said that the poverty rate was actually lower than predicted by many demographers, because many lost incomes were eased somewhat by increases in Social Security payments and unemployment benefits extensions. The Census Bureau estimates that approximately 3.3 million people were kept from poverty in 2009 because of extended unemployment benefits that paid unemployed workers for up to 99 weeks following their layoff.

Job loss and unexpected medical costs are two of the main reasons that Americans seek bankruptcy protection. If you need more information on how bankruptcy may help you, contact our Jacksonville bankruptcy law firm.

A study from the American Bankruptcy Institute says that 42 percent of consumer bankruptcies filed in 2007 were by Baby Boomers – those between the ages of 45 and 64 – and that the boomer generation continues to be disproportionately represented in bankruptcy proceedings.

Featured in the September issue of the ABI Journal, the study – Aging and Bankruptcy Revisited – updates a 2002 study that studied the correlation of age and bankruptcy filings. The new study found that the percentage of people filing bankruptcy who were over the age of 55 increased by 61 percent from 2002 to 2007, outstripping the aging of the general population as a whole.

In addition, the study found that the median age of those filing for bankruptcy increased to almost 45 in 2007, from 41.4 in 2002 and 37.7 in 1994. Americans under the age of 25 experienced the largest percentage drop in bankruptcy filings from 2002 to 2007.

Researchers found that the housing crisis has been responsible for many consumer bankruptcy filings. The study found that there was a 118 percent increase in bankruptcy filings in those states that suffered decreases in home price indexes.

Another trend noted by researchers was the rise in Chapter 13 bankruptcy filings, although they could pinpoint whether it was because of the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or because more debtors were using a Chapter 13 bankruptcy filing as a strategy to keep their homes from foreclosure.

A recent New York Times feature focused on the problems unemployed Americans over the age of 50 are having finding another job, and the growing fear they battle that they may never work again. If this is you, filing bankruptcy may be a solution to relieving yourself of debt you can no longer afford to pay off.

According to the Labor Department, the average length of time it takes American workers 55 and older to find another job is 39 weeks, the longest of any age group. And, at the current pace of 82,000 new jobs a month created in the U.S., it would take eight years to gain back the eight million jobs lost during the recession.

The Census Bureau reports that the poverty rate among those aged 55 to 64 increased from 8.6 percent in 2007 to 9.4 percent in 2009. One analyst quoted in the Times story worries that older workers who are forced into early retirement might present the country with a large policy problem in the future – a new class of “unemployables” that have been cast off during a vulnerable time in their careers and lives.

If you have suffered a job loss and have a large amount of debt that you are no longer able to handle, contact our Jacksonville bankruptcy law firm.

Although just about every personal financial advisor says it’s a bad idea to tap into retirement savings to pay living expenses, many Americans are doing just that, according to data recently released from Fidelity Investments of Boston, one of the world’s largest retirement plan administrators.

According to the Fidelity Investments data, the number of people who took early withdrawals from their retirement accounts during the second quarter of this year jumped 38 percent from the previous quarter. In addition, people taking out loans from 401(k) plans are at the highest level in ten years.

A Fidelity spokesperson said it was clear that current economic conditions are forcing people to take money from retirement savings to pay off debt, but doing so has long-term implications that many are not taking into consideration.

For example, filing bankruptcy may be a better option since it will either discharge debt entirely or restructure the debt so there is more time to pay it off. Filing bankruptcy also leaves retirement funds intact, as they are protected from bankruptcy.

In fact, one financial planner quoted in a Boston Globe story said that taking money from retirement accounts to stave off bankruptcy makes no sense, since it is “robbing Peter to pay Paul.”

According to a story in the Los Angeles Times, Blockbuster has been quietly informing Hollywood movie studios that it will be filing Chapter 11 bankruptcy in mid-September.

According to the Times, Blockbuster met with studio chiefs to ensure that it would continue to receive an uninterrupted supply of movies during its reorganization. The company reportedly will use Chapter 11 bankruptcy protection to restructure its $1 billion debt load, which has hampered it from growing its business. Blockbuster also plans to close more than 500 of its under performing retail locations in the U.S.

Blockbuster met with studio executives as part of its strategy to enter a “pre-planned bankruptcy,” where most if not all creditors would agree to its reorganization plan prior to the official filing of Chapter 11 bankruptcy. One of its primary goals during the bankruptcy process is to immediately shed pricey leases for 500 to 800 of its worst performing locations. The company closed nearly 1,000 stores in 2009.

Blockbuster was delisted from the New York Stock Exchange in July, and has lost over $1 billion since 2008. In August, most of Blockbuster’s debt holders agreed to a forbearance on interest payments until the end of September, at which time the company said it planned to try a recapitalization.

Contact our Jacksonville, Florida bankruptcy law firm for more information about the Florida Chapter 11 bankruptcy process.

Several members of Bravo TV’s Real Housewives reality series have come face-to-face with the reality of a foreclosure in recent months, according to a story in the San Francisco Chronicle.

Not surprisingly, three of them are in the hard-hit California foreclosure market and star in the Real Housewives of Orange County. However, unlike many distressed homeowners currently facing foreclosure, all three of these OC housewives have a happy ending to their foreclosure stories:

Jeana Keough, who owns a 7-bedroom mansion in Orange County, got a loan modification through Chase that has helped her avoid foreclosure. She said that she is “happy to report that the system works” and that she is glad not to have to deal any more with the “crazy people coming out of the woodwork to buy my $4.5 million home for $1.3 million.”

Tamra Barney, who is in the midst of a divorce from her OC hubby, participated in a short sale of their home for $1.12 million.

Alexis Bellino also received a mortgage modification from Chase on her $4.56 million Newport Beach home, which was at the auction stage when the modification came through.

On the east coast, New Jersey housewife Teresa Guidice and her husband have filed for bankruptcy and, according to the article, the contents of their 10,000 sq. ft. New Jersey mansion will be auctioned off in October. However, she insists the home itself is safe for now, from both the bankruptcy court and foreclosure.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

Local Market Monitor, a company that tracks real estate data in over 300 U.S. metropolitan areas, says that five metros in Florida could experience another ten percent drop in home prices over the next year.

The company predicts the largest fall in home prices will occur in Lakeland, where it expects to see an additional drop of 15 percent. The Orlando-Kissimmee area was next on the list, with analysts predicting a 14 percent drop over the next 12 months. Home sale prices in Orlando have dropped 37 percent since the housing crisis began in 2007.

Three other Florida metros are also predicted to experience double-digit drops in home prices over the next year. Panama City home prices are expected to drop another 13 percent, Daytona Beach prices another 12 percent and Sarasota home prices could fall another 11 percent, according to Local Market Monitor analysts.

One of the largest contributors to falling home prices in Florida has been the record number of foreclosures, which have hurt home values but have also helped to attract investors hungry for housing bargains in Florida. One Orlando Fannie Mae REO broker noted that July was his best sales month in a long time, saying that it is not only investors but also owner-occupant homebuyers who are involved in the bargain hunting.

If you are underwater on your mortgage and want to avoid foreclosure, contact our Jacksonville Florida foreclosure defense law firm.

A number of celebrities from the entertainment, sports and business worlds have not been immune from the foreclosure crisis of recent years, including:

Ed McMahon – the Johnny Carson sidekick and celebrity spokesman for American Family Publishers defaulted on a $4.8 million mortgage on his Beverly Hills mansion in 2008. A private buyer, who remains anonymous to this day, eventually rescued McMahon, who died in June 2009.

Nicholas Cage – Two Academy Awards could not stop the foreclosure process for Cage, who at one time owned a total of 15 homes. The IRS foreclosed on four of his homes and sold them to pay off $14 million in back taxes. Cage sued his former business manager, accusing the manager of “leading him down the path toward financial ruin.”

Jose Canseco – The baseball star walked away from his $2.5 million home, saying it did not make financial sense for him to keep paying the mortgage while the value continued to drop.

Veronica Hearst – The publishing heiress had to give up her 28,000 sq. ft. Florida estate after she fell $45 million into debt and was unable to keep up with the mortgage.

Victoria Gotti – The daughter of mob boss John Gotti was able to rescue her Long Island mansion from foreclosure by obtaining permission from the feds to sell other properties to pay off her loans.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

As midterm elections near, election officials are becoming more concerned that the number of foreclosures around the country will have homeowners and renters facing complications at the polls, according to a story in the New York Times.

Voter eligibility is tied to a home address, and with three million foreclosures looming for 2010, that is a lot of potential voters confused about where or even if they can vote. The Fair Elections Legal Network has released a report on the voting challenges faced by victims of foreclosure and the processes necessary to avoid disenfranchisement. In Florida, you can vote using a new address if you fill out a form swearing to that new address on the day of the election.

Advocacy groups who work hard to get out the vote are concerned that foreclosure victims will not make voting a priority come November. Political parties have also been accused of using foreclosure lists to challenge voters – in 2008, the Obama campaign filed a lawsuit in federal court to prohibit the Michigan Republican Party from doing just that.

A Fair Elections Legal Network spokesman said that the issue has not been well publicized, and that most victims of foreclosure probably do not know their rights when it comes to voting. Some states have already said they planned to launch informational campaigns to educate voters and poll workers.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

The U.S. Department of Housing and Urban Development (HUD) has announced an “unprecedented” agreement with top lenders to offer selected state and local governments as well as nonprofits a “first look” at purchasing foreclosed homes before those properties are offered to private investors.

According to the HUD announcement, the National First Look Program is designed to give communities participating in HUD’s Neighborhood Stabilization Program an exclusive opportunity to purchase bank-owned properties so the homes can be rehabilitated to be resold or rented, or in some cases demolished.

Communities hard-hit by foreclosures that received funds from the Neighborhood Stabilization Program to purchase homes have found themselves in stiff competition with private investors for bank-owned properties, which have hampered their ability to stabilize neighborhoods. Lending giants Fannie Mae and Freddie Mac will standardize the acquisition process for NSP participating communities that provides them with an exclusive opportunity to purchase foreclosed homes.

Many private lenders – including Bank of America, Chase, Citi, Wells fargo, U.S. Bank and others – are also participating in the new program, which will also provide NSP participants with the opportunity to purchase bank-owned property at a discount. NPS grantees can use NSP funds for these purchases.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

The Labor Department announced that the nation’s unemployment rate rose in August to 9.6 percent from 9.5 percent in July, but that private employers had hired more than 67,000 workers over the past three months, which was more than previously predicted.

Economists say that the private sector job gains mean that the economic recovery is still underway. Temporary employment was up by nearly 17,000 jobs, an indicator that employers are hiring, just not permanently yet.

The Labor Department tied the slight rise in unemployment in August to the resumption of job searches by more than half a million Americans. It noted that those who are unemployed but not actively looking for work are not included in the monthly unemployment statistics.

Analysts said that hiring continues to be weak across all industries for the fourth straight month, and predicted that the jobless rate could continue to rise in the coming months.

According to an Associated Press story, the U.S. economy lost almost 8.4 million jobs in 2008 and 2009. To date in 2010, private employers have added 763,000 jobs back into the economy, but the national unemployment rate continues to hover just below the 10 percent mark as it has since January.

For many of the unemployed, filing bankruptcy can provide relief from debt and financial strain. To get information on bankruptcy as an option for debt relief, contact our Jacksonville bankruptcy law firm.

At a Federal Reserve conference in Washington, D.C., Federal Reserve Governor Elizabeth Duke said that she is in favor of financial institutions promoting the rental of homes undergoing foreclosure to help stabilize communities hit hard by the housing crisis.

According to a Bloomberg report, Duke said that “It is not sufficient to do things the way we have always done them” given current economic conditions, and that a rental option makes sense, particularly at a time of high unemployment.

Duke said that the redevelopment strategies for high foreclosure rate neighborhoods should include lease-purchase as well as converting owners to renters in order to avoid vacancies. She noted that while the housing crisis was rooted in bad loans, a slow economic recovery and high unemployment is hindering a housing recovery and lenders must pursue opportunities to keep homes occupied until the housing market starts to recover.

Last month, the Mortgage Bankers Association reported that early mortgage loan delinquencies rose in the second quarter for the first time in almost a year, even though the inventory of homes in foreclosure and seriously delinquent mortgages declined slightly.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

Former Jacksonville Jaguars quarterback Mark Brunell said during a Section 341 creditors’ meeting for his Chapter 11 bankruptcy reorganization that he would make $1.5 million a year from the New York Jets if he makes the team.

According to an article in the Jacksonville Daily Record, Brunell said that a lot hinged on how he played in the Jets’ last preseason game versus the Philadelphia Eagles. (The Jets won the game 21-17, with Brunell connecting on 11 of 17 passes for 118 yards and two touchdowns.)

Brunell filed for Chapter 11 reorganization in late June, listing liabilities of over $24 million and assets of $5.5 million. Most of the liabilities listed are tied to bad real estate and business investments that he entered into with former Jaguars teammates Todd Fordham and Joel Smeenge.

Brunell told U.S. Trustee Timothy S. Laffredi that if he did not make the team, he and his family would return to Jacksonville to live. The family is currently renting a home in New Jersey in hopes that he will make the Jets’ roster. Brunell said that no one is currently living in his oceanfront Ponte Vedra home.

According to the Daily Record article, when Laffredi asked Brunell why he filed for Chapter 11 bankruptcy, Brunell said: “Because I got in over my head and the debt was insurmountable. I’m filing Chapter 11 to reorganize and come up with a plan to make this right.”

Seeking to recoup revenue no longer available to them because of the Credit Card Accountability and Responsibility and Disclosure Act of 2009, lenders are now targeting consumers with offers for “professional” credit cards that are not covered by the new legislation.

Once targeted only to business owners, professional cards are now being offered to millions of consumers. An article in the Wall Street Journal noted that in the first quarter of this year, over 47 million professional card offers were mailed to consumers, a 256 percent increase from the same period one year ago.

None of the prohibitions placed on credit card issuers by the Card Act apply to professional cards. With some cards, if the consumer is just one day late in making a payment, the interest rate can go up to almost 30 percent automatically. Consumers can also get hit with credit limit fees, rate hikes on existing balances and agreement changes without notice – all activities that have been outlawed by the Card Act.

Debt-troubled consumers may find professional card offers more attractive since some issuers are making it easier for them to qualify. The WSJ article said that applications for the Chase Ink professional card have been vastly simplified, from having to provide information on your business, including a federal identification number, to now just have to check a box that says you own a business.

To get information on bankruptcy as an option for debt relief, contact our Jacksonville bankruptcy law firm.

A new report from the American Bankruptcy Institute shows that personal bankruptcy filings declined 8 percent in August from one month earlier, to 127,028. However, despite the drop, year-to-date consumer bankruptcies continue to outpace 2009 levels. As of August, there were over one million personal bankruptcy filings nationally, as compared with 921,000 for the same period one year ago.

Analysts say that continued high unemployment and tight credit continue to plague consumers, who must borrow to pay off debt. When they are unable to do so, they usually file bankruptcy in an effort to relieve their debt burden.

The South Florida Business Journal reports that personal bankruptcy filings in Miami-Dade, Broward and Palm Beach counties were up 59 percent in August from the same period one year ago, going from 2,127 in 2009 to 3.387 in 2010. Business bankruptcies were up seven percent from one year ago, but down 17 percent from last month.

Miami-Dade County continues to lead the state in personal bankruptcy filings, which jumped 74 percent in August over the same period one year ago and five percent from July.

The American Bankruptcy Institute said that consumer bankruptcy filings are still on track to reach a total of 1.6 million filings in 2010, the highest in five years, since the bankruptcy laws were overhauled in 2005.

Rapper Young Buck has filed Chapter 13 bankruptcy after the Internal Revenue Service raided his Nashville area home. According to news reports, Young Buck owes the IRS over $300,000 in back taxes.

A story in the Wall Street Journal profiled the rapper’s Chapter 13 bankruptcy filing, quoting David Darnell Brown (his real name) as saying that he wants his property back and plans to sue rapper 50 Cent, whose record label signed Young Buck a few years ago.

Young Buck has been feuding with 50 Cent (real name: Curtis Jackson) for over two years about the management of his career. The Nashville rapper was originally a part of 50 Cent’s G-Unit crew of rappers, but was fired by 50 Cent in 2008. Young Buck remained on the G-Unit record label, which he has been fighting to be release from ever since.

According to the WSJ report, Young Buck filed a payment plan last month that calls for him to repay $750,000 to creditors that are owed over $1 million. His other debts include $700,000 on two mortgages and over $33,000 owed on a Cadillac Escalade.

The IRS seized over $160,000 in assets from his home last month, including computers, jewelry and home studio equipment. Young Buck said the IRS situation happened because he trusted others to handle his business for him, but “from now on, I am going to stay on top of my own business.”

Hollywood memorabilia collected for years by actress Debbie Reynolds will be up for auction next June to satisfy Chapter 11 bankruptcy creditors of a defunct Tennessee real estate development that was to have housed the actress’ Hollywood Motion Picture and Television Museum.

Reynolds’ son, Todd Fisher, told the Knoxville News Sentinel that he had once been offered $30 million for the collection from a family in India. The bankruptcy filing values the collection at $10.79 million.

The museum was originally to be part of Belle Island Village, an entertainment development that was to also have included a NASCAR attraction. The firm behind the project filed for bankruptcy last year and Belle Island Village was taken over by creditors. The developer tried to line up enough cash to save the museum, but was unsuccessful. A Tennessee bankruptcy judge approved the sale of the memorabilia by June.

Reports said that the collection includes over 3,000 costumes and “tens of thousands” of Hollywood artifacts, including the red slippers Judy Garland wore in “Wizard of Oz” and the white dress Marilyn Monroe wore when she stood over a subway grate in “The Seven-Year Itch.”

Mark Brunell, the former Jacksonville Jaguars quarterback who filed Chapter 11 bankruptcy earlier this year, has gained a job as the back-up quarterback for the New York Jets and his bankruptcy attorney reports that he is expected to file a plan of reorganization with the Jacksonville bankruptcy court in about a month.

Brunell told a meeting of his creditors earlier this month that he would be making $1.5 million a year as the Jets’ back-up quarterback. When he filed for Chapter 11 bankruptcy protection in June, he listed assets of $5.5 million and liabilities of $24.7 million, mostly related to bad real estate and business investments for which he had given a personal guaranty.

According to a story in the Jacksonville Daily Record, Brunell is continuing to make payments on secured debts like his oceanfront Ponte Vedra Beach home, which he must do in order to keep the property. He is reportedly abandoning his interest in several investment properties with no equity, which the secured creditors will take back.

The Jets signed Brunell to a two-year deal after he filed Chapter 11 bankruptcy, as back-up and mentor to starting quarterback Mark Sanchez.

A major feature story in the New York Times on Sept. 4 provides a telling insight into the mess that is the Florida foreclosure process, and is a true testament to the necessity of having a Florida foreclosure defense attorney involved from the beginning of any homeowner’s foreclosure proceeding.

The gist of the article is this: Since all foreclosure proceedings must go through the Florida courts, the housing crisis that hit the state so hard has resulted in an enormous backlog of cases. To streamline the process, the Florida courts created foreclosure divisions throughout the state, bringing on retired judges to wade through the backlog.

While well intentioned, this has resulted in many cases getting short shrift in terms of lenders providing proof that they truly own the loan for which they are trying to foreclose – which, under Florida law, they must do. Horror stories ensue of homeowners and their foreclosure attorneys who had documentation to prove that the lender trying to foreclose did not own the note, only to have the judge still allow the foreclosure to go through.

Florida’s Attorney General is currently investigating three lender law firms that he believes are “foreclosure mills”, which have falsified documentation in order to speed the foreclosure process. When combined with a judicial apparatus that exists only to speed the foreclosure process, the potential for homeowner abuse is enormous – and there is much anecdotal evidence to indicate that this is what is happening.

If you are a Florida homeowner facing foreclosure, do not allow your rights to be trampled. Contact our Jacksonville Florida foreclosure defense law firm for help.

A growing number of housing market and economic analysts are calling on lawmakers to stop trying to prop up the housing market and “let the free market do its thing,” according to a Sept. 5 article in the New York Times.

Since 2008, a number of programs designed to help homeowners avoid foreclosure and buttress the ailing housing market have failed to do either. The homebuyer tax credit briefly stimulated sales, but existing home sales fell into the dumper after the tax credit expired in June. July home sales were down 30 percent – and it now takes a year on average to sell a home.

Some economists are arguing that letting the housing market crash will further depress home prices, which will attract an influx of buyers. However, there is a lot of pain still to be felt by one group if this were to happen: existing homeowners, who have already seen the value of their homes decline by an average of 30 percent.

And, some argue, the more pain that homeowners feel, the less likely they are to spend – and any economic recovery is dependent on consumer spending.

With the federal government now on the hook for guaranteeing the majority of American mortgages through Fannie Mae and Freddie Mac, the likelihood of “doing nothing” is probably less than free marketers are hoping for.

The U.S. Department of Housing and Urban Development (HUD) has sent another $208 million to Florida as part of a third round of funding for its Neighborhood Stabilization Program (NSP) to help city and county officials purchase and renovate abandoned houses and offer financial assistance to low and middle income homebuyers.

Florida has received more HUD NSP funds than any other state. The latest round of funding includes $11.5 million for Orange County, $7.1 million for Duval County, $4 million for Seminole and $3 million each for Brevard, Lake and Osceola counties and the city of Orlando.

HUD said the funds are targeted to communities with high foreclosure activity to combat abandonment and blight in those communities. The funding was made available through the Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed by Congress and signed into law by President Obama earlier this summer.

State and local governments can use NSP funds to acquire land and property, demolish or rehabilitate abandoned properties. NSP funds can also be used to provide down payment and closing cost assistance to low- to moderate-income homebuyers.

In addition, cities and counties can use NSP funds to create “land banks” to assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re-use or redevelopment of urban property.

Duval County is currently slated to receive more than $10.6 million of the $317 million the Florida Housing Finance Corp. is making available to Florida cities to help fight foreclosure.

Florida Housing ranked each Florida county in three tiers; Duval County is a Tier 1 county, which means that it has more than two percent of the weighted share of seriously delinquent loans in Florida.

There are a total of 16 counties on the Tier 1 list, including Miami-Dade, Broward, Palm Beach, Orange, Lee, Hillsborough, Pinellas, Saint Lucie, Duval, Brevard, Volusia, Sarasota, Osceola, Collier, Polk and Pasco. These counties will share a pot totaling $285,602,580 for programs that help homeowners avoid foreclosure.

In late June, the U.S. Department of Treasury approved Florida Housing’s HFA Hardest-Hit Fund Mortgage Intervention Strategy to help unemployed and underemployed homeowners keep their homes. Florida Housing has issued a RFQ for Housing Counseling Agencies to implement the strategy, which can be found here.

Treasury also required Florida Housing to choose a pilot site for the Mortgage Intervention Strategy before the entire program could be rolled out statewide. The pilot site will be Lee County, which is considered the state’s foreclosure crisis epicenter. The pilot is expected to begin in mid-to-late August and continue for 60-90 days prior to full implementation of the program statewide.

Late last month, the Obama administration announced adjustments to the Home Affordable Modification Program (HAMP) and FHA programs to assist homeowners who have been adversely affected by the economic crisis by expanding flexibility for lenders to assist unemployed homeowners and those who are currently underwater on their mortgages.

The new guidelines, which take effect on June 1, 2010, include extra steps that lenders must take with homeowners facing foreclosure:

• Lender must evaluate a borrower’s loan modification eligibility under HAMP and make the determination that the borrower is ineligible before going to foreclosure;


• If foreclosure is already underway, a foreclosure sale cannot occur until the lender has determined that a borrower is ineligible under HAMP;


• Lender must give a borrower 30 days to respond to HAMP “non-approval” before conducting a foreclosure sale;


• Lender must provide a borrower’s foreclosure attorney certification in writing that the borrower is ineligible for HAMP before proceeding with a foreclosure sale.

There are also additional provisions regarding borrowers who are currently in active Chapter 7 or Chapter 13 bankruptcy, including that if a borrower has been approved for a trial loan modification and then files bankruptcy, a lender cannot use the bankruptcy filing as a reason to deny the borrower a permanent loan modification.

For more information on your rights as a borrower considering loan modification, contact our Jacksonville, Florida foreclosure law firm.

Even though the courts have instituted mortgage mediation as part of the Florida foreclosure process, there is no ruling that forces creditors to offer homeowners a mortgage modification. The news is full of stories these days of homeowners who were working with their lender through the lengthy mortgage modification process, only to find that the foreclosure process was still ongoing. What happens in this case? They still lose their homes.

If you cannot make your mortgage payments and want to be able to keep your home, bankruptcy may be your best option. In fact, it may be your only option these days. Filing bankruptcy automatically stops the foreclosure process in Florida.

If you file Chapter 13 bankruptcy, you will have up to five years to catch up on any mortage payments that are in arrears as well as time to negotiate with your lender for a mortgage modification – and you will not lose your home in the process.

If you file Chapter 7 bankruptcy, your unsecured debts are wiped out, which may free up enough income for you to be able to make your mortgage payments and keep your home.
If you are currently trying to work out a mortgage modification and have been told that the foreclosure on your home has been stopped, be sure that you have this in writing from your lender.

In addition, you should consult with a Jacksonville bankruptcy lawyer in case you need a back-up plan to save your home from foreclosure.

A Jacksonville foreclosure attorney points to a Wall Street Journal article from late last week about a Pasco County foreclosure case where the judge said a major national bank committed fraud in a foreclosure lawsuit and dismissed the suit.

The article also reported that, “Judges have said in hearings they are increasingly concerned that banks are attempting to seize properties they don't own.”

As a state with one of the highest foreclosure rates in the country, Florida has come under increased judicial and regulatory scrutiny regarding the true ownership of mortgages.  A federal criminal probe into fraudulent documentation by foreclosure plaintiffs in Florida is currently underway.

In a foreclosure case, the foreclosing party (usually a mortgage servicer or bank) must prove they own the mortgage at the time that a lawsuit is filed.  In this particular case – U.S. Bank N.A. v. Ernest Harpster – the court found that the ownership document filed by the bank "did not exist at the time of the filing of this action…was subsequently created and…fraudulently backdated, in a purposeful, intentional effort to mislead."

If you are a Florida homeowner facing possible foreclosure and need to know more about the Florida foreclosure process as well as your options for defending a Florida foreclosure, contact our Jacksonville, Florida foreclosure law firm.

According to the Wall Street Journal’s Daily Bankruptcy Review, data from U.S. bankruptcy court records show that commercial bankruptcy filings declined in August by five percent from the previous month.

Business bankruptcy filings in August totaled 6,950, compared with 7,299 commercial bankruptcy filings in July, which was the first month since March that saw an increase in commercial filings.

American Bankruptcy Institute executive director Samuel J. Gerdano said that the decline in business bankruptcies could be credited to lenders holding off on taking any action against defaulting borrowers while the economy remains uncertain. More lenders are negotiating with borrowers to restructure debt or extend payment timelines.

During the first six months of 2010, the number of companies filing for Chapter 11 reorganization fell by 17 percent compared with the same period last year. The number of businesses filing Chapter 7 liquidation bankruptcy was about the same as 2009.

However, the ABI’s Gerdano warned that the decline in business bankruptcy filings should not be considered a sign of commercial economic recovery. He said that “there is a sense that something is coming” – although whether it is a tidal wave or a ripple is yet to be seen.

Real Housewives of New Jersey star Teresa Guidice has run into real trouble with the U.S. Bankruptcy Court. On Sept. 2, the bankruptcy trustee in her Chapter 7 bankruptcy case filed a Complaint Objecting to Discharge, accusing Teresa and her husband Joe of perjury and fraud.

The trustee believes the couple failed to disclose pertinent financial information and lied about their assets. In the court filing, U.S. Bankruptcy Trustee Roberta A. DeAngelis said that the couple did not include earnings from Teresa’s best-selling cookbook, “Skinny Italian,” or from her popular website, two significant sources of income.

DeAngelis claims that Teresa received an initial advance on her cookbook of $250,000, another $30,000 advance and royalties, none of which were reported in the initial bankruptcy filing last November. Teresa’s TGFabulicious.com website provided another $100,000 in earnings during the six months after the filing.

According to a story at CBSNews.com, the complaint alleges that the Guidices “have concealed, destroyed, mutilated, falsified, or failed to keep or preserve recorded information from which their financial condition or business transactions might be ascertained."

DeAngelis has requested that the couple’s bankruptcy petition be denied because of their alleged failure to disclose financial information and various falsehoods contained within their Chapter 7 bankruptcy filing.

As this story illustrates, failing to properly disclose all assets can have serious consequences when filing for bankruptcy protection. Our Jacksonville bankruptcy law firm can help you understand and following the proper procedures for filing bankruptcy in Florida.

In 2004, Boca Raton accountant Jay Levin pleaded guilty to manslaughter for shooting and killing his 16-year-old neighbor, Mark Drewes, after Drewes rang Levin’s doorbell a number of times as a prank.

Levin was sentenced to 52 weekends in jail and 10 years of probation. In 2007, he was ordered to pay a $750,000 judgment to Drewes’ parents, Greg and Luciana Drewes, who sued Levin for shooting and killing their son.

In February, Levin filed Chapter 7 liquidation bankruptcy and sought to have the judgment discharged as part of his bankruptcy filing. On Sept. 9, a U.S. bankruptcy court ruled that Levin must still pay the judgment even though he declared bankruptcy.

According to a UPI story, U.S. Bankruptcy Court Judge Erik P. Kimball said in his opinion that, "The debtor is an adult. He owned a handgun. He took the time to retrieve the handgun and bring it to his front door. He opened the door and saw Mark Drewes. The debtor shot his handgun to repel Mark Drewes. It is inconceivable that the debtor did not realize Mark Drewes would be injured or killed."

Kimball called Levin's shooting "willful" and said that Levin must therefore be responsible for the consequences of the intentional act. Bankruptcy law does not allow the discharge of debt from “willful and malicious injury.”

Data from the Miami Association of Realtors shows that, contrary to national trends, pending home sales in Broward County rose by 17 percent in August compared with the same month one year ago.

A pending sale is when a contract has been signed but the transaction has not yet closed. Pending home sales figures included single family homes and condominiums.

According to REO Insider, South Florida market conditions are strengthening as the rest of the nation continues to struggle, primarily due to the large concentration of international buyers in the Miami and Ft. Lauderdale areas. According to the Miami Association of Realtors, an estimated 60 percent of sales in August involved a foreign buyer.

Condominium sales in Broward County were higher than single family home pending sales in August, where there were 4,350 units pending sales compared with 3,495 single family homes. Pending condominium sales in Broward were more than 27 percent higher in August of this year than they were at the same time last year.

Nationally, pending home sales have been impacted significantly by the expiration of the homebuyer tax credit. The National Association of Realtors said that its pending home sale index declined in June by 30 percent and in July by 19 percent compared with the same periods one year ago.

If you are a Florida homeowner and need more information on how to avoid foreclosure, contact our Jacksonville foreclosure defense law firm.

According to data from mortgage analytics firm CoreLogic, almost 40 percent of American subprime mortgages are delinquent by at least 60 days – of that number, 35 percent are over 90 days past due, 13 percent are in foreclosure and nearly four percent are bank-owned.

CoreLogic reported to HousingWire.com that almost 2.4 million subprime mortgages are still actively delinquent, which is down 12.5 percent from one year ago.

However, what may be of more concern is the data showing that almost 6.5 million prime mortgages are also 60 days delinquent, and are showing no significant decline. In addition, foreclosures on prime mortgages are growing, and are now over two percent of the total.

While subprime mortgages got the lion’s share of attention in the past few years, they represent only 5.4 percent of the total active loan market. Prime loans are the dominant loan type at more than 40 million. In terms of sheer numbers when it comes to delinquent mortgage loans, there are 6.4 million delinquent prime loans as compared with only 950,000 delinquent subprime loans.

This has led CoreLogic senior economist Mark Fleming to say that when it comes to economic policy regarding decreasing delinquent mortgages, lawmakers should be looking at what kinds of loans people have – and focusing law toward the prime space.

We see many clients who have tried working through debt settlement companies to avoid bankruptcy, only to discover that bankruptcy was the better solution for them after all. Why? There are several reasons.

Debt settlement costs you more. Even if a debt settlement company says they can settle your debt for half of what you owe, they do not do this for free. You still have to pay the debt, plus a fee – usually 15 percent of the total debt.

Creditors don’t have to settle. A debt settlement company cannot guarantee that all your creditors will agree to a settlement. If they do not, you are still responsible for the debt.

Your credit score will go down. A major portion of your credit score is dependent on paying your bills on time. If you are paying through a debt settlement company, even with the agreement of your creditors, your payments are still reflected on your credit report as late.

So how is bankruptcy a better solution than debt settlement? First, it will cost you less. You are not paying any fees to a middle party to settle your debt.

If you file bankruptcy, your creditors are obligated to follow bankruptcy law. If you file Chapter 7 bankruptcy, you pay nothing to your creditors. If you file Chapter 13 bankruptcy, the court will decide, based on your current income, what you can pay creditors and the process will be managed through a court-appointed trustee.

And even though bankruptcy does affect your credit score, once the bankruptcy has been discharged, you can start rebuilding your credit immediately – which is usually easier to do when you have the financial resources available now that your debt has been wiped out through the bankruptcy process.

According to a recent article in the Jacksonville Business Journal, Jacksonville bankruptcy filings for the first half of 2010 are at the highest level since the new bankruptcy laws were enacted in 2005, making it harder for consumers to fill bankruptcy and creating a surge in new cases before the new law went into effect.

During the first six months of 2010, bankruptcy filings in the Middle District of Florida, which includes Jacksonville, Orlando and Tampa, were up over 15 percent from the same period one year ago. Personal bankruptcies – Chapter 7 and Chapter 13 cases – were up over seven percent.

The largest percentage increase in Middle District of Florida bankruptcy filings was for Chapter 11, or business bankruptcies. A total of 440 businesses filed for Chapter 11 bankruptcy protection during the first half of 2010; over 25 percent of those cases were filed in Jacksonville, including several high-profile real estate filings by the Sawgrass Marriott Resort & Spa in Ponte Vedra Beach and the Shoppes of Lakeside in Neptune Beach.

One reason for the high number of commercial real estate filings is the number of lease defaults that commercial property owners have suffered during the economic crisis. In some instances, defaults on leases have forced more commercial properties into Chapter 11.

A July 21 article at CNNMoney.com says that all those ads telling consumer they can save their homes from foreclosure by filing personal bankruptcy are NOT too good to be true. They’re true!

The article notes, however, that if you do not have sufficient ongoing income to continue to pay on your mortgage – even if you obtain a modification from your lender – then filing personal bankruptcy will not save your home from foreclosure.

As the report states, filing bankruptcy will stop foreclosure in its tracks. The court not only forbids lenders from continuing the foreclosure process, it also forbids them from even contacting you to try to collect.

So which do you file, Chapter 7 or Chapter 13?

Most experts believe that Chapter 13 is more effective in helping debtors keep their homes because the 3-5 year timeline usually provides enough time to repair broken finances. Chapter 13 bankruptcy may even allow a debtor to “strip away” second and third mortgages, especially if the home is worth less than you owe.

Chapter 7 bankruptcy may be a solution if discharging all your unsecured debt will free up enough income to allow you to make your mortgage payments. However, Chapter 7 bankruptcy usually results in the liquidation of all of a debtor’s assets, including a home. Your Florida bankruptcy attorney can provide you with guidance.

A Chapter 7 Bankruptcy is also known as a straight liquidation bankruptcy. Because of the Chapter 7 Bankruptcy's other title many people believe they will have to liquidate or get rid of all their assets, like their house or their car. However, what a Chapter 7 Bankruptcy actually does is liquidate or wipe away all of your debts, thus its a straight liquidation bankruptcy. It is also the most preferred type of bankruptcy by consumers. After you have discharged all of your debts, you essentially get a free start.

Continue reading " A Jacksonville, Florida Bankruptcy Attorney Tells You the Secrets about a Chapter 7 Bankruptcy " »

When Long Island resident Michael Fleming declared bankruptcy in April, a bankruptcy court ordered that his property be sold to satisfy his debts. And his half-interest ownership in the home where his 81-year-old mother lives is to be part of that asset sale in October – under the condition that she be allowed to live there until her death.

When Joan Fleming transferred the title to her home to a son and daughter as part of her estate plan, this was undoubtedly not a scenario she had in mind. According to a story in the New York Post, a buyer would not be able to move in until she dies, and even then the buyer would still need to negotiate with the daughter on payment of an outstanding mortgage debt of $66,000.

Fleming’s bankruptcy attorney was quoted as saying that, “Whoever buys this, buys a lawsuit.” The auctioneer for the property said it will likely be difficult to sell for another reason as well: he is not allowed into the house to see exactly what he will be selling. And, he noted, if a buyer is found, the longer she lives, the lower the return on the investment.

Need to know more about the intricacies of filing for bankruptcy in Florida? Contact our Jacksonville bankruptcy law firm.

Sea Island Co., a luxury resort complex off the coast of southern Georgia, filed for Chapter 11 bankruptcy on August 11 and plans to sell all of its assets -- including its Cloister Hotel and three other resorts, four golf courses and two private clubs-- to Oaktree Capital Management LP, Los Angeles and Avenue Capital Group, New York, for $197.5 million, subject to bankruptcy court approval.

Founded in 1928 as an exclusive vacation spot for the wealthy, Sea Island is a 2-by-5-mile stretch of private beaches and stately oaks that has been a favorite vacation spot for several U.S. presidents, including George W. Bush, Dwight D. Eisenhower and Calvin Coolidge.

Sea Island Co. is family-owned and operated by Bill Jones III, the grandson of Sea Island founder Bill Jones. The company cannot pay off the $482 million in debt that it incurred primarily as the result of a $395 million expansion and renovation in 2006 and 2007. The lenders have approved the sale, and a Brunswick, Georgia, federal bankruptcy court judge will decide how the sale proceeds will be divided.

According to an Aug. 12 Florida Times-Union article, the current management team is expected to remain in place and the properties are expected to continue business as usual. The PGA Tour visits Sea Island’s Seaside Course on Oct. 7-10 for the McGladrey Classic.

If you have borrowed from your retirement account to fund a college education or purchase a home and are now facing bankruptcy, you may be wondering if that loan will be discharge in bankruptcy like many of your other debts.

And the answer is: it depends.

If you file Chapter 7 bankruptcy, a loan from a retirement plan is not subject to discharge. That means you will still have to pay it back. The reason for this is, Chapter 7 bankruptcy discharges debts you owe to others – not to debts you owe to yourself.

If you file Chapter 13 bankruptcy, a retirement plan loan becomes part of your repayment plan for the next three to five years, along with your other debts. You may only be required to pay back a portion, however, and the balance will be discharged at the end of your Chapter 13 bankruptcy.

You should also be aware that if you took out a loan from your retirement plan and are currently having payments automatically deducted from your paycheck, those payments will still continue to be withheld. Although the “automatic stay” that comes with a bankruptcy filing immediately stops collection efforts from creditors, it does not stop your collecting from yourself.

If you are nearing the age of retirement – or have significant assets stashed away in retirement accounts for when that day finally arrives -- how would filing a Chapter 7 or Chapter 13 bankruptcy affect your plans for retirement?

The good news is, if you have money in an ERISA-qualified pension plan like a 401(k), 403(b), Roth IRA, SEP IRA, SIMPLE IRA, Keogh, profit-sharing plan, money purchase plan or defined benefit plan, all of your money is exempt from creditors. That means you get to keep it, even if you file for Chapter 7 or Chapter 13 bankruptcy.

The only exceptions to this rule are for traditional and Roth IRAs: the exemption is limited to $1,095,000 per person, so if you have more than that in a traditional or Roth IRA, anything over that amount can be used to pay off creditors.

You should also know that while the funds in your account are exempt, any income you receive from retirement benefits is not. If you file Chapter 7 bankruptcy and are currently receiving income from retirement benefits, you can keep what is necessary for your own support and the rest will go to pay off debt. If you file Chapter 13 bankruptcy, your paid benefits will be figured into your income when determining your repayment plan.

The news is full of stories about divorce attorneys who use Facebook, MySpace and other social networking sites to get information about their clients’ soon-to-be exes to use in court. I’ve even blogged about it myself.

However, what is reported on less often is that debt collectors also use these sites to try and collect on delinquent debts. And while the law provides rules on how debt collectors can obtain information about a debtor’s location, it is frustratingly vague on the use of social networking sites.

To protect yourself, you should:

• Never post your personal information – address, phone number, email address, etc.
• Never post your employment information
• Never accept a “friend request” from someone you do not know
• Always use your privacy settings to allow only people you know to view your page

According to an NPR story, one debt collection agency says it regularly joins debtors’ social networks to talk to their friends and find out what they are doing. Going out on a new sailboat? That tells the collector you have an asset they can take.

In addition, if you have filed for bankruptcy, you should never post photos of yourself enjoying a lavish vacation or showing off a new car online.

The U.S. Treasury Department has added $2 billion to double the size of its Hardest Hit Fund in an effort to help unemployed homeowners avoid foreclosure.

According to a story in the New York Times, the Department of Housing and Urban Development will be drawing on $1 billion provided to it by the new financial overhaul legislation to work with local aid groups to provide interest-free bridge loans to distressed borrowers.

The Obama administration, acknowledging that the foreclosure crisis is far from over, said the new funds are needed to supplement existing programs that are already helping homeowners avoid foreclosure.

Government officials noted that while the housing market usually helps lead the U.S. out of a recession, it is holding the recovery back this time. While interest rates are at historic lows, unemployment remains high and unemployed homeowners are being squeezed out of their homes by falling values and an inability to keep up with mortgage debt.

Florida will receive an additional $235 million in federal aid and was one of the first states to benefit from the Hardest Hit Fund when it distributed over $1.5 billion to the five states hit hardest by the foreclosure crisis.