Bankruptcy and Foreclosure Attorney Blog

Many times debtors pay their Chapter 13 plan payments and forget or do not budget for their condo or homeowner's association fees. The bankruptcy only takes into consideration the past dues assessments. If the debtor falls behind on the post-petition payments, the Association may ask the Court for permission to record a lien and file foreclosure, or in the alternative, for adequate protection payments.

Adequate protection is usually available if their is no equity in the property or it can come in the form of requiring the debtor to keep property insurance on the property or force the debtor to make the regular monthly payment. If the debtor fails to make the payment, they are disobeying a court order.

The debtor may be able convert the post petition arrears into the chapter 13 plan if the Association agrees. The Association may work something our where the debtor can pay the Association directly over a period of time. If you have questions about this, you should consult an experienced attorney.

Continue reading " What Happens if I do Not Pay my Post-Petition Assessments in a Florida Chapter 13 Bankruptcy? " »

With the recent housing collapse, many people are underwater or upside down on their homes. In some instances, a Chapter 13 can give relief on a second mortgage or Home Equity Line of Credit ("HELOC").

However, if the junior lien holder has some security interest in the property, it cannot be "stripped" if the property is their personal residence. If the property is an investment property, the liens may be subjected to "cram down." Cram down essentially means the debtor equates the value of the home with what is owed on the house. However, whatever secured portion the junior lien holder holds, must be paid off during the Chapter 13 plan.

The unsecured portion will receive a pro rata share of whatever the unsecured creditors are receiving and the balance will be discharged at the end of the plan. If the debtor(s) do not complete the plan, then the cram down is ineffective and the lenders will retain their ordinary liens.

Continue reading " Can I cram down my Primary Residence in a Chapter 13 Florida Bankruptcy? " »

During each consult where chapter 13 is a possibility, every client always asks, "What will my plan payments be?" Unfortunately, that is pretty difficult to determine in the initial consultation.

The plan payment is based on the debtor's income and expenses, whether or not there are arrears on secured debt, the interest rates on secured debt, and whether or not strip offs or cram downs will or will not be available.

Please remember, if there are arrears on a mortgage or car loan, you only have 60 months or five (5) years to catch it up. The terms on a first mortgage primary residence cannot be altered unless the bank agrees to a modification while the bankruptcy is pending and active. If the plan payment is too high to catch up the arrears on a particular piece of secured debt, then the debtor should either surrender the property to a chapter 7.

Continue reading " What will determine my Chapter 13 plan payments? " »

Before the real estate collapse in 2006, many homeowners took out 2nd mortgages or home equity lines of credit on their homes. Basically, if a homeonwer has equity in real property, lenders may be willing to give a line of credit based on that equity. However, that line of credit is secured by the property and in the event of a default, the lender can foreclose on the property.

Now, is it always in the best interests for the lender to do so? Nowadays no, but they can. It is not in their best interests to foreclose on property now, because homes are so upside down.

If the 2nd lender forecloses on the property that is underwater, the first lien holder gets the sale proceeds first in order to satisfy that lien. Many times, the 2nd lender is left with nothing bit has incurred the costs of moving forward with a foreclosure.

Continue reading " Can a HELOC or 2nd mortgage foreclose on my Property? " »

When considering filing for bankruptcy, you should be aware of pre-filing mistakes that can be tempting. You should always be careful about taking your name off or transferring title to your assets before filing for bankruptcy, especially to “insiders”, which are close friends or family members.

The reason is that courts will closely scrutinize these types of transfers to determine if they are fraudulent, or made with the intent to frustrate the claims of creditors. If so, the transfer may be set aside by the court.

The basic rule is this: If the debtor transfers property, which includes money, to an insider within one year of filing for bankruptcy, the transfer may be set aside as an insider transaction. The transaction would be considered “preferential” by the bankruptcy code, meaning that it was for the benefit of the insider and to the detriment of the other creditors. If you transfer property or payback money to insiders to the detriment of your other creditors, the bankruptcy Trustee can file an action against the person who the transfer was made to in order to recover the asset(s).

The sort of behavior would be considered questionable by the court and possibly even fraudulent, and could result in the denial of your discharge. Moreover, if a debtor transfers ownership of any asset, including real estate, cars or certificates of deposit, for the purpose of frustrating the valid claims of creditors, the Trustee can file an action to “avoid the transfer”.

The bottom line is that those considering filing for bankruptcy should be very careful about transferring assets, taking their name off assets and repaying loans to friends or family members. These kinds of actions could lead to much bigger problems down the road for the debtor and for the people to whom the transfers were made. It is also important to know what property is exempt in Florida and therefore not subject to being taken by creditors.

Continue reading " Can I Take My Name Off Titles and then File a Florida Bankruptcy? " »

In today’s economic climate, Floridians should be aware of their options if they are threatened with a foreclosure. RMFMP stands for the Residential Mortgage Foreclosure Mediation Program. The program was created by an Order of the Florida Supreme Court and its purpose is to provide an opportunity for borrowers and lenders to come up with an agreement that allows the homeowner to remain in the home.

The process involves a trained mediator, who is a third party with no stake in the outcome of the situation and whose only purpose is to facilitate effective communication and mutually agreeable solutions. The RMFMP is a beneficial option for many homeowners because it completely free of charge and its goal is to keep the family in the home.

However, there are some requirements to be eligible to participate in the program:
1) The home must be the party’s primary residence
2) The home must have a current homestead exemption
3) The loan that the party used to purchase the home must be subject to the Federal Truth in Lending Act

If you meet these requirements, you may choose to participate in the program. The process works like this: After you receive the Summons and Complaint, or Notice of Foreclosure, you must file a written Response within 20 calendar days from the date you were served. If you elect to participate in the RMFMP, your case will be assigned to an approved credit counseling agency who will contact you to talk about your financial situation. After the counseling session, your case will be scheduled for mediation, where the mediator will try to facilitate a solution that avoids your home being foreclosed upon.

A mediation session does not guarantee that the lender won’t proceed with the foreclosure action, but it does provide a non-adversarial setting in which the lender and borrower may be able to reach a fair solution that keeps the family in the home.

Continue reading " What is the RMFM Program in Florida? " »

This answer depends on the reason, the chapter, and a variety of circumstances. Many times a debtor or debtor's attorney is looking to hold an entity liable for violating a discharge injunction. In order to do so, the bankruptcy case must be reopened and an adversary proceeding filed. (usually in the form of a complaint) Many times the debtor wants the bankruptcy case reopened in order to include a debt that was omitted from the bankruptcy schedule.

This district and most other districts do not allow the debtor to reopen the case to include creditors. Many times a debtor fails to reaffirm the debt on a vehicle and after the order of discharge goes through, the lender wants to foreclose or repossess the property. Whether or not the debtor will be allowed to reopen the estate for the sole purpose of filing the reaffirmation agreement depends on the Court and Judge assigned to the case.

Continue reading " Can I reopen my Florida Bankruptcy Case? " »

Many times debtors ask whether or not interest accrues on debt included in the bankruptcy. Interest does run on your secured debt and at the same contract rate the debtor agreed to (for the most part).

There are instances where the property can be crammed down and the Till interest applied. However, for the most part, the contract rate or terms that the debtor agreed to are the terms the debtor will have to live by unless a modification is reached with the lender. Interest on unsecured debt does not accrue. Interest on secured arrears do not accrue. Interest and penalties on tax debt do not accrue.

Therefore, when a debtor lists $100,000.00 in unsecured debt on the schedules, the most that the debtor could be required to repay the unsecured creditors is $100,000.00. When the Trustee requires a debtor to submit a 100% plan, this is what he or she is referring to. The Trustee believes the unsecured creditors should be paid at 100% over the life of the plan.

Continue reading " Does Interest accrue in my Chapter 13 Florida Bankruptcy? " »

There is new foreclosure legislation pending that cost Florida homeowners the right to defend their home in a foreclosure action by their lender. The legislation is called the Fair Foreclosure Act and it essentially would convert Florida from a judicial to a non judicial state. Do not let the name mislead you.

The legislation is a result of backed up foreclosure courts and an underfunded budget. Governor Scott recently omitted special funding to help support the foreclosure courts. Therefore, the courts are running low on resources and are asking for its elected leaders for a resolution. What does this mean for Fllorida foreclosure defense attorneys? It is uncertain but the horizon does not look well. If there is no court venue to fight the case, homeowners may lose their right to defend.

The requirements a bank would adhere to would be less stringent and less burdensome than what they are required to do now. It is ironic that will we have less regulation on the banks even in the midst of the biggest litigation scandal in decades exposed last fall.

Continue reading " New Foreclosure legislation in Florida? " »

The answer is you can. If you decide to surrender your home and or your vehicle, then you can discharge your personal obligation on those notes. However, if you want to keep the collateral, and you are in a chapter 7, you may have to sign a reaffirmation agreement or just stay current on the payments. In a chapter 13, it is a little bit different.

Although you may surrender the collateral, the lender is entitled to a deficiency claim if there is one. That claim would be lumped in and accounted for in the unsecured debt pool. The lender would be paid out whatever percentage the class is being paid out. If there is equity in the collateral, the lender would not be entitled to a deficiency claim.

These types of actions must be brought within 90 days of the confirmation order (assuming there is one). Failure to file a proof of claim for the deficiency within the 90 days (in most instances) waives the lenders right to a proof of claim.

Continue reading " Can I surrender my home and or vehicle in a Florida Bankruptcy? " »

An important question for those considering bankruptcy is how a filing will affect any existing wage garnishments. Wages can be garnished by employers for a number of reasons, including unpaid judgments, unpaid loans and domestic support obligations like child support or alimony. In a garnishment situation, a portion of the employee’s wages are held by the employer until the obligation is satisfied.

The short answer is that, yes, a bankruptcy filing under Chapter 7 or 13 will stop wage garnishments, but not under every circumstance. When one files for bankruptcy, an automatic stay goes into effect, meaning that all collection activities against the debtor must stop immediately, including wage garnishments. The garnishments will not restart and those debts will be dealt later with in the bankruptcy proceeding.

Filing for bankruptcy under Chapter 7 or Chapter 13 will help you with many kinds of debts, including unsecured debts such as credit card debt, medical bills and loans in which no collateral was given. However, under federal law there are certain types of debts which are not dischargeable in bankruptcy, meaning that they will not be erased under Chapter 7 or reorganized under Chapter 13.

These non-dischargeable debts include student loans and domestic support obligations, among others. So, if your wages are being garnished because of these types of debts, the garnishments will continue after filing for bankruptcy.

Continue reading " Can a Florida Bankruptcy Stop a Wage Garnishment? " »

One of the biggest problems in today’s economic climate is the prevalence of homes being foreclosed on, perhaps due to issues beyond the homeowner’s control. Maybe the homeowner lost his job and simply cannot afford to make the mortgage payments or has other, more pressing financial needs.

The fact is, one’s home is often his most valuable asset, both in economic and non-economic terms and when foreclosure proceedings are commenced, it can be difficult to know where to turn. Filing for bankruptcy can be one avenue for stopping foreclosure proceedings, although it is not necessarily a long-term solution.

The process works like this- after you have filed your bankruptcy case (which must be in good faith), there is an automatic stay which goes into effect immediately. This stay prevents your creditors from engaging in any further collections activities. This automatic stay will stop any foreclosure proceedings, at least temporarily. After you file for bankruptcy, the court will now legally control your debts and any property not covered by the Florida exemptions. After that, the debt that you owe on your mortgage will be dealt with in the bankruptcy proceeding.

In a Chapter 7 proceeding, a mortgage is considered a “secured” debt since the creditor owns an interest in the property and so the homeowner can either surrender the property or choose to reaffirm the secured debt and therefore keep the property as long as payments are made in a timely manner. In a Chapter 13 proceeding, the secured creditors are paid through the bankruptcy plan.

For any questions about what you can do to deal with a foreclosure proceeding or bankruptcy in general, contact the experienced attorneys at our Jacksonville, Florida bankruptcy law firm.

Continue reading " Can Bankruptcy stop a Florida Foreclosure? " »

This question depends on where the debtor lives and where the case was filed. Even if you live within a paritcular district, the venue you wish to file in may not be the one you are allowed under the bankruptcy code.

In the state of Florida, there are multiple bankruptcy courts within each district. For example, in the middle district of Florida, there are three court locations. Jacksonville, Orlando, Fort Myers and Tampa host these court locations. Florida also supports a Northern and Southern District with bankruptcy court locations in those locales. Bankruptcy law is primarily a creature of federal law. It makes sense to hold the bankuptcy proceedings in a federal forum.

Even after the bankruptcy case is closed, motions and other court papers can be filed in the same bankruptcy venue to reopen cases for all sorts of various issues. If there are issues that involve state law, the bankruptcy may hear and rule on some of these issues. Sometimes, judges may tell the parties to go resolve the issue in a state court venue.

Continue reading " Where are Bankruptcy Courts located? " »

What is a proof of claim? A proof of claim is what a creditor files to show they have an interest in the claim. Many times, the claim filed is wrong or mistaken in balance. It is important (more so in a Chapter 13 bankruptcy) to check the proof of claims that are filed with what you believe you owe.

Now, creditors are entitled to tack on reasonable late fees, attorneys fees and costs to the overall balance. However, the claim must be reasonable and if it is extraordinary the debtor can object to the proof of claim. There have been instances where proof of claims are filed and the debtor does not owe on that particular debt anymore.

It is important to get these proof of claims correct especially when dealing with secured claims. if you feel it is incorrect, you or your attorney may be able to object. Debtors can also fight and challenge the validity of mortgages and notes, just as if they were dealing with a foreclosure defense case.

Continue reading " Can I question a Proof of Claim that is Filed in my Florida Bankruptcy Case? " »

Many times cases can be dismissed for a variety of reasons. For example, in a Chapter 13, the debtor's failure to make the plan payments can cause a case to be dismissed. Once the judge signs the order and the case is dismissed, the automatic stay is lifted and the debtor loses the bankruptcy protection.

For example, once the case is dismissed, the debtor could have a vehicle repossessed if they were in default on the loan before filing for bankruptcy. A lender of real property could begin with or continue foreclosure proceedings against the debtor.

However, the debtor can file a motion for rehearing to reinstate the case. You have to show good cause why the case should be reinstated. Because many of the bankruptcy courts have gone to e-filing, there have been problems in the past with software glitches. This has, in the past, been a valid reason to reinstate the case

Continue reading " If my Florida Bankruptcy Case is Dismissed, can it be Reinstated? " »

If you are looking to purchase or refinance a home, now may be the best time ever to do so. Mortgage interest rates have reached an all time low by falling below 4% for the first time ever! In January of last year, if a borrower took out $250k on a home loan, the average interest rate was just over 5%.

Even with the record low rates, the housing market is sluggish because borrowers are skeptical of job security and have other existing debt. However, the federal government may be stepping in and reducing rates even lower for several reasons that may or may not be politically charges.

Those who choose or thinking of refinancing should run the numbers to make sure it makes sense to refinance. By refinancing, you should get a lower rate than you currently are at. You will want to see the closing costs involved to do a refinance and make sure you are still coming out on top. Furthermore, it can be difficult to find a lender willing to refinance if there is no equity in the home.

Continue reading " Mortgage Interest Rates Reach All Time Lows " »

This can be a more complicated matter than you would think. Currently, chapter 7 debtors can discharge whatever personal obligation they owe towards homeowner and condo assessments before they file. Once the case is filed, any new assessments that are incurred while title is still in the debtor's name, the debtor is personally liable for.

Only when title is transferred out of the debtor's name, will the debtor be released from these financial obligations. Even if the debt is discharged as to the debtor personally, the association can still put a lien against the property and foreclose on the lien unless it is satisfied.

In a chapter 13 bankruptcy, the debtor can roll pre-petition arrears into the chapter 13 plan. However, future assessments (even during the pending chapter 13 case) are the debtor's responsibility. The idea is the cost should have been calculated in the mean's test as an expense bringing dowon the debtor's disposable income.

Continue reading " Am I responsible for my Condo and HOA fees if I file a Florida Bankruptcy? " »

There are income limits and qualifications for chapter 7 bankruptcy. The income limits are set by each particular state median incomes. However, not all "income" is considered or used in calculating the total household income.

For example, social security, unemployment, and VA military income is not considered "income" for mean's test and qualification purposes. If your income level is over the state median income, then the debtor must pass what is called the "mean's test."

The mean's test looks at the debtors income, expenses, and disposable income. If the disposable income is too high (and their are guidelines for this) then a presumption of abue arises if that particular debtor wants to file for bankruptcy. If the majority of a debtor's debt is business related, the debtor does not have to pass the mean's test.

The legislative purpose behind this theory is that we do not want to discourage small business owners from trying to open or start a business. If debtors were not able to discharge debts connected with trying to run and operate businesses, it would deter people from trying.

Continue reading " What income is Considered for Chapter 7 Qualification Purposes? " »