Bankruptcy and Foreclosure Attorney Blog

There are many rumors going around that President Obama will be or plans to implement a new home relief program in the upcoming months. Whether it is a ploy to gain political gain or if the program will have teeth, only time will tell. The jist of the plan looks to allow struggling homeowner's the opportunity to refinance the home at lower interest rates. This will in turn lower mortgage payments. The specifics of the policy have not been released, but its anyone's guess how the program will be funded and carried out. Surely, the program will have limitations and qualifications before anyone could participate in such a program. The major banks have yet to comment on the program and how it will affect their "bottom line."

What is the difference between a "refinance" and a "loan modification?" A refinance allows the homeowner through either the current lender or through a separate lender to basically have the prior loan bought out and a new loan issued. Typically the new loan is more than the old loan but it could be at a lower interest rate which in turn may reduce the payments significantly. However, typically there are closing costs and fees associated with a refinance just as if you were buying the home for the first time. You need to make sure that the long term benefits outweigh the costs. Many times the homeowner/borrower still loses money even if the interest rate is better. Refinancing requires new Truth in Lending Act (TILA) disclosures of how fees and assessments are calculated. A three day notice of rescission is also required to be provided.

What is a loan modification? Many times homeowners fall behind on their mortgages and need relief. Loan modifications are a common method to get such relief. However, loan modifications are very difficult to come by and usually require several attempts of providing certain information before the bank decides to approve or deny the request. A modification can allow the homeowner a better interest rate, it can take the arrears and add them to the back of the loan, it may involve a temporary reduced payment such as a trial period, it may involve an overall principal reduction. Loan modifications should be recorded in the public records but do not typically require TILA disclosures.

Continue reading "Obama's New Home Mortgage Relief Plan" »

This is a common problem in many bankruptcies. Clients tend to transfer things before they file bankruptcy in hopes of not losing that particular piece of property. Transferring property out of your name shortly before filing bankruptcy is a quick and easy way to have your bankruptcy discharge revoked and you could still potentially lose the property. The entire look-back period for fraudulent transfers is 2 years. There is a 90 day period before the petition is filed where the Trustee can assert his or her will and void any transaction made within that time if the transaction did not involve a family member or friend. The Trustee can look back a year for a non fraudulent transfer to a family member. Intent is key. The look back period moves to two years on any transaction if there was a "fraudulent scheme" in place. This can be very hard and difficult to prove because it all comes down to intent. Two years is a lot of time to pass if something like voiding a fraudulent transfer has been made. Witnesses can forget things , data can be lost or destroyed, it becomes difficult for the Trustee to prove his or her case. That is not to say the Trustee cannot be successful because they can be. In fact, they can void the transaction and sue recipients of the transaction.

What happens if I am sued or someone I know is sued by the Trustee? If a judgment is entered against you, you will be responsible for the relief that the moving party is asking for. That can be monetary or equitable relief. Refusing to pay could lead to you becoming in contempt of court. If you are still in possession of the property you received you could always return it. However, I would seek legal counsel before you just forfeit your rights and give in. You may have legitimate defenses to the accusations and the Trustee may not be entitled to a dime. Many times, the Trustees do not know someone's intent when a transfer like this is made that is why we have 2004 examinations and they have the ability to sue and find out whats going on. The Trustee also has the ability to revoke a discharge AND recover the property. That is a lose, lose situation. It is meant as a deterrent for filing a bankruptcy in "bad faith." My argument is always "they are not lawyers." They do not know the law. Debtors should be up front and honest with their attorney so these types of disclosure can be made on the bankruptcy petition and schedules.

Being served with this type of action is not something you should ignore. You should speak with an experienced bankruptcy attorney who litigates these types of cases.

Continue reading "What is a Fradulent Transfer in a Bankruptcy?" »

As a practicing bankruptcy attorney in the Middle District of Florida, issues about proof of claims arise quite frequently. What is a proof of claim? A proof of claim is a document filed with the bankruptcy court that shows what amounts debtors owe on debt. The claims are categorized as unsecured or secured or priority. Most credit cards and medical bills are unsecured claims. Debt like mortgages and auto loans are secured debt. Certain IRS debt and domestic support obligations are considered priority debt. Proof of claims have bar dates and if creditors fail to file their claim before the date expires, the creditor may lose its right to assert a claim. Proof of claims are important in chapter 7 cases if there are assets to be liquidated. Typically, the bankruptcy Trustee will make a finding of assets and give creditor notice that the proof of claims bar date will be extended in order for creditors to file proof of claims. Once it is known the debtor has assets available and subject to liquidation, creditors jump at the opportunity to file proof of claims. Unsecured claims will get a pro rata share of the distribution. Secured claims are allowed to get their full claim.

Who files proof of claims? Typically, creditors file proof of claims on their own behalf. However, many times, chapter 13 plans cannot be confirmed until certain proof of claims are filed. If the bar date on the claims pass, the debtor or the debtor's attorney or even the Trustee can file proof of claims on behalf of creditors. It would be noted in the proof of claim that a party other than the creditor is filing the proof of claim. However, if there were supposed to be arrears on a certain secured claim, the debtor's attorney can file a proof of claim on behalf of the creditor that shows no arrears and because the creditor waits to object (if at all) after the bar date, the objection is typically waived. This could save the debtor thousands of dollars. That is why creditors should file proof of claims in a timely manner.

Can the proof of claim be objected or disputed? In most circumstances, yes it can be, as long as the objection is timely. The amount owed on arrears, principal, or even objections to the wrong party claiming money is owed or no money being owed at all are common objections. If they are objections, the court will generally hold hearings to determine the issues and rule on those issues.

Continue reading "Who can File a Proof of Claim in a Florida Bankruptcy?" »

An adversary proceeding is a lawsuit within the bankruptcy. It is treated very similarly procedure wise to state court lawsuits. There are all types of causes of action available and most require a filing fee to initiate the case. When the debtor is a party to the lawsuit, the debtor does not typically pay for any type of filing fee. What about if the debtor is a Plaintiff? Even so, the debtor is not charged with paying a filing fee. Many times debtors look to bring automatic stay violations or discharge injunction violations.

In these actions, the debtor is the Plaintiff looking to sue a particular creditor for such violation. A summons is required, and an answer to the adversary complaint should be filed within a specific amount of time, usually 30 days. Failure to answer the complaints could result in a default judgment. What does that mean? It means any defenses or counterclaims are waived and all allegations are deemed admitted. There are ways to set aside a default judgment, but that should be avoided if possible. There is usually a pretrial conference and the Federal Rules of Evidence and Procedure are deemed to govern the case. It is imperative that all parties involved know the procedural rules before getting involved with this type of case. Discovery is permitted also. What is discovery? Discovery comes in many forms: request for production of documents, request for admission, depositions, interrogatories, etc. To simplify the term, it means one party is trying to get information about the other party. Now, there are protections and objections that can raised to certain discovery. For example, a party cannot ask for communications between opposing counsel and his or her client. That is protected by the attorney-client privilege. There is an additional protection often used to protect certain documentation from being turned over to the opposing party and that is the "work product" rule. This rule protects property that the opposing counsel or party prepared in anticipation of litigation. This is generally not discoverable. Discovery requests that are burdensome are also objectionable if they are timely brought. If the only the way the information can be obtained is by opposing counsel providing then it the court may not find the request to be that burdensome.

After the pretrial conference and discovery has concluded, a trial or evidentiary hearing will most likely be set. During the trial, witnesses and exhibits are used by both sides in trying to prove or disprove the case. The bankruptcy judge rules (unless a jury trial which is rare) and the losing party may have the ability to appeal to the 11th Circuit Court of Appeals.

Continue reading "What is an Adversary Proceeding in a Florida Bankruptcy?" »

One of the newest trends making its way up from south Florida is the notion that modifications have a better chance at being approved through the bankruptcy courts. As mentioned in previous posts, the Florida mandatory foreclosure program for primary residences has been cancelled. The Florida Supreme Court did away with that program in December of 2011. With that being said, debtors/homeowners are distressed over the fact that there is no state law mandating that banks try and work anything out with their customers. Bankruptcy judges in the middle district of Florida are beginning to understand this and are allowing debtors in a chapter 13 to try and force the banks to come to the table and mediate. The banks are by no means required to settle or approve any deal but the bankruptcy judges will be tougher on the banks if they do not come to the negotiations in good faith, a major problem in state court. The bank representatives that were sent over to mediate did not have the settlement authority to approve modifications or principal reductions and so forth. House notes that are owned by trusts need investor approval before a modification or any other decision on the property can be made. Every note is not owned by trusts but most of them are. What the bankruptcy courts are looking to do is force the mediation settlements to mean something. The success rate in state court for homeowners getting modifications were slim to none. Thus far, the bankruptcy courts are having much better success rates. Now, the question will be, "can that success be sustained?"

Now, bankruptcy attorneys are permitted to charge extra fees to handle modifications for debtors. Because this area of law is so new there is probably a wide range of fees which attorneys are charging. Once there is a better understanding of what the procedure is and how long these typically last, the market will set the price and attorneys will have to be competitive with one another. Until then, like most anything new, it will take time to work out the kinks.

There are a number of different federal programs and nonfederal programs that homeowners may or may not qualify for. Some banks have their own in house policies and procedures for giving nonfederal modifications. With the upcoming presidential election, home refinancing and regulation of mortgage lenders will be or should be one of the top priorities for the administration. The mortgage bubble burst effects not only homeowners but contractors, builders, subcontractors, retail stores, and the list goes on and on. The burst had a domino effect on the economy.

The bankruptcy courts may be on to something if more modifications and homeowner relief are reached through the bankruptcy venue. However, I am concerned with the possibility that the court could becomes flooded with these types of cases and issues and the court will lack the resources (just as the state courts experienced) with keeping up with these quasi-bankruptcy related requests. If it becomes successful, then everyone will want in on the action.

Continue reading "Home Modifications and Florida Bankruptcies" »

One of the many duties of a foreclosure lawyer practicing in Northeast Florida is the responsibility of performing discovery. Discovery request can come in many types of forms. Requests for production, interrogatories, and depositions are three of the most common forms of discovery. When a lawyer is conducting "discovery" he or she is asking to learn information about the opposing party. All good lawyers do a general request for production when he or she becomes retained by the client. The type of case will determine the type of documents needed to request. The requests must be relevant and must reasonably lead to evidence. If not, the opposing party may object to the requests as long as the objections are timely. The timeliness factor may be different from jurisdiction to jurisdiction but generally it is about 30 days from receipt of the request. Some requests may be answered and provided while some may be objected to. In addition, each court/jurisdiction has their own rules. Criminal procedure is much different than civil or family law procedure.

What is a deposition? A deposition is an opportunity for one party to ask the opposing party (or party's representative) questions. The deposition is under oath and is considered sworn testimony. What does that mean? It means you can be prosecuted for perjury if you live under oath. There are rules that apply to the setting of deposition, who and who cannot be deposed, and what questions that can and cannot be asked during the deposition. Attorneys use the answers to these questions to have a better understanding of the facts so when they put legal arguments together, it all flows and makes sense. Depositions can be expensive and usually the party moving forward with the deposition has to bear the cost. Failure to appear for a deposition after someone has been duly noticed can pose problems for the party who failed to show. Sanctions may be imposed and costs awarded to the opposing party.

What is an interrogatory? An interrogatory is a question that must be answered by the party for which the question is directed to and it too is under oath.The questions are generally filed with the court. The questions must be answered in a timely manner. If an opposing party fails to answer timely, the moving party can ask the court to compel the noncooperating party to answer the questions. If that doesn't work, more sanctions and costs can be assessed. Requests for admissions are another popular channel for discovery. A request for admission basically speaks for itself but generally requires the responding party to admit to a fact. These two are also deemed under oath and sanctions can be imposed for failing to timely respond.

Continue reading "What is Discovery in a Florida Foreclosure Case?" »

This question comes up many times because it seems as though it would be much cheaper and easier to file a personal bankruptcy and include the business (assuming the business is struggling) rather than having to file two separate cases. Unfortunately, that is not always the case. When someone "incorporates" and creates/registers a business entity with the secretary of state, that in and of itself creates a separate "entity." Although the debtor may be the only member/shareholder of the company, the debtor and the business are considered two separate entities. Therefore, a business must file separately from the owner for bankruptcy relief.

Business bankruptcies do not result in a "discharge" per se, but they can, in some instances, alleviate the owner from personal liability. Business bankruptcies are usually reserved for struggling businesses who cannot pay their state taxes and employee wages. In a chapter 7 business bankruptcy, the bankruptcy Trustee liquidates the business assets and pays off creditors. Creditors are classified and categorized by their "priority." IRS and state entities are high priority along with employee wages. Therefore, when assets are liquidated, these parties are paid out first and the idea is that their claims will be satisfied and the owner will no longer be personally responsible for those debts.

Unsecured creditors like most vendors, suppliers and investors receive a pro rata share of whatever is left of the liquidated business assets. If after all creditors and bankruptcies trustee are paid off, and there is still leftover equity of the business, the business owners may be able to split the difference. However, this rarely happens. Many times creditor vendors require the owner to personally guarantee business debt. They make this requirement in the event the business does struggle financially and there is nothing to attach or collect on for the business, they still have recourse against the individual owner in an individual capacity. In most instances, this will hold the business and the individual responsible for the same debt. It works much like a co-signor on a vehicle loan or credit card. One borrower may not be approved for the amount of debt wanting to be taken out, however, with a co-signor obligating his or her self to the debt, the lender feels it is not taking as big of risk in lending the money. Now, the lender has two individuals it cal hold responsible in the event of a default.

One pitfall that debtors should avoid when thinking about filing business or personal bankruptcy is to avoid transferring assets shortly before filing. That is a very quick way to have your case dismissed and you will not receive a discharge. Now, you are out time, money and effort. The best thing to do is to avoid transferring business or personal assets if you plan to file bankruptcy. The bankruptcy Trustee has the right to go in and void those transactions if they happened within certain time frames provided in the bankruptcy code.

Continue reading "Can I file Personal Bankruptcy and Include my Florida Business?" »

As a Jacksonville bankruptcy and foreclosure defense attorney, I get questions all the time about the availability of different government programs for those who recently lost their job and who are struggling to make their mortgage payment. One of the programs that the Obama administration created was the ability for homeowners who recently became unemployed to essentially suspend their home loan accounts with Freddie Mac.

Before the new policy, Freddie would allow its servicers to forbear or reduce payment amounts to recent unemployed homeowners for a period of about 3 months with a maximum of 6 months. Usually, that required the servicer to get Freddie's permission before the action could be taken. The response often took much longer than needed and homeowners continued to fall further and further behind until they were finally denied for the program. Now, the period of time has been extended to 12 months and servicers have much more discretion and are on a lighter leash than before with Freddie to approve or reject these applications. At the very least, this should speed up response time and let the homeowner know where he or she stands before leading them on for month after month. Fannie has indicated it plans to begin a similar program.

Unfortunately, many of the government programs designed to help struggling homeowners have failed and failed miserably. The policies look good on paper but just have not panned out the way lawmakers hope they would. For example, just before 2011 ended, the Florida mandatory foreclosure mediation program was discontinued because of the ineffectiveness of the program. The program was designed to help alleviate some of the backlog on court dockets, but in reality, very few modifications or settlements were reached. Time, expense and effort were exhausted to no avail. Does that mean banks are not willing to participate in any type of mediation? The answer in most cases is no. The banks will setup a type of informal mediation called a "conciliation." However, the homeowner must beware of certain bank gimmicks and tricks. Many times the banks will set these appointments up unilaterally without coordination with the homeowner or the homeowner's attorney. If the appointment is set on a date and time that is not convenient for the homeowner or the homeowner's attorney, then the appointment is missed. Then, the banks will claim to the Court that they acted in good faith all along and tried to resolve the issues when in reality it was a ploy to make it appear the bank was acting in "good faith."

In time, we have to be optimistic that our lawmakers will come up with a program that makes sense on paper and in its practicality. It is going to take a program that punishes banks for failing to cooperate and negotiate in good faith.

Continue reading "Freddie Mac to Extend Aid To Unemployed Homeowners " »

As a practicing foreclosure defense attorney in Jacksonville, Florida, I have many clients who ask "if the banks are committing so much mortgage fraud, what is the homeowner's recourse against them? Can I sue the bank?" To be honest, it can be very difficult to sue national banks for mortgage fraud. I am not saying it cannot be done, but it normally takes State Attorney Generals to get involved. Banks receive a lot of protection against "unfair practices" claims and are immune from many causes of action that the homeowner looks to bring. However, when banks are acting in a "servicer" capacity they lose some of that immunity.

As more and more mortgage fraud is being uncovered, the state attorney generals are stepping in and filing actions against the banks. Many claims are being brought as class actions which allow homeowners to become part of the class and receive a pro rata portion of any settlement proceeds. Some attorney generals are suing to for equitable and injunctive relief to prevent banks from doing certain things moving forward when handling mortgage loans and applications. Because national banks do business all over, the matter can be brought in federal court.

Much of the recourse for banks committing mortgage fraud may result in banks having their foreclosure cases booted out of court. If a case is a dismissed with prejudice that party is longer able to bring that type of action against the homeowner. Most cases are dismissed without prejudice unless happens more than once. To get a case dismissed the first time with prejudice is very difficult and punitive in nature. There would have to be an extremely egregious act to warrant a case being dismissed with prejudice. If a case is filed after the statute of limitations has been filed, then the case can be dismissed most likely with prejudice. So, what does that mean to the homeowner? That means the homeowner may get a mortgage free house. Yes, that is correct.

It is possible to receive a house for free if a case is dismissed with prejudice. Again, these are few and far between but it is happening more and more. The homeowner can then file a quiet title action to make sure the county records reflect that the mortgage is longer on the property. Now, if there is a second mortgage or a home equity line encumbering the home, it is still attached to the property. The homeowner will want to keep that debt current. If the first lien is extinguished, the second lienholder has more of an incentive to foreclose because it now becomes the senior lien holder (assuming property taxes are current).

Continue reading "Foreclosure Fraud? Where is the Recourse? " »

Foreclosures are still on the rise. As a Jacksonville foreclosure defense attorney, more people than ever need assistance in defending their homes. The numbers for 2011 reflect an abrupt increase in the number of loans currently in default and 2012 doesn’t see much relief. It is estimated that, in the United States, some 6,452,000 homeowners are not paying their mortgage. The chief legal officer, and secretary of American Home Mortgage Servicing, Inc., believes without changes, the volume of foreclosures will continue to outpace the number of loan modifications.

Since the housing market came crashing down in 2008, approximately 3 million loans have been foreclosed, and it is predicted that another 5 million to 7 million more foreclosures will happen by the end of 2012!

The really depressing news… of all those foreclosures, only about 634,000 homeowners have been helped by modifications through HAMP. Talk to a Florida Foreclosure Attorney who can advise you about the Modification programs.

The executive also believes that hundreds of thousands of homeowners could potentially be helped with affordable loan modifications if they included responsible principal reduction components.

Time and time again, as a Florida Foreclosure Attorney, we hear stories of borrowers who are working directly with their lenders but are not getting any relief. The Courts have grown wise to these processes and in an effort to help borrowers the Supreme Court implemented managed Mediation. However, that program has come to an end. Chief Justice Canady made the announcement this past month and lawmakers are going back the drawing boards for other housing relief and programs. Mediation was intended to assist the homeowner, but the intentions never made its way to reality and were not practical. Few homeowners have had any real success at Mediation. Most banks were only offering modifications on a temporary modification “if you qualified.”

Do not always take for granted that one department of the bank is leading you on to a modification and that foreclosure will not be filed. In fact, that is far from the truth. Many banks will continue the foreclosure process even if the modification department is “considering” you under one of its programs. Nothing prevent the homeowner from working out a modification or reinstating a loan after foreclosure has been filed, but it may be expensive because once foreclosure is filed, the bank has incurred substantial costs in filing the case.

Did you know it is reasonable to fight foreclosure in Florida? Talk to an experienced Florida Foreclosure Attorney at Wood, Atter & Wolf, P.A., who understands that your needs are immediate and knows how to deal with the banks. We will evaluate your situation and provide you with valuable insight and legal advice so you can make and informed decision. The consultation is free, so you have nothing to lose. At Wood, Atter & Wolf, P.A., we are on your side, at your side. Don’t lose your home because you weren’t informed.

Continue reading "More Foreclosures Expected in 2012" »

As a practicing Florida bankruptcy attorney, many times debtors ask if they are eligible to file bankruptcy for a 2nd or 3rd time. This answer depends on several factors. Which chapter did the debtor file before? Did the debtor receive a discharge? If the debtor did not receive a discharge, was the case dismissed for fraudulent intentions?

The new bankruptcy laws of 2005 changed many of the eligibiity requirements to file for both chapter 7 and chapter 13. If the debtor has FILED a chapter 7 within the past eight years and received a discharge in that case, the debtor cannot file a chapter 7 again until eight years lapse from the previous filing date. Note that the important date is the filing date in determining the length of time to become eligible.

The debtor could possibly file a chapter 13. Debtors only have to wait four years in between chapter 7 and 13 cases. If the debtor did not receive a discharge and as long as the case was not dismissed for fraudulent intentions, the debtor can refile the case as long as it is filed in good faith. The good faith standard is determined by the judge. In addition, the automatic stay is typically limited to 30 days after filing, therefore, the debtor would need to ask the court's permission to continue the stay until further notice. Usually, this request needs to be made as soon as the case is filed but can be made prior to the 30 days running out. What happens if the automatic stay is not extended? Creditors can continue to try and collect on the debt. If that means by lawsuits or by contacting the debtor, the creditor may do so within the confines of state law. Garnishments and liens could be implemented or reimplemented until the discharge order goes through in the bankruptcy.

That is why it is critical to have an attorney who is experienced and well versed in what they are doing to provide this service. The average layperson would not know to do this or how to do this. What is the public policy behind the limitation on the automatic stay (unless the debtor is successful at extending it)? The reason behind the rule is the system is not designed to keep putting creditors in a bind of when or when not a particular debtor files for bankruptcy. If the debtor were allowed to file case after case and there was no limitation on the automatic stay, creditors rights would be impaired and constantly being suspended. This suspension and backlog would carry over into the state courts. The 2005 amendments were highly influenced by credit card companies and other creditors. For

Continue reading "How long do I have to wait between Florida bankruptcy filings?" »

Many debtors are excluded and unable to qualify for Chapter 7 bankruptcy. The new laws of 2005 made it much more difficult for debtors to file for protection under chapter 7. With the passage of the mean's test provision in 2005, if debtor's made over the state median income, then they would be forced to pass the "mean's test" which takes into account disposable income, or in many instances the lack thereof. If the debtors' disposable income is too high, then there would be a "presumption of abuse."

This presumption can be defeated but it is rare and in most instances not worth the debtor or debtor's counsel to defend or fight the presumption. In some instances, the debtor may not have to worry with the mean's test. If the debtor is a "disabled" veteran (defined under the bankruptcy code), the debtor does not have to take the mean's test. If the primary cause of the bankruptcy is business debt, the debtor does not have to take or pass the mean's test. If the debtor's total household income is less than the state median income, then the debtor does not have to take or pass the "mean's test." Just because the debtor does not pass the mean's test in one month, does not necessarily mean he or she will not pass the following month or shortly thereafter.

The bankruptcy court and the Trustee's office look back to six months worth of pay stubs to determine if the debtor qualifies for chapter 7. If the debtor's total household income is less than the state median income, does the debtor have to file a chapter 7? Absolutely not. The debtor must have a steady income and the 13 plan must be reasonable and feasible. If the plan is neither, the case can be dismissed or ordered to convert to a chapter 7. It may or may not be in the debtor's best interests to convert to a chapter 7. It depends on the amount of debt, the nature of the debt, whether or not the debtor has a substantial amount of unpaid assets, and whether or not the debtor qualifies for a chapter 7. Before converting to a chapter 7 or a chapter 13, you should speak with an experienced bankruptcy attorney. If the case is dismissed, can I refile? As long as the case was not dismissed for fraud or misrepresentation and you have not filed on multiple occasions within a short period with a bad faith intent.

Continue reading "Do I have to take the "Mean's Test" Under Florida Bankruptcy Law?" »