Blogs

7 years 1 week ago

What are the qualifications for an individual/couple to file for Bankruptcy?  The answer to this question is simple  -- there are no qualifications for filing Bankruptcy.  Everyone has the right to file a petition for relief under the Bankruptcy Code.  All one has to do is file a Petition for Relief with the Bankruptcy Court.  What type of bankruptcy an individual/couple can file does have certain qualifications.  describe the imageFor most of us, the choice is between filing a Chapter 7 bankruptcy in which one requests relief in the form of debt forgiveness of most of his/her debts or Chapter 13 bankruptcy in which one agrees to pay all or a portion of one’s debts over a period that varies between 3 to 5 years with certain exceptions such as your home mortgage.  How much gets paid back depends on how much “disposal income” a person has.  In general, this means how much money you have left over after paying your monthly expenses without considering the debts to be included in the Bankruptcy.
 In 2005, the Bankruptcy Code amended one of the major features of which was to require a person to meet an income and expense test in order to qualify for Chapter 7.  This test is known as the “Means Test”.  Certain classes of people are exempt from the Means Test such as if a person’s debts are more than 50% business related and certain types of income are excluded such as social security income.  If you do not qualify under the Means Test to file a Chapter 7 then you have the option of filing a Chapter 13.  If you qualify under the Means Test then you can file a Chapter 7 or a Chapter 13.  The Means Test is divided into two (2) distinct parts.  The first part is based strictly on  gross income for the six (6) months preceding the filing of a Bankruptcy case.  How much gross income allowed is dependent upon what state the person lives in and the size of the family unit.  If one exceeds the gross income test then the second part of the test comes into play which takes into consideration certain deductions, some of which are standardized and some of which are variable.  For example, housing.  If one rents then a deduction for housing is standardized based upon the county in which a person resides. If you own a home a deduction is allowed for the full mortgage payment including escrow for insurance and taxes.  There are standardized deductions for food and a variable deduction allowed for contributions to one’s church.  At the end of the second part of the test a determination is made as to whether a person has sufficient disposable income to pay a percentage of unsecured debts to creditors.
 In general, anyone can file Bankruptcy but must meet certain qualifications to file Chapter 7.  There are other types of bankruptcy that addresses certain specific situations such as chapter 12 which deals with farmers that are experiencing financial difficulty, Chapter 11 for businesses and  individuals with special problems.  For most of us, the choice is between Chapter 7 and Chapter 13 of the Bankruptcy Code.


7 years 1 week ago


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California has three separate statutory provisions that prohibit a lender from obtaining a deficiency judgment after foreclosure.  These provision are found at Cal. Civ. Proc. § 580b, Cal. Civ. Proc. § 580d in conjunction with Cal. Civ. Proc. § 726(a), and after July 15th, 2011, Cal. Civ. Proc. § 580e.  A deficiency is simply the loss that a lender sustains after the property is foreclosed.  The deficiency is measured by the difference between what is owed on the loan and what the bank collected from selling the property after foreclosure. A deficiency judgment after foreclosure may result in a wage garnishment, bank account levy, and a judgment lien against other property owned by the borrower.  Because of the seriousness of a deficiency judgment sound legal advice should be sought out whenever foreclosure appears imminent.
If a borrower is facing an imminent foreclosure or has already had a property foreclosed and one of the California statutory provisions to be discussed below is not helpful a bankruptcy discharge may be the only means of averting the negative consequences of a deficiency judgment. In reviewing options with a client as a bankruptcy attorney, I always start with non-bankruptcy law.  With that in mind I summarize the non-bankruptcy protections found in the California anti-deficiency provisions.
The first statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580b. Cal. Civ. Proc. § 580b protects a borrower from a deficiency after foreclosure where the property is occupied by the borrower as a personal residence and where the money borrowed from the lender was used for the purchase of the property.  This provision does not protect a borrower where the property is not a dwelling occupied by the borrower or where the loan was not part of the financing used to buy the property.  Specifically this provision does not protect a borrower if the loan was a refinance loan or an equity line of credit.
The specific language of  Cal. Civ. Proc. § 580b reads as follows: “[n]o deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser. 
The second statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580d. Cal. Civ. Proc. § 580d in conjunction with Cal. Civ. Proc. § 726(a) is often referred to as the “Single Action Rule.”  Basically what this means is if a lender non-judicially forecloses on the property (power of trust deed sale) they may not later seek a deficiency.  Practically speaking this means that in over 99% of foreclosures by a senior lienholder (the holder of the first Trust Deed) the senior lienholder will not be able to collect a deficiency.  However, note in rare cases where the property has very little value or no value and or if the borrower has independently very deep pockets the lender may choose judicial foreclosure and after the foreclosed property is sold obtain a money judgment for the balance of the loan.   One of the reasons that judicial foreclosure is rare in California is that it can take the lender much longer to ultimately foreclose on the property.
Another problem with the “Single Action Rule” is that it does not protect the borrower from being sued by a junior lienholder who either waives their right to foreclosure or sues after the property is foreclosed by the senior lienholder. Very frequently, a borrower will wind up owing a deficiency to a junior lienholder after the senior forecloses where the junior lien arose out of a home equity line of credit or from a refinance that included a second.  The term that is often associated with this a “deficiency from a sold out junior lienholder.” However where there is a “sold out junior lienholder” there is case law that may still prohibit them from collecting on the deficiency.  One California appellate case holds if the senior lienholder and the junior lienholder are one in the same than the foreclosure by the senior lienholder precludes the collection of a deficiency by the junior. The junior lienholder is deemed to have sold itself out and elected its sole remedy on CCP 726(a). Simon vs. Superior Court, 4 Cal.App.4th 63, 5 Cal.Rptr.2d 428 (1992).  Taking this one step further the California Court of Appeal recently held that where the senior and junior are owned by the same bank that an assignment to another lender of the junior after foreclosure does not allow the assignee to collect a deficiency.  Bank of America vs. Mitchell, 2012 Westlaw 1177866 Cal.App.  However the lender may circumvent the Simon and Bank of America vs. Mitchell results by assigning the junior trust deed prior to foreclosing on the senior trust deed.  National Enterprises, Inc. v. Woods, 94 Cal.App.4th 1217, 115 Cal.Rptr.2d 37 (2001).
The last statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580e. Cal. Civ. Proc. § 580e only became effective July 15th, 2011.  The provision expands anti-deficiency protection to all mortgages or deeds of trust if all lenders agree to a short sale.  A short sale occurs when the lender allows homeowners to sell their property for less than the amount owed to the lender. Although the lender receives less than the full value of the loan in a short sale, the lender avoids the costs of both the foreclosure and resulting expenses of a property which would end up with the lender. All lenders still have to agree to a short sale process. The law also makes clear that the protections do not apply to commercial loans with multiple security which includes a security interest in residential property.
As discussed earlier consulting with bankruptcy counsel early on may allow a distressed borrower to explore the greatest number of available options.  Bankruptcy may be used not only to avert the negative consequences of a deficiency judgment but a Chapter 13 may sometimes be also be used proactively to get caught up on defaulted payments or to avoid/ strip a wholly unsecured junior lien from the property altogether.  Please feel free to contact my office for assistance


5 years 2 months ago

California has three separate statutory provisions that prohibit a lender from obtaining a deficiency judgment after foreclosure.  These provision are found at Cal. Civ. Proc. § 580b, Cal. Civ. Proc. § 580d in conjunction with Cal. Civ. Proc. § 726(a), and after July 15th, 2011, Cal. Civ. Proc. § 580e.  A deficiency is simply the loss that a lender sustains after the property is foreclosed.  The deficiency is measured by the difference between what is owed on the loan and what the bank collected from selling the property after foreclosure. A deficiency judgment after foreclosure may result in a wage garnishment, bank account levy, and a judgment lien against other property owned by the borrower.  Because of the seriousness of a deficiency judgment sound legal advice should be sought out whenever foreclosure appears imminent.
If a borrower is facing an imminent foreclosure or has already had a property foreclosed and one of the California statutory provisions to be discussed below is not helpful a bankruptcy discharge may be the only means of averting the negative consequences of a deficiency judgment. In reviewing options with a client as a bankruptcy attorney, I always start with non-bankruptcy law.  With that in mind I summarize the non-bankruptcy protections found in the California anti-deficiency provisions.
The first statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580b. Cal. Civ. Proc. § 580b protects a borrower from a deficiency after foreclosure where the property is occupied by the borrower as a personal residence and where the money borrowed from the lender was used for the purchase of the property.  This provision does not protect a borrower where the property is not a dwelling occupied by the borrower or where the loan was not part of the financing used to buy the property.  Specifically this provision does not protect a borrower if the loan was a refinance loan or an equity line of credit.
The specific language of  Cal. Civ. Proc. § 580b reads as follows: “[n]o deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser. 
The second statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580d. Cal. Civ. Proc. § 580d in conjunction with Cal. Civ. Proc. § 726(a) is often referred to as the “Single Action Rule.”  Basically what this means is if a lender non-judicially forecloses on the property (power of trust deed sale) they may not later seek a deficiency.  Practically speaking this means that in over 99% of foreclosures by a senior lienholder (the holder of the first Trust Deed) the senior lienholder will not be able to collect a deficiency.  However, note in rare cases where the property has very little value or no value and or if the borrower has independently very deep pockets the lender may choose judicial foreclosure and after the foreclosed property is sold obtain a money judgment for the balance of the loan.   One of the reasons that judicial foreclosure is rare in California is that it can take the lender much longer to ultimately foreclose on the property.
Another problem with the “Single Action Rule” is that it does not protect the borrower from being sued by a junior lienholder who either waives their right to foreclosure or sues after the property is foreclosed by the senior lienholder. Very frequently, a borrower will wind up owing a deficiency to a junior lienholder after the senior forecloses where the junior lien arose out of a home equity line of credit or from a refinance that included a second.  The term that is often associated with this a “deficiency from a sold out junior lienholder.” However where there is a “sold out junior lienholder” there is case law that may still prohibit them from collecting on the deficiency.  One California appellate case holds if the senior lienholder and the junior lienholder are one in the same than the foreclosure by the senior lienholder precludes the collection of a deficiency by the junior. The junior lienholder is deemed to have sold itself out and elected its sole remedy on CCP 726(a). Simon vs. Superior Court, 4 Cal.App.4th 63, 5 Cal.Rptr.2d 428 (1992).  Taking this one step further the California Court of Appeal recently held that where the senior and junior are owned by the same bank that an assignment to another lender of the junior after foreclosure does not allow the assignee to collect a deficiency.  Bank of America vs. Mitchell, 2012 Westlaw 1177866 Cal.App.  However the lender may circumvent the Simon and Bank of America vs. Mitchell results by assigning the junior trust deed prior to foreclosing on the senior trust deed.  National Enterprises, Inc. v. Woods, 94 Cal.App.4th 1217, 115 Cal.Rptr.2d 37 (2001).
The last statutory provision that may protect a borrower from a deficiency is Cal. Civ. Proc. § 580e. Cal. Civ. Proc. § 580e only became effective July 15th, 2011.  The provision expands anti-deficiency protection to all mortgages or deeds of trust if all lenders agree to a short sale.  A short sale occurs when the lender allows homeowners to sell their property for less than the amount owed to the lender. Although the lender receives less than the full value of the loan in a short sale, the lender avoids the costs of both the foreclosure and resulting expenses of a property which would end up with the lender. All lenders still have to agree to a short sale process. The law also makes clear that the protections do not apply to commercial loans with multiple security which includes a security interest in residential property.
As discussed earlier consulting with bankruptcy counsel early on may allow a distressed borrower to explore the greatest number of available options.  Bankruptcy may be used not only to avert the negative consequences of a deficiency judgment but a Chapter 13 may sometimes be also be used proactively to get caught up on defaulted payments or to avoid/ strip a wholly unsecured junior lien from the property altogether.  Please feel free to contact my office for assistance


7 years 1 week ago

Pro se legal representation: Means advocating on one's own behalf before a Court.
pro se, legal fees, bankruptcy, bankruptcy lawyer, bankruptcy attorney
Recently, I have encountered a good number of individuals who decided they could file their Bankruptcy case on their own. It obviously seems like a pretty simple task, since at first glance the documents look like forms that you can just fill out. Unfortunately for these individuals, they are hit with reality when the Bankruptcy Court or the Trustee are requesting additional documents, Financial Management Course Certificates, Declaration Pages, and many other things that are very unlikely to make sense to someone who has not been through the process before or who does not work within the legal field. Filing your case Pro Se can put you in harm's way because if your case gets dismissed and you file a second time you will be faced with even more obstacles.
Individuals must be cautious of bankruptcy preparers and understand that these companies will not provide you with legal representation. It is important when considering bankruptcy you keep in mind that it is a legal proceeding in Federal Court which requires attention and knowledge.
I understand why some people choose to file their bankruptcy without legal representation.  Legal representation costs money and if money wasn't an issue bankruptcy would not be a consideration.  Is this really how you want to cut costs? Bankruptcy should be a solution to your problems not a problem in it of itself.


7 years 1 week ago

So you are a beneficiary of a recovable living trust.   You need to file bankruptcy.   Can you?   Well, it depends.   As long as you are not the settlor and the settlor lives through your bankruptcy, your beneficiary interest is contingent, meaning it doesn’t come into your bankruptcy as property of the estate.   That’s because if the settlor is still alive, that person can always amend the terms of the trust and exclude you as a beneficiary.
Imagine if you filed a chapter 7 bankruptcy, which typically lasts between 4-6 months.   During the course the chapter 7 trustee wanted to pull your contingent interest as a beneficiary into the bankruptcy estate.  Well, the settlor would more than likely just change the terms of the trust and write you out immediately as a beneficiary.  The chapter 7 trustee would be out of luck.   The settlor did not engage in fraud in writing you out of the trust; there is nothing improper in doing so.   However if the settlor was deceased or became deceased during the course of your bankruptcy, the beneficiary interest is no longer contingent and might become part of the bankruptcy estate where applicable.
 


7 years 1 week ago

By: Ceara L. Riggs, Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
The question I am probably asked the most is, “How long will I get to stay in my house?” It depends. Looking for a more definite answer? Chances are, any lawyer that wants to keep their Bar Card and Number will give you the same answer.
And as frustrating as that answer probably is, it’s the reality of the situation. So you want numbers, here’s the numbers:

  • Day 1 – a foreclosure complaint is filed by the bank (which probably means you’ve missed at least 2-3 payments already, if not more). Enjoy how definite that number is because after day 1, everything “depends.”
  • Some point after that – you’re going to be served with notice that the bank has filed a foreclosure suit against you. So, as you can see, the contingencies start early.
  • 20 days after you’re served – you better have filed an answer to the bank’s complaint, otherwise the process moves ALOT faster and you’re likely to have significantly less time in your house.
  • Sometime after you are served – there could be a Motion for Summary Judgment, there could be Interrogatories, Admissions, and/or Depositions, there could a case management conference, there could be a trial and there is no rhyme, reason or rule as to if any of these things occur or when they will occur if they do happen
  • 860 days after day 1 – Approximately. If you have not reached a modification or agreement with your bank, your house will be sold at a foreclosure sale. But, of course, this is an average too.

Sparknotes version: it takes, on average, 861 days (or, more than 2 years), to foreclose on a property in Florida.  Think about that. That means, every day, somewhere in Florida, a homeowner has stopped making payments on his or her house and then, at some point after that person stopped making payments, essentially nothing happened for about 861 days. Want to stay in your house? Want to find a new place? Want to rent out the place and have a new source of income? Maybe you just want to give raccoons and other critters a safe haven from the snowbirds on our roads?

Give us a call. Let us discuss your situation and where you fall on the “it depends” timeline. For a free evaluation of your situation and to see how we can help you stay in your house, contact The Reissman Law Group, P.A. today.


5 years 4 months ago

By: Ceara L. Riggs, Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
The question I am probably asked the most is, “How long will I get to stay in my house?” It depends. Looking for a more definite answer? Chances are, any lawyer that wants to keep their Bar Card and Number will give you the same answer.
And as frustrating as that answer probably is, it’s the reality of the situation. So you want numbers, here’s the numbers:

  • Day 1 – a foreclosure complaint is filed by the bank (which probably means you’ve missed at least 2-3 payments already, if not more). Enjoy how definite that number is because after day 1, everything “depends.”
  • Some point after that – you’re going to be served with notice that the bank has filed a foreclosure suit against you. So, as you can see, the contingencies start early.
  • 20 days after you’re served – you better have filed an answer to the bank’s complaint, otherwise the process moves ALOT faster and you’re likely to have significantly less time in your house.
  • Sometime after you are served – there could be a Motion for Summary Judgment, there could be Interrogatories, Admissions, and/or Depositions, there could a case management conference, there could be a trial and there is no rhyme, reason or rule as to if any of these things occur or when they will occur if they do happen
  • 860 days after day 1 – Approximately. If you have not reached a modification or agreement with your bank, your house will be sold at a foreclosure sale. But, of course, this is an average too.

Sparknotes version: it takes, on average, 861 days (or, more than 2 years), to foreclose on a property in Florida.  Think about that. That means, every day, somewhere in Florida, a homeowner has stopped making payments on his or her house and then, at some point after that person stopped making payments, essentially nothing happened for about 861 days. Want to stay in your house? Want to find a new place? Want to rent out the place and have a new source of income? Maybe you just want to give raccoons and other critters a safe haven from the snowbirds on our roads?

Give us a call. Let us discuss your situation and where you fall on the “it depends” timeline. For a free evaluation of your situation and to see how we can help you stay in your house, contact The Reissman Law Group, P.A. today.
The post 861 Days to Foreclosure appeared first on St. Petersburg Law Blog.


7 years 1 week ago

couple filing bankruptcy, bankruptcy, file bankruptcy, filing bankruptcySeveral times a week I get a client who is married but not interested in filing for Bankruptcy along with their spouse. There are many reasons for this. The most common reason being clients often keep their finances completely separate from their spouse.  Here in Texas we are a community property state.  This means any sort of asset would be considered community property as well as any liability that may arise from your spouse’s debt. When an asset is community property both parties involved in the marriage have an interest in that asset. This concept also applies to debts. In other words, if during the duration of a marriage one spouse acquires debt that does not include the name of the other spouse this debt is still considered a community debt, and the non signing spouse can still be held liable for the debt at a later time. In circumstances when only one spouse files and the other spouse decides not to file, there have been multiple occasions where the non-filing spouse has been served with a lawsuit due to a bad debt that was discharged in their spouse's bankruptcy. When filing for Bankruptcy you're aiming for a fresh start and by leaving the back door open the nightmare of harassing creditors may come back to haunt you.


7 years 1 week ago

By: Marshall G. Reissman Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
Professional athletes filing bankruptcy have been in the news over the years including Mike Tyson, Sheryl Swoopes, and Lawrence Taylor. It may shock some people that professional athletes, who made millions during their careers, face the same kind of financial troubles that middle class Americans find themselves in. One of the latest professional athletes to file bankruptcy is Warren Sapp, formerly of the Tampa Bay Buccaneers.
Unfortunately, professional athletes are not immune from the problems regular people face, they just have a few more zeros at the end of their bills. Whether it is over-spending, bad investments, or a victim of the recent real estate bubble, professional athletes are subject to the same types of financial problems. Another possible reason for filing bankruptcy is to stop pending litigation or to stop a garnishment. Read a post about bankruptcy and garnishment here.
Recently, I had the opportunity to look over Warren Sapp’s bankruptcy petition and schedules at the request of a local reporter. The question the reporter had was the question most people had, why did Warren Sapp file Chapter 7 bankruptcy? At first look, it may be hard to understand. Many of the larger debts owed by Warren Sapp would appear to be non-dischargeable including taxes owed to the IRS and domestic support obligations to a former spouse and minor children. So why now? When I looked over the Statement of Financial Affairs “why now” become apparent to me.
One of Warren Sapp’s creditors, PNC Bank, who Mr. Sapp listed a debt totaling over $800,000.00, held a judgment against Warren Sapp and the creditor executed a Writ of Garnishment. Warren Sapp stated that PNC bank garnished more than $130,000.00, in December, 2011. One way to stop a garnishment is to file bankruptcy. Our clients face garnishment of their wages and bank accounts on a regular basis, and if appropriate, we will file bankruptcy on their behalf to stop the garnishment and discharge the underlying debt. Again, Warren Sapp just  had a few more zeros at the end of his garnishment than most of our clients, but it still has the same effect.
Please check back for information regarding Warren Sapp’s bankruptcy. I will be following his case and providing my thoughts on what happens.


7 years 1 week ago

By: Marshall G. Reissman Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
Folks usually seek out the services of a bankruptcy attorney only when their situation becomes dire. One of those situations occurs when a credior sues someone. A lawsuit can be detrimental enough, but the real pain happens if the creditor is able to get a judgment against the person. Once the creditor obtains the judgment, the creditor can take whatever legal action is available to enforce the judgment. One action is the ability of the creditor to garnish a person’s wages, bank accounts, and other revenue streams. A garnishment can turn things from bad to worse.
Fortunately, one way to stop a garnishment is to file bankruptcy. When a person files bankruptcy, an auotmatic stay of protection is put into effect. The automatic stay prevents a creditor from taking certain actions including enforcing a pre-petition garnishment action.  Not only will the garnsihment stop, but as long the person remains in bankruptcy and receives a discharge, the underlying debt will likely be dischargeable as well.
If a creditor has filed a lawsuit against you, seek out the advice of an experienced bankruptcy attorney to find out if filing bankruptcy is right for you. Call us today, and we will provide a free consultation and determine what course of action is right for you.


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