Blogs

4 years 5 months ago

dual tracking foreclosureThe Atlanta newspaper ran a story this weekend about a Mableton woman who found herself facing an eviction notice following a foreclosure even though her mortgage loan account had been accepted into Georgia’s HomeSafe program. The HomeSafe program is a federally funded and state run arrangement whereby unemployed or underemployed borrowers can get a 0% interest bridge loan. The bridge loan funds are then paid to the mortgage lender to stop the pending foreclosure. In the Mableton woman’s case, her lender, Citibank, should not have foreclosed because it agreed to participate in the HomeSafe program.  In this case, after inquiries by the newspaper, Citibank has agreed to cancel the eviction and presumably reverse the foreclosure.  However, Citibank insists that it did nothing wrong because it was acting on behalf of the loan’s actual owner, Freddie Mac. The AJC notes that the Mableton woman’s case is another example of something called dual tracking, in which a lender prepares to foreclose while at the same time engages in negotiating with the homeowner for a loan modification or forbearance.  The homeowner often believes that a modification is imminent and that the foreclosure will be canceled, only to find out two or three days before the foreclosure that there is no deal. Our office regularly gets calls from frantic homeowners looking for a lawyer to prepare and file a Chapter 13 to stop the foreclosure.  Sometimes we can help and sometimes we have no choice but to refer these folks to one of the high volume bankruptcy firms in town that will accept last minute emergency filings. My advice to anyone who receives a foreclosure notice is this:

  • while there is no harm in negotiating with a lender who has started the foreclosure process, assume that the foreclosure will proceed and take steps to prepare for a Chapter 13 as early as possible.
  • you will need a credit counseling certificate before you can file – do not wait until the last minute because counseling providers get backed up prior to foreclosure day
  • residential mortgage foreclosures in Georgia are held on the first Tuesday of each month.  If you are negotiating with your lender, make the Wednesday or Thursday prior to foreclosure your “drop dead” deadline for reaching a deal.  In 25 years of bankruptcy practice I have never seen a negotiation approval come through and a foreclosure stopped on the Friday or Monday prior to foreclosure Tuesday
  • if you do reach a deal, make sure you understand the terms and that you receive confirmation in writing from your lender (or lender’s counsel) that the foreclosure will be canceled.  A verbal assurance is insufficient
  • do not wait until the week before a scheduled foreclosure to start looking for a lawyer.  You may find one but you are not going to have time to do your due dilgence

The post Georgia Homeowners Should Not Assume that Mortgage Lenders will Negotiate in Good Faith appeared first on theBKBlog.


4 years 5 months ago

Chapter 11 is most often associated with business bankruptcies; however, it is also a necessity for a few high-income individuals who have debt limits that surpass the Chapter 13 statutory requirements. You see, if you have more than approximately $360,000 (this number increases every now and then) in unsecured debts or $1.1 million in secured debts, you are not qualified to file a Chapter 13. Antiquated? Of course, but what else do you expect from Congress?
While Chapter 11 has it’s own pitfalls (significantly higher attorneys’ fees for one), it offers a much higher degree of control by the filer. When you file a Chapter 13, you are proposing a plan to repay a portion of your debts. This plan must be overseen by the Chapter 13 trustee assigned to your case. The Chapter 13 trustee is there to ensure that creditors are being treated fairly, among other things, but it simply adds another person to deal with in attempting to get a plan confirmed. If you file a Chapter 11, you still propose a plan of reorganization, but there is no Chapter 13 trustee to object to your plan.
In a Chapter 13 plan, your plan payments are determined by three tests, dependent upon the facts in each case.  Your payment is typically based on your disposable income after subtracting your income from your reasonably necessary expenses on Schedule J.  If you do not propose to pay creditors all your disposable income over a 5-year period, your plan will probably not be confirmed.
In a Chapter 11, there is no trustee to ensure that this occurs, and the code does not provide that your Chapter 11 plan must pay out all disposable income over a 5 year period.  The only way a Chapter 11 debtor can be forced to pay the equivalent of his 5-year disposable income through the plan is if an unsecured creditor objects. Notice I said “objects” and not “reject” the plan.  Unlike a Chapter 13 plan, your creditors are given the option to vote to accept or reject your plan of reorganization. All you need is one vote from an impaired class of creditors to push your plan through.  This is called “cram-down”, because you are essentially cramming the plan down the throats of your creditors, but I digress.  Many unsecured creditors will simply file a “rejection ballot” instead of ofrmally objecting to the plan. Most courts agree that this is not tantamount to filing a formal objection, and the only way a debtor is forced to pay all his disposable income he would have earned over 5 years to the plan is if an unsecured creditor objects to the plan.
Another advantage is that even if one is forced to pay the equivalent of 5-years disposable income through the plan,  the plan does not have an applicable commitment period like a Chapter 13, meaning that your plan can be much longer than 5 years if required. For instance, if your 5-year disposable income is $60,000, you would be forced to pay $1,000 per month in a Chapter 13 plan. If Chapter 11, you could pay $500 per month for ten years, 6 annual payments of $10,000 for ten years, 5 annual payments of $15,000, or any other variation that is fair and equitable to your creditors.
The take-home message is this: a Chapter 11 bankruptcy can be an extremely powerful tool for those that can afford it. It offers the debtor significantly more control over his financial affairs (as well as the ability to keep using credit cards), and the possibility, if no unsecured creditors object, to pay significantly less over time than in a Chapter 13.


4 years 5 months ago

Ever had a Black Friday Hangover?  A Black Friday Hangover is when you overindulged on so many seemingly great deals that you ended up overspending and now dread the ensuing financial headache.  There are ways to enjoy Christmas shopping and avoid the hangover but you must be diligent and remember the magic word:  ”No”.
1.  Just say No to Store Credit Cards
How many times have you checked out and had a store clerk ask you if you wanted to save 10% by applying for a store credit card?  Believe me, they aren’t offering the store credit card as a favor to you.  Store credit cards often come with high interest rates which more than offset any savings you would get when you open the account.  In addition, store credit cards are usually the least convenient way to charge simply because they limit your purchases to one particular business.  My usual answer is “No, thanks.  I’m trying to quit”.  If the store clerk persists (some get bonuses based upon the number of new accounts they open), firmly tell them that your answer has not changed since the last time they asked you.
2.  Just say No to the Incredible Black Friday Deal
Don’t always fall for the store’s advertising.  A recent study revealed that 90% of this year’s “incredible deals” are the same prices they were last year.  In fact, the Wall Street Journal has declared Black Friday a “myth”.  Don’t be swayed by mail-in rebates (does anyone ever mail in a request for rebates?).  Don’t be swayed by package deals because the “throw-in” items may be of poor quality or not necessarily what you need or want.  Finally, use technology to verify if you are getting the best deal.  Google Shopper, Invisible Hand and RedLaser all allow you to search for better deals on items.
3.  Just say No to Overindulgence
The holidays are about more than just overindulging on rich food.  Christmas can leave many families broke because of overindulgent gift giving.  This year, avoid spending too much by setting a budget for each person on your gift list and do not stray from that budget even if the latest and greatest Christmas toy is not on the budget.  In addition, consider leaving the television off (…you can do it!).  Television ads are designed to create hype and interest about a product and sometimes the price tag is a financial disaster.  Exchange TV time for wonderful holiday experiences with loved ones like baking, visiting a less fortunate member of the community or creating hand-made gifts together.


4 years 5 months ago

Ever had a Black Friday Hangover?  A Black Friday Hangover is when you overindulged on so many seemingly great deals that you ended up overspending and now dread the ensuing financial headache.  There are ways to enjoy Christmas shopping and avoid the hangover but you must be diligent and remember the magic word:  ”No”.
1.  Just say No to Store Credit Cards
How many times have you checked out and had a store clerk ask you if you wanted to save 10% by applying for a store credit card?  Believe me, they aren’t offering the store credit card as a favor to you.  Store credit cards often come with high interest rates which more than offset any savings you would get when you open the account.  In addition, store credit cards are usually the least convenient way to charge simply because they limit your purchases to one particular business.  My usual answer is “No, thanks.  I’m trying to quit”.  If the store clerk persists (some get bonuses based upon the number of new accounts they open), firmly tell them that your answer has not changed since the last time they asked you.
2.  Just say No to the Incredible Black Friday Deal
Don’t always fall for the store’s advertising.  A recent study revealed that 90% of this year’s “incredible deals” are the same prices they were last year.  In fact, the Wall Street Journal has declared Black Friday a “myth”.  Don’t be swayed by mail-in rebates (does anyone ever mail in a request for rebates?).  Don’t be swayed by package deals because the “throw-in” items may be of poor quality or not necessarily what you need or want.  Finally, use technology to verify if you are getting the best deal.  Google Shopper, Invisible Hand and RedLaser all allow you to search for better deals on items.
3.  Just say No to Overindulgence
The holidays are about more than just overindulging on rich food.  Christmas can leave many families broke because of overindulgent gift giving.  This year, avoid spending too much by setting a budget for each person on your gift list and do not stray from that budget even if the latest and greatest Christmas toy is not on the budget.  In addition, consider leaving the television off (…you can do it!).  Television ads are designed to create hype and interest about a product and sometimes the price tag is a financial disaster.  Exchange TV time for wonderful holiday experiences with loved ones like baking, visiting a less fortunate member of the community or creating hand-made gifts together.


4 years 5 months ago

A topic of much concern is liability in a residential mortgage foreclosure in Florida.

In the origination of a typical residential mortgage transaction, there are two instruments - the promissory note and the mortgage. The promissory note documents the actual terms of borrowing and the mortgage provides for a lien on the real property to secure the debt of the promissory note.

In a typical residential mortgage foreclosure action in this part of Florida, the foreclosure case initially usually only seeks a judgment setting a foreclosure sale of the involved real estate. This judgment of foreclosure seeks the setting of a foreclosure auction sale by the Clerk of the Court. A typical judgment of foreclosure is not a "money" judgment upon which the mortgage company can seek "execution" or collection of the sum due other than via the proceeds of the foreclosure auction. It should be noted though, that some residential mortgage foreclosure cases contain an additional count for a judgment on the promissory note which would be a "money" judgment and allow the mortgage company to seek "execution" or collection from any non-exempt assets

After the foreclosure sale, the mortgage company may be able to seek a "deficiency" judgment or otherwise sue for the balance due on the promissory note that was not paid from proceeds of the foreclosure sale. In recent times in South Florida, most mortgage companies have not pursued deficiency judgments for a variety of reasons. This policy though could change.

In a situation of a first and second mortgage on a property in today's market, often the second mortgagee will not pursue a foreclosure but will sue on the promissory note to obtain a "money" judgment upon which it may seek collection.

Where a husband and a wife own a property, it needs to be clarified if both parties actually signed the promissory note. Often one of the spouses only signed the mortgage and not the promissory note and such spouse would not generally face liability for a deficiency or on the promissory note. The spouse would have signed the mortgage but not the promissory note if he or she was a title holder or even if not on title, due to the Florida homestead provisions.Jordan E. Bublick, Miami and Palm Beach, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983


4 years 5 months ago

A significant consideration in filing your bankruptcy case is "venue" -- that's legalese for the physical location of the court in which you file.

It's a powerful feature of bankruptcy -- especially for business bankruptcy cases under Chapter 11 - that you may be able to pick the court, and that, in turn, can have a bearing on the legal outcome.

A federal statute, 28 U.S.C. 1408(1), specifies where a bankruptcy case may be filed and applies to all types of bankruptcy, from Chapter 7 through Chapter 13. The statute provides options for filing your bankruptcy case.

The law says a debtor may choose to file in the federal court district in which his domicile, residence, principal place of business, or principal assets in the United States have been located for the past six months (or where they have been located for the longest part of those six months, if they have been located in several places during that time.)

This can work to the benefit of businesses in bankruptcy because they are often incorporated in one place but work principally and have assets located in several places. Venue is generally considered to be permissive, that is, proper wherever the case is filed, unless someone objects.

Thus, a debtor should ensure that the place for venue is the most favorable to his case. With venue selection, certain factors must be considered, including:

  • Consistency in Decisions. Predictable rulings by judges on a given set of facts, and other key players, such as the Office of the US Trustee in that court, is one of the most important factors in deciding where to file. Consistency will allow the debtor to make a reasonable prediction of the outcome of ruling in his case. Judges are humans, too, and have their own inclinations, so it's good to know that from the outset. And particularly with a relatively new bankruptcy law that has is only seven years old and is still being interpreted, there can be variance in published rulings from court to court, and even from judge to judge in the same court as we see here in our area covering Washington, DC, Northern Virginia (Alexandria Division of the Eastern District of Virginia) and suburban Maryland (Greenbelt Division of the District of Maryland).
  • "Debtor-Friendliness." Some judges and courts are consistently more "debtor friendly" than others. This is something regular practitioners in the courts will know from experience.
  • Responsiveness of the Court. Poor responsiveness can affect the timing of so-called "first-day hearings" -- hearings early in Chapter 11 cases where the debtor company ask the court for permission to, for example, access cash to make payroll for employees, key vendors, etc. Slow decision-making by the court in first-day hearing procedures can also signal a general lack of court responsiveness, as well.
  • These are just a few of the considerations that may well affect the outcome of a debtor's case. Debtors should be mindful of the various options for venue and the burdens and benefits they carry with them when deciding where to file their bankruptcy case.

    Work with experienced bankruptcy counsel. For more than fifteen years, our law firm who has successfully handled cases in the various bankruptcy courts in this area of Northern Virginia, Maryland, and the District of Columbia. Call for a complimentary initial consultation.


    2 years 9 months ago

    A significant consideration in filing your bankruptcy case is "venue" -- that's legalese for the physical location of the court in which you file.

    It's a powerful feature of bankruptcy -- especially for business bankruptcy cases under Chapter 11 - that you may be able to pick the court, and that, in turn, can have a bearing on the legal outcome.

    A federal statute, 28 U.S.C. 1408(1), specifies where a bankruptcy case may be filed and applies to all types of bankruptcy, from Chapter 7 through Chapter 13. The statute provides options for filing your bankruptcy case.

    The law says a debtor may choose to file in the federal court district in which his domicile, residence, principal place of business, or principal assets in the United States have been located for the past six months (or where they have been located for the longest part of those six months, if they have been located in several places during that time.)

    This can work to the benefit of businesses in bankruptcy because they are often incorporated in one place but work principally and have assets located in several places. Venue is generally considered to be permissive, that is, proper wherever the case is filed, unless someone objects.

    Thus, a debtor should ensure that the place for venue is the most favorable to his case. With venue selection, certain factors must be considered, including:

  • Consistency in Decisions. Predictable rulings by judges on a given set of facts, and other key players, such as the Office of the US Trustee in that court, is one of the most important factors in deciding where to file. Consistency will allow the debtor to make a reasonable prediction of the outcome of ruling in his case. Judges are humans, too, and have their own inclinations, so it's good to know that from the outset. And particularly with a relatively new bankruptcy law that has is only seven years old and is still being interpreted, there can be variance in published rulings from court to court, and even from judge to judge in the same court as we see here in our area covering Washington, DC, Northern Virginia (Alexandria Division of the Eastern District of Virginia) and suburban Maryland (Greenbelt Division of the District of Maryland).
  • "Debtor-Friendliness." Some judges and courts are consistently more "debtor friendly" than others. This is something regular practitioners in the courts will know from experience.
  • Responsiveness of the Court. Poor responsiveness can affect the timing of so-called "first-day hearings" -- hearings early in Chapter 11 cases where the debtor company ask the court for permission to, for example, access cash to make payroll for employees, key vendors, etc. Slow decision-making by the court in first-day hearing procedures can also signal a general lack of court responsiveness, as well.
  • These are just a few of the considerations that may well affect the outcome of a debtor's case. Debtors should be mindful of the various options for venue and the burdens and benefits they carry with them when deciding where to file their bankruptcy case.

    Work with experienced bankruptcy counsel. For more than fifteen years, our law firm who has successfully handled cases in the various bankruptcy courts in this area of Northern Virginia, Maryland, and the District of Columbia. Call for a complimentary initial consultation.


    3 years 9 months ago

    I am frequently asked whether or not you have to surrender your tax refund if you file for bankruptcy.  While that topic is addressed in a different post, the popular and appropriate follow-up question is what to do with the refund once it is received.  Though you have to be careful if you spend large amounts of money prior to filing bankruptcy (you don't want to give out a gift or pay back a family member or friend), the court understands that you have to pay an attorney to file your bankruptcy.  So yes, you can spend your refund money on an attorney to help you file your case.  In fact, since most bankruptcy filers have a hard time coming up with attorney fees, using the tax refund money is one of the most common ways to pay for a bankruptcy.    Adam Brown is a bankruptcy attorney for Dexter & Dexter, a debt relief agency helping people file for bankruptcy.


    4 years 5 months ago

    I had to smile when I read the news that the banks were now lobbying to keep former Harvard bankruptcy professor and Senator-elect Elizabeth Warren from getting appointed to the Senate banking committee.

    Lobbying is not cheap. It runs into the millions of dollars for a campaign. And, like most good businesspersons, I am sure the banks did some cost-benefit analysis in making this decision.

    This action by the financial industry must mean they see a big threat to profits. And consequently, since bank profits and consumer losses are a zero-sum game, it also means her appointment to the committee could mean a big financial win for consumers. Granted, one person alone will not do it all, but the banks perceive she could have a significant effect on the outcome.

    For consumers, let's hope the banks are not as successful with this campaign as they were in sinking her appointment to head the Consumer Financial Protection Bureau (CFPB), a sort of consumer safety protection agency she dreamt up. Among the CFPB's primary goals is to prevent the reappearance of the bad mortgages that blew up in the mid-2000s and harmed so many average people and the nation's economy as a whole. It was passed as part of the Dodd-Frank financial reform act.

    We'll see.

    Closer to home, and down at the grass-roots, our law firm focuses on helping consumers and small businesses in Washington, DC, Northern Virginia, and suburban Maryland with financial problems. Call us, if you want to discuss your situation. We're not quite as feared as Elizabeth Warren right now, but we're working on it.


    2 years 9 months ago

    I had to smile when I read the news that the banks were now lobbying to keep former Harvard bankruptcy professor and Senator-elect Elizabeth Warren from getting appointed to the Senate banking committee.

    Lobbying is not cheap. It runs into the millions of dollars for a campaign. And, like most good businesspersons, I am sure the banks did some cost-benefit analysis in making this decision.

    This action by the financial industry must mean they see a big threat to profits. And consequently, since bank profits and consumer losses are a zero-sum game, it also means her appointment to the committee could mean a big financial win for consumers. Granted, one person alone will not do it all, but the banks perceive she could have a significant effect on the outcome.

    For consumers, let's hope the banks are not as successful with this campaign as they were in sinking her appointment to head the Consumer Financial Protection Bureau (CFPB), a sort of consumer safety protection agency she dreamt up. Among the CFPB's primary goals is to prevent the reappearance of the bad mortgages that blew up in the mid-2000s and harmed so many average people and the nation's economy as a whole. It was passed as part of the Dodd-Frank financial reform act.

    We'll see.

    Closer to home, and down at the grass-roots, our law firm focuses on helping consumers and small businesses in Washington, DC, Northern Virginia, and suburban Maryland with financial problems. Call us, if you want to discuss your situation. We're not quite as feared as Elizabeth Warren right now, but we're working on it.


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