Blogs

10 years 4 months ago

This week the American Bankruptcy Institute (ABI) held its 10th annual “Detroit Consumer Bankruptcy Conference” in Troy, Michigan.  The day long conference covered issues pertaining to both Chapter 13 and Chapter 7 bankruptcies, such as: Handling claims in a Chapter 13 bankruptcy; Real estate issues in Chapter 7 cases; Debtor’s Duties and Responsibilities in Chapter […]
The post Bankruptcy Attorneys in Detroit Gather for 10th Annual American Bankruptcy Institute Conference appeared first on Acclaim Legal Services, PLLC.


10 years 7 months ago

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The 8th Circuit Bankruptcy Appellate Panel denied Kathryn Nielen's application to discharge her student loans, and the result, although discouraging in many respects, is not all that surprising. (Nielsen vs. ACS Inc, No. 13-6034, 8th BAP 2014)  The debtor graduated high school in 1995 and went on to obtain an Associates of Science degree in biology and then a Bachelor's of Science in Health Services Administration followed by a Masters of Business Administration degree in 2001.  At the time she filed bankruptcy she was 36 years old and married with 4 children.  The debtor claimed medical problems due to allergies and mold exposure, but the court did not believe these conditions prevented the debtor from working.
 Several factors were decisive in turning down the application to discharge her student loans:

  1. Poor Work History.  The court described the debtor's work history as "minimal, if non-existent."  The debtor offered many excuses for her lack of employment such as being overqualified for many jobs or lack of job experience, but the opinion suggests that the minimal work history was due to a lack of effort and not lack of opportunity. 
  2. Opportunity for Job Advancement.  The debtor's spouse had opportunity for advancement at his employment.  In addition, the debtor's spouse was not exploring the possibility of higher paying jobs and was not supplementing his income with part-time employment.  (Does a father of 4 children really have to take on a 2nd job to discharge student loans?  Isn't being a father of 4 young children a full time job in itself?  The court continues a trend of chastising debtors who turn away work to tend to family matters.)
  3. Too Many Assets. The debtors had a retirement fund and equity in a home.  (Is home ownership a disqualification for student loan discharge?  Isn't the real question whether the mortgage payment exceeds comparable rental rates?)
  4. Extra Income Available. The debtors discharged a significant amount of credit card debt they were servicing prior to bankruptcy.  Clearly the funds that were used to pay credit cards could now be paid towards the student loan debt.
  5. Significant Tax Refunds.  The debtors received $7,000 of tax refunds, much of that coming from Earned Income Credit or Child Tax Credits.  Such refunds have to be included in the calculation of the average monthly income.
  6. Family Debts were Repaid.  When funds were available to repay debts in the past the debtors opted to repay family loans instead of making payments on student loans. 
  7. Post-Trial Change of Circumstances Ignored.   Following the trial the debtor and her husband separated and divorced.  Claims of spousal abuse existed, but this information was ignored by the appeals court since it occurred after the trial.  The appeals court is limited to reviewing facts presented at trial.
  8. Self-imposed Income Limits.  The court found that the debtor's ability to seek employment were mainly self-imposed.  Choosing to focus on raising a family, although admirable in many respects, is not well received by bankruptcy courts when seeking a discharge of student loans.
  9. Income Contingent Repayment Plan ("ICRP").  The debtor had not applied for an income-contingent repayment plan with the Department of Education.  The student loans (36 separate loans) appear to have been federal loans available for an income based repayment and not private loans, although the opinion does not explicitly state one way or the other.  The debtor was eligible for a zero monthly payment ICRP, so no real hardship existed by denying the debtor's application.  It is fair to say that a debtor has virtually no chance of discharging federal student loans in bankruptcy where no effort to comply with an income-based payment has been made, especially if the payment would be zero.  Private student loans, however, offer no such income based payments and for this reason are more frequently discharged in bankruptcy.
  10. Thirty-Six Separate Loans.  The debtor did not ask the bankruptcy court to evaluate each of her 36 loans for discharge separately.  In the 8th Circuit the bankruptcy courts will take a loan-by-loan analysis to determine which, if any, loans might be discharged.  Unfortunately, the debtor did not seek such an evaluation.  

10 years 6 months ago

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The 8th Circuit Bankruptcy Appellate Panel denied Kathryn Nielen's application to discharge her student loans, and the result, although discouraging in many respects, is not all that surprising. (Nielsen vs. ACS Inc, No. 13-6034, 8th BAP 2014)  The debtor graduated high school in 1995 and went on to obtain an Associates of Science degree in biology and then a Bachelor's of Science in Health Services Administration followed by a Masters of Business Administration degree in 2001.  At the time she filed bankruptcy she was 36 years old and married with 4 children.  The debtor claimed medical problems due to allergies and mold exposure, but the court did not believe these conditions prevented the debtor from working.
 Several factors were decisive in turning down the application to discharge her student loans:

  1. Poor Work History.  The court described the debtor's work history as "minimal, if non-existent."  The debtor offered many excuses for her lack of employment such as being overqualified for many jobs or lack of job experience, but the opinion suggests that the minimal work history was due to a lack of effort and not lack of opportunity. 
  2. Opportunity for Job Advancement.  The debtor's spouse had opportunity for advancement at his employment.  In addition, the debtor's spouse was not exploring the possibility of higher paying jobs and was not supplementing his income with part-time employment.  (Does a father of 4 children really have to take on a 2nd job to discharge student loans?  Isn't being a father of 4 young children a full time job in itself?  The court continues a trend of chastising debtors who turn away work to tend to family matters.)
  3. Too Many Assets. The debtors had a retirement fund and equity in a home.  (Is home ownership a disqualification for student loan discharge?  Isn't the real question whether the mortgage payment exceeds comparable rental rates?)
  4. Extra Income Available. The debtors discharged a significant amount of credit card debt they were servicing prior to bankruptcy.  Clearly the funds that were used to pay credit cards could now be paid towards the student loan debt.
  5. Significant Tax Refunds.  The debtors received $7,000 of tax refunds, much of that coming from Earned Income Credit or Child Tax Credits.  Such refunds have to be included in the calculation of the average monthly income.
  6. Family Debts were Repaid.  When funds were available to repay debts in the past the debtors opted to repay family loans instead of making payments on student loans. 
  7. Post-Trial Change of Circumstances Ignored.   Following the trial the debtor and her husband separated and divorced.  Claims of spousal abuse existed, but this information was ignored by the appeals court since it occurred after the trial.  The appeals court is limited to reviewing facts presented at trial.
  8. Self-imposed Income Limits.  The court found that the debtor's ability to seek employment were mainly self-imposed.  Choosing to focus on raising a family, although admirable in many respects, is not well received by bankruptcy courts when seeking a discharge of student loans.
  9. Income Contingent Repayment Plan ("ICRP").  The debtor had not applied for an income-contingent repayment plan with the Department of Education.  The student loans (36 separate loans) appear to have been federal loans available for an income based repayment and not private loans, although the opinion does not explicitly state one way or the other.  The debtor was eligible for a zero monthly payment ICRP, so no real hardship existed by denying the debtor's application.  It is fair to say that a debtor has virtually no chance of discharging federal student loans in bankruptcy where no effort to comply with an income-based payment has been made, especially if the payment would be zero.  Private student loans, however, offer no such income based payments and for this reason are more frequently discharged in bankruptcy.
  10. Thirty-Six Separate Loans.  The debtor did not ask the bankruptcy court to evaluate each of her 36 loans for discharge separately.  In the 8th Circuit the bankruptcy courts will take a loan-by-loan analysis to determine which, if any, loans might be discharged.  Unfortunately, the debtor did not seek such an evaluation.  

10 years 6 months ago

9192705292_1f50a709f2_m.jpg
The 8th Circuit Bankruptcy Appellate Panel denied Kathryn Nielen’s application to discharge her student loans, and the result, although discouraging in many respects, is not all that surprising. (Nielsen vs. ACS Inc, No. 13-6034, 8th BAP 2014)  The debtor graduated high school in 1995 and went on to obtain an Associates of Science degree in biology and then a Bachelor’s of Science in Health Services Administration followed by a Masters of Business Administration degree in 2001.  At the time she filed bankruptcy she was 36 years old and married with 4 children.  The debtor claimed medical problems due to allergies and mold exposure, but the court did not believe these conditions prevented the debtor from working.
 Several factors were decisive in turning down the application to discharge her student loans:

  1. Poor Work History.  The court described the debtor’s work history as “minimal, if non-existent.”  The debtor offered many excuses for her lack of employment such as being overqualified for many jobs or lack of job experience, but the opinion suggests that the minimal work history was due to a lack of effort and not lack of opportunity. 
  2. Opportunity for Job Advancement.  The debtor’s spouse had opportunity for advancement at his employment.  In addition, the debtor’s spouse was not exploring the possibility of higher paying jobs and was not supplementing his income with part-time employment.  (Does a father of 4 children really have to take on a 2nd job to discharge student loans?  Isn’t being a father of 4 young children a full time job in itself?  The court continues a trend of chastising debtors who turn away work to tend to family matters.)
  3. Too Many Assets. The debtors had a retirement fund and equity in a home.  (Is home ownership a disqualification for student loan discharge?  Isn’t the real question whether the mortgage payment exceeds comparable rental rates?)
  4. Extra Income Available. The debtors discharged a significant amount of credit card debt they were servicing prior to bankruptcy.  Clearly the funds that were used to pay credit cards could now be paid towards the student loan debt.
  5. Significant Tax Refunds.  The debtors received $7,000 of tax refunds, much of that coming from Earned Income Credit or Child Tax Credits.  Such refunds have to be included in the calculation of the average monthly income.
  6. Family Debts were Repaid.  When funds were available to repay debts in the past the debtors opted to repay family loans instead of making payments on student loans. 
  7. Post-Trial Change of Circumstances Ignored.   Following the trial the debtor and her husband separated and divorced.  Claims of spousal abuse existed, but this information was ignored by the appeals court since it occurred after the trial.  The appeals court is limited to reviewing facts presented at trial.
  8. Self-imposed Income Limits.  The court found that the debtor’s ability to seek employment were mainly self-imposed.  Choosing to focus on raising a family, although admirable in many respects, is not well received by bankruptcy courts when seeking a discharge of student loans.
  9. Income Contingent Repayment Plan (“ICRP”).  The debtor had not applied for an income-contingent repayment plan with the Department of Education.  The student loans (36 separate loans) appear to have been federal loans available for an income based repayment and not private loans, although the opinion does not explicitly state one way or the other.  The debtor was eligible for a zero monthly payment ICRP, so no real hardship existed by denying the debtor’s application.  It is fair to say that a debtor has virtually no chance of discharging federal student loans in bankruptcy where no effort to comply with an income-based payment has been made, especially if the payment would be zero.  Private student loans, however, offer no such income based payments and for this reason are more frequently discharged in bankruptcy.
  10. Thirty-Six Separate Loans.  The debtor did not ask the bankruptcy court to evaluate each of her 36 loans for discharge separately.  In the 8th Circuit the bankruptcy courts will take a loan-by-loan analysis to determine which, if any, loans might be discharged.  Unfortunately, the debtor did not seek such an evaluation.  

10 years 6 months ago

tax consequences of foreclosure sale bankruptcy exceptionExisting tax law provides that discharged debt, whether after a foreclosure or short sale, is generally taxable income realized in the year the debt was forgiven, unless an exception applies. Generally only reductions in principal and not forgiveness of interest results in discharge of indebtedness income ("DOI"). Usually a lender is required to issue a Form 1099-C to report the DOI to the IRS. Taxpayers are required to disclose DOI to the IRS whether the lender issues a 1099-C or not. Taxpayers may be able to exclude the DOI from income if an exceptions to DOI applies.

Exceptions Expired Statute In December, 2007, Congress passed the "Mortgage Forgiveness Debt Relief Act of 2007" to alleviate tax consequence for some homeowners in foreclosure. This Act excluded from taxable gross income certain cancelled discharged debt that may otherwise arise with respect to a "qualified principal residence indebtedness."

This act was scheduled to expire on December 31, 2012, but was subsequently extended for another year.  The act expired on December 31, 2013 and has not yet been extended by Congress.

Remaining ExceptionsTwo existing exceptions to DOI are the insolvency and bankruptcy exceptions. 26 U.S.C. section 108(d). If the borrower is insolvent, DOI is not taxable. If the debt is discharged in bankruptcy, DOI is also not taxable. Another exception is the "purchase price infirmity doctrine". This allows DOI to be excluded from income where the lender agrees to write down the purchase money debt to the true value of the collateral as the purchase price was inflated in the original transaction due to fraud or misrepresentation. Another exception from DOI is when the liability was contested. Pursuant to Zarin v. Comm'r, 916 F.2d 110 (3d Cir.1990), DOI is not income where there is a legitimate basis for the borrower to claim that the debt was never owed or collectible because illegal.

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com


10 years 7 months ago

Scooter after auto accidentOn November 13, 2104, two people in Pinellas County  died after the scooters they were riding were involved in separate auto accidents. The Pinellas County Sheriff’s Office investigated one auto accident in north Pinellas County when a woman on a scooter collided with an SUV. The young woman died at the scene after a Jeep Cherokee struck her while trying to make a turn in front of her.
A man in St. Petersburg also died after an auto accident that same night. A few hours earlier a 38-year-old man lost his life when he was hit by a Volkswagen. The man was transported to Bayfront Health Center where he was pronounced dead according to St. Petersburg police. You can read the full article from Bay News Nine here.
If you or someone you know has been injured or lost their life as a result of an auto accident, please contact us today for a free consultation. The attorneys at The Reissman Law Group, P.A. will fight for you and your family. After an auto accident, and  before speaking to an insurance adjuster call us to find what your rights are.
Here are some things to remember if you have been in auto accident. One, even if you do not think you have an injury, go see a doctor just to be sure. Under Florida law, you only have 14 days to see a doctor or you could lost all of your no-fault benefits. Never give a recorded statement to an insurance adjuster. Make sure that you contact your insurance carrier and notify them that you have been involved in a  car accident. Lastly, contact us for a free consultation to discuss your rights under Florida law.
The post Two Deaths After Auto Accidents appeared first on St. Petersburg Law Blog.


10 years 7 months ago

Scooter after auto accidentOn November 13, 2104, two people in Pinellas County  died after the scooters they were riding were involved in separate auto accidents. The Pinellas County Sheriff’s Office investigated one auto accident in north Pinellas County when a woman on a scooter collided with an SUV. The young woman died at the scene after a Jeep Cherokee struck her while trying to make a turn in front of her.
A man in St. Petersburg also died after an auto accident that same night. A few hours earlier a 38-year-old man lost his life when he was hit by a Volkswagen. The man was transported to Bayfront Health Center where he was pronounced dead according to St. Petersburg police. You can read the full article from Bay News Nine here.
If you or someone you know has been injured or lost their life as a result of an auto accident, please contact us today for a free consultation. The attorneys at The Reissman Law Group, P.A. will fight for you and your family. After an auto accident, and  before speaking to an insurance adjuster call us to find what your rights are.
Here are some things to remember if you have been in auto accident. One, even if you do not think you have an injury, go see a doctor just to be sure. Under Florida law, you only have 14 days to see a doctor or you could lost all of your no-fault benefits. Never give a recorded statement to an insurance adjuster. Make sure that you contact your insurance carrier and notify them that you have been involved in a  car accident. Lastly, contact us for a free consultation to discuss your rights under Florida law.
The post Two Deaths After Auto Accidents appeared first on St. Petersburg Law Blog.


10 years 7 months ago

By Jessica Silver-Greenberg

In the netherworld of consumer debt, there are zombies: bills that cannot be
killed even by declaring personal bankruptcy.

Tens of thousands of Americans who went through bankruptcy are still
haunted by debts long after — sometimes as long as a decade after — federal
judges have extinguished the bills in court.

The problem, state and federal officials suspect, is that some of the nation’s
biggest banks ignore bankruptcy court discharges, which render the debts void.
Paying no heed to the courts, the banks keep the debts alive on credit reports,
essentially forcing borrowers to make payments on bills that they do not legally
owe.

The practice — a subtle but powerful tactic that effectively holds the credit
report hostage until borrowers pay — potentially breathes new life into the pools of
bad debt that are bought by financial firms.

Now lawyers with the United States Trustee Program, an arm of the Justice
Department, are investigating JPMorgan Chase, Bank of America, Citigroup and
Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the
banks of violating federal bankruptcy law by ignoring the discharge injunction, say
people briefed on the investigations.

The banks say that they comply with all federal laws in their collection and sale of debt.

Still, federal judges have started to raise alarms that some banks are
threatening the foundations of bankruptcy.

Judge Robert D. Drain of the federal bankruptcy court in White Plains said in
one opinion that debt buyers know that a bank “will refuse to correct the credit
report to reflect the obligor’s bankruptcy discharge, which means that the debtor
will feel significant added pressure to obtain a ‘clean’ report by paying the debt,”
according to court documents.

For the debt buyers and the banks, the people briefed on the investigations
said, it is a mutually beneficial arrangement: The banks typically send along any
payments that they receive from borrowers to the debt buyers, which in turn, are
more willing to buy portfolios of soured debts — including many that will wind up
voided in bankruptcy — from the banks.

In bankruptcy, people undergo intense financial scrutiny — every bank
account, bill and possession is assessed by the bankruptcy courts — to win the
discharge injunction, which extinguishes certain debts and grants a fresh start.
The heavy toll of personal bankruptcy, which can tarnish a credit report for a
decade and put some loans out of reach, is worthless, bankruptcy judges say, if
lenders ignore the discharge.

At the center of the investigation, the people briefed on it said, is the way
banks report debts to the credit reporting agencies. Once a borrower voids a debt
in bankruptcy, creditors are required to update credit reports to reflect that the
debt is no longer owed, removing any notation of “past due” or “charged off.”
But the banks routinely fail to do that, according to the people briefed on the
investigation, as well as interviews with more than three dozen borrowers who
have discharged debts in bankruptcy and a review of bankruptcy records in seven
states.

The errors are not clerical mistakes, but debt-collection tactics, current and
former bankruptcy judges suspect. The banks refuse to fix the mistakes, the
borrowers say, unless they pay for the purged debts. And many borrowers end up
paying, given that they have so much at stake — the tarnished credit reports
showing they still owe a debt can cost them a new loan, housing or a job. The
Vogts, a couple in Denver, for example, paid JPMorgan $2,582 on a debt that was
discharged in bankruptcy because they needed a clean credit report to get a
mortgage.

There are many more who make payments on debts that they no longer legally
owe, but never alert anyone because they do not realize the practice is illegal or
cannot afford to litigate.

Humberto Soto, a 51-year-old unemployed hospital worker who went through
bankruptcy in 2012, said he was almost one of those people who paid. In January,
he was rejected for a Brooklyn apartment after the housing agency pulled his
credit, which was tarnished by $6,411 on a Chase credit card, according to a letter
from the agency, a copy of which was reviewed by The New York Times.

When he called JPMorgan, Mr. Soto said, he was told that the black mark
would remain unless he paid. “It was either pay or lose the apartment,” he said.
But after his bankruptcy lawyer explained the situation to the rental agency, Mr.
Soto ultimately did not pay. (He got the apartment.)

JPMorgan and the three other banks declined to comment for this article,
citing pending litigation in federal bankruptcy court in White Plains.

But the banks have offered defenses in court documents filed in conjunction
with those lawsuits brought by Charles Juntikka, a bankruptcy lawyer in
Manhattan, and George F. Carpinello, a partner with Boies, Schiller & Flexner.
Those lawsuits — seeking class-action status on behalf of the borrowers — accuse
the banks of bolstering the value of their debt by refusing to erase debts that were
discharged in bankruptcy.

The banks have moved to throw out the lawsuits, arguing that they comply
with the law and accurately report discharged debts to the credit agencies. Their
lawyers have argued that the banks typically sell off debts to third-party debt
buyers, and have no interest in recouping payments on the stale debts.

Some bankruptcy judges, however, have questioned whether the banks’ sale of
the debts is precisely what the problem is.

Judge Drain, who is presiding over the cases, posited that the banks’ ability to
sell the soured debts depends on ignoring the bankruptcy discharge in order to
collect money from people who don’t have to legally pay it.

In July, the judge refused to throw out the lawsuit against JPMorgan, saying
that the “complaint sets forth a cause of action that Chase is using the inaccuracy
of its credit reporting on a systematic basis to further its business of selling debts
and its buyer’s collection of such debt.”

During a hearing last year on a related case, transcripts show, Judge Drain
said, “I might refer this, if the facts come out as counsel’s alleging, to the U.S.
attorney,” for criminal prosecution.

Newly unsealed court documents reviewed by The Times illustrate how the
banks handle payments from borrowers on stale debts, including those voided in
bankruptcy. In contracts with debt buyers that were filed with the court, the banks
outline the steps they will take when payments are made on charged-off debts.

In one contract between FIA Card Services, a subsidiary of Bank of America,
and a debt buyer, the seller can keep any payments it receives 18 months or later
after the sale. Before then, the contract shows, the lender will send any payments
to the debt buyer.

Another contract between JPMorgan and a debt buyer allows the bank to keep
a percentage — the exact amount is redacted in the court’s copy of the contract —
of any payments sent in on the debts.

Those contracts shed light on the shadowy market of soured debts, including
tens of billions of dollars that were voided in bankruptcy. Some banks sell off long
overdue bills, which eventually wind up being extinguished in bankruptcy after the
sale, for steeply discounted prices to debt buyers.

None of the banks specifically outline how much of their overdue loans are
sold to debt buyers, but a review of publicly traded debts buyers like the PRA
Group in Norfolk, Va., shows that the sums of bad debt bought and sold are vast.
Since 1996 the company has bought more than 36 million accounts with a face
value of $81.3 billion. Roughly 16 percent of those accounts — with a face value of
$23.4 billion — are bankruptcy debts.

If the United States Trustee’s office determines the banks have violated
bankruptcy law, say the people briefed on the investigations, they could audit the
lenders and extract steep penalties.

The costs are more immediate for people like Bernadette Gatling, a
46-year-old hospital administrator whose credit report is still marred by Chase
credit-card debts that were voided in bankruptcy three years ago. Since being laid
off in March, Ms. Gatling said she has lost one job opportunity after another
because potential employers pull her credit report.

“It’s just so unfair,” she said.

Copyright 2014 The New York Times Company.  All rights reserved.


10 years 6 months ago

Jordan E. Bublick is a Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055

A short sale involves the mortgage lender (or lenders) agreeing to a homeowner to sell his home for a price less than enough to payoff the mortgage in full. The lender agrees to satisfy its mortgage lien for an amount less than a full pay-off so as to allow the sale of the real estate.  As the net proceeds of the sales price is less than the full amount due on the mortgage lien(s), the mortgage holder(s) must agree to accept a "short" payoff in exchange for release of its mortgage lien.

Many homeowners facing foreclosure consider a "short sale", but have a difficult time understanding all of its implications. Some property owners that attempt to achieve a short sale are not successful in their efforts. Many seem to indicate frustration in the attempt to communicate with the mortgage lender(s) and/or actually complete a short sale. In addition, many lenders may be under contractual or regulatory restrictions that may not permit them to agree to a short sale.

Apparently the most difficult item in the short sale process is communicating with the lender and any second mortgage holder, such as the holder of a "home equity loan." In addition to the agreement of the first mortgage holder, the agreement of any junior mortgage holders must also be obtained. Outstanding judgments or tax liens may also be an issue as the buyer would need to receive clear title.

The process of obtaining a short sale usually takes several weeks to pursue and one needs to furnish substantial documentation, including personal financial information such as paycheck stubs, bank statements, 401(k) statements, and tax returns. One may also need to furnish information about a hardship.

Release from Liability

One of the most important issues in the short sale is whether the homeowner is actually released from liability for the "short" or unpaid amount. If the mortgage company and/or the second mortgage company do not release a person from liability for the unpaid portion, the benefit of a short sale to a homeowner may be questioned.

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com


10 years 3 weeks ago

Jordan E. Bublick is a Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055

A short sale involves the mortgage lender (or lenders) agreeing to a homeowner to sell his home for a price less than enough to payoff the mortgage in full. The lender agrees to satisfy its mortgage lien for an amount less than a full pay-off so as to allow the sale of the real estate.  As the net proceeds of the sales price is less than the full amount due on the mortgage lien(s), the mortgage holder(s) must agree to accept a "short" payoff in exchange for release of its mortgage lien.

Many homeowners facing foreclosure consider a "short sale", but have a difficult time understanding all of its implications. Some property owners that attempt to achieve a short sale are not successful in their efforts. Many seem to indicate frustration in the attempt to communicate with the mortgage lender(s) and/or actually complete a short sale. In addition, many lenders may be under contractual or regulatory restrictions that may not permit them to agree to a short sale.

Apparently the most difficult item in the short sale process is communicating with the lender and any second mortgage holder, such as the holder of a "home equity loan." In addition to the agreement of the first mortgage holder, the agreement of any junior mortgage holders must also be obtained. Outstanding judgments or tax liens may also be an issue as the buyer would need to receive clear title.

The process of obtaining a short sale usually takes several weeks to pursue and one needs to furnish substantial documentation, including personal financial information such as paycheck stubs, bank statements, 401(k) statements, and tax returns. One may also need to furnish information about a hardship.

Release from Liability

One of the most important issues in the short sale is whether the homeowner is actually released from liability for the "short" or unpaid amount. If the mortgage company and/or the second mortgage company do not release a person from liability for the unpaid portion, the benefit of a short sale to a homeowner may be questioned.

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com


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