Blogs
Bankruptcy attorneys are hired to navigate debtors through the murky waters of the bankruptcy court. One concern for a debtor is when they own a home that is worth more than what is owed to a lender. Some debtors unwarily rely sites like Zillow or Trulia to determine their property values. Zillow and trulia are too unreliable. As a result, debtors filing bankruptcy can ruin their bankruptcy because their property values are higher than what Zillow or Trulia believes.
How You Can Keep Your Home In Bankruptcy: Exemptions for Residence
Under current bankruptcy rules, debtors are allowed to keep up a certain amount of home equity. However, this amount of equity should not exceed your jurisdication's limit. In California, bankruptcy courts allow debtors to keep between $75,000 and $150,000 of home equity.
For example, if you own a home that is worth $100,000, and you owe a lender $75,000, you have $25,000 in home equity. In California, bankruptcy courts allow you to exempt all the equity in the home from the creditors. However, by choosing to exempt your home equity, you reduce the amount of money that you can exempt other items, such as car equity and cash savings accounts. Sometimes by choosing to save the equity in a home, a debtor will have to let the bankruptcy court take other personal property.
Let us look at another example. You own a home that is worth $100,000. You owe $99,000 to a lender. Thus, you have $1,000 in equity. Most California bankruptcy attorneys will choose not to use house exemption to protect this equity so that they can protect more equity in other property, such as car equity and cash savings accounts. Under this scenario, the $1000 of equity will be protected under the "wild card" exemption.
Can You Trust Zillow or Trulia?
Therefore, it is important to have accurate house valuation. What is the best way to determine house value? Hire an appraiser. Unfortunately, an appraisal will cost $350. Another reliable source would be to have a competent Realtor tour your house and compare your house to homes that have sold in your neighborhood recently. While less reliable than an appraisal report, a Realtor report should be pretty accurate a fraction of the price of an appraisal.
How about Zillow? Or Trulia? Why not just look at home values through these symstems because they are free? Bankruptcy courts have held time after time that Zillow is not credible evidence of value. (In re Phillips, 491 BR 255, 260, n.7 (Bankr. D. Nev. 2014).)
Debtors relying on Zillow are often surprised when the trustee tells them that their homes are worth more than what Zillow says. Typically, debtors can recover from this surprise by changing their exemptions so that they choose the house exemption. However, often that leads to other personal property as not being exempt. The trustee is allowed to sell those items for the benefit of the creditors.
The Circuit Court of Appeals of the 3rd Circuit recently issued its opinion in In re SCH Corp., et al, 2014 WL 2724606 involving the doctrine of "equitable mootness" in the bankruptcy context. The District Court had dismissed the appeal from the Bankruptcy Court as being "equitably moot" by applying the five-factor test set forth in In re Continental Airlines, 91 F.3d 553 (3rd Cir. 1996). In making its decision, the 3rd Circuit reviewed that distinctions between the concepts of "mootness", "equitable mootness", and the "prudence doctrine".
Constitutional MootnessThe Court explained that the mootness determination it was making in this case, was not that of mootness in the constitutional sense of the limits of the federal courts' authority under Article III, but rather that of equitable mootness or the application of prudential factors. The Court noted that the Continental decision cited Supreme Court precedent that "an appeal is moot in the constitutional sense only if events have taken place during the pendency of the appeal that make it "impossible for the court to grant ‘any effectual relief whatever.’ ” The Court noted that a case is not moot merely because a court cannot restore the parties to the status quo ante - but rather, whether a court can can fashion some form of meaningful relief, even if it only partially. Equitable Mootness The Court referred to a 7th Circuit decision that stated: “[t]here is a big difference between inability to alter the outcome (real Article III Constitutional mootness) and unwillingness to alter the outcome (‘equitable mootness') and that these concepts should not be confused. The Court also noted that another court preferred not to ask whether a case is "equitably moot", but rather whether it is "prudent" to upset a bankruptcy reorganization plan at a later date. The Continental Court stated that these “equitable” or “prudential” considerations focus on the following five “concerns unique to bankruptcy proceedings”: 1. whether the reorganization plan has been substantially consummated2. whether a stay has been obtained3. whether the relief requested would affect the rights of parties not before the court4. whether the relief requested would affect the success of the plan5. the public policy of affording finality to bankruptcy judgments
Statutory Mootness
The Court in SCH Corp. did not reach the concept of "statutory mootness". This ABI article explains that the concept of statutory mootness is provided for in sections 363(m) and 364(e) of the Bankruptcy Code and are designed to protect capital providers, including purchasers and lenders.
Further References
Other articles, here and here, review the Supreme Court denial of cert. in a case involving the issue of equitable mootness in the case of Law Debenture Trust Co. v. Charter Communications, Inc., No. 12-847. The doctrine of equitable mootness as applied in the 2nd Circuit is also reviewed in this article by Hunton & Williams, LLP. Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
One major benefit of the Chapter 13 reorganization program is the ability to modify the terms of a vehicle loan. In most every case we are able to help you reduce your monthly payment by reducing the interest rate and lengthening the finance terms. In some cases, we can legally reduce what you owe on […]
The post Chapter 13 Bankruptcy in Michigan: Using the Reorganization Plan to Reduce Your Vehicle Payments appeared first on Acclaim Legal Services, PLLC.
A federal judge ruled in favor of the Detroit bankruptcy plan, finalizing a 16 month process in which the city petitioned to file a Chapter 9 bankruptcy.
U.S. Bankruptcy Judge Steven Rhodes ruled that the Motor City’s complete restructuring plan is rational and achievable. Detroit now has legal authority to cut more than $7 billion in unsecured liabilities and put back $1.4 billion into public services over the next 10 years.
The decision allows Detroit to trim roughly 74 percent of its unsecured debt. Additionally, the plan expects probable cost savings via more effective government operations that might increase the city’s reinvestment plan to $1.7 billion.
Rhodes said that Detroit’s settlement with pensioners was a “miraculous” conclusion; he also overruled every objection to the city’s plan.
"This city is insolvent and desperately needs to fix its future," Rhodes said.
Rhodes also stated that Detroit made the correct decision to preserve the Detroit Institute of Arts instead of attempting to sell artwork to settle debts.
Today’s ruling ends the largest municipal bankruptcy in U.S. history; the city of Detroit is expected to officially emerge from bankruptcy within the next few weeks.
Detroit emergency manager Kevyn Orr made a statement regarding Rhodes’ decision:
"With Judge Rhodes's historic decision, Detroit moves further along the path toward financial stability and success as a viable and attractive place to live, work and invest. My team and I are pleased that Judge Rhodes agrees that the Plan is the best way for the City to resolve its financial difficulties and remain on solid financial footing.”
Detroit’s two major financial creditors, Syncora and Financial Guaranty Insurance Co. initially fought the city’s petition, arguing that the filing illegally favored pensioners over other creditors. However, both institutions dropped their objections after reaching settlements with the city.
The remaining creditors supported the plan and pensioners voted to accept the deal over a 60-day balloting process this summer.
Orr’s tenure in Detroit will now end with the conclusion of the city’s bankruptcy filing. General control over the city will return to Mayor Mike Duggan and the City Council.
A Financial Review Commission, staffed by gubernatorial appointees, will oversee the city’s finances over the next decade.
The post Judge Approves Detroit Bankruptcy Plan appeared first on The Bankruptcy Blog.
When you deposit money into the bank, you want to access it as fast as possible. Here’s why you may not always get what you want from the bank, and how to turn it around to your advantage.
Before 2010, the banks were a mess when it came to new money. Sometimes you’d deposit money into your account and it would be available immediately, and other times it would take a few days to clear. With no clear rules on funds availability, consumers were perpetually confused.
Expedited Funds Availability Act
To standardize the process of depositing and clearing funds into your bank account, in 1987 Congress enacted The Expedited Funds Availability Act. The real reason for the law was that it regulated how banks were able to use funds deposited into bank accounts, but the benefit was that consumers got to understand when they’d be able to use their own money.
The law broke banks down into geographic zones, providing different holding periods based on where the banks were in relation to one another. As of 2010, that was changed to bring each bank into the same zone for collection purposes.
How Quickly Your Deposit Clears
There are a few different holds uner EFAA. They are:
- Statutory Hold: $200 1st Business Day Following Deposit, Remainder 2nd Business Day
- Large Deposit Hold: If you deposit $5,000 or more then you get $5000 on the second business day after the deposit is made, and the remainder on the seventh business day.
- New Account Hold: If your bank account has been open for less than 30 days, your deposit will clear on the 9th business day after the deposit is made.
- Bad Customer Holds: You will not get any of your deposit until the 7th business day after the deposit is made if:
- You have overdrawn your account for six or more business days of the previous six months
- You have overdrawn your account for for two or more business days in excess of $5000 in the previous six months
- The bank has reason to doubt the check is good.
- The item being deposited is a legal copy of an item previously returned for NSF.
- Item is accepted for deposit during a power outage or computer failure
Some Deposits Automatically Clear Faster
If you look at the list, it’s all about risk to the bank. If you’re an unproven customer or one who bounces checks, you’re going to need to wait for your money. But if there’s no risk, the money is cleared that much more quickly.
Under the law, the following items must have the first $5000 available by the first business day following the deposit:
- Cashier’s checks, certified checks, or teller’s checks;
- Postal money orders;
- U.S. Treasury checks;
- Checks drawn on a Federal Reserve Bank or Federal Home Loan Bank;
- Any check issued by a state, city, county, or other municipality;
- Any check drawn from another account at the depository institution.
Need Your Money Faster?
If you have an urgent need for your money, and you can’t wait for the check to clear, you’ve got a few options. You can cash the check at a check cashing place (in exchange for paying a huge fee).
Or you can open a bank account and keep it open for more than 30 days.
Balance your checkbook regularly so you minimize the chances of bouncing a check and falling into the “Bad Customer” column.
If you do overdraw your bank account, replace the money immediately – within the same business day if possible.
Treating your banking relationship well can ultimately benefit you by putting more money in your pocket, sooner.
As a bankruptcy attorney in Chicago, I meet with countless people every year who are often more concerned about their credit scores then actually getting out of debt. There is a fear that filing bankruptcy will take the credit score to the point where the person will not be able to obtain credit in the+ Read More
The post You Should Be Concerned About Your Credit Score appeared first on David M. Siegel.
Assignment of Mortgage Promissory Note 
It is generally the rule in Florida that the transfer of a mortgage note transfers with it the related mortgage. The mortgage note is regarded as the principal item with the mortgage being regarded as a mere accessory. 6 Fla. Jur. 2nd, Bills and Notes, Section 123. Hence the adage "the mortgage follows the note." . The Restatement (Third) of Property provides in Mortgages section 5.4(a) (1997) that "[a] transfer of an obligation secured by a mortgage also transfers the mortgage unless the parties to the transfer agree otherwise." Florida law is apparently in accordance with the Restatement. The stated objective of the Restatement is to avoid economic waste to the lender and a windfall to the borrower if the note and mortgage are split rendering the mortgage note as a practical matter unsecured. The Restatement cites the case of Carpenter v. Longan, 83 U.S. 271 (1827) which held that "[a]ll the authorities agree that the debt is the principal thing and the mortgage an accessory."
The Restatement's exception provides that a transfer of a mortgage note is possible without the transfer of the mortgage if the parties so agree, but the effect of such a transfer would be to make it impossible to foreclose the mortgage unless the transferor of the mortgage note is made the assignee's agent or trustee with authority to foreclose on the behalf of the assignee of the mortgage note.
Assignment of the Mortgage
The opposite situation is presented if a mortgage is transferred without the transfer of the mortgage note. The apparent rule in Florida is that an assignment of a mortgage without an assignment of the related mortgage note is deemed a nullity and creates no right in the assignee because a mortgage is a mere lien incidental to the obligation it secures. 37 Fla. Jur. 2nd, Mortgages, Section 511. See e.g., Sobel v. Mutual Development, Inc., 313 So.2d 77 (Fla. 1st DCA 1975). Vance v. Fields, 172 So.2d 613 (Fla. 1st DCA 1965).
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
For many, bankruptcy is a confusing subject — and a daunting one. As with most issues involving the law, it can be hard to dig through all the legal jargon used. And when you’re feeling stressed about your finances, it can be even harder to understand the process.The post Understanding Bankruptcy: The Basic Concepts appeared first on Tucson Bankruptcy Attorney.
For many, bankruptcy is a confusing subject — and a daunting one. As with most issues involving the law, it can be hard to dig through all the legal jargon used. And when you’re feeling stressed about your finances, it can be even harder to understand the process.The post Understanding Bankruptcy: The Basic Concepts appeared first on Tucson Bankruptcy Attorney.
For many, bankruptcy is a confusing subject — and a daunting one. As with most issues involving the law, it can be hard to dig through all the legal jargon used. And when you’re feeling stressed about your finances, it can be even harder to understand the process.
The post Understanding Bankruptcy: The Basic Concepts appeared first on Tucson Bankruptcy Attorney.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.