I. Pursuant to Administrative Order 13-01, the Bankruptcy Court for the Southern District of Florida has implemented a "Loss Mitigation Mediation" (LMM) program. The goal of LMM is to "facilitate communication and exchange of information in a confidential setting and encourage the parties to finalize a fesible and beneficial agreement with the assistance and supervision of the United State Bankruptcy Court."
II. The LMM is generally effective for individual cases filed or reopened or converted to an eligible chapter on or after April 1, 2013. The Court has implemented LMM Program Procedures and Local Forms.
In chapter 7 an individual debtor may request LMM to surrender real propery and in chapter 13 an individual debtor may request LMM to modify a mortgage or surrender real property.
III. Participation in the LMM program will require use of a secure online LMM Portal and Document Preparation Software that facilitates the preparation of the loan modification package. All communication between the parties is to be sent through the LMM Portal
IV. To participate in LMM, an eligible debtor must file within 45 days from the petition date a local form "Attorney-Represented Debtor's Verified Motion for Referral to Loss Mitigation Mediation" and an attached form order, Order of Referral to LMM. Prior to the filing of this motion the debtor's information must be submitted and processed through the Document Preparation Software and Debtor's initial loan modification forms are to be ready for signature and submission.
The debtor or the lender may seek LMM.
Co-obligors and co-borrowers must participate in the LMM process if requested. The "Consent to Attend and Participate in Loss Mitigation Mediation" is prepared.
Within 7 days after entry of the Order of Referral to LMM the Lender will confirmation that the
"Lender's Initial Package" is availabe on the LMM Portal.
V. Filing a request out of time
VI. Additional parties such as co-obligors and co-borrowers must particiate in the LMM.
VII. Order of referral to LMM
VIII. All parties are required to attend the LMM conference and be authorized to settle all matters requested in the Verified Motion. The parties attending the LMM conference shall be ready, wiling and able to sign a binding settlement agreement at the LMM conference.
The initial LMM conference is not to exceed one hour. The second LMM conference if required shall also not exceed one hour.
IX. The automatic stay is to be modified to the extent necessary to faciliate LMM. Pending motions for stay relief with respect to the property shal be continued until such time as the LMM has been concluded.
X. If the parties reach a final resolution or if no agreement has been reached the Mediator shall report the results on the LMM Portal and file the "Final Report of Loss Mitigation Mediator" with the Court. If a resolution is reached at the LMM conference, the local form "Motion to Approve Loss Mitigation Agreement with Lender" is to be filed.
XI. Certain wording is to be included in a chapter 13 plan where mortgage modification is sought as part of LMM in a chapter 13 case. The plan language provides that while the LMM is pending and until an agreement is reached, the debtor is required to include a post-petition plan payment of no less than 31% of the debtor's gross monthly income as adequate protection. Objection to lender's proof of claim are to be held in abeyance. If a settlement is reached an approved by the Bankruptcy Court, the debtor is to amend or modify the chapter 13 plan to reflect the settlement. If there is a failure to reach a settlement, the debtor is to modify the plan to conform to the Lender's proof of claiim or provide for a surrender of the property.
XII. The Mediator is to be slected from the Clerk's Register of Mediators. The debtor and the lender are to each pay the Mediator $300.00.
Monday, April 1, 2013
New "Loss Mitigation Mediation" in the Bankruptcy Court
Thursday, March 7, 2013
The bankruptcy law regarding the scope of the chapter 13 discharge is complex and has recently undergone major changes. Therefore, debtors should consult competent legal counsel prior to filing regarding the scope of the chapter 13 discharge.
A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor: (1) certifies (if applicable) that all domestic support obligations that came due prior to making such certification have been paid; (2) has not received a discharge in a prior case filed within a certain time frame (two years for prior chapter 13 cases and four years for prior chapter 7, 11 and 12 cases); and (3) has completed an approved course in financial management (if the U.S. trustee or bankruptcy administrator for the debtor's district has determined that such courses are available to the debtor).
The discharge releases the debtor from all debts provided for by the plan or disallowed (under section 502), with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.
As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. To the extent that they are not fully paid under the chapter 13 plan, the debtor will still be responsible for these debts after the bankruptcy case has concluded. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for restitution or damages awarded in a civil case for willful or malicious actions by the debtor that cause personal injury or death to a person will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. .
The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings.
The provisions of a confirmed plan bind the debtor and each creditor. Once the court confirms the plan, the debtor must make the plan succeed. The debtor must make regular payments to the trustee either directly or through payroll deduction, which will require adjustment to living on a fixed budget for a prolonged period. Furthermore, while confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor may not incur new debt without consulting the trustee, because additional debt may compromise the debtor's ability to complete the plan. .
A debtor may make plan payments through payroll deductions. This practice increases the likelihood that payments will be made on time and that the debtor will complete the plan. In any event, if the debtor fails to make the payments due under the confirmed plan, the court may dismiss the case or convert it to a liquidation case under chapter 7 of the Bankruptcy Code. The court may also dismiss or convert the debtor's case if the debtor fails to pay any post-filing domestic support obligations (i.e., child support, alimony), or fails to make required tax filings during the case.
Unless the court grants an extension, the debtor must file a repayment plan with the petition or within 14 days after the petition is filed. A plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment on their claims.
Types of Claims. There are three types of claims: priority, secured, and unsecured. Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding. (3) Secured claims are those for which the creditor has the right take back certain property (i.e., the collateral) if the debtor does not pay the underlying debt. In contrast to secured claims, unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor.
The plan must pay priority claims in full unless a particular priority creditor agrees to different treatment of the claim or, in the case of a domestic support obligation, unless the debtor contributes all "disposable income" - discussed below - to a five-year plan.
If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral (e.g., a car loan), and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral (which may be less due to depreciation). Payments to certain secured creditors (i.e., the home mortgage lender), may be made over the original loan repayment schedule (which may be longer than the plan) so long as any arrearage is made up during the plan.
The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under chapter 7. In chapter 13, "disposable income" is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance or support of the debtor or dependents and less charitable contributions up to 15% of the debtor's gross income. If the debtor operates a business, the definition of disposable income excludes those amounts which are necessary for ordinary operating expenses. The "applicable commitment period" depends on the debtor's current monthly income. The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size - and five years if the current monthly income is greater than a family of the same size. The plan may be less than the applicable commitment period (three or five years) only if unsecured debt is paid in full over a shorter period.
Payments. Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee. . If any secured loan payments or lease payments come due before the debtor's plan is confirmed (typically home and automobile payments), the debtor must make adequate protection payments directly to the secured lender or lessor - deducting the amount paid from the amount that would otherwise be paid to the trustee.
Confirimation Hearing. No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors will receive 28 days' notice of the hearing and may object to confirmation. While a variety of objections may be made, the most frequent ones are that payments offered under the plan are less than creditors would receive if the debtor's assets were liquidated or that the debtor's plan does not commit all of the debtor's projected disposable income for the three or five year applicable commitment period.
If the court confirms the plan, the chapter 13 trustee will distribute funds received under the plan "as soon as is practicable." If the court declines to confirm the plan, the debtor may file a modified plan. The debtor may also convert the case to a liquidation case under chapter 7. If the court declines to confirm the plan or the modified plan and instead dismisses the case, the court may authorize the trustee to keep some funds for costs, but the trustee must return all remaining funds to the debtor (other than funds already disbursed or due to creditors).
Plan Modification. Occasionally, a change in circumstances may compromise the debtor's ability to make plan payments. For example, a creditor may object or threaten to object to a plan, or the debtor may inadvertently have failed to list all creditors. In such instances, the plan may be modified either before or after confirmation. Modification after confirmation is not limited to an initiative by the debtor, but may be at the request of the trustee or an unsecured creditor.
Filing of Case. A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. Unless the court orders otherwise, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs. The debtor must also file a certificate of credit counseling, evidence of payment from employers, if any, received 60 days before filing; and a statement of monthly net income and any anticipated increase in income or expenses after filing.
The debtor must provide the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). A husband and wife may file a joint petition or individual petitions.
The courts must charge a $281.00 filing fee. Normally the fees must be paid to the clerk of the court upon filing. If a joint petition is filed, only one filing fee and one administrative fee are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case.
In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:
- A list of all creditors and the amounts and nature of their claims;
- The source, amount, and frequency of the debtor's income;
- A list of all of the debtor's property; and
- A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household's financial position.
Appointment of Chapter 13 Trustee. When an individual files a chapter 13 petition, an impartial trustee is appointed to administer the case. The chapter 13 trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors.
Automatic Stay. Filing the petition under chapter 13 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. Filing the petition does not, however, stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.
Chapter 13 also contains a special automatic stay provision that protects co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a "consumer debt" from any individual who is liable along with the debtor. Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose.
Saving Home from Foreclosure. Individuals may use a chapter 13 proceeding to save their home from foreclosure. The automatic stay stops the foreclosure proceeding as soon as the individual files the chapter 13 petition. The individual may then bring the past-due payments current over a reasonable period of time. Nevertheless, the debtor may still lose the home if the mortgage company completes the foreclosure sale under state law before the debtor files the petition. The debtor may also lose the home if he or she fails to make the regular mortgage payments that come due after the chapter 13 filing.
Meeting of Creditors. Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan. If a husband and wife file a joint petition, they both must attend the creditors' meeting and answer questions. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the creditors' meeting. The parties typically resolve problems with the plan either during or shortly after the creditors' meeting. Generally, the debtor can avoid problems by making sure that the petition and plan are complete and accurate, and by consulting with the trustee prior to the meeting.
After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor's chapter 13 repayment plan.
Creditors' Claims. In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has 180 days from the date the case is filed file a proof of claim.
Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.
An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency.
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with a regular income to develop a plan to repay all or part of their debts.
Length of Chapter 13 Plan. Under chapter13, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §1322(d). During this time the law forbids creditors from starting or continuing collection efforts
Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.
Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers.
Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection
Wednesday, March 6, 2013
A
adversary proceeding
A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. A nonexclusive list of adversary proceedings is set forth in Fed. R. Bankr. P. 7001.
assume
An agreement to continue performing duties under a contract or lease.
automatic stay
An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
B
bankruptcyA legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).
Bankruptcy Code
The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.
bankruptcy court
The bankruptcy judges in regular active service in each district; a unit of the district court.
bankruptcy estate
All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)
bankruptcy judge
A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.
bankruptcy petition
The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which opens the bankruptcy case. (There are official forms for bankruptcy petitions.)
C
chapter 7The chapter of the Bankruptcy Code providing for "liquidation,"(i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.)
chapter 9
The chapter of the Bankruptcy Code providing for reorganization of municipalities (which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts).
chapter 11
The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)
chapter 12
The chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer," or a "family fisherman" as those terms are defined in the Bankruptcy Code.
chapter 13
The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)
chapter 15
The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.
claim
A creditor's assertion of a right to payment from the debtor or the debtor's property.
confirmation
Bankruptcy judges's approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.
consumer debtor
A debtor whose debts are primarily consumer debts.
consumer debts
Debts incurred for personal, as opposed to business, needs.
contested matter
Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.
contingent claim
A claim that may be owed by the debtor under certain circumstances, e.g., where the debtor is a cosigner on another person's loan and that person fails to pay.
creditor
One to whom the debtor owes money or who claims to be owed money by the debtor.
credit counseling
Generally refers to two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.
creditors' meeting
see 341 meeting
current monthly income
The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor's spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).
A person who has filed a petition for relief under the Bankruptcy Code.
debtor education
see credit counseling
defendant
An individual (or business) against whom a lawsuit is filed.
discharge
A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.)
dischargeable debt
A debt for which the Bankruptcy Code allows the debtor's personal liability to be eliminated.
disclosure statement
A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide "adequate information" to creditors to enable them to evaluate the chapter 11 plan of reorganization.
The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)
executory contract or lease
Generally includes contracts or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or lease is executory, a debtor may assume it or reject it.)
exemptions, exempt property
Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.
insider (of individual debtor)
Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or a corporation of which the debtor is a director, officer, or person in control.
insider (of corporate debtor)
A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.
A court-approved mechanism under which two or more cases can be administered together. (Assuming no conflicts of interest, these separate businesses or individuals can pool their resources, hire the same professionals, etc.)
joint petition
One bankruptcy petition filed by a husband and wife together.
lien
liquidation
A sale of a debtor's property with the proceeds to be used for the benefit of creditors.
liquidated claim
A creditor's claim for a fixed amount of money.
M
means testSection 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor's aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.
motion to lift the automatic stay
A request by a creditor to allow the creditor to take action against the debtor or the debtor's property that would otherwise be prohibited by the automatic stay.
A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.
nondischargeable debt
A debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action.
objection to dischargeability
A trustee's or creditor's objection to the debtor being released from personal liability for certain dischargeable debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor's fraud while acting as a fiduciary.
objection to exemptions
A trustee's or creditor's objection to the debtor's attempt to claim certain property as exempt from liquidation by the trustee to creditors.
petition preparer
A business not authorized to practice law that prepares bankruptcy petitions.
plan
A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time.
plaintiff
A person or business that files a formal complaint with the court.
postpetition transfer
A transfer of the debtor's property made after the commencement of the case.
prebankruptcy planning
The arrangement (or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions. (Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.)
preference or preferential debt payment
A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor's chapter 7 case.
presumption of abuse
see means test
priority
The Bankruptcy Code's statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code's priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.
priority claim
An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers to the order in which these unsecured claims are to be paid.
proof of claim
A written statement and verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money. (There is an official form for this purpose.)
property of the estate
All legal or equitable interests of the debtor in property as of the commencement of the case.
R
An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.
S
schedulesDetailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor's assets, liabilities, and other financial information. (There are official forms a debtor must use.)
secured creditor
A creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim.
secured debt
Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans and tax liens.
small business case
A special type of chapter 11 case in which there is no creditors' committee (or the creditors' committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.
statement of financial affairs
A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc. (There is an official form a debtor must use.)
statement of intention
A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.
substantive consolidation
Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditors receives, but also the harm that other creditors suffer as a result.)
341 meeting
The meeting of creditors required by section 341 of the Bankruptcy Code at which the debtor is questioned under oath by creditors, a trustee, examiner, or the U.S. trustee about his/her financial affairs. Also called creditors' meeting.
transfer
Any mode or means by which a debtor disposes of or parts with his/her property.
trustee
The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor's plan, receiving payments from debtors, and disbursing plan payments to creditors.
U.S. trustee
An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statements; monitoring creditors' committees; monitoring fee applications; and performing other statutory duties. Compare, bankruptcy
administrator.
undersecured claim
A debt secured by property that is worth less than the full amount of the debt.
unliquidated claim
A claim for which a specific value has not been determined.
unscheduled debt
A debt that should have been listed by the debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)
unsecured claim
A claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor's assessment of the debtor's future ability to pay.
V
Voluntary transferA transfer of a debtor's property with the debtor's consent.
Monday, February 25, 2013
How to File Chapter 7 Bankruptcy
To start a chapter 7 bankruptcy case, a person needs to file a petition with the United States Bankruptcy Court. Usually the case is filed with the Bankruptcy Court in the district where the person lives. If a person lives in Palm Beach County, Florida it is usually filed with the Bankruptcy Court in Downtown West Palm Beac Miami and if a person lives in Broward County, Florida, the case is usually filed with the Bankruptcy Court in Ft. Lauderdale. The Bankruptcy Court for the Southern District of Florida includes Miami-Dade, Broward, Palm Beach, and other nearby counties.
Besides the bankruptcy petition, the debtor must also file various schedules and statements. Schedule A is a list of a person's real estate, schedule B is a list of the personal property, schedule C lists one's exempt property, schedule D lists the secured debt, schedule E lists priority debt, schedule F lists unsecured debt, schedule G sets forth executory contracts and leases, schedule H lists co-debtors, and schedule I and J set forth income and expenses. A statement of financial affairs setting forth various information is also required.
In order to file for chapter 7, a person usually needs to file a certificate of credit counseling and evidence of payment from employers for the 60 days prior to filing.
Wednesday, February 6, 2013
Chapter 13 Bankruptcy: Wipe Out Second Mortgage
Chapter 13 bankruptcy is often used to save a person's home from foreclosure. Under chapter 13, you are allowed to stop the mortgage foreclosure case and catch your mortgage up-to-date. The chapter 13 plan usually involves paying off the mortgage arrearage over a 3 to 5 year period in addition to making your regular ongoing monthly mortgage payments.
If your home has decreased in value, sometimes you are able to wipe out or "avoid" your second mortgage. For example, if you owe $300,000 on your first mortgage and $100,000 on your second mortgage and your home has gone down in value to $299,000, there is no equity or value to "secure" the second mortgage. Under these circumstances, the chapter 13 plan (and related section 506 motion) may provide to wipe out or avoid the second mortgage lien. The $100,000 debt owed on the second mortgage will be wholly unsecured and usually only receive a small dividend like the credit cards receive -- typically around five cents on the dollar.
A certified copy of the order avoiding the second mortgage may be recorded in the county public records to document that the second mortgage is void.
Wednesday, January 16, 2013
The Short Sale
The hottest topic in South Florida is the real estate "short sale." Actually a short sale is nothing new, but it now quite the vogue. A short sale basically means that the mortgage lender (or lenders) agree to satisfy its mortgage lien and allow the transfer of the real estate in exchange for receipt of less than the full amount of the amount due on its mortgage loan. In a short sale, the real estate is sold to a buyer who obtains a new mortgage. 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.
Despite this basic definition, there is more involved with the short sale and whether it is actually beneficial to the homeowner facing foreclosure. The fact that the internet is full of courses, books, and seminars offering to turn out "short sale experts" should in and of itself advise caution.
It is been my experience so far that many homeowners facing foreclosure seek out the "short sale", but do not entirely understand the process or many of its implications. Some do not even seem to understand where they stand on various issues even after a "short sale" supposedly took place. Apparently, one of the short sale's greatest boosters, at least at present, is the real estate broker or other "third party negotiator" who would earn a commission upon the closing of a short sale.
At this time, it seems that substantially more are failing to achieve a short sale than are those who have achieved one. Many seem to seek out the short sale as almost a holy grail and advise that they are in the "process of a short sale", but few have actually advised that they have completed one. Many seem to indicate frustration in the attempt to communicate with the mortgage lender(s) and/or actually complete 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 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 judgment or tax liens may also be an issue as the buyer would need to receive clear title.
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.
Another important issue is the federal income tax consequences. If the unpaid mortgage debt is forgiven, "discharge of indebtedness income" may be implicated. Discharge of indebtedness income basically involves the recognition as income for federal income tax purposes of the discharged mortgage debt. But there are various exceptions to the recognition of discharge of indebtedness income, such as the insolvency exception or discharge in bankruptcy. Although a form 1099 may be issued as to the homeowner/seller to the IRS, one of the various exceptions to the rule may apply and income taxation on the discharge amount may not be due. A complete analysis of this issue should be completed before one commits to undertake a "short sale."
Many seem to seek out the short sale to "save their credit." One should try to get the best understand possible of whether a short save will actually save or protect one's credit from the reporting of a foreclosure. In general, a credit reporting agency may report accurate information on your credit report. Although a "foreclosure" may not be reported on one's credit, a mortgage delinquency may. One may question the effective difference.
A short sale may be in the mortgage lender's supposed "best interest." But one should realize that many lenders may be under contractual or regulatory restrictions that may not permit them to agree to a short sale. Furthermore, one may actually be communicating with the lender's loan servicer and not the actual mortgage lender.
The apparent word on the street is that a short sale takes many weeks to pursue and that you need to furnish substantial documentation. One may need to furnish personal financial information such as paycheck stubs, bank statements, 401(k) statements, and tax returns. One may also need to further information about a hardship.
Monday, January 14, 2013
Monday, January 7, 2013
Short Sale in South Florida - The Chapter 13 Bankruptcy Way
A very hot topic in South is the "short sale". This usually involves a sale to another person with your mortgage company agreeing to satisfy its mortgage with a payment of less than the full amount due. A variation on the short sale is the "short refinance." In a short refinance, a person tries to refinance his mortgage with a new mortgage for less than the full amount owed on his existing mortgage with the existing mortgage company agreeing to take less than a full payoff.
Chapter 13 bankruptcy reorganization may offer some people results similar to a short refinance. If the value of your home has fallen dramatically, like most real estate has in South Florida, you may be able to wipe out or "avoid" your second mortgage. For example, if you owe $400,000 on your first mortgage and $100,000 on your second mortgage and your home has fallen in value to $399,000, you may wipe out or avoid your second mortgage as there it is wholly unsecured. That is, there is no value or equity to "secure" it.
If your foreclosure involves real estate that is not your principal residence, you may be able in Chapter 13 bankruptcy to reduce even your first mortgage down to the value of your home in addition to wiping out your second mortgage. You may also be able to lower your mortgage interest rate.
Thursday, December 20, 2012
Tax Consequences of Foreclosure or Short Sales of Certain Primary Residences
In December, 2007, Congress passed the "Mortgage Forgiveness Debt Relief Act of 2007" to alleviate tax consequence for some homeowners in foreclosure. The new Act excludes from gross income certain cancelled discharged "qualified principal residence indebtedness."
Existing 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.
Two 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.
The new Act adds to the existing exceptions from DOI a category of "qualified principal residence indebtedness." Up to $2 million of indebtedness may be excluded if the reason for the discharge is either a decline in the residence's value or the taxpayer's financial condition. It should be noted that debt excluded by the Act reduces the taxpayer's basis and a "short sale" could result in a taxable "gain" which may be taxable as a capital gains.
In order for this new exception to apply, the debt must be "qualified" which includes only acquisition and not home equity indebtedness. Acquisition indebtedness includes funds borrowed to buy, construct, or improve a home. Debt consolidation loans or cash out loans are generally not acquisition indebtedness. The Act only applies to debt discharged between January 1, 2007 and December 31, 2009. Pub.L.No. 110-142 Section 2(d). If acquisition debt is refinance, the refinanced principal amount retains its status as acquisition indebtedness. The excess of the total refinanced loan amount over the refinanced acquisition indebtedness is treated as home equity indebtedness and is not eligible for exclusion from income. Acquisition indebtedness included loans to "substantially improve" the principal residence.
This new exclusion only applies if the debt was discharged due to the borrower's financial condition or a decline in the home's value. A discharged based on the lender's acknowledgment of its wrongdoing or even rescission is not eligible for the qualified principal residence exclusion. Documentationj in any litigation or settlement that one of the required grounds is the basis for the discharge of the debt would be helpful.
The homeowner must apparently elect to take either the qualified principal residental exception or the insolvency exception. The insolvency exception, if elected, is "in lieu of" the qualified principal residence excetion.
Wednesday, December 5, 2012
Mortgage Foreclosure and Discharge of Indebtedness Income
A mortgage foreclosure may also have federal income tax consequences. One issue is "discharge of indebtedness income." This can be understood as the IRS's attempt to tax you on money you were loaned but are not going to repay. The mortgage lender may be required to report the amount of the cancelled debt to you and the IRS on a Form 1099-C, Cancellation of Debt. Fortunately though there are various exceptions to this rule and even a recently added exception.
One of the exceptions to discharge of indebtedness income is if the mortgage debt is discharged in bankruptcy, including under chapter 7 or under chapter 13. In order to take advantage of this exception, it may be important to file for bankruptcy before the foreclosure sale.
Another exception to discharge of indebtedness income is the insolvency exception. That means if you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. Insolvency generally means that your total debts are more than the fair market value of your total assets.
The new exception if the Mortgage Forgiveness Debt Relief Act of 2007 which generally allows people to exclude certain discharge of indebtedness from the foreclosure or mortgage restructuring on their principal residence. This new provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).
An applicable form is Form 982, "Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).
Saturday, December 1, 2012
Florida Mortgage Foreclosure and Liability
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.
Thursday, November 1, 2012
Modifying Your Mortgage in Chapter 13 Bankruptcy
New mortgage modification rules make it easier to combine a HAMP or "Obama Plan" mortgage modification with a Chapter 13 Bankruptcy. Combining a HAMP mortgage modification may be beneficial to many homeowners.
The filing of a chapter 13 bankruptcy generally stays all foreclosure and collection actions by mortgage companies and other creditors. This allows a person to formulate a chapter 13 plan to reorganize their financial situation.
A typical homeowner who owes more on their home than it is valued at will propose a chapter 13 plan to avoid their second mortgage lien and categorize it with other unsecured claims, such as credit cards. The homeowner will also file a HAMP mortgage modification request if they haven't already file it. The chapter 13 plan will provide for payment of the estimated and anticipated HAMP modified mortgage payment. The chapter 13 plan provides also provides for a percentage dividend to unsecured creditors.
Filing for a HAMP modification together with a chapter 13 bankruptcy may increase the likelihood of obtaining a HAMP modification for various reasons, including the increased feasibility of making the new payment for the first mortgage, as the second mortgage is avoided and categorized as an unsecured creditor. Also, as the HAMP is being filed in the context of the chapter 13 case, it may receive more prompt review by the mortgage company.
A typical HAMP modified mortgage payment is calculated as 31% of the homeowner's gross income. The 31% amount would cover principal, interest, taxes, insurance and associations.
Thursday, October 25, 2012
HAMP Case Law
Wright v. Bank of Am., N.A., No. 10-cv-1723, 2010 U.S. Dist. LEXIS 73807, at *9-15 (N.D. Cal. July 22, 2010) - July 22, 2010, Judge Jeremy Fogel, of the United States District Court for the Northern District of California, held that borrowers are not intended third-party beneficiaries of the Servicer Participation Agreement and, therefore, lack standing to sue for an alleged breach of the agreement.
Hoffman v. Bank of America, N.A., No. 10-cv-2171, 2010 U.S. Dist. LEXIS 70455, at *8-14 (N.D. Cal. - Jun. 30, 2010. On June 30, 2010, Judge Susan Illston, of the United States District Court for the Northern District of California, held that borrowers are not intended third-party beneficiaries of the Servicer Participation Agreement and, therefore, lack standing to sue for an alleged breach of the agreement.
Simmons v. Countrywide Home Loans, Inc., No. 09-cv-1245, 2010 U.S. Dist. LEXIS 65031, at *7-115 (S.D. Cal. Jun. 28, 2010) On June 28, 2010, Judge John A. Houston, of the United States District Court for the Southern District of California, held that borrowers are not intended third-party beneficiaries of the Servicer Participation Agreement and, therefore, lack standing to sue for an alleged breach of the agreement.
Benito v. Indymac Mortgage Services, No. 2:09-cv-1218, 2010 U.S. Dist. LEXIS 51259, at *18-22 (D. Nev. May 21, 2010) (Attached as Exhibit 2).Judge Philip M. Pro, of the United States District Court for the District of Nevada, similarly held that borrowers are not intended third-party beneficiaries of the Servicer Participation Agreement and, therefore, lack standing to sue for an alleged breach of the agreement.
Marks v. Bank of America, N.A.,No. 3:10-cv-08039, 2010 U.S. Dist. LEXIS 61489, at *6-13 (D. Ariz. Jun. 21, 2010) On June 21, 2010, Judge James A. Teilborg, of the United States District Court for the District of Arizona, held that borrowers are not intended third-party beneficiaries of the Servicer Participation Agreement and, therefore, lack standing to sue for an alleged breach of the agreement.
Monday, August 6, 2012
Chapter 13 and "HAMP" Mortgage Modification
Chapter 13 bankruptcy may present a platform to obtain modification of first mortgages under the U.S. Treasury Department's "Home Affordable Modification Program" (HAMP).
As most people are aware, Congress did not yet pass the "cram-down" provision for principal residential mortgages. Despite this, the legal landscape does seem to indicate that the HAMP program will be of substantial assistance to homeowners - perhaps in many instances - more than the much sought after "cram-down".
The chapter 13 plan may be a good platform to obtain relief under HAMP. As part of the chapter 13 plan, modification of the first mortgage may be sought under HAMP. Usually the mortgage company retains an attorney to represent their interests and this lawyer will serve as a contact person to insure review for HAMP relief. A substantial portion of first mortgage are eligible for HAMP relief either as Fannie Mae or Freddie Mac related mortgages (GSE Loans) or as the mortgage servicer has agreed to participate in HAMP (non-GSE Loans).
Some homeowners have trouble communicating with their mortgage company to obtain HAMP relief. But as most mortgage company usually retain an attorney to represent their interests, this mortgage company attorney will serve as a contact person to insure review for HAMP relief.
Upon filing of the chapter 13 case, most foreclosure actions are stayed until further order of the court. This automatic stay allows for pursuance of approval of the chapter 13 plan, HAMP modification of the first mortgage, avoidance of wholly underwater junior mortgages, and substantial discharge of unsecured debt.
Sunday, June 3, 2012
A Guide to the Distressed Florida Homeowner Facing Foreclosure
Friday, June 1, 2012
Ft. Lauderdale Broward Chapter 7 and Chapter 13 Bankruptcy Lawyer
Bankruptcy Attorney Jordan E. Bublick practices Chapter 7 and Chapter 13 bankruptcy law in Ft. Lauderdale and all of Broward County, Florida. Jordan E. Bublick has been a member of the Florida Bar since 1983. Chapter 7 bankruptcy is generally used by people who desire to discharge unsecured debt and who have little non-exempt property. Chapter 13 bankruptcy is used to reorganize secured and unsecured debt as well as to discharge unsecured debt.
Chapter 13 bankruptcy is often used to stop a foreclosure action and proposed a plan of reorganization. Due to the decreased real estate values in South Florida, often a junior mortgage lien may be avoidable as an "unsecured debt."
Certain unsecured debt in not dischargeable in Chapter 7 and Chapter 13 such as certain taxes, student loans, fines, etc.
Thursday, May 31, 2012
Miami, Palm Beach, Boca Raton, Broward, Plantation, and Miramar Bankruptcy Lawyer
Jordan E. Bublick is a Board Certified Consumer Bankruptcy lawyer (American Board of Certification). The law firm was established in 1985. Practice is limited to bankruptcy law.
Jordan E. Bublick is a graduate of New York University School of Law (LL.M., 1984), Ohio State University College of Law (J.D., 1983), and Brandeis University (B.A., 1979)
North Miami Office - 11645 Biscayne Blvd., Suite 208, Miami, Florida (305) 891-4055
Broward Telephone - (954) 424-6618
Chapter 7 personal bankruptcy is generally used to discharge your dischargeable debt including credit cards, medical bills, and unsecured loans.
Chapter 13 bankruptcy is generally used to reorganize your financial affairs while under the protection of the Bankruptcy Court. Chapter 13 bankruptcy is often used to stop a mortgage foreclosure and to catch the payments up-to-date.
Chapter 11 bankruptcy is also used to reorganize your financial affairs while under the protection of the Bankruptcy Court. Chapter 11 can be used by individuals or corporations.
Practicing in Miami-Dade, Broward, and Palm Beach Counties, including W. Palm Beach, Boca Raton, Ft. Lauderdale, Coral Springs, Miramar, Pembroke Pines, and Plantation.
Wednesday, May 30, 2012
Bankruptcy Lawyer Miami - Practice Limited to Bankruptcy
Bankruptcy Lawyer Miami - Practice Limited to Bankruptcy
Jordan E. Bublick Attorney at Law is a Board Certified Specialist in Consumer Bankruptcy Law (American Board of Certification) with offices located at 11645 Biscayne Blvd., Miami, Florida and South Dade Brand at 10700 Caribbean Blvd., Miami, Florida. Jordan E. Bublick limits his practice to person and businesses in Chapter 7, Chapter 13, and Chapter 11 bankruptcy. The firm of Jordan E. Bublick, P.A. was established in 1985. The firm offers a free initial consultation.
Chapter 7 bankruptcy allows a person to discharge most types of debt while keeping his "exempt" property.
Chapter 13 bankruptcy allows a person to propose a plan of reorganization. It is often used to stop a mortgage foreclosure and to catch the mortgage payments up-to-date. Chapter 11 is used by individuals and businesses to reorganize their debt under a chapter 11 plan.
Wednesday, November 9, 2011
Another "Robo-Signer" Class Action Suit
Various "Robo-Signer" class action suits have been filed across the country. The case of Geoffrey Huber, et al. vs. GMAC, LLC, n/k/a Ally Financial, Case 10-2458-SCB was filed in the Federal District Court of the Middle District of Florida on November 2, 2010. The complaint alleges that the Defendant engaged in a fraudulent scheme to fabricate and falsify affidavits and other documents to support foreclosure complaints and judgments.
The action is being brought as a statewide class action on behalf of all other similarly-situated obligors who have been obligors on notes and mortgages in the State of Florida served by the Defendant within the previous three years. The relief sought is based on an alleged violation of constitutional rights under color of state law 42 U.S.C. 1983, abuse of process, and unfair and deceptive trade practices pursuant to Fla. Stat. 501.201 et seq.
Thursday, April 14, 2011
"Anatomy of a Financial Collapse"
On April 13, 2011, the United States Senate Permanent Subcommitte on Investigations, Committe on Homeland Security and Governmental Affairs issued its report "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse."
Saturday, March 5, 2011
Change in Miami-Dade Foreclosure Mediation Program
The Miami Herald reports today that the 11th Circuit Court, which includes Miami-Dade County, has made a change in the organization that has been managing the mortgage foreclosure mediation program since its initiation. It has replaced the Collins Center with the Oasis Alliance Corporation, apparently based in Tampa. Herald quotes a director of the Collins Center that it operates in "six of Florida's judicial districts and receives $275 for each case it handles, [and] has managed about 8,000 foreclosure mediations in Miami-Dade over the past two years."
Change in Miami-Dade Foreclosure Mediation Program
The Miami Herald reports today that the 11th Circuit Court, which includes Miami-Dade County, has made a change in the organization that has been managing the mortgage foreclosure mediation program since its initiation. It has replaced the Collins Center with the Oasis Alliance Corporation, apparently based in Tampa. Herald quotes a director of the Collins Center that it operates in "six of Florida's judicial districts and receives $275 for each case it handles, [and] has managed about 8,000 foreclosure mediations in Miami-Dade over the past two years."
Tuesday, January 11, 2011
The Supreme Court's Decision in Ransom
The U.S. Supreme Court issued its 8-1 decision in Ransom today. Justice Kagan wrote for the majority and Justice Scalia wrote a dissenting opinion. It is reported that this is Justice Kagan's first opinion.
The majority opinion held that an over-median income debtor in chapter 13 is not entitled to the "ownership costs" deduction (approx. $471.00) in the computation of the means test (used to determine "disposable income") for a vehicle that is not encumbered by debt. The debtor is though is entitled to a deduction for the "operating costs" deduction (approx. $388.00) for an unencumbered vehicle.
Thursday, December 16, 2010
Yet Further Congressional Hearings on the Foreclosure Crisis
As reported in the media, the House Committee on the Judiciary held a further hearing on the mortgage foreclosure crisis on December 15, 2010. The witness list included Senator Sheldon Whitehouse (D-RI). It is reported that Senator Whitehouse is seeking "to introduce legislation early next year that would give [Bankruptcy Court] judges comfort that they have the authority to force parties, including banks, to the table to discuss modifications."
Senator Whitehouse noted that in today's "age of securitization, the [mortgage] servicer merely serves as processing agent and may not work in the interests of the people who actually own the mortgage and in the age of corporate bureaucracy, the left hand may not know what the right hand is doing." He further reviewed his efforts to give bankruptcy court judges the power to modify mortgage on principal residences just as they are able to for other loans including those on vacation homes, cars, and boats. He reviewed efforts in various Bankruptcy Court loan mitigation programs and some mortgage servicer challenges thereto. He noted his proposal to pass legislation to clarify the power of Bankruptcy Courts to run foreclosure loss mitigation programs.
Tuesday, December 14, 2010
HAMP has "Failed to Make a Dent in the Foreclosure Crisis"
Today the Congressional Oversight Panel issued its oversight report of over 170 pages reviewing the Department of Treasury's Foreclosure Prevention Programs. The report reviews where HAMP stands today, reviews the future of HAMP, and sets forth conclusions and recommendations. Annex I to the report reviews lessons from the Home Owners' Loan Corporation of the 1930s and 1940s. The report states that despite the tweeking of HAMP since its April 2010 report, the concerns with the program have not been resolved. The report states that it presently estimates that HAMP will "prevent only 700,000 to 800,000 foreclosures - far fewer than the 3 to 4 million foreclosures that Treasury initially aimed to stop, and vastly fewer than the 8 to 13 million foreclosures expected by 2012." It further notes that since "Treasury's authority to restructure HAMP ended on October 3, 2010, the program's prospects are unlikely to improve substantially in the future." The report concludes that HAMP has failed to "make a dent in the foreclosure crisis" and that Treasury has "failed to acknowledge HAMP's shortcomings in time."
Monday, December 6, 2010
Professor Levitin Refutes the American Securitization Forum
Professor Adam Levitin posted this blog post on Creditslips.org refuting the position of the Tom Deutsche of the American Securitization Forum's testimony before the Senate Banking Committee last week. Professor Levitin also recently testified before Congress on November 16, 2010 and November 18, 2010.
One of the important involved issues is the "chain of title" problem in mortgage securitization, including whether an endorsement is required from every party in the securitization chain.
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