debt settlement – Fleysher Law

Debt Settlement “Programs” are Often Scams

Posted on November 16, 2012February 22, 2023 by Emil Fleysher

Today, large amounts of debt are facing many Americans. Because of this, many debt settlement companies have popped up. They are promising consumers ways to get out of their debt in a relatively short amount of time. And, for less money than they actually owe. However, despite all their TV and radio advertisements, the industry admits that the debt settlement companies’ schemes fail to work for about two-thirds of clients.

According to the FTC and state attorneys general, it is actually less than 10% of consumers who successfully complete these programs. And, who have their debts reduced. Additionally, even for the “successful” consumers, there is often a high price. The companies typically charge large up-front fees. They also charge a monthly payment and a percentage of the money they “saved” the consumer at the end. Also, the IRS considers income the amount that the customer’s debt is reduced. Thus, it is taxable unless the consumer is considered insolvent. The article suggests checking for a government-approved credit counseling organization that is non-profit. Or, meeting with a bankruptcy attorney to further discuss the available options.

If you have questions about foreclosure, loan modification, bankruptcy; or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

What is a “Final Judgment” and why should I care?

Posted on July 11, 2012February 22, 2023 by Emil Fleysher

A final judgment is the Judge’s final decision in a case as recorded in the files stored in the Office of the Clerk of Courts. The name for the party that sued you and obtained the judgment is “judgment creditor.”
The judgment creditor can obtain the right to proceed against your property through a writ of execution, garnishment, or other judicial processes. A judgment becomes a lien when a certified copy of it is recorded in the official county records. The lien may attach to any non-exempt real property in the county where it is recorded. The recorded judgment also report as a negative history on your credit report. This blemish can make it difficult or impossible to obtain loans or financing. The judgment lien is good for up to 20 years and can stay on your credit report for that long.

Answering Questions

As soon as the creditor has obtained a Final Judgment, it may require you to answer a series of questions. Maybe in person or otherwise. They must be answered under oath, seeking to identify and locate your assets against which the creditor will enforce its Final Judgment. If you fail to respond to these questions in time, you may be held in contempt of court. Moreover, a Writ of Bodily Attachment may be issued. A Writ of Bodily Attachment is a writ commanding law enforcement to physically bring in a person in contempt of court. Evidently, you cannot get out of this writ just by paying the fine. The court can hold you up to 48 hours to meet with the person issuing the writ directly.

Once the creditor has the judgment lien and knows where your assets are, it can seek a Writ of Execution. The writ of execution tells the sheriff to seize your property to satisfy the judgment. If your only asset is your paycheck, the creditor can go after that with a Writ of Garnishment. A Writ of Garnishment may enable the creditor to levy against your paycheck or bank account.

In Florida, you have a certain property that may be exempt from garnishment. Furthermore, most judgments and their resulting garnishments can be discharged in Bankruptcy. For more information, please contact a qualified attorney to discuss your options.

If you have questions about foreclosure, loan modification, bankruptcy; or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

South Florida Bankruptcy Filings Continue to Fall

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

South Florida bankruptcy filings were down substantially in the 2nd quarter, compared to last year; according to data released by the U.S. Bankruptcy Court for the Southern District of Florida. Personal bankruptcy filings (Chapter 7 & Chapter 13) in Palm Beach, Broward, and Miami-Dade counties totaled 7,194. This is from April through June of 2012; down 23% from 2011.

Bankruptcy filings can be linked in large part to the rate of foreclosure filings. And, foreclosure sales, both of which slowed in 2011. This is due to the banks’ robo-signing debacle and nationwide settlement with states’ attorneys general. While foreclosure filings have begun to pick up steam again, many homeowners are avoiding bankruptcy. They are doing this by obtaining loan modifications or participating in the short sale process.

Bankruptcies increased in 2007 and 2008 following the collapse of the housing market. But, they are now starting to taper off with the demand for housing in South Florida starting to make a come-back and the willingness of servicers to participate in the loan modification process improving.

A struggling homeowner tends to file for bankruptcy just before the bank is scheduled to repossess a property. The bankruptcy filing temporarily halts the foreclosure action and buys the borrower more time to negotiate with the lender. When the value of a property is less than what’s owed, the lender can go back to court after the foreclosure. Moreover, they can hold the homeowner responsible for the difference. Bankruptcies wipe out these so-called deficiency judgments. A bankruptcy also may discharge a second mortgage.

Lenders Prefer Short Sales to Foreclosures

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

Short sales are exceeding the number of foreclosure sales in South Florida. Broward County had 1,831 short sales in the first three months of 2012, compared with 1,476 foreclosure deals. On a quarterly basis, this is the first time short sales have outnumbered foreclosures in Broward since early 2008. Short sales also exceeded foreclosures in Palm Beach County and across Florida from January through March.

Banks are more motivated to do short sales because of the messiness and the risk of foreclosures. After a homeowner defaults on a mortgage, the bank files a foreclosure lawsuit. But, the two sides often continue to negotiate a resolution. A short sale is when the lender allows the homeowner to sell for less than what’s owed on the mortgage and absolves the homeowner from paying a deficiency. Foreclosures can be lengthy. It takes an average of 861 days to complete a foreclosure in Florida. This is one of the longest timelines in the nation. There’s a backlog of cases in Florida courts because in 2010 some bank employees admitted they had signed off on thousands of cases without proper review. As a result, some major lenders temporarily suspended foreclosures.

Time Frame of Short Sales

A short sale in Florida takes an average of 603 days. Although, many now are happening much faster sometimes within a few months. They are helping the housing market recover. That is because they more quickly put distressed homes in the hands of cash buyers or owners who can afford the mortgages. The number of Broward short sales in the first quarter of 2012 increased 30 percent from the same period a year ago. Statewide, short sales rose 18 percent from a year ago. Some of the biggest lenders, including Bank of America and Chase, now offer thousands of dollars to homeowners to complete them.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

CoreScore goes into Effect

Posted on April 29, 2012February 22, 2023 by Emil Fleysher

CoreLogic implemented its new CoreScore credit scoring model at the end of March. The CoreScore consists of 2 parts. The first is a report consisting of data that may not have appeared in conventional credit reports compiled by the top three credit bureaus (Experian, Equifax, and TransUnion). The second consists of a composite score based on the data in the CoreScore Credit Report combined with traditional credit bureau data and scores.

What does CoreScore include?

Examples of data that will now be available to lenders under the CoreScore include next things. Missed rental payments, evictions, foreclosures, delinquent homeowner’s association dues, tax liens, child support judgments, credit card judgments, and even applications for payday loans. Much of this data comes from public records. In addition, CoreScore will identify borrowers that owe more on their mortgage than the property is worth (underwater mortgages). And, mortgages with small lenders that may not routinely report to the major credit bureaus (up to 70% more prevalent among lower score borrowers).

Based on the information provided by CoreLogic, it appears that the CoreScore model will have a disparate impact on the lower score/lower-income individuals and families. The CoreScore will especially impact those that have gone through economic hardship resulting in foreclosure, short sale, or even delinquent mortgage or rent payments.

There is a concern

An area of concern for many consumer attorneys is improper reporting of foreclosure actions, which are generally public records. And, they often include named defendants that are not the borrowers on the defaulted loan.

For example, imagine you took out a mortgage in 2005 in your name only. But, you only placed yourself and your spouse on the title. You subsequently default on the mortgage and foreclosure action is filed. When the bank files its lawsuit it will often name not only the borrower but also any party that may have an interest in the property (i.e., your spouse on the title), as a defendant.

Fast forward a few years later… You and your spouse are back on your feet. Moreover, you would like to purchase a home again (presumably one that is worth what you will owe on it). Because you recently went through foreclosure, your credit is too weak to obtain a mortgage. Your spouse gets a copy of her credit reports from the top 3 credit bureaus. It shows that her score is in the 700s (usually high enough to qualify for a proper mortgage). However, when the lender pulls the CoreScore report, she may be rejected based on the public record showing that she has been sued in a foreclosure action. In the aftermath of the housing crisis, this type of scenario may become increasingly common.

CoreScore complies with FCRA

CoreLogic claims that CoreScore complies with the Fair Credit Reporting Act (FCRA). The FCRA requires the removal of most negative information after 7 years. According to § 605 of the FCRA, the report may not include any information relating to civil suits, civil judgments, accounts sent to collection, foreclosures, etc. that are more than 7 years old. The FCRA also requires Credit Reporting Agencies to provide you with a free copy of your consumer report. Also, they have to provide procedures for you to dispute incorrect information. CoreLogic is offering this information both directly and via the FCRA central source[1].

If you uncover an item that is being improperly included in the report, you may dispute the item. Do this by notifying CoreLogic by phone or mail. Under the requirements of § 622 of the FCRA, CoreLogic must investigate disputes.
And, they must update your file within 30-45 days if they determine that the item is being reported incorrectly.

[1] 877-322-8228, www.annualcreditreport.com, or Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281

Dodgers Bankruptcy Plan to Include Divorce Payments

Posted on April 20, 2012February 22, 2023 by Emil Fleysher

The Los Angeles Dodgers have cleared up last-minute money disputes ahead of a hearing. They did this to confirm a bankruptcy reorganization plan that provides for selling the team for $2 billion. The filing of documents took place on behalf of the Dodgers that sought to convince the judge to approve the plan. They stated that the plan would provide more than sufficient capital to ensure the long-term financial success of the team. The plan is a remarkable outcome for the Dodgers. When the case began, they did not have enough cash to meet payroll. And, they ended up in a bitter dispute with Major League Baseball.

The Dodgers responded to concerns by the team owner’s ex-wife. They said that the plan failed to specify that she will get $131 million to satisfy her divorce agreement. Although the team was not a party to the divorce agreement, the Dodgers will stipulate that she receive her money.

Baseball Commissioner Allan Selig has objected to language declaring the team owes no payments to the league for its legal costs and fees. Moreover, he argued that, under the league constitution, the Dodgers are liable for $7.6 million. The league spent it on legal fees and costs associated with the bankruptcy. The MLB objections are being addressed with a mediator. Also, they are anticipated to be resolved prior to the confirmation hearing.

Auto Maker Saab in Bankruptcy

Posted on April 20, 2012February 22, 2023 by Emil Fleysher

The value of bankrupt Saab Automobile’s assets covers less than a third of its debts. And, only some preferential creditors will get their money back. Saab’s balance sheet showed the company has debts of $1.9 billion and assets of around $532 million. Saab owes GM 2.2 billion kronor it paid for preferential shares. But, GM would only be entitled to that if the bankruptcy produced a surplus. Trustees said that mainly preferential creditors, or those who hold securities for their claims, will receive money. The Swedish state will get some money for securities in Saab shares. Also, they will get a surplus from the sale of tools and equipment in Saab’s tools unit. Employees of the auto marker won’t see any money. Trustees have said six or seven potential investors are going over plans to save the brand from dissolution.

Senator Durbin Targets Private Student Loan Defaults

Posted on March 26, 2012February 22, 2023 by Emil Fleysher

A top Senate Democrat took aim at the private student-loan industry, calling for new rules that would allow wiping away of educational debts during bankruptcy. Majority Whip Richard J. Durbin (D-Ill.) convened a Senate judiciary subcommittee hearing Tuesday to address what one consumer group has called the nation’s next potential “debt bomb.” Research by the Federal Reserve Bank of New York found that Americans owe about $870 billion in student loans; surpassing the amount of outstanding credit-card debt or auto loans. More than a quarter of borrowers had past-due balances.

Of particular concern to lawmakers is the high rate of default on loans by students at private institutions, many of them for-profit colleges. A default can haunt borrowers for decades because consumers cannot discharge student debts if they file for bankruptcy. Other loans, including mortgages and credit-card balances, can be cleared away.

Durbin Has Sposored Legislation

In fact, Durbin has sponsored legislation that would allow private student-loan debt to be discharged in bankruptcy. Though consumers would still be responsible for paying federal student loans. Furthermore, Durbin has held several town halls in Illinois on the issue. And, a recent hearing was the latest attempt to drum up support in the face of partisan gridlock on Capitol Hill. However, some advocacy groups say the legislation does not go far enough. Moreover, some want all student loans to be able to be discharged.

On July 1, a five-year reduction in the interest rate for new federally subsidized Stafford loans will expire, doubling the rate from 3.4 to 6.8 percent. Sen. Jack Reed (D-R.I.) and Rep. Joe Courtney (D-Conn.) have introduced a bill that would keep it at its current level. Letting it rise could cost some students as much as $5,000 over 10 years. President Obama has proposed extending the lower rate through 2013.

Pride may be a Bad Reason to Avoid Bankruptcy

Posted on March 26, 2012February 22, 2023 by Emil Fleysher

For years economists and financial advisers have scratched their heads and wondered how so many Americans wound up in bankruptcy. The numbers show that total U.S. bankruptcies are in decline. U.S. bankruptcies dropped by 12% from November 2010 to November 2011. The total number of U.S. consumer bankruptcies should come in lower than 1.4 million.

Research has shown that Americans tend to wait far too long to look into bankruptcy protection. This is primarily out of shame and wounded pride. Half of the individuals interviewed wouldn’t even admit they were bankrupt. Despite the fact that it was on the public record and easily accessible by anyone else who cared to look. It’s all about shame because consumers who admit to being in bankruptcy and have a financial plan to deal with it are much more likely to get on their feet again than those who go underground.

Blaming the bankruptcy court is a big mistake. A bankruptcy discharge issued by the judge is merely a determination that the debtor is financially unable to pay his debts. Until bankrupt Americans acknowledge their situation and take steps to prevent it or manage it better once they’re in it, their financial situations will continue to suffer.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Are Fewer People Benefitting from Bankruptcy?

Posted on March 26, 2012February 22, 2023 by Emil Fleysher

Consumer debt, which drove almost 1.37 million consumers into bankruptcy during 2011, is on the rise. Yet, consumer bankruptcies slowed down last year from the 1.55 million bankruptcy filings in 2010, a decline of 12 percent. Some experts attribute it to more cautious consumer spending and a decline in credit card debt. Others say that we’re just running out of people who can benefit from filing. Despite the drop in bankruptcy filings, however, sources indicate that national levels of poverty and consumer debt are on the rise. And, they show no signs of changing any time soon.

Bankruptcy is meant to help consumers get back on their feet after experiencing irreplaceable economic loss. Bankruptcy allows individuals to restructure their debt by agreeing to a structured plan requiring the debt to be paid between two and five years. Since the onset of the financial crisis, the total revolving debt, also called credit card debt, went into a steep decline; dropping from $989.1 billion in 2008 to $826.7 billion in 2010, according to a Feb. 7 Federal Reserve statistical release. By the end of 2011, the revolving credit moved upward, reaching $827.5 billion. During the first three quarters in 2011, the quarterly revolving debt was below $800 billion; with a low of $779.6 billion at the end of the first quarter. In December, the revolving debt rose to above $800 billion, resulting in a 2011 year-end cumulative total of $827.5 billion.

Poverty is on the Rise despite less Bankruptcy Filings

While bankruptcy filings have seen a slight dip during the fall of 2011, compared with the same time period last year, reports indicate that overall poverty is on the rise. The 2010 U.S. poverty rate, the latest such rate available on the U.S. Census Bureau website, was 15.1 percent, with 9.2 million families living at or below the poverty level. The poverty threshold, also called the poverty line, is the minimum income an individual needs to survive. The poverty threshold depends on the number of people in a family and the location of one’s residency. As of February, debt collectors are pursuing approximately 30 million Americans. And, credit agencies, including Equifax Inc., Experian PLC, and TransUnion LLC, have collected credit information on more than 200 million Americans.