Debt – Fleysher Law

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.

“Fee Only” Chapter 13 Filings are Not Necessarily Made in Bad Faith

Posted on April 8, 2012February 22, 2023 by Emil Fleysher

Bankruptcy courts have expressed mixed views on fee-only plans as their experience accumulates. In a recent case, the Chapter 13 debtor proposed a 36-month plan paying $100 per month to the trustee. Out of this money, $2,900 was to go to the debtor’s attorney. The bankruptcy court denied confirmation citing In re Buck, 432 B.R. 13 (Bankr. D. Mass. 2010), which held that submitting “fee-only” Chapter 13 plans happens in bad faith.

Furthermore, the Court determined that good faith needs to be determined based on the totality of the circumstances. The only thing the majority rejected was the bankruptcy court’s reliance on a per se rule. The rule is that “fee-only” plans are proposed in bad faith. Moreover, the majority did not reject the bankruptcy court’s concern that “fee-only” plans are abusive.

Paid Upfront

Fee-only plans benefit debtors who need Chapter 7 relief but can’t afford to pay the attorney’s fee upfront. In 2004, the U.S. Supreme Court ruled that fees charged by debtors’ attorneys in Chapter 7 cases generally may not be paid from estate funds. Rather than risk not getting paid for their work, debtors’ attorneys demand payment upfront. The amount of that payment increased substantially; following the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

The fee-only Chapter 13 petition can be a creative solution for the “paid upfront” problem. At least some debtors who cannot afford an attorney-assisted Chapter 7 filing – because the attorney would expect upfront payment – can afford to pay for an attorney to assist with a Chapter 13 filing. This is because the payment of the fee will go in post-petition installments. Debtors who are unable to pay an attorney’s fee up front have limited options. Theoretically, they can proceed pro se. But, is having them attempt to navigate the complexities of bankruptcy on their own better than allowing them to pay the attorney’s fee through Chapter 13? There should be a better understanding of critical facts; before fashioning a rule that may, in practical effect, make fee-only Chapter 13 plans unavailable. For some debtors, the press of creditors, and the resulting stress, would make waiting to accumulate legal fees intolerable.

Another Take on Florida’s Wild Card Exemption in Bankruptcy

Posted on April 8, 2012February 22, 2023 by Emil Fleysher

In the recent case of in re Kehoe, the Chapter 7 Trustee filed an Objection to a Debtor’s Claim of Exemptions against the Debtor. The Debtor owns his home as a tenant by the entireties (TBE) with his wife. And, they used the TBE exemption to fully exempt the marital house. The Debtor did not claim a homestead exemption for the home. Instead, he applied the $4,000 wild card exemption to a car he owns individually.

Entitlement to Use Wild Card Exemption

The Trustee objected to the vehicle’s $4,000.00 exemption claim. The basis was that the Debtor is receiving the benefits of a homestead exemption. Thus, they do not qualify for the $4,000 Wild Card exemption. The Debtor asserted that he has a right to utilize the wildcard exemption because of two things. One, he neither claimed nor is receiving any benefits from the homestead exemption. Two, the Debtor and his wife have no joint debts. So this case presents no issue of the Trustee being impeded from administering a jointly owned asset where joint debts exist.

The issue to be determined was whether the Debtor, through the homestead exemption’s self-executing nature, was somehow receiving the benefits of the homestead exemption.

The Court found that while the Debtor’s non-filing spouse retained her homestead rights in the property, such retention does not in any way prevent the Chapter 7 Trustee from administering any TBE property for the benefit of joint creditors. The Chapter 7 Trustee may not administer the TBE property because no joint debts exist. The Debtor was not, in any respect, receiving the benefits of the homestead exemption. And, they were entitled to claim the $4,000 wild card exemption.

TaxMasters Files for Bankruptcy

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

TaxMasters, the tax-resolution firm, sought bankruptcy protection after coming under fire from multiple states’ attorneys general. The company listed debt of more than $1 million and assets of less than $50,000 in Chapter 11 documents filed in the U.S. Bankruptcy Court in Houston. TaxMasters said it has between 1,000 and 5,000 creditors. The company estimates that funds will be available for distribution to unsecured creditors. Three affiliates also filed for bankruptcy, two of which will liquidate under chapter 7 of the U.S. Bankruptcy Code.

What happened?

Texas and Minnesota attorneys general sued TaxMasters in 2010 for deceptive trade practices. Furthermore, TaxMasters used a nationwide marketing campaign to offer services for distressed taxpayers who needed help dealing with the IRS. In fact, a state investigation and nearly 1,000 customer complaints indicate that the defendants routinely misled customers. Moreover, the commercials duped unsuspecting citizens into believing that one of its “former IRS agents” or tax specialists will answer their calls to the tax-relief firm. A salesperson providing deceiving information answers the customers’ calls instead of a highly qualified tax consultant. Tax-burdened citizens are misled about the service contract terms. And they are talked into paying thousands of dollars upfront for a tax solution.

The Minnesota attorney general is seeking restitution for the customers, and civil penalties against TaxMasters. The Texas attorney general is seeking restitution. And, civil penalties of as much as $20,000 for each violation of the Texas Deceptive Trade Practices Act. Furthermore, two customers sued the company in September 2010 in Houston seeking authority to represent U.S. customers on a nationwide basis. The customers seek damages over TaxMasters explicit and implicit misrepresentations and violation of consumer-protection laws and breach of contract.

Using Tax Refunds to Pay for Bankruptcy Fees

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

While saving up to declare bankruptcy sounds odd, that’s exactly what many people have had to do. Ever since the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act was passed. Many families wait for their tax refund to file for bankruptcy. This trend has been increasing as costs related to the filing have gone up. Researchers have looked at the relationship between tax refunds and bankruptcy filings in 2001 and 2008; two years when a high percentage of Americans received refund checks. Total bankruptcies increased by about 2% after the 2001 refunds, and by 7% after the 2008 refunds.

This increase follows the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act legislation. It raised legal and administrative fees from an average of $921 to $1,477. And, it mandated credit counseling paid for by the filer. As a result, the number of bankruptcy filings quickly fell by more than half. Although, they have since returned to near pre-2005 levels.

The 2005 legislation has been at the center of debate since it passed. The question is whether the more expensive rules help screen out spurious bankruptcies. Or, if they just prevent legitimate bankruptcies from being filed. Bankruptcy can be a Catch-22 when a substantial amount of money is needed to get out of a situation defined by having little or no money. If it weren’t for these refund checks, many families would have to postpone filing for bankruptcy for months. That is until they save enough money.

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.