Tag: Florida

South Florida Bankruptcy Filings Continue to Fall

Posted on 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.

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.

Stripping an Unsecured 2nd Mortgage in Chapter 7 Bankruptcy. Can it be?

Posted on by Emil Fleysher

Previously, lien stripping was something that could only be done in Chapter 13. However, a recent opinion from the 11th Circuit has changed that rule. Here, a Chapter 7 debtor in Georgia sought to strip off a second mortgage that was totally unsecured. The 11th Circuit reversed the Bankruptcy Court. And, they found that the lien could be stripped off pursuant to the plain language of the Bankruptcy Code.

It is an old belief that the Supreme Court’s decision in Dewsnup v. Timm precluded a Chapter 7 debtor from stripping off a lien. However, the Supreme Court only addressed stripping down in Chapter 7. Stripping down is the process of reducing a secured claim to the value of the property it secures. There is a very clear difference between the two.

While this is a Georgia case, 11th Circuit decisions are controlled in Florida; because Florida is part of the 11th Circuit. Accordingly, it will be interesting to see how bankruptcy judges in our district rule when they face this new case law.

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.

Dodgers Bankruptcy Plan to Include Divorce Payments

Posted on 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.

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.

Auto Maker Saab in Bankruptcy

Posted on 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.

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.

Underwater Homeowners may get Help from HARP 2.0

Posted on by Emil Fleysher

Homeowners who owe substantially more than the value of their homes are probably too far underwater to refinance their debt anytime soon. But those who have less debt soon may have an opportunity to refinance at lower interest rates; with renewed help from the government. The government has revamped its Home Affordable Refinance Program or HARP. It will help more borrowers refinance mortgages owned by Fannie Mae and Freddie Mac.

Eligibility for the new program remains restricted to mortgage borrowers who make monthly payments on time. Qualified borrowers must have unpaid loan balances that exceed 80 percent of the value of their homes. Almost all of the HARP refinancing in the past has gone to homeowners who owe less than what their homes are worth or a bit more. However, one big change has been the elimination of the maximum loan-to-value ratio. This will allow homeowners deeply underwater to have a better chance at refinancing. Another new feature of the HARP program is reduced liability for lenders. This is based on their promises that the refinanced loans conform to the underwriting standards of Fannie Mae and Freddie Mac.

The elimination of the loan-to-value ratio should help many South Florida homeowners. Because the South Florida housing market took especially hard hit, the number of borrowers beyond the 125 percent mark is very high. For the last few years, they were not able to take advantage of the program. This is because they were too far underwater. They should now be able to do once the new program is implemented.

Bill Killed that would Move Foreclosure Notices from Paper to Websites

Posted on by Emil Fleysher

A bill has been killed that could have led to foreclosure notices disappearing from newspapers and going to websites. The sponsor argued that the county clerks of the court should be able to decide whether to continue the decades-old practice of publishing foreclosure notices in newspapers. Or, placing them on non-newspaper websites. Newspaper officials argued that most papers already put notices online, along with publishing them in print. Further, many seniors and minorities don’t have access to the Internet or don’t feel comfortable using it.

Debates about publishing legal notices in newspapers have flared repeatedly in recent years. This is because the public has increasingly turned to the Internet for information. And, government agencies put more and more documents online. In certain counties, it would be workable to have notices online while in others it probably would not. The bill would have allowed local clerks to decide whether they wanted to keep running notices in newspapers or use a website. Counties without good Internet access or with a large population of seniors could have opted out. And, they could have stayed with the newspaper method.

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.

Can a Mediation Save your Home from Foreclosure?

Posted on by Emil Fleysher

In 2009, Florida Supreme Court issued an order mandating foreclosure mediation for all residential homesteaded properties. In other words, upon filing a foreclosure action on a primary residence, the banks now have to attend mediation with the borrower. This is before the case can proceed, or at least provide the borrower with the option. Under this order, borrowers have the right to ask their lenders for a “plaintiff’s disclosure” before mediation. It can include four things. Firstly, a payment history. Secondly, a current appraisal of the property. Thirdly, the bank’s estimate of the mortgage loan’s present net value. Lastly, documentary evidence proving the bank owns and holds the mortgage note.

Design of Mediation Program

The mediation program is designed to function as a fast track for mortgage loan modifications where the borrower was unable to get results working directly with the servicer outside of the court system. The documents required of the borrower are essentially identical to those required under the Making Home Affordable Modification (HAMP) program. The difference is that the bank’s attorney is supposed to provide an accounting of the loan. And, a “Net Present Value” of the property which should facilitate a smoother more transparent negotiation. There is a mixture of reports as to whether the bank’s attorneys are providing this information accurately and promptly.

However, the more frustrating problem is that the plaintiff/bank/servicer’s attorney may not have the authority to settle. That is because its client does not have the authority to settle. Sound confusing? It is. It is often the case that the servicer is bringing the foreclosure action on behalf of the true owner of the loan/note (usually another bank or Real Estate Investment Trust). Without a grant of authority from the true note holder, the servicer’s attorney is powerless to enter into a settlement agreement at mediation.

Statistics and Results

The statistical results of this mediation program are so far, scattered and inconclusive. A December analysis released by the Florida Supreme Court showed about 6 percent of cases referred to mediation statewide result in written settlements for homeowners. Although, the inclusion of all circuits did not happen. For example, the report shows that 12 percent of mediations ended with written settlements last month in Broward County. But, no figures are available for Palm Beach County. Furthermore, the report did not provide any details as to the number of cancellations of mediations or postponing and for what reasons. I am hoping that a more thorough and inclusive report will be issued at the end of 2011’s first quarter.

What are the alternatives to Bankruptcy?

Posted on by Emil Fleysher

Believe it or not, there are some alternatives to bankruptcy.

Your right to file for bankruptcy and discharge your debts is a very important and very powerful right. It can only be used once every 8 years and should not be exercised unless absolutely necessary. The general rule of thumb for deciding whether you should file for bankruptcy is this. If your unsecured debts are equal to or greater than your annual salary, you should file for bankruptcy.

This general rule is based on the fact that if your debts are greater than your annual salary, you will probably never get out of that debt in any reasonable time frame or at a reasonable expense. Paying minimum monthly payments will take many years and you will end up paying much more over time than the original debt amount. However, if your debts are less than this threshold amount, you may want to consider other alternatives to bankruptcy.

If your debts are less than your annual salary but still too high to pay, my office can help negotiate a debt settlement.
Bankruptcy attorneys generally enjoy a greater degree of leverage in dealing with collection companies and creditors. This is because they know that they can either accept the terms. And, the amount that my client is willing to pay. Or, they can get nothing if my client decides to file for bankruptcy. Historically, my firm has been able to negotiate a 40% – 80% reduction in the debt and payment terms of up to 6 months. If you have more questions about bankruptcy and its alternatives please call 954-484-9987. Or, send an e-mail to efleysher@fleysherlaw.com, or complete the contact form below…

What Happens to my 2nd Mortgage/Home Equity Loan in Ch. 7 Bankruptcy?

Posted on by Emil Fleysher

Many clients are concerned with what will happen to their second mortgage (also referred to as a Home Equity Loan, Home Equity Line of Credit or HELOC) during and after Chapter 7 Bankruptcy.

What is Second Mortgage?

In general, second mortgages or HELOCs are loans that property owners get. The value of the property above the amount of the first mortgage secures these loans. The difference between what the property is worth and what the amount of the first mortgage is “Equity.”
That is why these loans are often referred to as “Home Equity Loans.”

In short, you are borrowing against the equity in the property.
With the state of the current economy and housing market here in South Florida, Equity no longer secures most second mortgages that were issued between 2004 and 2008. That is because that equity disappeared. When the price of the property drops below the balance of the first mortgage, the equity that was securing the loan evaporates. And, the loan becomes unsecured. An unsecured loan is essentially a loan that is not tied to any real or personal property.

Ch. 7 Bankruptcy

In Ch. 7 Bankruptcy, nearly all unsecured loans can go through dischargement. This includes your personal obligation to make payments on the 2nd Mortgage/HELOC. However, the lien from the 2nd mortgage will stay with the property. If you plan on keeping the property used to obtain the 2nd mortgage/HELOC, then you will eventually have to address the lien. This is if and when you decide to sell the property. However, if you surrender the property or lose it after a foreclosure sale, the remaining lien should have little or no importance to you. Of course, every situation is different. So, you should call my office (954-484-9987) for a free consultation for detailed information relating to your particular circumstances.