FLORIDA’S FORECLOSURES ARE DOWN

Florida’s foreclosures are down compared to this time last year. It is being widely reported that mortgage foreclosures in Florida dropped by 17% in the third quarter of 2015 when compared to the same period last year. While this is certainly positive news, Florida still recorded the second highest foreclosure filings in the U.S., behind only Nevada, with one and every 186 housing units experiencing a foreclosure. Overall, foreclosure filings have decreased 28% from a year ago, and scheduled foreclosure auctions are down 46%. However, bank repossessions in Florida have increased 34% from last year’s third quarter and across the nation, foreclosures are down 5% when compared to 2014.

Jacksonville, Florida ranks second highest among the top 10 U.S. metropolitans with one in every 153 housing units being foreclosed. Florida municipalities of Deltona-Daytona Beach-Ormond Beach; Tampa-St. Petersburg-Clearwater; Miami-Fort Lauderdale-West Palm Beach; Lakeland-Winter Haven; and Ocala also all rank among the top to in foreclosures nationwide.

If you are facing foreclosure or any other financial crisis please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, P.A., for your free consultation. We are here to help.

CHAPTER 7 SECOND MORTGAGE STRIPPING STOPPED

Chapter 7 second mortgage stripping stopped by the U.S. supreme court further eroding homeowners ability to save their homes in foreclosure.  Chapter 7 Bankruptcy no longer allows stripping of upside down second mortgages. For the past several years if you owed more on your first mortgage than your home was worth, a chapter 7 bankruptcy discharge could strip the secured status of your second “underwater” mortgage treating it as an unsecured debt and relieving you of your obligation to pay.   The theory was that because the second mortgage holder stood to gain nothing from the sale of the home, and because all proceeds from the sale would be put toward satisfying the first mortgage, the second mortgage was, for practical purpose, unsecured as defined by §506(a)(1) of the bankruptcy code and could be discharged in a chapter 7 bankruptcy. Unfortunately for homeowners earlier this year in the case of Bank of America v. Caulkett the U.S. Supreme Court ruled that despite the plain language of the code, a chapter 7 bankruptcy could not strip the secured status of the mortgage holder regardless of how upside down the mortgage is.

In reaching its conclusion the Supreme Court acknowledged that “under a straight forward reading of the statute, debtors would be able to avoid” the claims by bank’s on underwater second mortgages. Despite this acknowledgment the Court looked back in time to a its 1992 decision of Dewsnup v. Timm, which also chose not to follow the statutory definition of “secured claim” under §506(a), reasoning that the term “secured claim” was ambiguous and as long as a bank holds any security interest in a property, there is nothing that can change that status.

The Supreme Court’s ruling is a big win for banks and may ultimately result in a rise in foreclosures and individuals losing their homes due to second mortgage foreclosure. While second mortgages can still be stripped through chapter 13 bankruptcy, chapter 13 is expensive and in most cases requires debtors pay all of their disposable monthly income to a bankruptcy trustee for a 5 year period.

If you have questions about bankruptcy or debt relief please contact Matthew C. Bothwell, Esq., Jacksonville’s debt relief lawyer. We are here to help.

TENANTS BY THE ENTIRETIES

The judicially created doctrine of “Tenants by the entireties” is one of the best protections for married couples against creditors but it does have certain limitations. In the early twentieth century the Supreme Court of Florida adopted a common law rule whereby property held by husband and wife that satisfy certain ownership criteria will be protected from creditors of either individual spouse. The characteristics of ownership necessary to create a tenancy by the entireties are:

  1. Unity of Possession (both husband and wife must have joint ownership and control of the property);
  2. Unity of Interest (both husband and wife must have the same type of ownership of the property and own it 50/50);
  3. Unity of Title (both husband and wife must have acquired ownership of the property by the same document of title);
  4. Unity of Time (both husband and wife must have acquired ownership at the same time);
  5. Survivorship (both husband and wife must have the right of survivorship and 100% ownership of the property should the other die); and
  6. Unity of Marriage (the property must have been acquired during the marriage of the husband and wife).

If all six (6) characteristics are met the Supreme Court of Florida has held that all qualifying property, whether real property (land) or personal property (everything else) is protected from individual creditors of either spouse. However, if all six (6) unities are met the burden of disproving the presumption tenants by the entries protects certain property shifts to the creditor or judgment holder to disprove.

Limitations of Tenants by the Entireties:

While the protections offered by tenants by the entireties against claims of creditors are great, they are not without limitation. Limitations include:

  1. The protection is not applicable to joint debts for which both husband and wife are liable;
  2. If you are divorced the property is stripped of any protection offered by tenants by the entireties; and
  3. If either party dies the protection is stripped. This is really only an issue when the debtor spouse survives the non-debtor spouse resulting in their 100% ownership of the property after death.

For more information about tenants by the entireties or assets protection please contact Matthew C. Bothwell, Esq. today for a FREE CONSULTATION. We are here to help.

ASSETS OF A SPOUSE AFTER JUDGMENT

As a general rule, assets of a spouse after judgment is entered against you will likely be protected from your creditors if the judgment is entered only against you, not your spouse. After Final Judgment is entered the judgment holder, usually a bank or lender, must first identify what property you may have to satisfy the debt. This typically starts with your completing a sworn 1.977, Fact Information Sheet form as ordered by the court. When your assets are identified the judgment holder can seek to collect on the judgment by garnishing your wages or bank accounts, or seizing property that is not protected by Florida’s exemptions. Oftentimes it is harder to collect on a judgment than it is to win the judgment and Florida’s protections offered to property owned jointly by husband and wife contributes to the frustration creditors.

In Florida your spouse’s property, whether it is money in the bank, pension, retirement accounts, personal property or real property, is separate from yours and cannot be taken by a judgment creditor to satisfy your debt. However, the rules of discovery may require you and your spouse to provide the judgment holders information about both your property if they can prove that you have transferred property that would otherwise be available to satisfy the judgment fraudenlty or to delay, hinder or defraud creditors. Such predicate is typically proven through depositions and interrogatories. Even if you have to tell the judgment holder what property your spouse owns this simple disclosure does not mean the bank or creditor can seize your husband or wife’s separate property. Further, even if you own property jointly with your wife it may be protected by what is called “tenants by the entirety” if you each own the property or account 50/50; you acquired the property at the same time; you and your spouse have ownership under the same title; and you were married at the time you both acquired the property.

To protect your spouse’s property from your creditors it is best not to co-mingle ownership of the property. Keep separate bank accounts and do not title property jointly unless all of the above requirements necessary to establish tenants by the entireties protection are in place. If judgment has been entered against you or if you have been threatened with a lawsuit do not transfer property to a relative without just compensation for the transfer and made sure any transfers of property are for a legitimate business or financial purpose.

If Final Judgment has been entered against you Matthew C. Bothwell, Esq. is here to help. Please contact us for your FREE CONSULTATION today.

FACT INFORMATION SHEET

After judgment is entered against you the Plaintiff or judgment holder may request the court to require that you complete a sworn Fact Information Sheet after judgment. The sole purpose of this form is to force you to tell the judgment holder how to find your assets (money or property) and help them seize your property in satisfaction of the debt. If you are ordered to complete the Fact Information Sheet after judgment you will be required to disclose:

  1. Your name and address;
  2. Personal Identification Information (Social Security Number; Driver’s License Number);
  3. Employer;
  4. Your pay rate and the amount of your income;
  5. Marital status and your spouse’s name;
  6. The names of your children and any child support alimony obligations you have;
  7. Your banks and corresponding account numbers;
  8. Your vehicles; and
  9. Identify any real estate you own.

You will also be required to provide your last pay stub, your last three bank statements, registration and title to your vehicles, deeds to property you own or a copy of your lease, any loan application for the prior three years, and your last two income tax returns.

If you are married and the judgment holder can meet the predicate necessary to seek your spouse’s financial worth you may also be required to disclose their assets. For more information on the disclosing your spouse’s finances to debt collectors click this link to our Blog: Assets of Your Spouse After Judgment.

Even if Final Judgment has been entered against you and the judgment holder is entitled to know what assets you have, that does not mean they are automatically entitled to garnish or seize your property. The state of Florida may protect your property through exemptions and limitations on what can be seized by creditors. For more information on Florida Exemptions available to protect your assets from creditors please follow this link to our Blog: After Judgment Exemptions.

If Final Judgement is imminent or has already been entered against you we may be able to help. Please call Matthew C. Bothwell, Esq. for a FREE CONSULTATION to learn about your rights and discuss your options. We are here to help.

PROOF OF CLAIM

When someone owes you money and files chapter 7 bankruptcy or chapter 13 bankruptcy you must decide whether or not to file a Proof of Claim. If you choose to do so you must file the claim timely in accordance to the deadline set by the court. If you choose not to file a Proof of Claim you will not receive the benefit of any distributions from the trustee.

What is a Proof of Claim?

When a bankruptcy is filed all creditors listed by the debtor’s bankruptcy petition are mailed notice of the bankruptcy, the type of bankruptcy filed, the date of the Meeting of Creditors and, if applicable, the time by which they must file a Proof of Claim. If the debtor has filed a chapter 7 bankruptcy you will not be allowed to file a Proof of Claim unless it appears from the petition that the trustee will be able to liquidate their assets or if during the course of the bankruptcy process the trustee identifies asset they can sell to pay creditors. For chapter 13 cases in most cases creditors listed by the debtor’s petition will receive notice of the “bar date,” the date before which all claims must be filed. If you fail to file a claim on or before the bar date the debtor can do it for you or you must convince the court that your failure is excusable.

Should I file a Proof of Claim?

YES! If the court allows you to file a Proof of Claim do so. If you do not there is no chance that you will receive any money from the debtor. Filing a Proof of Claim is now 100% electronic, takes very little time and is a relatively simple process.

How to File a Proof of Claim?

Filing a Proof of Claim in Jacksonville, Duval County or the surrounding area is done online through the bankruptcy court’s website. The notice you receive from the court setting the “bar date” will identify the court in which the bankruptcy filing was made. The online form requires you to identify the court, name of debtor, and case number as wells as the creditor’s name and address. You will also need to state the amount you are owed including interest, if applicable, and the basis for your claim (examples include goods sold, money loaned, services performed, personal injury/wrongful death, car loans, mortgage notes, and credit cards). To help the debtor identify your claim you must include the last four digits of the debtor’s account or other number used by the creditor to identify the debtor, if any.

If your claim is secured you must identify the nature and value of property that secures the claim, attach copies of lien documentation, and state, as of the date of the bankruptcy filing, the annual interest rate (and whether it is fixed or variable), and the amount past due.

You must also attach redacted copies of any documents that show the debt exists, any lien that secures the debt or documents that evidence perfection of any security interest in property.  The Proof of Claim is signed and dated electronically under oath and subject to penalties of perjury.

Objections to Proof of Claim:

After you file a Proof of Claim the Trustee, debtor, or another interested party may object to the Proof of Claim as untimely (i.e. filed after the bar date), improper (i.e. it includes charges or fees that are not allowed by law, inaccurate (i.e. the debt is not calculated properly) or false (i.e. the claim is invalid).

If you have received a notice setting a deadline to file a Proof of Claim, are a debtor faced with Proofs of Claim or have any questions about bankruptcy please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq., for your FREE INITIAL CONSULTATION. We are here to help.

Review Student Loan Contract

If you have been sued on a student loan debt make sure you review your student loan contract before assuming the bank is right. A client recently came to me who was sued on a student loan debt she co-signed for an ex-husband. She believed she was responsible for the debt and really just wanted me to settle it for her and make it go away. However, when we took a look at the student loan contract some problems with the bank’s claim were apparent:

 

  1. A student loan debt is a consumer debt requiring notice to the consumer when it is assigned to a new creditor. This notice never happened and without it the lender did not have standing to sue my client;
  2. The terms of the “Application/Agreement” the client signed believing she was responsible for the debt were not identical to the terms of the ultimate loan; raising the argument that no contract was formed as their could have been no meeting of the minds;
  3. An assignment of a student loan must have be in writing and, in this case, it was not attached to the Complaint. Without the assignment the bank could not sustain its claim;
  4. The Complaint did not specify when the last payment on the loan was made invoking a potential statute of limitations defense.

While the case was dismissed voluntarily by the bank prior to our Motion to Dismiss being heard and before trial, we were able to create enough concern that the bank did not think it was worth the fight. Instead of negotiating with the bank to pay the loan my client paid nothing; simply because she came in and had an attorney review the contract. If you are faced with a lawsuit to collect on a student loan or any other debt do not assume the bank or lender has what it takes to win the case. Assess your chances of winning early on make a plan. Jacksonville’s debt relief law firm, Matthew C. Bothwell, P.A. is here to assist you and answer any questions you may have. We are no further away than your telephone or computer. Please contact us today.

Student Loans After Death

Will your family be responsible for your student loans after death in Florida? The answer this questions is generally NO, your family will not be responsible for your loans but it is a bit more complicated than that.

Federal Student Loans

All federal student loans subsidized by the federal government are forgiven at death. This means that your spouse, your family and your probate estate will not be responsible for your federal student loan debt upon your death.

Private Student Loans

If you are have private student loans not backed by the federal government your loan agreement or lender’s policy may not automatically forgive the debt upon your death. This means that your student loan lender may, make a claim against your estate to satisfy the debt. The good news is with proper estate planning all or most of your assets will pass to your spouse or your family outside of your probate estate and the student loan lender will be left with nothing to collect. If you have a life insurance policy that pays out upon your death your named beneficiary on the policy will receive the proceeds outside of your probate and will not be subject to a lender’s claim. In Florida, as long as your spouse is not a co-signer on student loan debt they will not be personally responsible for the debt.

Co-Signers

If you are or have co-signers on your student loans they will remain liable after your death. One way to avoid this risk is to obtain life insurance on yourself, and the co-signer if you choose, to pay off the debt upon their death. Term life insurance policies are generally affordable, costing $100 or so a month, and may give your co-signer peace of mind should you die before paying off you student loans.

If you have questions regarding your student loan debt or structuring your estate to protect your love ones should you pass prematurely, please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq. We are here to help.

Bankruptcy Mortgage Cramdown

One of the benefits of bankruptcy is the chapter 13 bankruptcy mortgage cramdown. A chapter 13 bankruptcy mortgage “cramdown” allows debtor to propose a chapter 13 plan that reduces the debt on your home or investment property to the actual fair market value of the property and reduce the interest rate. For example, if you owe $200,000 on your mortgage but the properties’ fair market value is $125,000, you can cramdown your mortgage on the property to $125,000 and reduce your debt to the bank. While cramdowns are a very valuable tool in chapter 13 bankruptcy they are not without limitations and you must meet certain criteria to cramdown a loan:

  1. You cannot cramdown a first mortgage on your homestead property. You can, however, cramdown or even strip a second mortgage completely if your home is worth less than the value of the first and second mortgage combined. For example, if you owe $250,000 on your first mortgage and $100,000 on your second but your home is only work $200,00 you can strip your second mortgage completely, considering it an unsecured debt but you will still be required to pay your first mortgage; even though your home is worth less than the first mortgage.
  2. You can cramdown a first mortgage on a commercial, investment or rental property.
  3. If you cram down a mortgage you must pay the entire balance of the remaining mortgage during the chapter 13 plan period. This means that if you have $100,000 remaining on a crammed down mortgage and you propose a 60 month (5 year) chapter 13 plan, you must pay the entire $100,000 off within 5 years; plus interest (typically the prime rate plus one) and the trustee’s 10% administration fee. Doing so would require you pay approximately $1,911 per month to the holder of the crammed down mortgage. The crammed down mortgage cannot survive the chapter 13 bankruptcy.
  4. You must be able to show the court that you have sufficient income to make monthly payments that will pay off the property, as well as any other secured debt on property you wish to keep and the liquidation value of your unsecured non-exempt assets.
  5. You are not eligible for a chapter 13 cramdown if you have had another bankruptcy dismissed, whether voluntary or by the court, within 6 months of filing the chapter 13 petition.

If you have questions regarding bankruptcy or the chapter 13 bankruptcy cramdown, please contact Jacksonville’s debt relief attorney, Matthew C. Bothwell, Esq. We are here to help.

Foreclosure Case Management Conferences

Initial foreclosure Case Management Conferences in Duval County are now mandated by the courts creating an opportunity for the banks to expedite foreclosure proceedings to final judgment and take your home quickly. The Duval County foreclosure courts recently invoked a policy requiring and setting a Case Management Conferences (CMC) within a few months of a foreclosure case being filed. The stated purpose of this conference is to get the homeowners who want to save their homes together, face to face, with the bank’s representative, typically a lawyer handling numerous cases that day, to determine the homeowner’s intent with regard to the foreclosure and to see if it is possible to save the home. While this new procedure means well, it can have unintended negative consequences to the homeowners if they do not act timely and assert their rights in foreclosure.

When a bank files a foreclosure proceedings they must first file a Complaint with the Clerk of Court claiming you owe it money on a note, are in default and that the court should sell your home and pay the bank back. The bank is required to serve its Complaint on you, the homeowner, and you then have 20 days to file a response. If they fail to respond within 20 days the bank will likely ask the Clerk of Court to issue a default, denying you certain defenses in the case and the right to receive notice of future proceeding. Following default banks are now quickly filing motions seeking summary judgment and using the Case Management Conference mandated by the court to rush the matter to final judgment. This is bad for homeowners and you must act quickly to avoid the expedited sale of your home in foreclosure.

When a homeowner is in default the mandatory Case Management Conference (CMC) offers the bank a perfect opportunity to call its Motion for Summary Judgment for hearing to be heard at the conference. If the homeowner has defaulted and does not appear at the CMC, the court will likely grant summary judgment against the homeowner and set a foreclosure sale within 60 days of serving its Complaint. This is lightning speed to final judgment and the judicial sale of your home compared to how foreclosure proceedings have been handled in the past.

As a general rule, foreclosure attorneys for large banks handle hundreds of cases and, in the past, would often not move for summary judgment or set a final hearing for many months or even years after a foreclosure was filed. The court ordered foreclosure Case Management Conferences in Duval County require the bank’s attorney to appear in court far earlier than ever before and they are taking advantage of this by asking judgment to set foreclosure judicial sales faster than ever.    To avoid the bank taking advantage of the court’s ordered Case Management Conference, and to avoid a quick sale of your home, you must answer a foreclosure Complaint within 20 days of service, even if the case is set for CMC. You or your attorney must also appear at the Case Management Conference and it is also recommended that you serve discovery on the bank in the form of Requests to Produce, Interrogatories or Requests for Admissions when you answer the Complaint.

If you have any questions regarding foreclosure defense or any other debt relief matters please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq. We are here to help.