by evolveAdmin | Jun 29, 2012 | Bankruptcy
For many in the Orlando area it has become common to owe more on your home than it is currently worth. A recent decision out of the Eleventh Circuit Court of Appeals offers a new avenue of relief for struggling homeowners who may soon face foreclosure. In McNeal v. GMAC Mortgage, LLC, the court found that in a Chapter 7 bankruptcy an individual can “strip off” a junior lien. The bankruptcy term “strip off” means that an unsecured lien is removed in its entirety. What is an Unsecured Junior Lien? A homeowner purchased a home for $200,000 in 2004 and financed $165,000 through a mortgage. The value of the home increased and in 2006, the homeowner consolidated debts with a second mortgage of $40,000. In 2012, the home is now valued at $150,000. The homeowner owes $158,000 on the first mortgage and $35,000 on the second mortgage. The second mortgage is a junior lien and is unsecured, because the house is no longer worth the amount owed on the first mortgage. How Does the Case Benefit Underwater Homeowners? Prior to this case, an individual who was underwater and facing foreclosure could only strip a junior lien, such as a home equity line of credit or a homeowner’s association lien, with a Chapter 13 filing. The individual pays back a portion of the debt they owe under a three- or five-year plan in Chapter 13. Banks holding those junior liens receive a portion of what was owed and are treated similarly to other unsecured creditors. In the past a homeowner might have needed to file a Chapter 13 solely to strip off junior...
by evolveAdmin | May 7, 2012 | Bankruptcy
The Florida Bankruptcy Court recently came down hard on Bank of America after it ignored a Florida debtor’s discharge and continued to call the debtor thirty-eight times trying to collect on debts. The court ordered the bank to pay the debtor for emotional distress and attorney’s fees. A debtor’s discharge is a legal action intended to protect a debtor. Following a discharge, collection agencies are not allowed to send letters or make phone calls asking for payment. This gives debtors time to collect their finances without harassing phone calls and other communications. Creditors can file an objection to the debtor’s discharge. All creditors get notice of the debtor’s filing and a deadline to object. The court will not always grant a debtor’s discharge if the debtor concealed assets or has not fulfilled the necessary discharge requirements such as taking classes on personal financial management. Not all debts are dischargeable in a Florida bankruptcy petition. The most common non-dischargeable debts are those for child or spousal support or willful injuries to another person or their property. Student loan debts are also usually not dischargeable, but sometimes a knowledgeable Orlando student loan help attorney can help. Collection Agencies May Not Know of Discharge Bank of America has ignored debtor discharges in the past. The Bank will give the debtor’s information to outside collection agencies even though the debtors have a discharge. One court ruled that Bank of America took “clearly inadequate” steps in order to determine if a debtor had a discharge. Another woman spent three years working with Bank of America after they had sold her account to a collection agency. The woman...
by evolveAdmin | Feb 27, 2012 | Bankruptcy
The costs of higher education continue to increase faster than the overall rate of inflation. Parents are struggling to pay tuition costs for their children. Although funding college was never easy, the ballooning increase in tuition and fees forces many parents to take out loans they may not be able to repay. These excessive loans can worsen your financial situation and drive you to consider filing for bankruptcy protection. In the past, families would often fund college expenses through a second mortgage. But as home prices have plunged borrowers no longer have adequate equity for a second mortgage. Many parents are turning to other forms of funding. One popular choice is the Parent Loans for Undergraduate Students (PLUS) loan. This loan is government issued and requires no collateral. But a PLUS loan comes with a 7.9 percent fixed interest rate. Differences from Student Loans Student loans differ from PLUS loans in two important ways: Student loans carry lower interest rates Interest on student loans accrues after graduation, which makes student loans generally favorable However, a larger student loan award generally is only granted after a PLUS loan application is rejected. College financial aid officers have voiced concerns about this system, according to U.S. News. They find that PLUS loans are awarded to financially strapped parents, who may not be able to repay the loans and need student loan debt relief. Bankruptcy and Educational Loans Bankruptcy is designed to aid individuals attempting to manage excessive amounts of debt by offering a fresh start. However, a PLUS loan is not dischargeable in bankruptcy. Forgiveness from a PLUS loan is only granted in extreme...
by evolveAdmin | Nov 18, 2011 | Foreclosure Defense
Orlando had spent almost a year outside the dreaded top-ten metropolitan areas for foreclosures, but October 2011 marked Orlando’s reentry to the top end of the list. From September to October of this year, Orlando-area homeowners saw a 36 percent increase in foreclosure filings. Good News, Bad News According to the Orlando Sentinel, September was the first time since November 2010 Orlando has been on the list. While nationwide foreclosures were up only seven percent, in Orlando they rose 36 percent. The good news is this is still down 41 percent from a year ago. What this may indicate is that lenders have overcome some of the defects in many of the foreclosures they filed in 2010. Those defects eventually led to many mortgage holders placing a moratorium on new foreclosure filings, until they could fix the deficiencies in many of the filings. Lenders Return To Court Now that they have their documents properly back in order, they may be beginning to ramp up their filings. The further bad news is that the ample supply of foreclosed properties will continue to exert downward pressure on housing prices. If you have fallen behind on your mortgage and want to attempt to save your home, you may have options other than losing your home to your lender. A short sale or loan modification may be a possibility or a Chapter 13 bankruptcy filing may offer a solution. An Orlando foreclosure defense and bankruptcy attorney can review your mortgage and your finances and let you know if a Chapter 13 could help you save your house. Source: Orlando Sentinel, “Orlando back in Top 10 for foreclosure filings,” 10...
by evolveAdmin | Aug 31, 2011 | Bankruptcy
Many individuals and families have considered bankruptcy in recent years due to the poor economy, a lost job and the sharp downturn in the housing market. But there is another all-too-common reason for seeking bankruptcy relief, one an Orlando family knows all to well: medical bills. The birth of their daughter in 2007 was a celebrated event for the Sutherland family. But, shortly after Ellie’s birth, she was whisked away to a neonatal intensive care unit, where she remained for 25 days, thus beginning a lifetime of visits to hospitals and specialists trying to determine what was affecting little Ellie. She was partially deaf, suffered from high fevers, was lacking muscle tone on one-half of her face and would scratch and bite until she bled. In 2009, the Sutherland’s filed for bankruptcy. The medical bills were piling up, the couple made too much money to qualify for government benefits for Ellie, but not enough to keep up with the house, the living expenses and Ellie’s treatment. Medical Bankruptcies are Not Uncommon in Florida and Throughout the U.S. Researchers at Harvard and Ohio found that 62 percent of all bankruptcies are due at least in part to medical debt. Every 90 seconds, a family somewhere in the United States files for bankruptcy relief because of overwhelming medical expenses. Contrary to popular belief, a majority of those families, three-quarters to be exact, had health insurance. Both of the Sutherlands were employed when Ellie was born and both had insurance. Neither thought that medical bills would become an issue. But the insurance companies pointed fingers at each other, claiming that the other was the...
