POST MORTGAGE MODIFICATION ISSUES IN CHAPTER 13 CASES

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POST MORTGAGE MODIFICATION ISSUES IN CHAPTER 13 CASES

Some disturbing trends appear to making a comeback in the Chapter 13 mortgage sector. It was hoped that the trend towards modifying loans in Chapter 13 cases would reduce the number of issues associated with the servicing of loans during Chapter 13 bankruptcy. In the past, servicers would routinely misapply payments from a Trustee, fail to apply payments to an account or add charges and fees to accounts that were not approved by the Bankruptcy Judge. In such cases, our office would routinely see mortgages coming out of Chapter 13 cases with arrearages of thousands of dollars in past due payments and fees.

Of course, no one wanted to struggle through three or five years of Chapter 13 payments only to be told that the mortgage they fought so hard to cure was again delinquent. Our office routinely filed suit against mortgage servicers which had refused to comply with the terms of the Chapter plans and other Court orders to make sure that the hard work which went into the Chapter 13 was rewarded with a current mortgage.

Beginning in 2012, the Jacksonville Bankruptcy Court allowed for modification mediation in Chapter 13 cases involving a mortgage. Since that time, our office has had great success with saving homes through the modification process. Homes which were once unable to be saved through Chapter 13, could then be modified and cured of arrears through the program. Unfortunately, the five year cycle of Chapter 13 means that many of these loans are completing the Chapter 13 process. Instead of complying with the terms of the modification and the Chapter 13 confirmation order, we are again seeing mortgages exit Chapter 13 with substantial arrears alleged.

It is unfortunate that mortgage servicers will not honor the promises that they make to borrowers in modifications. Our office understands that filing bankruptcy and making a five year plan be successful are difficult. We will make sure that your efforts are not wasted. Mortgage servicers must be held accountable for errors in the servicing of Chapter 13 loans and for not applying payments as required by the Court and modification documents.  Give our office a call or email if you find yourself in such a position for free analysis of your potential case.

At Mickler & Mickler, we attend Court and see the bankruptcy trustees and judges in action several times a week. We have the experience to guide you to the right decision about whether to file a case, and if so, what Chapter to file.   When you contact our office, we can help you in your case with sound legal advice.

Please contact Mickler & Mickler at 904.725.0822 or bkmickler@planlaw.com. We will be happy to set you up a free appointment to discuss your situation and potential solutions.

Bryan Mickler

BANKRUPTCY PREDICTIONS FOR 2017: TIPPING POINT FOR CONSUMER CREDIT COMING SOON?

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BANKRUPTCY PREDICTIONS FOR 2017: TIPPING POINT FOR CONSUMER CREDIT COMING SOON?

Each year our office looks at the coming trends for consumer bankruptcy to figure out if bankruptcy filings are on the rise of will continue to fall. Recently, our office and some of the latest National figures show a modest increase in filings for the end of 2016 and start of 2017.

Based on my past research in this area, bankruptcy filings are tied closely to the level of consumer debt. When that level become too high, payments for households become unsustainable and defaults begin to occur. That then leads to the rise in consumer filings. This is exactly what we saw in the 2007 time period. Revolving debt and house expense became more than families could afford and the housing market collapsed, taking jobs, banks and anything else connected to the housing market down.

For 2017 some of the same trends appear to be back as in 2007. According to the article below:

https://www.bloomberg.com/news/articles/2017-02-07/consumer-borrowing-in-u-s-posts-smallest-annual-gain-since-2013

consumer revolving debt (think credit cards) increased at the fastest rate since 2007. The rate was up over 6% from the year prior. This follows a 5% increase in 2015 and 4% in 2014. So, 15% in the last three years. Secured loans for vehicles and student loan levels also continued to increase, although slower than prior years.

Based on the above, for 2017 it appears that we will continue to see moderate increases in bankruptcy filing numbers compared to the steep drops that have happened in the last few years. If debt levels continue to rise then expect to see sharper increases in bankruptcy filings over the next couple of years.

As an aside, to see some of the causes of rising debt levels check out this article and the cost of being an American consumer as compared to income growth:

https://www.nerdwallet.com/blog/average-credit-card-debt-household/

At Mickler & Mickler, we attend Court and see the bankruptcy trustees and judges in action several times a week. We have the experience to guide you to the right decision about whether to file a case, and if so, what Chapter to file.   When you contact our office, we can help you in your case with sound legal advice.

Please contact Mickler & Mickler at 904.725.0822 or bkmickler@planlaw.com. We will be happy to set you up a free appointment to discuss your situation and potential solutions.

Bryan Mickler

THE END OF HAMP MODIFICATION PROGRAM AND CHAPTER 13 MODIFICATION OF MORTGAGES IN CHAPTER 13

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THE END OF HAMP MODIFICATION PROGRAM AND CHAPTER 13 MODIFICATION OF MORTGAGES IN CHAPTER 13

As most people are aware, the federal HAMP modification program ended on December 31, 2016. That means that if you did not get your application in to your servicer prior to that date, there is no opportunity to modify your loan through the program.

While HAMP was not perfect, it was a proven method of obtaining accurate modification information for the purpose of determining if the homeowner was able to afford a modification and save their home. Now that HAMP is no longer, what does that mean for the Chapter 13 modification program in Jacksonville, FL?

The good news is that the Chapter 13 Trustee in Jacksonville recently announced that the Bankruptcy Court’s modification program would continue without the HAMP program. The Trustee has concluded that the Court’s modification program was not based on HAMP, but on the administrative order issued by the Bankruptcy Judges which set up the program. While that Order used some of the HAMP guidelines to determine trial payments and other plan terms, the Order was not authorized or based on HAMP.

This means that the Chapter 13 Plans can still set up a trial payment of 31% of the Debtor’s gross income as the new proposed payment, can still put no payments towards arrears and can still use the Court’s modification document portal. In summary, it means that thousands of homeowners in Florida can still save their home through the program. Our office is actively working with numerous homeowners to continue the bankruptcy modification process.

At Mickler & Mickler, we attend Court and see the bankruptcy trustees and judges in action several times a week. We have the experience to guide you to the right decision about whether to file a case, and if so, what Chapter to file.   When you contact our office, we can help you in your case with sound legal advice.Please contact Mickler & Mickler at 904.725.0822 or bkmickler@planlaw.com. We will be happy to set you up a free appointment to discuss your situation and potential solutions.

Bryan Mickler

SUBPRIME AUTO LENDING BUBBLE ABOUT TO POP?

IMG_1302[1]SUBPRIME AUTO LENDING BUBBLE ABOUT TO POP?

            A recent New York Times article looked at the rising percentage of auto loan delinquencies in the “sub-prime” auto lending marketplace. The article can be found here:

http://www.nytimes.com/2016/11/30/business/dealbook/as-auto-lending-rises-so-do-delinquencies.html?_r=0

 

This article combined with a recent USA Today story regarding subprime delinquencies in auto loans paints a grim picture of what may happen with any slow down in the economy or change in expenses for the average subprime consumer.

 

http://www.usatoday.com/story/money/cars/2016/08/26/delinquencies-rise-risker-auto-loans/89389096/

Some interesting statistics from both articles:

  • 60 day delinquencies reached 4.59% in July on Subprime auto loans;
  • 90 day delinquencies reached 2% in September;
  • That is near the historical high of 2.4% from 2009 in the middle of a recession;

What remains to be seen, is whether the economy will continue to remain strong and the job market stable heading into 2017. If the job market falters or 22 million people lose access to health coverage, with the exposure to crushing medical costs, then the subprime default rate may rise over the historical high from 2009.

Bankruptcy can offer many solutions to subprime auto defaults. Chapter 13 allows for a retention of your vehicle with a lowering of the interest rate over a five (5) year repayment period in most cases. Your car may even qualify for a reduction in principal in certain circumstances. Chapter 7 allows for a surrender of the vehicle with no deficiency after the surrender – goodbye underwater car. We work with local dealers to qualify you for a new vehicle loan, either immediately after filing or after discharge.

If your family is still experiencing financial trouble even after the recovery, give our office a call. We have affordable bankruptcy programs designed to help your debt problems. We will counsel you on the potential long term credit benefits of filing bankruptcy in order to help you make wise choices.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com

 

Bryan K. Mickler

 

 

THE RETURN OF THE MEDICAL BANKRUPTCY AFTER TRUMP ELECTION?

image1THE RETURN OF THE MEDICAL BANKRUPTCY AFTER TRUMP ELECTION?

            The internet is awash in euphoria and dire predictions over the election of Donald Trump as President. One thing that is sure to change with the election is the number of people covered by health insurance and subsidies to allow health insurance coverage is set to decline.  Studies done in 2009 and 2013 found that between 57% and 62% of personal bankruptcy filings were as a result of medical bills that could not be paid. The link below compares both studies and the conclusions in each.

https://www.nerdwallet.com/blog/health/managing-medical-bills/nerdwallet-health-study-estimates-56-million-americans-65-struggle-medical-bills-2013/

            My own experience over 20 years of filing personal bankruptcy for individuals is that medical bills are rarely the sole cause of filing for a bankruptcy. There are generally a variety of factors which cause individuals to file bankruptcy, with medical bills being a part of the equation. The authors of the 2013 Nerdwallet study appear to have accounted for this finding and still came up with the 57% figure.

“Bankruptcy: We relied on a widely cited Harvard study published in 2009. NerdWallet Health chose to include only bankruptcy explicitly tied to medical bills, excluding indirect reasons like lost work opportunities. Thus we conservatively estimated medical bankruptcy rates to be 57.1% (versus the authors’ 62.1%) of US bankruptcies. We also used official bankruptcy statistics, released this month through March 2013, from US Courts.”

So what to expect with an estimated 20-25 million people about to lose health insurance coverage over the next two years?

https://www.washingtonpost.com/news/wonk/wp/2016/09/23/25-million-people-could-lose-health-insurance-under-donald-trumps-plan-analysis-shows/

http://www.vox.com/2016/11/9/13487772/trump-obamacare-repeal

 

           If the 2013 study showed the accurate figure for “medical bankruptcy” filings, then the consequences for bankruptcy filing rates could be dramatic. Inability to pay medical bills will result in a dramatic upswing in the number of filings based on the 57% figure. The amount of increase in medical bankruptcies depends largely on whether the new Trump administration can find a suitable replacement for the millions of Americans who rely upon the exchanges and Medicaid, where the greatest losses of coverage will be felt. Loss of personal savings and increased credit card debt are also possibilities as Americans attempt to cover medical bills without insurance. A future article will focus on the effect of the loss of Obamacare to the medical industry. Will medical providers suffer the same fate as consumers?

            At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

 

MORTGAGE RESCUE FRAUD: WHY CHOOSE SCAMS OVER CHAPTER 13 BANKRUPTCY?

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MORTGAGE RESCUE FRAUD: WHY CHOOSE SCAMS OVER CHAPTER 13 BANKRUPTCY?

            More sad news for distressed homeowners recently. Mortgage foreclosure scams are still prevalent and still costing people their homes. Two recent articles point out the dangers associated with these scams:

http://www.presstelegram.com/general-news/20160825/long-beach-pastor-admits-to-running-3-million-mortgage-scam

http://www.housingwire.com/articles/37821-florida-attorney-general-fights-alleged-foreclosure-fraud-firm

            Unfortunately, the story is all too familiar: A family is in danger losing their home and turn to the internet for help. Up pop slick looking websites with promises to save your home. The sites may even have a legal firm sounding name. The pitches are varied and based on land trusts, class actions against mortgage companies, forged notaries, etc. Any of these things are promised to the family as a way that the foreclosure will be stopped and the home saved, maybe even cancelling the mortgage completely. Just give us $1,500.00 to get started and a monthly fee after that payment for as long as the home is tied up in foreclosure.

            As seen by the above articles, too many families are falling victim to the scams and losing millions in monetary damages and homes. The thought of saving a home through a Chapter 13 bankruptcy is rarely brought up by the family once they are ensnared by the scammers. However, the Chapter 13 process is generally cheaper and certainly more likely to save their home than a mortgage rescue scam.

            Chapter 13 in Jacksonville Court involves a legitimate mortgage modification program. The Court expects a good faith trial payment while the modification is being pursued. The Bankruptcy Judge is available to force a mortgage company to participate in the process if it is ignoring the homeowner. Finally, a dedicated website is used for all documents submitted. No more sending in the same document 10 times with no success. Over the last few years, the program has saved hundreds of homes in the Jacksonville area.

           If you are serious about saving your home, then consider a Chapter 13 modification. Don’t fall victim to the next mortgage rescue scam and lose your chance.

            At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

RISING CREDIT SCORES BRING MORE DEBT

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A recent Wall Street Journal article looked at the falling percentage of consumers with “sub-prime” credit scores. The article can be found here.

This is certainly good news for anyone wanting to buy a home, car or take out a loan. However, the good news seems to mask some stubborn trends in consumer lending. First, the percentage of sub-prime borrowers has fallen from 25.5% in 2010 to 20.7% today. While it is great that a large number of people have seen their credit scores improve, over one-fifth of the consumers in this Country are sub-prime borrowers who routinely pay exorbitant car loan interest rates, are locked out of the traditional housing market and may not qualify for a traditional credit card.

Secondly, higher credit scores leads to more borrowing. According to the article, “Already, consumers are starting to borrow more again. Auto-loan balances surpassed $1 trillion for the first time ever this year, according to credit-reporting firm Experian. Credit-card debt is on pace to hit $1 trillion this year. Student-loan debt continues to swell.” This has long term consequences for the typical consumer, as high debt levels typically lead to a default when any interruption in income is experienced. That is becoming evident in the subprime car market where default rates have been increasing and credit card debt defaults have recently increased for five months straight.

Finally, disposable income continues to lag behind debt payment needs. The average consumer has debt equal to 102% of disposable income. Again, any interruption in income and the consumer is bound to default on obligations. One glaring omission from the article is any discussion of increased wages to handle all this new debt.

If your family is still experiencing financial trouble even after the recovery, give our office a call. We have affordable bankruptcy programs designed to help your debt problems. We will counsel you on the potential long term credit benefits of filing bankruptcy in order to help you make wise choices.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

Bryan K. Mickler

NEW PHONE SPOOFING SCAMS TARGETING BANKRUPT INDIVIDUALS

 

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I recently had a couple in my office who alerted me to an ongoing scam against people who have filed for Chapter 13 bankruptcy. This couple had filed for Chapter 13 protection pro se (without an attorney) and immediately began to receive calls from the “clerk of the court” – at least that was the number which was popping up on their cell phone caller ID.

The caller had information from the Chapter 13 filing (which is a semi public record that can be pulled with a PACER account) related to their debts, place of employment and other bankruptcy related filings. The caller said that there was an issue with the Chapter 13 related to one of the debts having to be paid off immediately. The caller insisted that unless the debt was paid off (approximately $500) immediately by wire transfer, then the FBI would have be called to prosecute them for some type of fraud.

If you read the above paragraph, red flags are all over place. Never wire money. Never believe that a law enforcement group is going to enforce a civil debt. Never pay money to a creditor directly after you have filed for Chapter 13 unless your Plan says to pay directly.

Luckily, the individuals did not fall for the scam, but plenty of people have in the past. In fact, this scam has been ongoing for at least a year, even with files who have been represented by attorneys.

If you are experiencing harassment as a pro se filer, give us a call. We can alert you to this type of activity. We will review your situation and give you an honest opinion of whether we can help you through the process. We may even be able to help you avoid criminal scams so that you can put your money towards saving your home and vehicles as the Chapter 13 intended.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

MORTGAGE DELINQUENCIES AFTER CHAPTER 11 BANKRUPTCY

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            As we approach the middle of 2016, it is interesting to look back and see the effects of the bulge of filings from 2009-2011. During that time, the filings in Jacksonville routinely approached 12,000 cases per year.

            With the end of the boom now approaching five (5) years, it is particularly interesting to see the effects of the surge in Chapter 11 filings. After the 2005 Bankruptcy Code Amendments were passed, it became quite acceptable to file an individual Chapter 11 case in an effort to deal with substantial mortgage debt related to investment properties. That turned out to be exactly what thousands of real estate investors did when the real estate market crashed.

            The Chapter 11 filing allowed the investors to match cash flow from the rental properties to a restructured mortgage based upon a valuation of the investment properties. Unlike homestead properties, the protection against modification did not extend to investment properties. Chapter 11 plans would strip down an investment property to the current value, change interest rates and extend the term of the amortization period in an effort to make the properties cash flow for the investors. These restructured rental units formed the basis for repayment of secured debt and unsecured debt in most individual chapter 11 plans.

            The typical individual Chapter 11 plan was a 5 year plan. That means that we are approaching the end of the cycle for completion of the Chapter 11 Plan payment period. So what is happening with the mortgages which were restructured in the Chapter 11 Plans? If the Debtor successfully completed a Chapter 11 case and received a discharge, the answer is familiar.

            In almost every case, our office is seeing mortgage servicers fail to comply with the terms of the discharged plan. Some failures are small, with servicers just misapplying payments over the term of the plan. Others are more substantial. Failures include the wrong principal balance, interest rate, amortization term or other aspects of the Chapter 11 modification of the mortgage.

            This is a repetition of the Chapter 13 issues that our office has been fighting for years. As in Chapter 13, it is very difficult to complete a Chapter 11 plan and comply with the payment structure of the modified mortgage. However, the benefit for such compliance is supposed to outweigh the effort upon completion of the Plan. The hard working debtor is supposed to have a new mortgage with a modified principal balance, interest rate and term as ordered by the Court. Unfortunately, the failure of the mortgage servicers to adjust the mortgage to comply with the Plan has the potential to undo all of the hard work of the client.

            Our office spends considerable time after the completion of every Chapter 11 case to ensure that all mortgages are current and in compliance with the Plan. We do this at no cost to our clients to ensure that they do not have to call us in a panic 6 months after discharge with the fear that a home is going to be foreclosed due to the errors of the mortgage company.

            If you are experiencing post discharge issues with your mortgage company, give us a call. We will review your situation and give you an honest opinion of whether the mortgage company is in error.

            At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

BEHIND ON YOUR UNDERWATER CAR?

Two recent articles highlight both the good and bad of the recent auto sales explosion.

http://www.bloomberg.com/news/articles/2016-03-14/subprime-auto-bond-delinquencies-highest-in-20-years-says-fitch

 

http://mishtalk.com/2016/03/13/60-day-delinquency-rate-in-packaged-subprime-auto-loans-highest-in-nearly-two-decades/

        Both articles speak to the easy credit access that has allowed new car sales to top 17 million vehicles annually. However, that easy access to credit has come at a price. As a result of the flood of “less than perfect” credit approvals, the default rate on so called subprime auto loans has crept up to over 12% in some of the bond packages. Sound familiar? Maybe just like the subprime housing boom?

            The good news is that car loans are a much smaller part of the economy than housing and most likely will not have the financial impact of a housing crash if the default rate continues to stay high.

         However, most people need a car to have employment and for other daily life needs. So what is a person to do with a car that was purchased in the past couple of years which is hopelessly underwater and maybe not suitable for their needs any longer? Until a few years ago, Chapter 13 used to be the option most people would chose. That would allow you to value the vehicle over a 60 month period at the current value of the vehicle and at a reduced interest rate. The 2005 amendments to the Bankruptcy Code made this a much less attractive option. Now, the car has to be over 910 days from the date of the purchase in order to strip down a purchase money lender to a reduced value. That is nearly 2 ½ years from purchase – an eternity in constantly changing families. The auto lenders successfully pushed that portion of the legislation through with that time period since they knew that 910 days was the average length of a family keeping a vehicle after purchase. The end result has been many families stuck with high car payments on cars no longer suitable for them for years due to the inability to change value in a Chapter 13 or trade in a vehicle due to negative equity.

        Several new programs in Chapter 7 may serve to help families obtain the vehicles that they need. Chapter 7 allows a vehicle to be surrendered, along with all of the past due payments, negative equity and other issues, back to the lender. A new program available from a national lender to Chapter 7 debtors allows them to obtain a new vehicle the day after they file a Chapter 7. If a person qualifies for the program, this would allow a new vehicle to be obtained with no need to roll negative equity from a previous vehicle into the purchase. Payments could be lowered and the value of the vehicle would more closely match the loan amount. Similar programs are available in Chapter 13 after confirmation of the Plan. If this sounds like a program that may interest you, then give us a call for more details.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler