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

Bankruptcy: There’s an App for that!!!!

 

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BANKRUPTCY: THERE’S AN APP FOR THAT!!!!

This past weekend I read an interesting article on healthcare and expectations of people of various ages for delivery of health services:

http://www.usatoday.com/story/news/politics/elections/2016/02/07/heres-how-millennials-could-change-health-care/79818756/

            The premise of the story was that the younger generation expected rapid delivery of health services, along the lines of shoes, electronics and other consumer goods from Amazon. The promise of the internet and its efficient marketplace was not being reached according to the younger generation, since healthcare required them to wait weeks for an appointment, show up in person and all the other inconveniences of obtaining health services.

            In contrast, the older generation in the story expected personal service from a Doctor or other health care professional. They did not mind the waiting time for an appointment if they felt that it would lead to personal service and results for health issues.

            I don’t claim to have the answers to fix the healthcare system and make it work for two such contrasting expectations. However, the story made me think of the services that I provide for people and the expectations that they have for a bankruptcy filing through our office. Are people looking for an efficient model or do they want a personal touch with filings? How can I continue to deliver quality legal services in bankruptcy law if I don’t know expectations?

            It appears that the Courts are trying to set up the bankruptcy system for the efficient model. In December of 2015, the Official Bankruptcy Forms were changed to provide for new schedules (your financial and asset related information) for each Chapter of bankruptcy forms. The forms were designed with a “check box” approach to facilitate a yes/no type of answer to each question regarding assets and other financial information. I can see a day in the near future where a consumer could log onto a website, check some boxes, swipe a debit card and have bankruptcy filing completed in a short time period. I believe that day is coming sooner than most bankruptcy attorneys want to imagine.

            Here is the problem with the efficient model for bankruptcy: People rarely go to jail, lose assets or lose the ability to discharge debt as a result of mistakes in filling out medical forms. All of those things can and do happen to people who fill out bankruptcy forms incorrectly. Failure to list assets, incorrect valuations, fraudulent transactions prior to filing and other form related issues are all grounds for loss of a bankruptcy discharge, criminal referrals and significant legal consequences.

            With those consequences in mind, our office tries to take a balanced approach to filing each case. We respect your time. You will not be sent to a waiting room and made to wait for hours when you set up an appointment. Our attorneys will see you promptly at your appointment time. If there is a conflict that was unavoidable, then we have three attorneys to make sure that you are taken care of right away.

            We use the latest technology to make your completion of the forms as thorough and quick as possible. We routinely use services to pull all three credit bureaus. We check all the court records for judgments and other liens on property. All of these make your time at our office as efficient as possible, while still safeguarding your ability to properly complete the forms to be filed.

            When you need to file bankruptcy, don’t rely on Amazon to deliver a Chapter 7 in a box. Bankruptcy filings have real consequences and should be treated seriously by each filer. Let us give you the attention that you need to make sure that your bankruptcy is completed properly and you understand the process – no matter your generation or approach to services.

           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

 

 

Refiling Chapter 13 in Jacksonville

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REFILING CHAPTER 13 BANKRUPTCY

When I started practicing bankruptcy law 20 years ago, Chapter 13 was a revolving door of refiling. A case would be dismissed and we would immediately have the client in our office to re-file and start a new 60 month plan. Sometimes it seemed that the 5 year Chapter 13 Plan was really morphing into a 10-15 year process.

A couple of things changed to stop the revolving door. First, the Bankruptcy Code amendments of 2005 made it much more difficult to immediately refile after a dismissal. You now have to have Court approval to extend the stay/protection past the initial 30 days after filing. If you have to re-file twice within a year after the initial dismissal, then you receive no stay/protection unless the Judge imposes the stay within 30 days of the filing. At each type of hearing, you are required to prove that the dismissal was caused by unforeseen circumstances and that the new case was filed in good faith due a change in those previous circumstances.

The second big change was the introduction of mortgage modification to Chapter 13 in Jacksonville. Now, we don’t have to cure the entire mortgage arrears during the 5 year plan. Instead, a mortgage modification may allow for a re-amortization of the outstanding balance on the mortgage over a new 30-40 year term at a reduced interest rate. This has significantly increased the success rate of our Chapter 13 cases and cut down on the refiling rate.

If you do need to re-file your Chapter 13 case, we routinely have clients refile and receive the protection of the Court due to a change in circumstances. If you are considering changing attorneys or have experienced some issues in your current 13 and need another start, contact us and we will be happy to discuss your re-file options.

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 orbkmickler@planlaw.com.

 

Bryan K. Mickler

FRAUDULENT STUDENT LOAN CANCELLATION AND DISCHARGEABILITY IN BANKRUPTCY

 

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FRAUDULENT STUDENT LOAN CANCELLATION AND DISCHARGEABILITY IN BANKRUPTCY

           I had written previously on the issue of potential changes to the student loan crisis and the potential for change in relaxing the strict rules to discharge student loans in bankruptcy. Both Public and Private student loans are currently nearly impossible to discharge in bankruptcy, due to a bankruptcy reform package pushed through by Republicans in 2005. Essentially, a consumer must be disabled to the point of never being able to rise above the poverty line standard of living in order to attempt to discharge any portion of a student loan debt, whether publicly or privately backed.

            The Supreme Court recently refused to hear a student loan appeal which had the potential to relax the bankruptcy requirements for forgiveness of student loans. So, for now, the strict requirements remain in place.

           However, it appears that many students have taken another approach to the problem. In this article:

http://www.wsj.com/articles/thousands-apply-to-u-s-to-forgive-their-student-loans-saying-schools-defrauded-them-1453285800

 students have begun to challenge student loans with a 1994 Federal Law which allows for forgiveness of the loans based on fraudulent conduct by a school. The examples cited for fraud in the article include over promising on job prospects, earning potential and other problems which lead to high student loan debt with no reasonable job prospects to repay such loans.

           Our office has seen first hand the growing problem of student loan debt. Student loan debt has been growing tremendously over the past few years. The total outstanding student loan balance is $1.08 trillion, and a whopping 11.5% of it is 90+ days delinquent or in default. That’s the highest delinquency rate among all forms of debt and the only one that’s been on the rise consistently since 2003. (see http://www.forbes.com/sites/halahtouryalai/2014/02/21/1-trillion-student-loan-problem-keeps-getting-worse/ for chart and other statistics). The delinquency rate on student loans is higher than credit cards, mortgages and auto loans which have all seen a decline in late payments.

            Our office has started a new program to apply for such forgiveness if the potential client can show that the school over-promised earnings, job prospects, education standards or other conduct which would make the loans fraudulent. Let us speak to you about applying for such a program and any other financial issue that you may have.

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

STUDENT LOANS, BANKRUPTCY AND THE ELDERLY IN 2016

STUDENT LOANS, BANKRUPTCY AND THE ELDERLY IN 2016

What if you knew that a loan that you were going to make was not likely to be repaid 50% of the time? Would you make the loan? Would you consider it a smart investment?

            Right now, 50% of education loans held by people age 75 and over are in default – meaning no payment for at least 270 days. 27% of education loans held by people age 65-74 were in default, as well. http://www.abi.org/newsroom/bankruptcy-headlines/analysis-student-debt-may-be-the-next-crisis-facing-elderly-americans

            The education loans above include loans for the education of the borrower and Parent Plus loans for the parents of the person attending school. The Parent Plus program allows the borrower/parent to borrow the entire cost of the education with no need to show ability to repay the amount borrowed. However, most programs for income based repayment plans or forgiveness do not apply to Parent Plus loans. http://www.bloomberg.com/news/articles/2015-12-18/this-parent-trap-involves-71-billion-of-federal-education-debt

            In consulting with people recently, we have seen a dramatic increase in elderly clients having social security and tax refunds garnished for repayment of defaulted federally backed student loan debt. The loss of such income has begun to cause great hardship to elderly clients with the increase in medical costs, living expenses and housing costs.

            I regularly have to explain to the potential client that the Parent Plus student loans are treated just like other student loans. This means that there is almost no possibility of being able to discharge the student loan through any type of bankruptcy filing. Several recent cases have served to re-emphasize the impossibility of student loan discharge. See http://www.ksb.uscourts.gov/images/ksb_opinions/REN_11-05138-40.pdf

(sex offender can’t discharge student loans despite inability to find job due to status).

            The first paragraph above is meant to warn parents that good intentions alone will not provide for repayment of student loans taken out for their own education or their children’s education. Default rates of 50% are a sure indication that most elderly student loan borrowers are not able to maintain even minimum student loan payments based on reduced income, increased medical costs and other factors. The consequences of default are also draconian, with the loss of government benefits and tax refunds and the inability of the borrower to escape the debt through bankruptcy as the most obvious problems. So the borrower should make sure that such an investment is financially “worth it” based on the expected consequences.

            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 orbkmickler@planlaw.com.

 

Bryan K. Mickler

BANKRUPTCY PREDICTIONS 2016

BANKRUPTCY PREDICTIONS FOR 2016

            In my 2014 Blog on the state of bankruptcy filings, I discussed the causes of bankruptcy filings and how it was related to the availability and amount of consumer credit. That article is here: http://www.planlaw.com/bankruptcy-predictions-2014-beyond/

            Now with 2015 behind us, it appears that the expansion of short term credit has still continued to push bankruptcy filing numbers down. Consumer credit has continued to expand at approximately a 6% annual rate through 2015. As expected, the 2015 numbers show a nearly 12% decline in bankruptcy filings compared to 2014. That is on top of the 11% decline in 2014. http://www.creditslips.org/creditslips/2015/08/yep-800000-bankruptcy-filings-this-year.html#more

            The filings in the Middle District of Florida show an even larger decline of nearly 18% compared to 2014 filings through the latest October, 2015 statistics. http://www.flmb.uscourts.gov/statistics/2015/October.pdf

            As expected, after the short term credit bulge, delinquencies are starting to rise. In the Third Quarter of 2015, credit card delinquency rates started to creep just a little higher. Car loan delinquency rates bottomed out in July of 2015 and have started to rise slowly through the Third Quarter of 2015.

            So based on the slight rising in default rates throughout the last half of the year, what can we expect for 2016? It appears that the bankruptcy filing rate should start to pick up during 2016 and accelerate in 2017. This would coincide with a greater amount of consumer debt levels and the gradual tightening of the credit markets as delinquencies start to increase. Of course, this being an election year, most of the activity in the economy and major life decisions will most likely take place in the last part of the year and into 2017.

            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 orbkmickler@planlaw.com.

 

Bryan K. Mickler

SERIAL BANKRUPTCY FILERS

SERIAL BANKRUPTCY FILERS AND THE NEED FOR EXPERIENCED BANKRUPTCY ATTORNEYS

            I was reading an article recently regarding the problem of serial bankruptcy filings in Tampa, Florida. You can find the article here:

http://www.tampabay.com/news/business/realestate/tampa-bay-judges-crack-down-on-serial-bankruptcy-filers/2234543

            The article serves to warn people to consult experienced bankruptcy counsel prior to filing a Chapter 13 Petition. In Tampa, a new system will flag your case if you have filed three (3) times for Chapter 13 relief. If you are caught as an “abusive filer” then you can be banned for up to two (2) years from re-filing to save the home.

            Now, most people don’t like to think about filing Chapter 13 once, much less three times. But it does happen. A common pattern that we see is a first filing dismissed after being prepared by a paralegal for failure to file proper documents or propose a Plan that complies with the Court requirements. Then a second filing is typically filed immediately by the same paralegal petition preparer in order to cover up the first mistake. That second case is generally dismissed for the same reasons as the first. By the time people reach our office, the third case needs to be filed in order to save the home. However, now the filing looks abusive and can be flagged. Losing your home to save a few dollars of attorney’s fees starts to look like a bad idea in such a situation.

            Chapter 13 has become increasingly complex in the past few years. The new mortgage modification procedures require a great deal of experience and organization to navigate. The new Chapter 13 form plan is now required and is much more complicated than the older plans. Finally, the requirements for self employed people, tax returns, tax refunds and other financial issues have recently changed to require much more documentation.

            When you consider saving your home through Chapter 13, we invite you to talk to our experienced and compassionate attorneys. We will walk you through the entire process and attempt to make the filing as financially affordable as possible. That way, you don’t end up being labeled as an abusive filer due to simple errors or missing documents.

            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 orbkmickler@planlaw.com.

 

Bryan K. Mickler

STUDENT LOAN BANKRUPTCY DISCHARGE STAYING DIFFICULT

STUDENT LOAN DISCHARGEABILITY CHANGES NOT COMING SOON

            There has been some hope that change from the Federal Government was coming soon to the growing issue of student loan debt. Both Public and Private student loans are currently nearly impossible to discharge in bankruptcy, due to a bankruptcy reform package pushed through by Republicans in 2005. Essentially, a consumer must be disabled to the point of never being able to rise above the poverty line standard of living in order to attempt to discharge any portion of a student loan debt, whether publicly or privately backed.

            Now the Obama administration has weighed in on the issue. And the results are not what many borrowers were hoping for from this administration. In this article:

http://www.bloomberg.com/news/articles/2015-10-14/obama-administration-hits-back-at-student-debtors-seeking-relief

 the administration argues in Court filings that the current standards for discharging student loans should not be relaxed. This case involved a parent taking out loans on behalf of his three children, but the standard for any student loan discharge would be covered by the filing. Essentially, the government argues that to allow a discharge in bankruptcy would endanger the entire federal student loan program due to the expected loss of repayments.

            Student loan debt has been growing tremendously over the past few years. The total outstanding student loan balance is $1.08 trillion, and a whopping 11.5% of it is 90+ days delinquent or in default. That’s the highest delinquency rate among all forms of debt and the only one that’s been on the rise consistently since 2003. (see http://www.forbes.com/sites/halahtouryalai/2014/02/21/1-trillion-student-loan-problem-keeps-getting-worse/ for chart and other statistics). The delinquency rate on student loans is higher than credit cards, mortgages and auto loans which have all seen a decline in late payments.

            Putting in some form of ability to discharge private student loans would be a good start to addressing the growing student loan problem that continues to plague today’s struggling consumers. Often, private student loans have been incurred at predatory type of institutions which provide minimal benefit to consumers or which have very low graduation rates compared to the level of lending. More than 70 percent of Americans matriculate at a four-year college — the seventh-highest rate among 23 developed nations. But less than two-thirds end up graduating. Including community colleges, the graduation rate drops to 53 percent. (http://www.nytimes.com/2013/06/26/business/economy/dropping-out-of-college-and-paying-the-price.html?pagewanted=all&_r=0). Allowing truly needy consumers the ability to discharge some private loans would allow those consumers the ability to enter the credit markets again in order to purchase homes, cars and other necessary items in order to contribute to the economy, without the burden of crushing student loan debt. The rate of home ownership is 36% less among those currently repaying student debt, according to research from ProgressNow.

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