CURRENT BANKRUPTCY NEWS – JANUARY 2018

CURRENT BANKRUPTCY NEWS – JANUARY 2018

Several articles recently highlighted the deepening sense of financial pain being felt by middle class and working class Americans. Below are some of the recent bankruptcy related news stories for January of 2018 and how these trends may affect bankruptcy filings in the future.

Hurricane mortgage woes continue to pile up

https://www.nationalmortgagenews.com/news/severe-delinquencies-associated-with-harvey-irma-keep-piling-up

This article focused on the continuing economic toll of the major hurricanes of 2017. There are currently 4% of all Florida mortgages that are at least 90 days late as of January, 2018 according to the article. In addition to the economic toll of the hurricane, it seems that my recent experience has been that most people who applied for mortgage held did not fully understand the terms of the help. Most people who I have spoken to regarding the forbearance programs thought that the loans would be easily modified or the payments were not due in 90 days. Instead, the January, 2018 end of the forbearance program meant that 4 mortgage payments are now due all at one time.

20% Jump in credit card delinquency rates

https://www.newsmax.com/finance/personal-finance/banks-credit-card-losses/2018/01/22/id/838551/?ns_mail_uid=19301467&ns_mail_job=1774900_01222018&s=al&dkt_nbr=01050299wswo

Banks and other card issuers suffered a 20% jump in credit card delinquencies in 2017 as compared to the year prior. The main point of the article focused on normal consumers using credit cards as day to day living income to supplement low or no wage growth.

Top 1% income earners earned 82% of all wealth created in 2017

https://www.bizjournals.com/phoenix/news/2018/01/22/top-1-percent-rake-in-82-of-economic-stock-gains.html

Worldwide, the top 1% of income earners kept 82% of all new wealth created in 2017. Only 18% went to the other 99%.

Please feel free to contact our office with any bankruptcy related questions at 904-725-0822 or bkmickler@planlaw.com

Bryan K. Mickler

FORBEARANCE ON MORTGAGE ISSUES AFTER HURRICANE


FORBEARANCE ON MORTGAGE ISSUES AFTER HURRICANE

In September of 2017, Florida experienced it’s second major hurricane episode within the past year. Hurricane Irma caused extensive damage to major population centers in Florida, including Jacksonville. A federal disaster declaration was issued just prior to the storm making landfall in the Florida Keys. As a result of the federal disaster declaration, both Fannie Mae and Freddie Mac, two large federal mortgage holders, have temporarily suspended foreclosure sales in the State of Florida. See article below.

http://www.tcpalm.com/story/weather/hurricanes/2017/09/15/lenders-offering-mortgage-assistance-hurricane-irma/670047001/

As part of the federal disaster declaration, there are several mortgage companies that have offered what are termed forbearance plans. In reality, these plans are a trap for unsuspecting homeowners struggling with repair bills and missed work.
If you elect to take advantage of the mortgage assistance program through your lender, the lender will offer an immediate 90 day forbearance of the mortgage payments through the end of 2017. In January of 2018, if you made no payments during that previous 90 days, you will owe 4 months of payments. Again, the payments were only temporarily put on hold while the disaster effects have subsided. The payments were not forgiven and the loan was not modified in any way.
The servicer may attempt to offer a modification package to the homeowner in January of 2018. This will require the normal modification documentation be provided to the servicer by the homeowner. The modification is not guaranteed and will have no legal effect on foreclosure proceedings being commenced.
If you find yourself in such a predicament, our office can advise you on relief offered by Chapter 13 bankruptcy. Chapter 13 in Jacksonville, Florida offers the ability to stop foreclosure proceedings and submit modification documents through a court supervised process. Our office has a dedicated staff member who handles only the modification documents for your case and ensures that all of the appropriate documents are submitted through a dedicated website that is used by Chapter 13 filers. No more faxing or mailing multiple copies of the same documents to the mortgage company after they lost things for the third time!!! The Chapter 13 process also can allow for a cure of past due amounts over a period of up to 60 months if your loan was recently modified. Either way, the homeowner has the ability to save the home.
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

FANNIE MAE AND FREDDIE MAC SUSPEND FORECLOSURE SALES IN FLORIDA

 

FANNIE MAE AND FREDDIE MAC SUSPEND FORECLOSURE SALES IN FLORIDA

In September of 2017, Florida experienced it’s second major hurricane episode within the past year. Hurricane Irma caused extensive damage to major population centers in Florida, including Jacksonville. A federal disaster declaration was issued just prior to the storm making landfall in the Florida Keys. As a result of the federal disaster declaration, both Fannie Mae and Freddie Mac, two large federal mortgage holders, have temporarily suspended foreclosure sales in the State of Florida. See article below.

http://www.tcpalm.com/story/weather/hurricanes/2017/09/15/lenders-offering-mortgage-assistance-hurricane-irma/670047001/

The Sale Suspension and Forbearance Program

In Duval County, the foreclosure sales have been suspended until after January 1, 2018.  There are also additional options to temporarily suspend car and credit card payments as a result of the federal disaster declaration.

If you elect to take advantage of the mortgage assistance program through your lender, the lender will offer an immediate 90 day forbearance of the mortgage payments through the end of 2017. In January of 2018, if you made no payments during that previous 90 days, you will owe 4 months of payments. Again, the payments were only temporarily put on hold while the disaster effects have subsided. The payments were not forgiven and the loan was not modified in any way.

Often, after January of 2018, the servicer may attempt to offer a modification package to the homeowner. This will require the normal modification documentation be provided to the servicer by the homeowner and will have no legal effect on foreclosure proceedings being commenced.

If you find yourself in such a predicament, our office can advise you on relief offered by Chapter 13 bankruptcy. Chapter 13 in Jacksonville, Florida offers the ability to stop foreclosure proceedings and submit modification documents through a court supervised process. Our office has a dedicated staff member who handles only the modification documents for your case and ensures that all of the appropriate documents are submitted through a dedicated website that is used by Chapter 13 filers. No more faxing or mailing multiple copies of the same documents to the mortgage company after they lost things for the third time!!!

CONTACT US

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

HURRICANES AND BANKRUPTCY: HOMEOWNERS BEWARE OF HIGH DEDUCTIBLES

HURRICANES AND BANKRUPTCY FILINGS: HOMEOWNERS BEWARE OF HIGH DEDUCTIBLES

In September of 2017, Florida experienced it’s second major hurricane episode within the past year. Hurricanes Matthew and Irma both caused extensive damage to major population centers in Florida. The damages ranged from falling trees to complete flooding of homes. In any situation, the homeowner may be in for a terrible financial consequence due to the effects of the storms.

Initially, most Americans are living paycheck to paycheck. Two-thirds of households don’t have more than $1,000.00 in savings. A recent article from the end of 2016 explained the dire financial situation of most households:

https://www.fool.com/retirement/2016/09/25/nearly-7-in-10-americans-have-less-than-1000-in-sa.aspx

That article found that “even though lower-income adults struggle with saving money more than middle- and upper-income folks, no income group did particularly well. Some 29% of adults earning more than $150,000 a year, and 44% making between $100,000 and $149,999, had less than $1,000 in savings. Comparatively, 73% of the lowest income adults (those earnings $24,999 or less annually) had less than $1,000 in their savings account.”

This situation has been largely characterized as people having less than 2 weeks of savings to handle an emergency such as a loss of job, medical episode or other work loss. The result of such an episode can lead to immediate financial pressure without adequate savings to make such basic payments as mortgage payments, rent, car payments, health insurance, etc. Unfortunately, our office sees such individuals on a daily basis.

But what about damage to your home from a Hurricane? How does that impact a homeowner with only two weeks of savings? The answer is based on the value of the home. In Florida, damage to a home from a hurricane is generally covered by insurance. However, the insurance coverage normally has a 2% deductible or higher. That percentage is based upon the value of home – not the estimated repair costs. See:

https://www.iii.org/issue-update/background-on-hurricane-and-windstorm-deductibles

This could mean that out of pocket deductible expenses will be in the tens of thousands of dollars for some homeowners. For example, a $250,000 home (about average sale value) would have a $5000 deductible. Obviously, the more the home is worth, the more that the deductible will be for the homeowner. Having to come out of pocket for $5000 is a financial impossibility for most families based on the less than $1000 in savings figures above. Other expenses may not even be covered by homeowner’s insurance, such as tree removal for trees which did not hit the structure, flooding costs and business losses for self-employed individuals. Most people will generally lose time from work due to the approach of a storm and the loss of power/internet for several days after the storm passess.

The result of a large out of pocket expense is usually that the homeowner is left without funds to pay car payments, credit card bill or other expenses which are not as critical as ensuring shelter for themselves and their family. In such a situation, financial pressure may start to mount once the emergency of the situation has worn off. Within a couple of months after a hurricane, collectors and creditors are generally not sympathetic to homeowner’s expenses related to the storm. Lawsuits and other collection activity will generally pick right back up and threaten wages, vehicles and other assets. If you find yourself in such a situation, then bankruptcy may provide the financial tools necessary to save your home, vehicles and income from collection.

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, which 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

ZOMBIE DEBT RETURNS WITH A TWIST

ZOMBIE DEBT ISSUES IN CHAPTER 13 CASES

Zombie debt appears to be making a comeback due to some recent Court rulings involving Chapter 13 bankruptcy cases. Recently, there was a Supreme Court ruling which prohibited the filing of an FDCPA action against a debt collector in Chapter 13 cases where a “stale” claim had been filed, i.e. a claim based on a debt which was deemed uncollectible based on an applicable statute of limitations. The opinion is found here:

https://www.supremecourt.gov/opinions/16pdf/16-348_h315.pdf

An interesting note in the opinion is that the Court considered a Proof of Claim that was obviously time barred. “Whether Midland’s assertion of an obviously timebarred claim is “unfair” or “unconscionable” (within the terms of the Fair Debt Collection Practices Act) presents a closer question.” Page *5 above. The Claim in the above case made no misrepresentations regarding the age of the account or whether such account was past an applicable statute of limitations. In such a case, the Supreme Court has said that debt collectors are free to file such a claim and suffer no liability through the FDCPA for attempting to collect on a stale claim.

But what if the claim is presented in such a way as to attempt to appear timely? What if a creditor or debt collector intentionally “re-ages” an account in an attempt to collect a stale debt so that the claim wasn’t “obviously time barred” as stated by the Supreme Court? Would that type of collection activity subject the creditor or debt collector to liability through the Bankruptcy Code or the FDCPA?

Twice in the past 2 years our office has seen large institutional creditors (not debt collectors, surprisingly) file claims that contained account statements dated for the month of the petition when the account is well past the Florida five year statute of limitations. In one case the creditor filed multiple claims with the same deceptive account statements. We filed suit against both creditors in adversary proceedings in an attempt to bring such behavior to the attention of the Bankruptcy Judge and to prevent future repeat violations.

Such behavior is an obvious violation of Bankruptcy Rule 3001 which requires that claim filers provide in the Proof of claim the date of the last transaction, date of last payment and date charged off for all unsecured open end or revolving accounts. The reason for such a requirement is obvious: Put everyone on notice as to whether the claim is collectible. The Rule also provides the Bankruptcy Judge with the ability to disallow the presentation of evidence of the missing items, award attorney’s fees and costs, as well as other “appropriate relief”. Our office believes that any “appropriate relief” that is awarded should be sufficient to deter repeated violations of claim standards and to prevent deceptive filings in reorganization cases.

As we move well past the limitations period for most debts incurred and charged off during the financial crisis of the late 2000’s, it becomes critical to any successful reorganization effort to make sure that only legitimate claims are provided with financial benefit in a reorganization case. Stale claims, deceptive claims and the other variations of uncollectible debt should be carefully checked in each case and taken out of any reorganization plan to allow for the best chance of success.

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

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

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

 

 

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