The End of Stripping Second Mortgages in Jacksonville Bankruptcy

It was fun while it lasted. For the past two years, the 11^th Circuit decision of McNeal v. GMAC Mortgage LLC (In re McNeal), 2012 WL 1649853 (11th Cir. May 11, 2012), allowed lien-stripping of a wholly unsecured lien or second mortgage in chapter 7. However, the as the saying goes, “The party is over . . . “

This week, however, the Supreme Court voided the ability to strip second mortgages in Chapter 7 cases. Now, Chapter 13 may be the only avenue to obtain relief from the second mortgage. This option is still attractive if the first mortgage is subject to modification. I have previously written about modification of Mortgages through Chapter 13 in Jacksonville, FL bankruptcy:

https://www.planlaw.com/modification-of-mortgages-in-chapter-13-in-jacksonville-fl/

If you feel that you may benefit from a loan modification or any type of mortgage relief, contact our office at 904.725.0822 or bkmickler@planlaw.com for a free consultation.

Bryan Mickler

CREDIT REPORTING AFTER BANKRUPTCY – IS IT ABOUT TO GET BETTER?

            One of the leading questions that I receive while consulting with people is about the effect of bankruptcy on a credit report. I try to tell people that federal law requires that all discharged debts be reflected as discharged, and not some type of “charge off” or “90 day delinquent” account after a bankruptcy discharge has been entered. However, too often, that is not the case. Banks and mortgage companies routinely fail to update the credit reports of millions of American each year to reflect the current status of discharged debt. Now a landmark settlement may finally produce some results for those affected by such a situation. In this article:

http://www.nytimes.com/2015/05/08/business/dealbook/bank-of-america-and-jpmorgan-chase-agree-to-erase-debts-from-credit-reports-after-bankruptcies.html?_r=0

            The New York Times discussed the causes of the credit reporting issues (Hint – it involves banks making money off of holding consumers’ credit reports hostage) and the potential fix to this problem.

            I see this type of behavior by lenders repeatedly after discharge in all types of bankruptcies. Our office provides a full service bankruptcy to our clients. If they have credit reporting issues which can’t be cleared up in the Bankruptcy Court, we put them in touch with knowledgeable credit reporting attorneys who can repair the problems through federal court litigation. Don’t let your credit report be held hostage or feel that you must pay discharged debt in order to clear your credit report.

            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

TAX REFUNDS AND DEBT COLLECTORS – IS IT ABOUT TO GET EASIER TO TAKE YOUR MONEY?

One of the leading causes of filing bankruptcy is having a judgment entered against an individual. In Florida, the entry of a judgment allows a judgment creditor up to 20 years to collect the debt, allows the judgment creditor to place liens on property and even garnish wages in certain instances.

Now it appears that some debt collectors feel that is not enough power. Recently, an article out of Indiana House of Representatives highlighted the aggressive nature of debt collection these days. The article can be found here: https://iga.in.gov/legislative/2015/bills/house/1358

This bill provides that if a debt has been reduced to a judgment in Indiana and the judgment has not been satisfied, set aside, or discharged in bankruptcy, the judgment creditor may garnish a state tax refund otherwise due to the debtor. The bill also allows a writ of garnishment to be electronically filed with the department of state revenue. The easy garnishment of the tax refund will deprive many needy families of a source of income that many rely upon for providing extra income for necessary expenses.

At this point the legislation is only related to Indiana State tax returns. However, the debt collection industry is very powerful at lobbying. It would not be at all surprising if similar legislation is introduced in other States and/or targets the federal refunds of State citizens. If you have a judgment against you, don’t wait until your wages or property are seized. Call our office today to see if the debt may be discharged in a bankruptcy procedure.

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

GAY MARRIAGE AND FILING BANKRUPTCY IN 2015

It was recently a banner day at the Law Offices of Mickler & Mickler. We just received our first discharge in a case filed by a married gay couple.

When the case was filed as a Chapter 7 in September of 2014, gay marriage was not legal in Florida. However, the couple were Florida residents who had recently been married in New York. Our office took the position that a married couple should be allowed to file a joint case no matter the status of the marriage in Florida. It was clear that the Supreme Court ruling striking down discriminatory federal marriage laws meant that the Federal Courts were going to have to allow joint cases for gay married couples – even if Florida law was still unsettled.

When the discharge was entered without objection, it was another small step in what has been a long march to equality in marriage. If you have questions regarding your eligibility to file bankruptcy, call our office today to schedule a free appointment to review your 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

BANKRUPTCY PREDICTIONS FOR 2015

            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: https://www.planlaw.com/bankruptcy-predictions-2014-beyond/

            Now with 2015 upon us, how is the model of cause and effect playing out? In 2014 it appeared that short term credit was rising which was expected to push down filing rates. As expected, the 2014 numbers show a 12% decline in bankruptcy filings compared to 2013. http://www.acainternational.org/creditors-bankruptcy-filings-decrease-by-12-percent-in-2014-34672.aspx

            So how is 2015 going to compare to 2014? It appears that consumer debt is still rising. This article shows that consumer debt increased by over 3% in the third quarter of 2014, or almost $15 Billion. http://www.ttnews.com/articles/basetemplate.aspx?storyid=36997

      As expected, after the short term credit bulge, delinquencies are starting to rise. The subprime auto market is especially vulnerable to a dramatic rise in delinquency rates. http://www.wsj.com/articles/car-loans-see-rise-in-missed-payments-1420768083

            So based on the availability of credit, what can we expect for 2015? Based on the below chart, it appears that consumer credit has been steadily increasing since 2011 at approximately 4-8% a year. At that rate, the bankruptcy filings should start to pick up during 2015 and accelerate in 2016. 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, real wages remain flat for most workers, making any increased expense difficult to handle. It will be interesting to see if the historical trends continue with the current tepid recovery that has been ongoing in the job market.

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

MEDICAL BILLS AND BANKRUPTCY: HOW TO SAVE YOUR WAGES FROM GARNISHMENT

            A recent broadcast and article regarding medical bills from non-profit hospitals caught my attention. http://www.propublica.org/article/how-nonprofit-hospitals-are-seizing-patients-wages

            The above link will take you to the story regarding non-profit hospitals suing low-wage workers for past due medical bills. The suits resulted in judgments against the low wage workers and garnishment of wages. In the article, some people had been garnished for years as a result of large past due medical bills. The hospitals in question were all non-profit hospitals that were receiving significant tax breaks and were supposed to be offering low wage workers financial programs to reduce or eliminate medical bills based on income guidelines. Of course, the hospitals weren’t following the guidelines and continued to garnish wages from low wage workers.

            In our practice, we see this type of behavior by medical providers nearly every day. Almost every potential client who comes in to our office has some type of medical debt. Frequently, the medical bills are a primary cause of the need to file Chapter 7. Co-pays and uninsured costs can quickly overwhelm low income and middle class people if any type of serious medical incident occurs. The result is often collection calls, notices and lawsuits.

           My thought during the entire broadcast regarding the above link was “Why don’t these people just file Chapter 7?”. I listened to several people on the story recount how they had been garnished 10% to 25% of their wages for years. These were people who could not afford to have even $1 taken from their family. Yet, there they were still struggling with the garnishments.

            If you find yourself or a family member in such a situation, contact our office for a personal and private conversation to discuss options. Chapter 7 or Chapter 13 bankruptcies offer the opportunity to stop wage garnishments and eliminate or reduce medical bills, credit cards and other unsecured type of loans. Don’t struggle with wage garnishment needlessly. Know your 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 or bkmickler@planlaw.com.

Bryan K. Mickler

BANKRUPTCY AND CREDIT UNIONS

            Over the many years of filing every Chapter of bankruptcy for people, one thing has remained constant – people really like their credit union accounts. I have clients come in who have been with Vystar or Navy Federal for years and don’t want to include such debts in any bankruptcy filing. We always end up talking about the same thing in every meeting: “Will I lose my credit union account?”.

            The short answer is “Yes, if the credit union will lose money when you file.” Typically, a person will come in with a credit card, a car loan and maybe a signature loan through a credit union. They would like to keep the car, but discharge the credit card and signature loan. That is easily accomplished through a Chapter 7 or Chapter 13 filing, but the credit union will close any checking or savings accounts held by the individual. Why does this happen? Credit unions are member owned, as you often hear in advertisements. That means if the credit union takes a loss on a member, that member hurts all other members. Until the loss is cured or made up by the member, the credit union will normally deny membership privileges.

            What can be done to make things a little easier for the client looking to file a bankruptcy and discharge credit union debt? First, consult with experienced bankruptcy counsel to make sure that you receive appropriate advice regarding the problems with a credit union account after bankruptcy. There is nothing worse than having no access to a direct deposited paycheck and trying to pay bills. Not to mention trying to open a bank account with an open bankruptcy filing. Second, make sure that you open any new bank or credit union accounts prior to filing a bankruptcy and move any direct deposits or debits to the new account. A lot of frustration and aggravation can be avoided with just a little planning. Contact our office if you have other questions regarding a credit union account during a bankruptcy filing.

          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 SAVING LIVES!!

A new study finds that bankruptcy filers make more money and live longer than those who were denied such protection, Fortune Magazine reported today. In a working paper released Monday by the National Bureau of Economic Research, economists Will Dobbie and Jae Song examine 500,000 bankruptcy filings in the U.S. to measure the effect of bankruptcy laws on consumers. They found that the Bankruptcy Code is an effective social insurance policy. According to their findings, getting approved for chapter 13 bankruptcy protection “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.”

 See the entire article here: http://fortune.com/2014/09/30/bankruptcy-law-inequality-income/

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

Modification of Mortgages through Chapter 7 in Jacksonville, FL – What’s Not to like?

I have previously written about the mortgage modification program in Chapter 13 that was been available in the Jacksonville Division of the Bankruptcy Court for the past two years. https://www.planlaw.com/modification-of-mortgages-in-chapter-13-in-jacksonville-fl/

The program has been a great success for many homeowners who have come to our office to save their homes. Instead of having to cure many months or years of arrearages over the life of the Chapter 13 Plan, the homeowners have been able to modify the mortgages and cure the arrears over the life of the mortgage loans. The program has also lowered interest rates and allowed longer terms for mortgages in order to make payments more affordable and save homes.

 Recently, the Court expanded the program to include Chapter 7 filings to be eligible for mortgage modification relief. The announcement can be found here:

https://ecf.flmb.uscourts.gov/announcements/MemorandumforExternalWebsitereDistrictMMMprocedureswithsampleorderforemailblast.pdf

To be eligible for HAMP modification in a Chapter 7 or Chapter 13 (or even a Chapter 11 case), a homeowner must owe less than $729,750 on a one-unit property, have established the mortgage prior to January 1, 2009, and have monthly mortgage payment greater than 31 percent of his monthly gross income. Also, a homeowner must be able to provide documentation indicating that he is facing a serious financial hardship as a result of his mortgage. In house modifications have significantly broader eligibility criteria limited only by the investor for the loan.

So what is not to like about the prospect of a mortgage modification through Chapter 7? To understand the potential traps in a Chapter 7 modification program, it is necessary to understand how Chapter 7 and Chapter 13 differ.

Initially, the Chapter 7 has no Plan or payment to the mortgage company. This means that the mortgage company is receiving no potential trial payments and has no real understanding of what a homeowner considers 31% of their income – the normal trial period payment. Secondly, the Chapter 7 process is over in approximately 90 days. This means that a homeowner will lose all protection from foreclosure after 90 days when a discharge has been entered. In a Chapter 13, the stay is in effect for several months while estimated trial payments are being made to a Chapter 13 Trustee and a modification is being reviewed by the mortgage servicer. No foreclosure can commence or resume as long as the Chapter 13 payments are being made to the Trustee.

Finally, remember that modifications are voluntary. There is no forced modification under Chapters 7, 11 or 13 of the Bankruptcy Code for homestead property. If the normal modification process takes 6-9 months – what protection does a homeowner have once a Chapter 7 discharge has been entered? Mortgage companies routinely foreclose on homeowners who have modification applications pending. Just do an internet search for the horror stories related to modifications outside of bankruptcy and lost houses.

It will be interesting to see how the Chapter 7 modification process will work out over the next few months or years. My fear is that many homeowners will see Chapter 7 as an easy way to modify the mortgage on their home. This will lead to significantly lower Chapter 13 filing rates in the next few months, as home modifications are the main reason to file Chapter 13. However, will we see a great loss of homes as a result of this shift in filings? Based on past experience, I fear that will be the result.

If you are seeking to modify your home mortgage through a Chapter 7 or Chapter 13, make sure that the attorney who you are dealing with can answer the above questions regarding protection after the discharge, foreclosure during a modification and ability to save a home in default after discharge when the mortgage company refuses payments. All of these are critical to deciding if a Chapter 13 or Chapter 7 is the appropriate Chapter to file in your situation.

 If you feel that you may benefit from a loan modification or any type of mortgage relief, contact our office at 904.725.0822 for a free consultation.

Bryan Mickler

bkmickler@planlaw.com

UPDATE ON INHERITED IRA’S TARGETED BY CHAPTER 7 TRUSTEES AND THE FLORIDA EXEMPTION FOR INHERITED IRA’S

The Supreme Court issued its opinion today in the Clark et ux. V. Rameker et al., inherited IRA case. While it may be bad news for some potential bankruptcy filers in other States, Florida filers with the ability to use Florida exemptions should continue to enjoy the protection of a 100% exemption for inherited retirement accounts.

As discussed in my previous writing on this subject, the coming wave of Baby Boomer inheritance IRAs and 401(k) funds will offer heirs a tremendous financial windfall. Debtor earned/owned accounts are two of the most common exemptions that are claimed in Chapter 7 or Chapter 13 cases. This means that the IRAs and 401(k) plans cannot be liquidated in a Chapter 7 filing or counted as liquidation in a Chapter 13 case. The accounts simply pass through the filing of a bankruptcy and will remain available for later income upon retirement.

However, in the Clark case, the Wife inherited a $300,000.00 IRA from her late mother. She immediatly rolled that amount into an exempt IRA in her own name. When their pizza business failed, the Clarks filed for Chapter 7 to discharge approximately $700,000.00 in business guarantee and personal debts. They claimed the IRA as exempt in the Chapter 7 filing.

Prior to that date, the 5th and 8th Circuits had ruled such inherited funds to be exempt. Undeterred, the Chapter 7 Trustee filed an exemption to the IRA in the Clark’s Chapter 7 case. Eventually, the 7th Circuit ended up with the case and ruled that the IRA was not exempt since the funds were inherited and not for the savings or retirement of the Clarks. The Supreme Court ruled on June 12, 2014 that the inherited IRA was not exempt from the claims of the Chapter 7 Trustee since such an IRA was not necessary for the basic support of the Debtor as is normally the case with a traditional retirement account.

While this may seem like it will mean that all inherited IRA accounts are subject to the liquidation of a Chapter 7 Trustee, the ruling of the Supreme Court was based upon the Federal Exemptions contained in 11 U.S.C. sec. 522. Florida is an “opt out” State, which means that all Florida filers of Chapter 7 who meet the requirements for claiming Florida exemptions will not use the Federal exemptions.

So what does Florida exemption law say about the exempt status of inherited IRA’s? On May 31, 2011, Florida Governor Scott signed into law House Bill 469. Now, section 222.21(2)(c) of the Florida Statutes serves to exempt from creditor claims the owner, beneficiary, or participant of a regular and inherited individual retirement account. The law also was written to apply retroactively to all inherited individual retirement accounts without regard to the date the account was created.

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