Good News! Fannie Mae Lowers Waiting Period After Bankruptcy

Good news for people who filed bankruptcy and are back on their feet and hoping to obtain a mortgage. Fannie Mae recently reduced the mandatory waiting period after a bankruptcy from 4 years to 2 years. The FHA mandatory waiting period remains the same at 1 year.

To read more, click on the link below:

http://themortgagereports.com/16750/fannie-mae-waiting-period-bankruptcy-short-sale-foreclosure

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

 

 

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

Hidden Second Mortgages

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Hidden Second Mortgages in Jacksonville Bankruptcy

I have previously written about modification of Mortgages through Chapter 13 in Jacksonville, FL bankruptcy:

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

 Since the Supreme Court did away with Chapter 7 second mortgage stripping in early 2015, the ability to strip second mortgages has been limited to Chapter 13 cases. So what does that do with modifying your mortgage? The two have come together recently in a number of my cases recently. In several Chapter 13 cases, I have seen previous modifications that were actually treated as second mortgages – usually without the understanding of the clients.

 The typical scenario is that our office starts working on the modification paperwork required for the current modification and we pull a title report from the local public records. What we see is a large second mortgage from the Florida Housing Finance Corporation or HUD related to a previous modification on the first mortgage. When I contact the clients about this mortgage, they claim there is no second mortgage and don’t know anything about the recorded mortgage on their property.

 This is disturbing on several levels. First, it appears that creditors are not explaining important legal documents to homeowners when completing modification paperwork. All of the previous modifications were done without the benefit of an attorney and were outside of the Chapter 13 process. Second, it means that your Chapter 13 attorney had really be able to understand this issue even if the clients never inform them of the potential existence of the second mortgage.

 Our office will make sure that your public records are thoroughly checked and that all liens are discovered and dealt with in the Chapter 13 case. Judgments should be cleared from the title. Second mortgage should be stripped where appropriate. Finally, HOA liens should be cleared also.

 Don’t risk coming out of Chapter 13 with liens on your property. All of your hard work in completing a Chapter 13 plan could be wasted if the appropriate action was not taken with respect to liens and mortgages on your property.

  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

 

RAISING A CHILD AND THE ROAD TO BANKRUPTCY

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RAISING A CHILD AND THE ROAD TO BANKRUPTCY

            There seems to be a new emphasis on the cost of raising a child in this Country. Rather, how it is becoming impossible to afford to have children. Maybe it’s the Millennials starting to have children and realizing the enormous financial cost or the student loan crisis that is ensnaring many parents who co-signed for their children? Whatever the cause, it is apparent that educating and raising children has become prohibitively expensive. A recent article talked about the average annual cost of raising each child as $13,248.00. Per year!!!

http://www.usatoday.com/story/money/personalfinance/2015/09/27/credit-dotcom-moms-debt/72629890/

            That was the average cost. In fact, many parents feel the need to go further into debt to send children to private schools, fund extra-curricular activities or create a “perfect childhood”. Such was the pressure to provide everything for their children, that 46% of the parents in the article were actually creating debt, such as credit cards and other loans. The article took no real position on the creation of such debt, other than to say it could have long term credit report implications (the article was sponsored by credit.com where you could check your credit reports to see the debt that you created).

            The creation of such debt in order to provide for children is more than just a credit reporting issue. It is a conscious choice that most parents will make even if faced with the long term consequences of the debt. That is why the percentage of people who responded and said that they were creating debt is so high. It may be an even higher percentage based on how people will usually respond to a question that may embarrass them (such as whether your deeply in debt).

            If you find yourself in long term debt due to the choice of raising your children as you wish versus what you could really afford, contact our office for solutions. We have experience in guiding couples of all ages and economic status out of financial problems. We offer private and supportive consultations to explain all of your options when faced with long term debt. You can even bring your kids to save on expenses.

            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 Discharge for Private Student Loans Maybe?

 

 

 

MAYBE SOME MOVEMENT ON STUDENT LOAN DISCHARGEABILITY?

            Legislation unveiled by Sen. Tom Harkin (D-Iowa) this month as part of a larger higher education package would allow private student loans to be discharged in bankruptcy. 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.

            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 orbkmickler@planlaw.com.

 

Bryan K. Mickler

Individual Chapter 11 v. Chapter 13 – Which one is right for you?

INDIVIDUAL CHAPTER 11 CASE V. CHAPTER 13 CASE

Part of every bankruptcy attorney’s job is the proper choice of which Chapter to recommend to a client when the filing of a Bankruptcy case is needed. The Client needs all the information they can get to make an appropriate decision as to whether to file a case and under which Chapter.

The individual Chapter 11 has been an option for several years due to the real estate slump and other concerns. But, what are the differences between the individual Chapter 11 and a Chapter 13 case?

CHAPTER 13 IS NOT FOR EVERYONE

There are many reasons why a Chapter 11 case may be preferable to a Chapter 13 case. Debt limit restrictions, liquidation issues which can’t be cured in the 5 year Chapter 13 period, lack of regular income or lack of ability to cure a mortgage arrearage within the 5 years of the Chapter 13.  Some qualify for Chapter 13, but aren’t eligible for discharge because of a prior discharge.

For these clients and others, an individual Chapter 11 case may be the answer.  Some of the possible advantages of an individual Chapter 11 over a Chapter 13 case include:

  • No Chapter 13 debt limits to prevent filing a reorganization
  • No means test – income and expenses are calculated as a normal monthly budget
  • No unsecured plan payments until the Plan is confirmed, often 6-12 months after filing
  • Greater flexibility in structuring mortgage and unsecured debt under the Plan
  • No limit on Plan length—reasonable to creditors is standard used by Judges to approve length
  • Relaxed income requirements to allow for infrequent payments or payments upon a sale
  • No requirement that the debtor make periodic payments
  • No 910 day restriction on motor vehicle loan strip-downs
  • No Trustee fees once case is administratively closed – usually about 12 months after filing
  • The ability to restructure non-residential property loans over a new amortization period and interest rate

One of the biggest advantages of an individual Chapter 11 case is the flexibility in addressing mortgage debt on homestead property.  Chapter 11 provides an opportunity to restructure homestead mortgage debt in a much more manageable way. Being able to structure a repayment plan for arrears over longer than five years makes it possible for debtors who could not afford the high Chapter 13 Plan payment to save their homes. Additionally, the mortgage mediation program is available for Chapter 11 debtors to attempt to modify the homestead under the HAMP or other modification program.

CHAPTER 11 DIFFERENCES

One of the biggest differences is the average fee associated with a Chapter 11 case—it’s a lot higher than a typical Chapter 13 fee due to the increased workload in a typical Chapter 11 case. The increased expense may put Chapter 11 out of reach for some debtors.

Other differences include:

  • Both creditors and the court must approve the Plan— There is no way of ensuring that you have enough votes from the appropriate classes to confirm the Plan;
  • Separate “debtor-in-possession” bank accounts are required, and the client must  file monthly reports with the U.S. Trustee;
  • There is no “Chapter 11 Trustee,” and the U.S. Trustee takes a much less active role in the case, putting nearly all of the burden for moving the case forward on the debtor’s attorney;
  • No absolute right to dismiss like in Chapter 13 – generally case is converted to a Chapter 7 and Trustee liquidates non-exempt property;
  • No co-debtor stay in a Chapter 11 case; and
  • Adequate protection payments must be made if a creditor so requests.

CONCLUSION

Chapter 11 is a complicated and expensive process. It requires the right client who is willing to put in the work required and the right attorney to see the case through to confirmation. But, when used effectively, it can provide the means to save assets and relieve debt burdens that may otherwise not be eligible for Chapter 13 relief.

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.

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

Who is the Chapter 13 Trustee in Jacksonville, FL?

WHO IS THE CHAPTER 13 TRUSTEE?

When any potential Chapter 13 client speaks to our office about modifying a mortgage through a Chapter 13 filing or saving other assets, we always talk to the client about making payments through a Chapter 13 Trustee. But who is the Trustee and what are his duties in the case?

GENERAL DUTIES OF THE CHAPTER 13 TRUSTEE IN JACKSONVILLE CHAPTER 13 CASES

The most basic duty of the Chapter 13 Trustee is to collect the monthly Chapter 13 payments from the filer and disburse that money to the creditors based on the Chapter 13 Plan and claims filed. It is the steps prior to the disbursement of the money that are really critical to the filer.

Initially, a Chapter 13 Plan is filed by the Debtor. That Plan is typically an estimate of what the Debtor thinks the payments will be in a future Confirmation Order to be signed by a Judge. The Plan is based upon the expected mortgage payment, car payments, tax payments and the left over money to the unsecured creditors. Normally, secured debts such as mortgage payments, property taxes and car payments are verified by the secured creditors. So, if the mortgage payment in the Plan does not match what is called for in the note and mortgage, then the secured creditor will file an objection to the Plan and have the amount corrected.

It is the unsecured creditors who rely upon the Chapter 13 Trustee to watch out for their interests during the course of the Chapter 13 case. There are several ways that the Chapter 13 will seek to maximize recovery for the unsecured creditors:

INCOME MINUS EXPENSES

The Chapter 13 Trustee will do a basic review of the Schedules to determine if the Debtor’s budget appears to include too little income or expenses that are too high. If the Chapter 13 Trustee feels that either income or expenses are not correct, he can file an objection to the Plan and ask the Judge to increase the Plan payments based upon the objection. This review is different from the means test review below. The budget prepared by the Debtor is a “snap shot” of the current actual income and expenses, not the formula utilized by the means test.

CHAPTER 13 AND THE MEANS TEST

The Chapter 13 means test is similar to the Chapter 7 means test in that it sets up the income in the exact way of the Chapter 7 test – 6 months of household income averaged to a monthly amount. Then, expenses are subtracted from the income figure to determine a net disposable income. The left over figure is used to determine how much money (if any) needs to be paid to the unsecured creditors in a Chapter 13 Plan. Unsecured creditor are such bills as credit cards, stripped off second mortgages, medical bills, etc. that have been included in a bankruptcy filing. In a Chapter 13 filing, you generally cannot deduct future expenses for property that will be surrendered in a Chapter 13 case. That is a big difference from a Chapter 7 filing, where you can deduct future payments if you are contractually obligated but going to surrender the property.

OTHER AREAS TO INCREASE UNSECURED DISTRIBUTIONS

The Chapter 13 Trustee will also seek to review the yearly tax return. If the tax return shows a refund or increase in income, the Trustee will seek to modify the Plan to recover the refund or increase future payments based upon the increase in income. Additionally, settlements of lawsuits which result in a monetary award to the debtor generally result in the Chapter 13 Trustee attempting to recover the proceeds of the suit to distribute to the unsecured creditors. If the Debtor inherits any type of monetary award, the value of the inheritance may be recovered by the Chapter 13 Trustee and distributed to the unsecured creditors. The same is true for sales of property during the Chapter 13 Plan.

WHY DOES THE TRUSTEE TAKE MONEY AFTER THE FILING OF THE CASE?

All of the above are examples of monetary changes that occur after the filing of a Chapter 13 case. Unlike a Chapter 7 case, the Bankruptcy Code requires that all “disposable income” be paid to the unsecured creditors. That disposable income may come in to the case two or three years after the case had been filed. Normally, in a Chapter 7 case, the money would belong to the debtor as long as the right to receive the funds did not exist on the petition date. However, in Chapter 13, the funds belong to the unsecured creditors if they are considered disposable income.

CONCLUSION

Determining disposable income is an ongoing process in Chapter 13. What about future medical expenses due to the car accident suit? What about burial expenses related to an inheritance? All sorts of issues come up when trying to determine what income is truly “disposable”. 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.

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.

Common Bankruptcy Myths

Common Bankruptcy Myths

Everyone has heard the horror stories about filing bankruptcy. The reality is usually very different. Common myths include the loss of clothing, furniture and all personal property as soon as you file bankruptcy. How about the one where you lose your home since you filed bankruptcy? Or maybe it’s the myth that you get to keep one car when you file for bankruptcy? That you will have a bankruptcy trustee showing up at your home with no notice to inspect and appraise all of your assets as soon as you file? That all of your friends and neighbors will receive a notice of your filing? All of these are common statements when people come to our office.

Most of the above myths have resulted from a simple mistake that people make in filing bankruptcy. The mistake is not obtaining the proper legal advice about whether to file and potential issues that may arise after filing. The first step to help overcome these common misconceptions is to seek professional bankruptcy advice. Don’t rely on family, friends, co-workers or others to tell you what the law is in bankruptcy. Even if that person has filed their own case, every case is unique and may be very different from your situation. Seek professional advice from an attorney who only practices bankruptcy law and is before the bankruptcy court on a weekly basis.

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 avoid any horror story 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.