The biggest rental increases in years have been sweeping across the United States over the past 2+ years. This recent article by Forbes illustrates the problem of rising rents:

http://www.forbes.com/sites/laurengensler/2015/02/24/rising-rent-smaller-cities/

According the article, even small cities are seeing double digit rental increases year over year. In fact, in many areas, rental rates have increased twice as fast as wages. Increasingly, rental payments take up a larger portion of monthly income than ever before. Rental payments now account for approximately 30% of the monthly income of the average renter. That is surprisingly close to the 31% standard for mortgage payments. It will not be long before the rental percentage surpasses that of the mortgage percentage.

If you have a home or are interested in owning one, then it makes financial sense to hang on to the home in order to stop the prospect of ever-increasing rental rates. Our office specializes in providing Chapter 13 modification solutions to people faced with the prospect of losing their home. We have saved hundreds of homes through modification of defaulted mortgages, even after a failed foreclosure defense. We recently received a modification in a case where a foreclosure defense firm had tried to obtain one for several years while defending the foreclosure. Eventually, a sale was set and our office filed a bankruptcy to stop the sale and provide much needed help in the modification process. Ultimately, the home was saved and 5+ years of arrears were modified into the modified payment.

 At Mickler & Mickler, we provide solutions to your financial issues. Please contact us for a free consultation to review your situation.

Bryan Mickler

bkmickler@planlaw.com

MORTGAGES 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 the ability to purchase a home in the future. Despite financial troubles, people tend to look ahead in their lives and see a brighter financial future. This can be especially true when they consider that they could be essentially debt free after many bankruptcies.

A recent article highlights the potential to quickly recover from a negative credit event in order to purchase a home:

http://www.wsj.com/articles/call-it-a-comeback-for-risky-home-buyers-1435185671

The Wall Street Journal article discussed the new lenders pouring into the mortgage market in order to fund home mortgages shortly after foreclosure, bankruptcy or other types of credit events. Typical waiting times for mortgages after such events are normally 2-4 years. According to the article, hedge funds and other private lenders have stepped into the void left behind by traditional lenders. These non-traditional lenders can approve a mortgage loan in just weeks after a foreclosure according the article. Often these lenders charge rates between 5-10% and require down payments of 25% for mortgage loans, well above traditional levels.

The service provided by these lenders is a valuable one. But like the subprime mortgage crisis that caused the financial turmoil of the last few years, it will be interesting to see if the loosening of lending standards causes a return of the high default rates of the past.

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

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

Recently an article came out about loan buyers and some new requirements for attempting to modify delinquent mortgage loans prior to foreclosure. The article, found here:

http://www.wsj.com/articles/fannie-freddie-regulator-puts-new-rules-on-delinquent-loan-sales-1425318221

summarized the new Fannie Mae and Freddie Mac sale rules for delinquent mortgages.

It appears that Fannie Mae and Freddie Mac are preparing to auction a large portion of delinquent mortgage loans to private entities in order to recover some portion of the outstanding debt. The loan buyer would then be required to institute procedures for modifying the loan prior to foreclosing as part of the sale terms. It was interesting to note that according to the article, “Loan buyers also have the flexibility to take drastic steps to keep homeowners in place, such as by cutting mortgage principal balances, which Fannie and Freddie are largely prohibited from doing.” This has been a big problem in mortgage modifications in loans owned by a governmental agency since most of the loans are severely underwater. In some instances, the homeowners have received a modification designed to save the home from foreclosure, but have walked away due to the amount of debt on the property as related to the value.

If the loan buyers do follow through on actually working with families to save homes, reducing principal, extending terms and lowering interest rates, then the program could potentially save thousands of homes from being foreclosed. In the past, this type of relief has been hard to achieve as hedge fund investors have purchased the loans and looked to turn a quick profit by foreclosing on the homes in order to sell or rent them quickly.

Our office has worked for the last three years through the Bankruptcy Court Modification program. The results so far have been very positive if you compare the current system to the old “cure” plans that were required under the Bankruptcy Code. Under Chapter 13 (Section 1323(b)(2)), the Chapter 13 Plan may not modify the rights of lien holders secured by real estate that is the principal residence of the debtor. The same prohibition exists in Chapter 11 in § 1123(b)(5). These sections have been interpreted to mean that principal residence mortgages may not be “stripped down” to current value, may not have legitimate interest charges as allowed by the note and mortgage deleted from the account and also may not prohibit attorney’s fees and other charges if allowed by the note and mortgage. The end result was that many people were unable to save their home from foreclosure due to a variety of factors.

Take, for instance, a hypothetical example of a couple who went to a foreclosure defense firm prior to the mediation program. The foreclosure defense firm may have been able to stall the foreclosure process due to the backlog in the court system. Eventually, however, the home will be severely delinquent and a summary judgment hearing will be looming. At this point, many foreclosure defense firms would have simply told the couple to plan on moving out shortly. Or that firm may have recommended to the couple to file Chapter 13. However, due to the delay in the filing of the Chapter 13 case, the arrearages under the old “cure” Chapter 13 would have been too large to cure while trying to maintain the regular mortgage payments each month. Not only did the foreclosure defense serve only to delay the inevitable, it also made a cure plan impossible.

HAMP Program now in use by the Jacksonville Bankruptcy Courts

In December of 2011, the Jacksonville Bankruptcy Courts began a HAMP modification program in Chapter 13 cases. The program is a voluntary mediation program that was modeled after successful programs in Orlando and Tampa Bankruptcy Courts. The program cannot force the mortgage company to modify a loan. But, it does provide a process to obtain a HAMP modification through a mediation session with a federally appointed mediator. The great benefit of the program is that it is run through the Federal Bankruptcy Court and is subject to the Mediation Order issued by the Bankruptcy Judge. If the mortgage company fails to cooperate or does not offer a HAMP modification to an otherwise qualified candidate, that mortgage company may be subject to sanctions.

In fact, statistically, our office has seen great success in obtaining modifications, either through HAMP or an “in house” program offered by the servicer. Each financial situation is different, so a full evaluation of your particular eligibility for the modification program must be performed prior to any recommendation to attempt to obtain a modification through Chapter 13.

HAMP Eligibility

To be eligible for HAMP, 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. Our office has a full-time person devoted to making sure that your paperwork is organized and prepared properly prior to submission to the mortgage servicer. Based on our experience, the paperwork component of the modification process is the step that most denials have been based upon outside of Chapter 13. Without the experience of a dedicated staff member and multiple past modifications, it is simply too difficult to put together a complete modification package. We utilize a court approved website which serves as a deposit site for all mortgage related documents provided to the mortgage servicer. No More lost documents!!

Once our office has obtained your package, the mediation session is set up to provide a decision on the modification request. Typically, the mediation session is held about 45 days after the modification package has been presented. The mediation session is held at our office with the mortgage company on the phone and generally lasts about 20 minutes. The mediator is present during the mediation session and will guide the parties through the process in order to ensure that each side has a chance to present whatever documentation and testimony is needed. A modification is usually offered at the mediation session or at a follow up phone conference to be held within two weeks of the mediation session.

There are also instances where the modification is denied at the mediation session. Normal reasons for denial are that the mortgage payment is currently low enough to be below the 31% of gross income, the borrower does not currently have income to support the modified payment amount needed or that the Net Present Value of the home is greater through foreclosure.

The mortgage modification process has been extremely beneficial to those people who qualify for HAMP treatment on their principal residence. With the benefit of judicial oversight and attorney involvement on by both the borrower and lender, more modifications have been obtained through the Chapter 13 loan modification program. While no modification can be guaranteed, you can at least have your modification application reviewed by mortgage company and expect to receive a written approval or denial instead never receiving any response. 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

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

REVERSE MORTGAGES AND CHAPTER 13 BANKRUPTCY: HOW TO SAVE YOUR INHERITED HOME

            By now, everyone has seen the flood of reverse mortgage advertisements which have appeared on television. Celebrity spokespersons invite you to put a reverse mortgage on your home to pay off your existing mortgage and never make a mortgage payment again if you are over 62 years old. Many of you may have a parent who has taken advantage of a reverse mortgage in order avoid mortgage payments while on a fixed income.

            Reverse mortgages are great for eliminating mortgage payments on homestead property, while preserving income during retirement. Generally, a reverse mortgage is not payable until sale of the property or death of the mortgagor. The homeowner is responsible for payment of all taxes and insurance on the property while the reverse mortgage is in place.

            So what happens after the death of the homeowner when a reverse mortgage has been taken out against a property? Typically, the lender will allow the heirs a period of time to repay the original principal amount and all accrued interest. Normally, this period of time is a year. The problems come in when the heirs want to keep the home, but cannot qualify for a mortgage to pay off the reverse mortgage. This may be due to credit score issues, lack of equity in the home or if the probate of the home has not been completed.

            So what is an heir to do to save the inherited home? Recent Bankruptcy Court cases suggest that Chapter 13 may be a legitimate option. Several recent Chapter 13 cases have dealt with the situation above, i.e. that an heir is trying to save a home they live in and inherited, which is subject to a reverse mortgage. See Fannie Mae v. Griffin (In re Griffin), 489 B.R. 638, 642 (Bankr.D.MD 2013) and cases cited therein.

            The above case and the cases cited by the Maryland Court hold that an heir may file a Chapter 13 bankruptcy to protect the home. Since the mortgage has expired and is due and payable in full prior to the end of the Chapter 13 Plan, the home mortgage may be modified to change the balance, interest rate and term of the mortgage. This means that a home on which a reverse mortgage is owed $80,000.00, but is only worth $29,000, may be valued at $29,000.00 by an heir and paid off over the five (5) year term of a Chapter 13 Plan. If the Court approves the Plan, the heir will own the home after 5 years for $29,000.00, with the remainder treated as an unsecured claim.

            If you find yourself facing the loss of your inherited property due to a reverse mortgage which has matured, give us a call to discuss your rights. You may be able to save the home through a Chapter 13. You may even be able to strip down the amount owing on the home.

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