May 6th, 2013
Fort Lauderdale Bankruptcy Division Judge Olson has recently entered a written opinion allowing a lien strip of pre-petition association fees in chapter 13. In re Campbell, Case No 12-35903(March 31, 2013). The court discussed that its decision is consistent with other cases in both the Southern District and Middle District of Florida. Note that the same issue is currently before Judge Raymond Ray with the same attorney for a different association.
A recent state court decision is important on the issue of foreclosures by condominium associations. Aventura Management, LLC v Spiaggla Ocean Condominium Association, Inc. , 105 So. 3d 637 (3rd DCA January 23, 2013) In this case, the condominium association first completed its foreclsoure and obtained title. Then, the bank foreclosed. A third party bidder obtained a certificate of title as the successful bidder at the bank’s foreclosure sale. The issue was whether the third party bidder was still responsible for the association fees due prior to the completion of the bank foreclosure process. The trial court found for the bidder, but the court of appeal reversed the trial court. The Court held in a split decision that the successful third party bidder was still responsible for association fees from prior to the bank’s foreclosure sale. The condo lien essentially survived the foreclosure.
This decision is being used to argue that the condo lien cannot be stripped in a chapter 13 because the third party bidder still owes association fees even though the bank who foreclosed is out of the picture. However, the state court case is only dealing with a third party bidder who takes title after the condominium association has already taken title in its own foreclosure. More broadly, the case only involves what happens after a Florida foreclosure, not as in Fort Lauderdale chapter 13 while the debtor still owns the property. While the debtor owns the property, the association is typically subordinated or inferior to the first mortgage. The state court decision is not relevant to the bankruptcy issue. In chapter 13 bankruptcy, when there is no value to the underlying secured claim, then that lien can be stripped. I do, however, have concerns about Spiagga, and invite any comments.
May 1st, 2013
A borrower might have a real need to surrender real estate to the lender. Perhaps the owner has moved from the home or has investment property that is vacant. The owner can file a Fort Lauderdale bankruptcy to discharge the mortgage debt. But association fees owed after the case is filed remain an ongoing obligation as long at the debtor still owns the property. The debtor might also be subject to liability if someone slips and falls or for code enforcement violations.
The debtor in a Chapter 13 bankruptcy in South Florida can use the new mandatory mediation procedures to attempt to have the bank accept a deed for the property.
The mandatory mediation procedure can also be used in Miami Chapter 7 bankruptcy solely for the purpose of surrendering property. The mediation procedure does not apply to trying a Broward mortgage modification in a chapter 7.
April 29th, 2013
This is my 8th post on the Fort Lauderdale bankruptcy mediation program . The underwriter for the servicer reviews the application and financial information provided by the borrower to determine whether a modification can be provided and the terms of the modification. I have been informed that typically the underwriters in the bankruptcy department for the lender are more experienced; they have received promotions and have higher pay then the typical foreclosure underwriter. A more knowledgeable and experienced underwriter would be better able to understand the situation of the debtor during a mediation.
April 24th, 2013
This 7th post is critical for numerous homeowners. The Chapter 13 bankruptcy mandatory mediation program in South Florida can provide individuals another chance to save their home.
The program can be utilized in a new chapter 13 case even if the debtor received a discharge in a prior chapter 7.
The debtor can file a chapter 13 and require the lender to attend mediation even if the lender previously denied a modification.
The homeowner can file a chapter 13 and obtain a court ordered mediation even if the debtor had defaulted under a prior modification.
April 18th, 2013
Countless homeowners have had the frustration of sending required documents to the mortgage servicers only to be told the servicer never received the docs or cannot find them. The owner might have proof of submission by fax or overnight delivery.
No longer! The new bankruptcy mediation program will solve the problem of the servicer losing documents.
How is this possible? The bankruptcy mediation program will use an online portal. Documents will be uploaded through this portal which the servicer receives. The debtor will have a record of all uploaded documents. The mediator also has access to the portal.
This portal is not new for modifications, but the system has been updated to accommodate the needs of the new bankruptcy mandatory mediation program for the Southern District of Florida. The Middle District of Florida program, which claims a 76% success rate, did not have the benefit of this online portal.
(Note the program applies to a Miami bankruptcy, a Fort Lauderdale Bankruptcy, a Boca Raton bankruptcy, a West Palm Beach bankruptcy, and surrounding areas.)
April 16th, 2013
This post is my 5th installment discussing the new South Florida bankruptcy mandatory mediation program. What happens if the first bankruptcy mortgage mediation is unsuccessful or cannot be concluded with a firm offer to modify? This could be due to a myriad of issues, such as documenting a recent change of income or expenses. The new bankruptcy mediation program anticipates the possible need for a second meeting. The mortgage mediation program requires a second session between the debtor, lender and mediator.
The mediator for a Broward County bankruptcy mediation receives a total fee of $600, split between the debtor and lender. The fee covers both sessions.
April 13th, 2013
During bankruptcy a debtor’s chapter 13 attorney might be able to better communicate with the lender’s attorney. This might be a more subjective and anecdotal observation, but let me explain.
We all know how difficult it can be to speak with anyone during a state court foreclosure. However, in bankruptcy, experienced debtor’s counsel typically has routine dealings with the lender’s bankruptcy counsel. As a creditor’s attorney stated at an 8 hour bankruptcy mortgage modification seminar I attended, large creditor firms typically have a small bankruptcy department to monitor and coordinate the bank’s representation.
As a result, I often know and can contact directly the attorney needed to help resolve an issue. I do not want to overstate this point, and must still observe that the creditor’s attorney still must get answers from the lender, but the communication in bankruptcy is still better I suspect then dealing with state court foreclosure mills.
April 11th, 2013
The new Fort Lauderdale bankruptcy mediation program provides that it applies not only to an individual’s home but also to investment property of under four units. So if an individual owns real estate that he or she leases to a tenant paying rent, then the owner can file a chapter 13 and obtain a court order requiring mortgage mediation. Another possibility is that the debtor owns the home but a parent or adult child is living in the second property. A Fort Lauderdale chapter 13 bankruptcy could be filed to require mediation as to these non-homestead properties.
April 9th, 2013
The new program for mandatory mediation program for South Florida bankruptcies obviously does not yet have any results since the program only became effective on April 1, 2013. So what basis do we have to estimate a success rate for a Fort Lauderdale mortgage modification in a bankruptcy mediation?
The Bankruptcy Court for the Middle District of Florida previously adopted a mandatory mortgage mediation program. The success rate of the mandatory bankruptcy mediation program is reported to be at 76%, unlike the state court foreclosure mediation rate of under 5%.
I should clarify the definition of success. The 76% figure is based on lenders providing a proposed modified mortgage to the homeowner. It must be understood that many individuals might be unable or unwilling to accept the proposal made by the lender. But just getting to the point of receiving a firm offer of a modification within a reasonable time would be a great accomplish for countless homeowners.
Reasons for the higherbankruptcy success will be discussed in future posts. And the local program should have even better results. Why? See installment #6 when it posts. The advantages of this system should be considered when deciding whether to file a Ft. Lauderdale bankruptcy.
April 7th, 2013
As of April 1, 2013, an individual who files bankruptcy in the Southern District of Florida has the right to require mandatory mortgage mediation. The bankruptcy judges have entered a local rule authorizing debtors to file a motion to obtain an order requiring lenders to participate in mandatory mediation in Chapter 13 bankruptcies to try to obtain a successful mortgage modification.
This program is expected to be highly successful unlike the failed mandatory state court foreclosure mandatory mediation program.
There are many reasons why this program is expected to be a successful program and may help homeowners save their homes. I will be providing a series of posts on this new mediation program that I hope will be informative.
March 23rd, 2013
The median income figures for the means test change again on April 1, 2013. The last change was in November, 2012. The Florida median income figures increase. As of April 1, the median income is as follows: For a household of 1, $41,915.00; household of 2, $51,760.00; household of 3, $54,934.00; household of 4, $65,260.00, and for each additional member of the household, an additional $8100.00.
March 21st, 2013
The jurisdictional limit for chapter 13 bankruptcies increases April 1, 2013. The allowable debt limit for an individual increases from $360,475.00 to $383,175.00 for unsecured debt and from $1,081,400.00 to $1,149,525.00 for secured debt.
The Chapter 13 payment plan can provide a substantial benefit to many individuals to restructure their debt and make some payment to creditors while saving assets that they would lose in a chapter 7. For example, a chapter 13 bankruptcy often can save a home or investment property for an individual. (Corporations are not eligible to file chapter 13.)
One problem in a Fort Lauderdale chapter 13 bankruptcy as in any other chapter 13 is that the bankruptcy code provides a jurisdictional limit. In other words, if a debtor has too much debt, then he or she is not eligible for chapter 13. However, it is recognized in the bankruptcy in the Southern District of Florida that a plan will be confirmed even if the debtor is above jurisdictional limit if no party objects. (which is often the case; creditors as well as debtors would have much larger bankruptcy expense if the debtor has to convert to chapter 11).
(Note in a prior blog post I discussed the issue of how the limits might be able to be combined for a husband and wife with separate debts.)
March 16th, 2013
A common bankruptcy issue is whether the right to receive an exempt asset, such as worker’s compensation or social security, extends until after receipt and the funds are sitting in the debtor’s bank account. (The above assets would continue to be exempt). But what about unemployment insurance? Apparently, no case had been decided previously. A person receiving unemployment generally needs to spend this payment for necessities.
But a case decided this past week held that $15,631 in a bank account from unemployment was not exempt. (I must assume the husband and wife debtors had savings and used the savings money first for living expenses. They saved the unemployment hoping this would be exempt. This is a practice my Fort Lauderdale bankruptcy clients have utilized in other contexts, such as saving social security income in one bank account and spending for living expenses from non-exempt savings.)
Judge Williamson in the Middle District of Florida reviewed the language of other exemption statutes. In re Swetic, 2013 Bankr Lexis 926 (Bankr. M.D. FL. March 12, 2013). Other statutes more clearly exempt the benefits after received or proceeds of the assets. But the unemployment statute, Section 443.051(2), did not contain any additional language. The Court sustained the Chapter 13 Trustee’s objection to the claim of exemption of the bank account with the unemployment funds. (Note, in a chapter 7 these funds would be turned over to the chapter 7 trustee. In a chapter 13 bankruptcy the funds would not be surrendered, but the debtor would have to pay the value of the asset during the chapter 13 plan.)
February 28th, 2013
Mandatory mediation is coming to Fort Lauderdale bankruptcy cases to require real estate lenders to come to the table to discuss modification. The mandatory mediation will apply in the Southern District of Florida. This will include any Miami bankruptcy and West Palm Beach bankruptcy case. Debtors will have the right to obtain a court order in chapter 13 bankruptcy cases. (The new procedure will apply to chapter 7 only as to surrendering property.) The new program will apply to all cases filed after April 1, 2013 (and for a limited tme debtors can file the request for cases filed prior to April 1,2013).
A structure will be set up where the lenders can’t just say “we didn’t receive your documents” because there will be proof of sending the documents through the cloud, an online portal for uploading the modification request and all supporting documents. (At least this is the theory). This online portal actually has existed for bankruptcy attorneys to submit modifications to participating lenders, but now the procedure will be mandatory if the debtor requests. Lenders will not be able to just ignore modification requests.
Note that this procedure still does not require the lender to actually approve the modification, but the new system will hopefully lead to more successful modifications.
Stay tuned for further updates.
February 18th, 2013
I will be one of the attorneys speaking in Fort Lauderdale on March 14, 2013 at an all day seminar sponsored by National Business Institute (NBI). Fort Lauderdale bankruptcy attorneys and other professionals might be interested in this intermediate level bankruptcy seminar entitled “Top 9 Complications in Bankruptcy.” Registration link is at http://www.nbi-sems.com/SemTeleDetails.aspx/R-61671ER%7c?ctname=SPKEM
February 13th, 2013
An individual who starts a chapter 13 payment plan might not be able to complete the plan and might have to convert to chapter 7. Consider the issue if the debtor had $10,000.00 in non-exempt funds when she filed the original chapter 13. One year later the debtor converts to chapter 7. The debtor no longer has the $10,000.00. If the debtor had filed a chapter 7 at the beginning, the chapter 7 trustee would have been entitled to those funds.
So what happens now when upon conversion from chapter 13 to 7 and the trustee demands the $10,000? A recent case addressed this issue. In re Ashley, 2013 Bankr Lexis 328 (Bankr M.D. FL. Jan. 28, 2013) held that debtors could in good faith have used the funds for purposes such as for ordinary and necessary living expenses. If that is established, the debtor is only required to turnover upon conversion the non-exempt property the debtor held at that date, relying on Section 348(f)(1)(A).
Ashley actually had an added twist. The debtor did not list the asset when she filed the original chapter 13, but could have claimed the funds as exempt. This created another good faith issue which had to be determined at an evidentiary hearing.
Any client in a chapter 13 fort lauderdale bankruptcy should consult with their attorney when evaluating the choice of converting from chapter 13 to 7.
February 10th, 2013
Homeowners have been able to strip the liens of condominium associations in chapter 13 just as they have second mortgages. This procedure is possible when the value of the debtor’s residence is less than the balance of the first mortgage. Miami Bankruptcy Judge Cristol has previously had a written decision on this issue. Fort Lauderdale bankruptcy practice has also enbled individuals in chapter 13 to strip these liens.
To clarify, the amounts due to the association prior to the filing of the bankruptcy can be eliminated as a lien on the home. The ongoing obligations after the filing of the bankruptcy would not be eliminated.
Another recent court decision has upheld the ability of the owner to eliminate the lien of the association in a chapter 13. In re Plummer, 2013 Bankr. Lexis 245, Case No. 8:12-bk-03870-MGW(Jan 14, 2013)(Middle District of Florida).
February 9th, 2013
The Florida Bar grievance committee found probable cause against Broward County foreclosure attorney David J. Stern. As reported by the Daily Business Review, Mr. Stern at one time had more than 200 attorneys to handle 70,000 cases in a year throughout Florida. The Florida Bar’s allegations include notary fraud, failure to attend hearings, and backdating documents. Mr. Stern is contesting the disciplinary proceedings.
February 4th, 2013
A recent case by Miami bankruptcy Judge Cristol should not come as a surprise to a Fort Lauderdale bankruptcy attorney but might be a surprise to those considering bankruptcy. Property owned as husband and wife in Florida can be exempt from the creditors of one spouse. For example, a car owned by husband and wife would appear to be protected from individual creditors. But what if the wife purchased the car in her name and later changed the title to husband and wife? This would violate one of the so-called unities of title required to establish tenancy by the entireties. In re Shahegh, 2013 Bankr Lexis 359(Bankr. S. D. FL January 28, 2013)(Case no 12-25260) upheld the chapter 7 trustee’s objection to the debtor’s claim of exemption in a Mercedes.
(Beware: note as to motor vehicles based on the Florida motor vehicle title statute, a car owned by husband or wife is not held as tenancy by the entireties. The title certificate must say “and” instead of “or”.)
January 28th, 2013
I have written previous posts on the McNeal case. On January 18, 2013, Judge Cristol sitting in the Miami bankruptcy division granted a motion to strip a second mortgage in a chapter 7 in a contested case. This is apparently the first motion granted in the Southern District of Florida including Fort Lauderdale bankruptcies where the mortage holder filed and briefed an objection to the motion to value. In re Bertan, 2013 Bankr Lexis 216(Bankr. S. D. FL 2013)(Case No 11-27057).
January 13th, 2013
The following is copied from a report by Robin Miller who provides updates on bankruptcy cases throughout the country from her company CBAR(Consumer Bankruptcy Abstracts and Research).
“ Court certifies classes in class action asserting that Wells Fargo committed fraud on court in filing motions for relief from stay
Although the court in its earlier opinion, found at In re Brannan, 2011 WL 5331601 (Bankr. S.D. Ala., Nov. 7, 2011), declined to certify a class in a proposed class action, the court concluded that the plaintiffs had now demonstrated that the prerequisites for the certification of two classes in a proposed class action were satisfied. The class action asserts that Wells Fargo committed fraud on the court through its practices in generating affidavits filed in connection with motions for relief from stay. Specifically, the action asserts that (1) persons signing affidavits did not, in fact, possess personal knowledge of the facts stated in the affidavits, as the affidavits represented; and (2) the person signing the affidavits did not actually sign them in the presence of a notary public, as represented in the affidavits. These allegations, if established, warranted relief, the court concluded, both under Code § 105(a) and under the court’s inherent authority to punish contempt of the court.
The plaintiffs offered into evidence a Memorandum of Review from the Inspector General of the U.S. Department of Housing and Urban Development dated March 12, 2012, that examined Wells Fargo Bank’s foreclosure and claims processing in Fort Mill, South Carolina. The findings of that review included the following:
- “The affiants routinely signed and certified that they had personal knowledge of the contents of documents, including affidavits, without the benefit of supporting documentation and without reviewing the source documents referred to in the affidavits and verifying the accuracy of the foreclosure information stated in the affidavits. A number of affidavit signers admitted having signed up to 600 documents per day.”
- “Work histories (when available) showed a lack of qualifications to hold the titles held by affiants; for example, vice president of loan documentation. Moreover, interviews disclosed that the titles were given for the sole purpose of allowing the individual to sign documents and came with no other duties or authority. Employees who notarized documents, including affidavits, routinely did not witness the signature of the documents and notarized up to 1,000 documents per day.”
The court certified the two classes proposed by the plaintiffs:
- All individuals who (i) Have filed a Chapter 13 or Chapter 7 bankruptcy case in the Southern District of Alabama in which the defendant filed, or caused to be filed, an affidavit in support of a motion for relief from stay, motion for adequate protection, or similar motion filed from January 1, 1996 through December 31, 2008; and (ii) Made any payment to Defendant (directly or indirectly) for attorneys fees and/or filing fees associated with such motions.
- All individuals who (i) Have filed a Chapter 13 or Chapter 7 bankruptcy case in the Southern District of Alabama in which the defendant filed, or caused to be filed, an affidavit in support of a motion for relief from stay, motion for adequate protection, or similar motion filed from January 1, 1996 through December 31, 2008; and (ii) Have any charges posted to their mortgage account for attorneys fees and/or filing fees associated with such motions.
In re Brannan, 2013 WL 85158 (Bankr. S.D. Ala., Jan. 8, 2013)
(case no. 1:02-bk-16647; adv. proc. no. 1:04-ap-1037) (Chief Bankruptcy Judge Margaret A. Mahoney) “
January 7th, 2013
My last post discussed a case finding that the right to receive a tax refund can be asserted as exempt as tenancy by the entireties. However, on January 2, 2013, Judge Mark in the Miami bankruptcy division disagreed, finding that the right to receive a tax refund cannot be claimed as tenancy by the entireties. In re Ascuntar, 2013 Bankr. Lexis 5(January 2, 2013) (Case no. 12-13965). The court did recognize that once the refund is received and deposited into a tenancy by the entireties account, then the funds could be exempt.
December 9th, 2012
A few days ago another court upheld the claim of exemption as tenancy by the entireties in a tax refund. In re Newcomb, 2012 Bankr Lexis 5654 (Bankr. M.D. FL Dec 4, 2012). The court did discuss the conflicting authority amongst Florida bankruptcy judges. The court reasoned that there was a rebuttable presumption in favor of finding that personal property owned by husband and wife was held as tenancy by the entireties.
December 8th, 2012
For those who want to consider issues of rights to life insurance when a debtor files bankruptcy, see In re Maudie Meyers, 2012 Bankr Lexis 5318(Bankr. W. D. N.C. Nov 14, 2012). Consider a debtor, James Meyers, who has a term insurance policy. The named beneficiary is his grandmother, Maudie Meyers. James Meyers files bankruptcy in early 2009. He does not list the policy in his bankruptcy. During his bankruptcy, James Meyers changes the beneficiary to Mr. Wallace, a creditor. Grandma files her own bankruptcy in early 2010. But 145 dies later James Meyer commits suicide. Who has the right to receive the insurance proceeds, Mr. Wallace or the bankruptcy estate of grandma?
(The case also has issues regarding rights of reinstatement of lapsed policy).
This case has some complicated issues, but the case is intriguing and serves as a caution. The court held that only the bankruptcy trustee in the James Meyers bankruptcy case had the right to change the beneficiary. The change of beneficiary by James Meyers to Mr. Wallace was not valid. Thus the beneficiary remained grandma Meyers, so her bankruptcy estate was entitled to the life insurance.
December 3rd, 2012
My last post was on the general topic of tenancy by the entireties protection. There are lots of cases in Florida addressing the issue of whether particular property is exempt. A recent case is useful to analyze whether a particular bank account is exempt as tenancy by the entireties. In re Stephenson, 2012 Bankr Lexis 4849 (M.D. Fl Oct, 4, 2012). Fort Lauderdale bankruptcy attorneys should pay attention to this case as to how to analyze signature cards.
The court recognized that a rebuttable presumption of tenancy by the entireties exists in a bank account based on a joint signature card absent an express disclaimer on the card of the tenancy by entireties election. If the debtors had this option on the card and picked a different option, then the presumption would be be rebutted.
Also, attorneys are familiar with the 6 unities of title. In this case, the account was opened prior to marriage, and after marriage the signature card was changed to create a tenancy by the entireties. This change violated the test of unity of title (property was not acquired as tenancy by the entireties.)
December 1st, 2012
Attorneys are aware of a concept called tenancy by the entireties to protect assets owned as husband of law. This is a creature of common law going back to old England that protects jointly owned property(well, it was viewed as really the husband’s property) Many states no longer recognize tenancy by the entireties, but the concept is alive and well in Florida.
Consult your attorney as to whether your property can be protected as Florida tenancy by the entireties property. But the basic point is that property owned as husband and wife cannot be seized by a creditor of one spouse.
Call it a planning technique or trick that many attorneys perhaps don’t consider, but consider a joint bankruptcy filed by husband and wife. Each spouse has separate debt. Can the debtors assert the exemption of tenancy by the entireties in a joint case? Two United States Circuit Courts of Appeal have recognized that tenancy by entireties can protect property in a joint case. See In re Bannon, 476 F. 3d 170 (3rd Cir 2007), and In re Bunker, 212 F. 3d 145 (4th Cir 2002). I have used this exemption technique successfully in several cases to protect assets from the claims of the trustee.
November 14th, 2012
There is often an issue that bankruptcy attorneys must analyze as to exempt assets. What happens to proceeds of an asset after deposited in a bank account? For example, the proceeds of sale of a Florida homestead are still exempt if deposited in a separate bank account. The funds must be used to buy a new homestead within a reasonable time. Even 2 years likely reasonable.
Similarly, deposits of social security checks would be exempt. There is also a Florida exemption for the wages of the head of household in a bank account.
What about the withdrawal of funds from a 401k or IRA? A first thought might be that the withdrawn funds would no longer be exempt. But a recent case that the proceeds of the 401k continue as an exempt asset even though deposited in a bank account. In re Sundstrom, 2012 Bankr Lexis 5035, (Bankr Md. Oct 26, 2012). This court relied in part on the discussion in a Florida bankruptcy case, In re Ladd, 258 BR 824(Bankr. N. D. FL 2001)
November 10th, 2012
This past week a local bankruptcy judge denied the discharge of an attorney and title agent for failure to maintain records. All debtors have an obligation to preserve their financial records to be able to account for how they have spent their money. A debtor can be denied a bankruptcy for failure to keep these records.
As a Fort Lauderdale bankruptcy attorney, it is often necessary to essentially audit my client before a decision is made to file bankruptcy. Consider an individual who received an accident settlement of $50,000 two years ago. I want to see the deposit and the bank statements to show what happened to the money. A client might have refinanced her home and received $100,000 three years ago. Show me the money!(or more specifically, show me where it went!)
In re Pertierra, 2012 Bankr Lexis 5220 (November 6, 2012)(Case no 10-13778), Judge Isicoff denied the discharge of an attorney. The attorney had refinanced her home twice getting cash out of $800,000. She also had taken cash advances of $150,000 and had credit card debt of $$323,000. She did not keep records including bank statements. There is often more than meets the eye as to why a case was filed, but this result does not at all seem surprising.