Archive for December, 2016

Supreme Court Ruling on Foreclosures

Friday, December 23rd, 2016

You have probably read in the papers that foreclosures are down in Florida. A big reason for this is that the housing market has turned around and prices are going up. Therefore, it’s a lot easier to get out of trouble by selling the house and moving on. However, if you are “upside down” on your loan and are having trouble making your mortgage payment, you probably don’t want to hear about the fact that foreclosures are fewer for other people.

foreclosure

The Florida Supreme Court has issued a ruling that could increase the number of foreclosure actions brought against homeowners in the state.

According to the Florida Bar News, as a result of the state Supreme Court’s November 3 ruling,“Lenders who have had a foreclosure suit dismissed can bring new action if the borrower continues to default after the dismissal and the case is brought within five years of nonpayment.”

The ruling had to do with the statute of limitations provision in Florida that says foreclosure on a mortgage has to be brought within five years of the borrower defaulting on payments.

Notice of Default and Intent to Accelerate

It works like this. When you miss mortgage payments, you’re in default. Your lender will probably send you a Notice of Default and Intent to Accelerate informing you that you have a right to “cure the default” by paying the bank for all of your missed payments plus fees.

The notice will also tell you that failure to cure the default will result in the bank exercising their right to accelerate payment on the loan, which means demanding that you pay off the entire balance of the loan. It’s not that they think that you can afford to pay off the whole balance, but if there’s an acceleration clause in your mortgage (most mortgages have it), your lender has to accelerate in order to foreclose.For mortgages that have an acceleration clause (most do), that means that, after breaching your contract by missing payments, your lender can demand that you either pay off the entire balance of your mortgage or be foreclosed upon. The Notice of Acceleration tells the homeowner about their right to avoid that by reinstating their loan.

Once you default and they accelerate the promissory note, the five year statute of limitations clock starts. But foreclosure might not happen within those five years. The case could be dismissed for any number of reasons. Maybe your bank couldn’t prove that they have the standing to foreclose, or that they’re the right party in interest. If the foreclosure case was dismissed and the statute of limitations expired, it wasn’t clear how the lender could bring another foreclosure action. Until now.

After Foreclosure Case Is Dismissed

Justice Barbara Pariente of the Florida Supreme Court wrote in the November ruling:

“After the dismissal, the parties are simply placed back in the same contractual relationship as before, where the residential mortgage remained an installment loan, and the acceleration of the residential mortgage declared in the unsuccessful foreclosure action is revoked.”

Did you get that? The court ruled that, after the foreclosure case is dismissed, even due to lack of standing or lack of prosecution, the mortgage is restored to its regular terms. If the borrower doesn’t make payments after the dismissal, that’s a new default that creates a “new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.”

But the bank doesn’t really restore your mortgage to its normal terms. It won’t take your payments even if you tried to make them. If the case is dismissed, but no loss mitigation solution was reached, you never have a chance to be out of default. This ruling allows the bank to assign a new default date for its renewed foreclosure action.

Florida has been one of the states most affected by the foreclosure crisis, and the ruling could increase the number of foreclosures in the state because it gives judges and bank lawyers a more clear understanding on how the five year statute of limitations issue affects foreclosure cases.

Lawyers for homeowners worry that the ruling could add confusion and make it easier for banks to foreclose by setting a default date for whenever is convenient for them.

How to Deal with Your Foreclosure Case

The Florida Supreme Court ruling isn’t a victory for homeowners, but it’s not terrible either. It doesn’t change the options available to you to avoid foreclosure.

If all the talk about defaults, acceleration, and civil court procedures sounds like a foreign language to you, you’re not alone. It is complex and confusing. To get the best result you have to either get a thorough understanding of it or, even better, work with someone who does.

And great results are possible even for homeowners in terrible circumstances. The legal process can be drawn out, allowing a homeowner in default to continue to live in their home for years without making payments.

You may be eligible for a loan modification that reinstates your loan, lowers the principal you owe on your mortgage, and gives you a more affordable monthly payment. Or you could exit your home without going through foreclosure through a deed in lieu of foreclosure or short sale.

If you have a problem with your home loan, consider consulting with Caroline Secor. Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

No More Co-signers for Credit Cards

Sunday, December 18th, 2016

Discover Card recently announced that they will no longer allow applicants to use a co-signer to qualify for a new credit card. The company joins other major issuers in ruling out the co-signer option, including American Express, Citibank, Capital One and Chase.

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Why co-signers matter

When you don’t have much of a credit history, or the history you have is not exactly stellar, it can be hard to get approved for a credit card. Issuers don’t want to take a chance that you’ll run into problems paying back what you owe. Asking a family member or a friend with strong credit to co-sign for you can make a big difference.

Even if you don’t need a co-signer to get approved, some couples prefer to have equal standing on their credit accounts. With co-signed accounts, both parties are equally responsible for paying the bills. Good stewardship of the account will benefit both people’s credit equally. And, yes, mistakes made on the account will also damage both people’s credit, no matter who was “supposed” to pay the bill.

But among the largest credit card issuers, fewer and fewer allow co-signers. Discover was one of the last big ones to still allow co-signing.

If you have a large amount of credit card debt and it is causing a problem, consider having a consultation with Caroline Secor. Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

Bankruptcy and Divorce

Friday, December 9th, 2016

That’s a double whammy. Getting divorced and going through bankruptcy at the same time. It is not unusual for people to have those challenges at the same time. One of the major causes of problems in a relationship is money problems, and if you are having money problems, very often you are having marital problems. Then there is the idea of a fresh start where people remove all their challenges at the same time.

unhappy couple having argument at home

Bankruptcy cases that involve a pending or recent divorce need to be analyzed closely by a bankruptcy attorney.  You should be aware of the potential issues a divorce can have on your bankruptcy case or, vice versa, that the bankruptcy could have on your divorce case.  While I cannot possibly cover every issue between divorce and bankruptcy in a short article, I will describe a few common issues I often encounter in my office below.

Bankruptcy or Divorce: Which Should I Do First?

Probably the most common question I get from a potential client that is considering divorce and bankruptcy is, “Which should I do first?”  Unfortunately, most of the time, the answer to this question is, “It depends.”

In order to determine whether divorce or bankruptcy should come first, you should meet with a qualified attorney. Talk with your bankruptcy attorney about how you plan on dissolving the marriage.  Is the divorce going to be uncontested (or agreed upon)? Or are there issues that will be contested (or require litigation)? Of course, things may come up in the divorce proceeding that may change this plan, but you should still have this conversation with your bankruptcy attorney.

If you are pretty confident that your spouse will not agree to how to divide assets and debts, and it looks as if litigation cannot be avoided, the first thing you should do is hire a competent divorce attorney as soon as possible. In my opinion, having counsel in both the bankruptcy and divorce is paramount to the success in both cases, especially when the divorce is going to be contested. You need to be getting sound advice on both cases and having attorneys that can communicate with one another can be very beneficial for you.

How Will Assets and Debts Be Divided?

Another issue you need to consider when going through a divorce is “How will we divide our assets (and debts)?”  A divorce determines how marital assets such as real property and personal property will be divided. A final decree of divorce will also dictate what debts each spouse will pay.  If spouses owe a joint debt (for example, a car loan or a credit card you may have together), the divorce decree should state which spouse is responsible for paying that debt.  It is important to note: if a spouse is ordered to pay a debt pursuant to a final decree of divorce, that obligation becomes a debt he or she cannot discharge in a subsequent bankruptcy filing.

11 U.S.C. Section 523(a)(15) is the section of the Bankruptcy Code that sets forth this exception to discharge of a debt owed to a spouse or former spouse incurred in the course of a divorce. This exception from discharge is only enforceable by the spouse. The creditor to whom the debt is owed still cannot collect from the bankrupt spouse.  However, here’s a very common scenario: Let’s say you are assigned to pay a joint credit card debt per your divorce decree and hold your former spouse harmless. You then file bankruptcy. The credit card creditor then attempts to collect from your spouse on that joint debt that you were decreed to pay as part of your divorce. To the extent that your ex-spouse incurs actual damages from the collection (i.e. garnished wages), he or she would have the right to file an action in the court where the divorce was finalized seeking those damages, court costs, and attorney fees from you.

When a client tells me they have recently divorced, I always ask to see a copy of the final decree of divorce to see if the potential client assumed any debts pursuant to the divorce.  If they did, then this provision of the Bankruptcy Code would apply and the client often needs to keep paying that particular debt in full to avoid a potential action by their former spouse.

Filing for Bankruptcy as Single or Joint

Another common scenario I see related to divorce and bankruptcy is when a potential client and his/her spouse are not yet divorced but likely will be divorcing soon. The question I get in this situation is: “Should we file bankruptcy together or separately?” Though it varies case by case, it is sometimes advisable for a married couple to go ahead and file a joint bankruptcy before they go through with the divorce. One reason to go ahead and file is that it usually will save you money related to court costs and attorney fees. A joint bankruptcy case typically costs the same as an individual case. Filing together can also take away the issue of the exception from discharge described above if the parties owe joint debts; if you both discharge your liability in bankruptcy then there is no party left for the creditor to collect from, rendering the assumption of that debt moot for divorce purposes. Often filing for bankruptcy together before a divorce, can pave the way for a much smoother and less costly divorce proceeding.

There are many other ways in which divorce and bankruptcy interact and I come across unique scenarios all the time. If you’re considering bankruptcy, be sure you mention to your attorney if you have recently divorced or may be divorcing soon so that the attorney can go through the potential impact of that divorce on your bankruptcy and the potential impact of the bankruptcy on the divorce. Going through a divorce is stressful, but the process can be made less stressful with the right financial advice.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.