Archive for the ‘Chapter 13 Bankruptcy’ Category
Sunday, June 6th, 2010
For most of us, the story of how the Great Recession started is a familiar tune: the stock market soared because of speculation on the real estate market, which meant real estate prices soared as well. And when the bubble burst, millions of Americans lost serious money and foreclosure rates climbed steadily.
And the latest news, according to real estate information source Zillow.com, still reflects a seriously distressed housing market in many parts of the country.
Underwater Homes
One of the biggest problems homeowners face today is negative equity: when you owe more on a home loan than the property is currently worth, you’re said to have negative equity, or be “underwater” on your mortgage loan.
According to sources, a whopping 23.3 percent of U.S. homes are currently underwater, slightly more than the 23 percent reported in the last quarter of 2009. Here’s a look at the U.S. cities currently suffering from the highest negative home equity rates:
- #15: Jacksonville, Florida. Here, 127,807 homes, or 49.1 percent of residences, are currently underwater.
- #14: Riverside, California. This city has a 51.2 percent underwater rate, with 347,778 individual homes.
- #13: Tampa, Florida. 286,303 underwater homes give this city a 53.1 percent rate.
- #12: Vallejo, California. With 41,436 homes underwater, this city has a 54.7 percent rate.
- #11: El Centro, California. A 54.9 percent rate means 12,103 houses in this city are underwater.
- #10: Port St. Lucie, Florida. With 54,190 homes underwater, this city has a 56.2 percent rate.
- #9: Stockton, California. Once the foreclosure capital of the country, this city now has the dubious distinction of a 57.7 percent underwater rate, with 64,614 homes underwater.
- #8: Fort Meyers, Florida. Here, 58.2 percent of homes (83,533) have negative equity.
- #7: Lakeland, Florida. With 62,423 homes underwater, this city has a 58.5 percent rate.
- #6: Merced, California. 24,076 underwater homes, for a rate of 58.8 percent.
- #5: Modesto, California. A 60.7 percent rate with 54,417 homes underwater.
- #4: Reno, Nevada. 45,107 homes underwater gives Reno a 64.4 percent rate.
- #3: Phoenix, Arizona. Here, 64.4 percent of homes (totaling 479,692) have negative equity.
- #2: Orlando, Florida. With 289,209 homes underwater, Orlando has a 74.8 percent rate.
- #1: Las Vegas, Nevada. A whopping 80.6 percent of homes (254,880) have negative equity.
Negative equity is no small matter for affected homeowners, considering that mortgage modifications have been difficult to process and foreclosure is generally a trying process.
For some people facing foreclosure of their homes, a Chapter 13 bankruptcy filing may help, but it may not help the problem of owing more on a house than it's worth.
If you have negative equity in your home, consider speaking with a personal bankruptcy lawyer about your options.
Additional Resources
Estimates of Negative Equity among Nonprime Borrowers (PDF)
Foreclosure Mitigation Efforts in the United States (PDF)
Posted in Chapter 13 Bankruptcy, Foreclosure, Mortgage Foreclosure, underwater mortgage | Comments Off
Tuesday, January 12th, 2010
A recent report from the Milwaukee Journal-Sentinel Online describes a potential complication that might arise during a bankruptcy filing. Here’s a look at what happened and what it might mean for other filers.
Your Records in Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy, you’re agreeing to the following:
- Committing to a repayment plan that lasts three to five years and satisfies part or all of your secured debt
- Completing two courses (the pre-filing credit counseling briefing and the pre-discharge debtor education course) designed to help you improve your relationship with money and credit
- Making public your records of debts and payments
It’s the last item on this list that has proved problematic. In the case of some Wisconsin bankruptcy petitioners, it seems, debt and payment information in medical bills that became part of the public record included details about doctor’s visits, procedures and medicines they used.
Now, according to sources, several Wisconsin residents have filed class-action lawsuits in state and federal court against Aurora Health Care Inc., the company reportedly responsible for submitting the detailed medical information.
Beyond Embarrassment
Bankruptcy filers who see their medical history become part of public record may have reason for embarrassment, but, according to reports, that isn’t the only reason this lawsuit has gotten attention.
Certain information (for instance, about treatment for past injuries) could prevent a filer from getting hired at a job in the future or pave the way to medical identity theft. And privacy laws often protect the disclosure of such information.
Should You Be Worried?
The good news here is that, while medical records included as part of a bankruptcy filing may have the potential to hurt your career or cause you embarrassment, the odds of anyone besides your lawyer, your bankruptcy trustee and the judge on your case seeing them is slim.
After all, such information appears as part of the loads of paperwork involved with filing a bankruptcy petition – sifting through to find such details would be a daunting task.
Still, this story highlights one more reason why enlisting the help of an attorney when you decide to file for bankruptcy protection can be a crucial element of making sure you receive the protection and fresh financial start you’re seeking.
Additional Resources
2009 Medical Identity Theft Final Report (PDF)
Posted in Bankruptcy Courts, Chapter 13 Bankruptcy, class action, medical bankruptcy, milwaukee | Comments Off
Tuesday, December 1st, 2009
The U.S. Supreme Court began hearing today the case involving a debtor whose student loans were discharged in a Chapter 13 bankruptcy—though possibly against the U.S. Bankruptcy Code.
Student loans are notorious for being difficult to discharge in bankruptcy, even in a Chapter 13 bankruptcy. In order to have student loan debt eliminated, a debtor must prove undue hardship.
In the case before the Supreme Court, the debtor, Francisco Espinosa, was allowed to enter a Chapter 13 plan without ever proving undue hardship to the bankruptcy court, according to a story on National Public Radio.
The Bankruptcy Case
In 1988, Espinosa was a baggage handler for America West Airlines when he began taking computer drafting classes at a technical school. Espinosa took out four student loans totaling over $13,000 from United Student Aid Funds.
After earning his degree, Espinosa was unable to find work in the computers field, and continued working at America West. However, that company was facing its own financial strain, and began cutting salaries. In 1992, Espinosa, a college graduate earning $6 an hour, filed bankruptcy.
According to the NPR story, Espinosa agreed to repay the full amount of the student loan debt through a three-to-five year Chapter 13 plan—but not the $4,000 of interest accrued on the loan. USAF was notified several times of the terms of the plan, and never objected to the case.
In 1997, the bankruptcy court declared Espinosa's debt repaid, and issued him a debt discharge.
However, two years later, USAF issued a lien on Espinosa's tax return for the unpaid interest. USAF claimed that the bankruptcy plan was illegal—11 years after the court confirmed it—because of the undue hardship requirement.
Undue Hardship Hearing Never Held
The student loan company argues that the bankruptcy court should have held a special hearing to determine whether Espinosa's situation qualified as an undue hardship, and should have summonsed USAF to appear in court. Because the hearing was never held, undue hardship was never established, and the loan should not have been dischargeable, USAF argued.
Espinosa's attorney has argued that USAF was properly notified and did not raise any objections at the time. A federal appeals court agreed.
Now it's up to the Supreme Court to decide just when a creditor can raise objection to a Chapter 13 bankruptcy plan—and when the can still collect on debts.
Posted in Bankruptcy, Bankruptcy News and Events, Chapter 13 Bankruptcy, Student Loans, Supreme Court | Comments Off
