Are we in Southwest Florida heading into a "Double Dip Recession" ? If you are an avid reader of this blog, and I know there are many of you because of the feedback I receive, you know that I believe we are no where close to the end of this recession/depression. I honestly do not believe that we are being given all of the information that we need to have a proper debate on the economy.
Maybe our elected officials are sparing us more bad news??? I don' t know. But, on the other hand, when you call the U.S. a democracy, and the definition of the words means: Rule By The People. I begin to get concerned when the people are mis-informed and ill-informed.
So what does this all mean? Well, it means that tough times are still ahead for South West Florida. There is no doubt about that. The questions floating around in my head are: When is our Leadership going to wake up and realize that you cannot spend this Country's way into prosperity. When is our State Leadership going to step up to the plate and look at Florida's Housing and Job problems. I don't care how bad the housing problem is down here. People who are unemployed cannot purchase houses.
So, we have a rather cyclical argument. The World economy is in turmoil, which clearly has a direct impact on the United States economy, which clearly has a direct impact on the local economy. However, until the jobs problem is fixed, our housing issues (which are huge) and market will keep limping along. Great.
When I first moved to South West Florida, I used to wake up and say: Ah, another day in Paradise. Now, my attitude has changed slightly. I wake up and say: How is Corporate America and the U.S. Government going to shaft the citizens of Southwest Florida today.
I still believe that America is the Greatest Country in the World, and I have not lost my faith in the people. I believe that I have lost my faith in our Government, and the way things get done or don't get done. That is a shame. What would our founding fathers think if they could see how we have totally distorted their vision? I'm sure they wouldn't be happy.
The Fourth of July celebrates our Independence, and I am going to do exactly that once I get out of the office today. I am going to have a great weekend with my family, and I am going to remind them of all the things this Country stands for. Hopefully, they will feel the way that I do, that this Country still has a chance of coming out of this economic disaster with a new attitude. Hopefully. When you see examples of the people coming together in Nashville after the floods, you know that being American runs in our veins. It's in our DNA. Let's see if we can find that place in all of us, and get back to our Roots.
Well, according to a recent ABA Journal article, it appears Fannie Mae is going to pursue deficiency judgments against borrowers who walk away from loan obligations without good reason.
A deficiency judgment is a judgment following a foreclosure sale for the difference between the property’s value at the time of the foreclosure sale and the balance owed on the loan obligation. Once the deficiency judgment is obtained, the creditor may be able to garnish wages, seize assets, and take any other action allowed by law. Apparently Fannie Mae will be instructing its servicers to recommend which homeowners should be pursued for deficiencies.
The first question I had when I read this article is what criteria will be used to determine whether a reason for the walk away was a “good reason.” It appears that the Fannie Mae’s goal is to stop people who have the ability and means to pay their mortgages from walking away merely because the property is no longer an economically appealing investment. But with the management of the loans I have seen by the servicers in my clients’ cases I have little doubt that implementation of this program will affect people not intended.
Some states do not allow deficiency judgments but Florida is not one of those states and pursuit of a deficiency judgment is becoming a more frequent occurrence here. While deficiency judgments may be obtained even if there is a valid hardship, it has largely not been pursued against debtors in the past. However, it seems the tides are changing.
In Florida, a deficiency judgment is an equitable remedy and is discretionary with the trial court judge. Following a foreclosure sale, the creditor has one year from the date of the foreclosure judgment to seek a deficiency in the foreclosure case. If one is not sought or requested in the foreclosure case, the creditor has up to five years to bring a new action for a deficiency. Many debtors believe there is no defense to deficiency judgments but in most instances, this couldn’t be farther from the truth. In defending against a deficiency judgment, debtors can fight creditor’s valuation of the property and raise numerous equitable defenses and legal defenses that an experienced attorney can counsel them on.
As with any legal issue, early consultation with an attorney can many times make the issue much easier and cheaper to deal with. With creditors becoming more aggressive in the collection efforts on the loans by seeking deficiencies, it is more important than ever to seek an attorney’s advice and counsel in handling a foreclosure case from its outset as merely “walking away” may put you in more jeopardy than it may have in the past.
The bad part, as you can tell from the title is that he had his Grandfather co-sign for the loan. So, during the course of the bankruptcy when this young man couldn't get the lender to modify, he asked me: Can I short sale the property, and if so, what will happen to me, and what will happen to my Grandfather? These are both excellent questions.
Here is my advice: Yes, as an option, you can do a short sale. Of course, since you are in a Chapter 13, we will need the Judge's permission, and I will have to file a motion with the Court to allow same, but that is not a problem. I don't believe that the Judge will require any additional items from you other than a signed contract. With regard to the deficiency and you, the answer is simple, your debt will be included in the bankruptcy and you will ultimately receive your discharge, so, no problem.
The problem is: How will a short sale on your primary residence hurt you or hurt your grandfather? As to your grandfather, we have to look at a whole new set of issues. Since this property is not his primary residence, any deficiency that is still owed to the lender will have to be dealt with. This can come in two forms: First, they can pursue him for a deficiency balance. In other words, they can sue him for the remaining balance owed on the promissory note. As I have explained in the past, it's kind of like having two fish on a hook and one gets away. The lender still has one fish to reel in (Grandpa)
When the lender wins the lawsuit, they could go after his non-exempt assets. Alternatively, the lender could just issue him a 1099C cancellation of debt. If the lender takes the second option, your grandfather would have to deal with the IRS. As such, I would advise him to see a CPA for tax advice on how to combat this issue.
All and all, it is not fun to have to explain this to someone who took a risk on purchasing a first home and then sat back and watched his investment disappear as the Southwest Florida real estate market crumbled to the ground.
Now, I just hope the relationship doesn't crumble as well.
I apologize for the depressing blog, but this is something that you need to know and need to prevent in the future. When you take a risk, you want to do it on your own so that you don't jeopardize anyone else's future. It is never worth that risk.
This Morning I wrote a blog for the Bankrutpcy Law Network discussing why consumers shoudn't apply for a department store credit card at the register and try to save 10%.
Please check it out and tell us what you think? It should be active in 7 to 10 days. The Fair Credit Reporting Act Blog will focus on all aspects of Credit Reporting.
When you file for bankruptcy, a bankruptcy estate is created (11 U.S.C. 541). Individuals are allowed to protect items of personal property, cars and equity in real estate from their creditors. The process is called claiming an exemption or exemption planning. When an item is claimed as exempt, the property is theoretically removed from the bankruptcy estate and is no longer available to pay the claims of creditors.
If you are a Florida resident or have lived here for at least two years prior to the date of filing for bankruptcy protection, you must use the Florida Exemptions to protect your personal property in a Chapter 13 or a Chapter 7.
Even if you are just falling behind on your bills or have lost your job and think you may have some financial troubles, knowing the Florida Exemptions is important. In a nutshell, exempt property is protected from liquidation by a creditor. So, if you have a creditor or creditors coming after you, you know that your property is safe because it is exempt.
Florida's most significant exemption is the Homestead Exemption because it is unlimited. The reason it is significant is because the protection arises in the Florida Constitution. Therefore, the homestead exemption cannot be altered without a constitutional amendment. The exemption extends to real property of 1/2 acre within a municipality and 160 acres outside a municipality. Accordingly, a person can own up to 160 acres outside of a municipality with a house with no mortgage and a creditor cannot touch the place. This exemption was limited by the 2005 Bankruptcy Amendments.
In Bankruptcy, to qualify for the unlimited Florida Homestead Exemption, you must own the residence for 40 months. Or, if you owned your current home for less than 40 months, you must have owned a previous home in Florida for 40 months total. If you have owned a home(s) in Florida for less than 40 months, then you are only allowed to exempt $136,875.00 of equity per person.
There is a new check fraud scam in Southwest Florida. In the past few weeks, I have received numerous emails and phone calls from clients and potential clients regarding phone calls and messages they and members of their families have received on a check fraud investigation resulting from a payday advance. The callers allege that they are “investigators” and are investigating the debtors for check fraud for a loan from a payday advance that was not paid. The callers state the debtors need to return the call to prevent criminal charges. Some callers even go as far to say that a warrant has been issued and give fake case numbers for the court where the debtors live. As you can imagine, many people become extremely frightened and upset when they hear this.
The first thing you need to know is the allegations made are completely FALSE! There are no criminal charges for the inability to pay a debt. Not paying a payday advance is not check fraud. A fraudulent check can occur in situations where you issue a check on an account knowing it has insufficient funds to cover the check or forging a signature on another person’s account. When a payday advance is taken, the advancing company is loaning you money until your next payday and is getting interest (usually very high) back on the return. It is a loan, plain and simple, not a fraudulent check.
The phone calls are coming from collection agents attempting to scare people in paying back the debt. How can this misrepresentation be legal you ask – the answer is, it is NOT! Consumers have numerous protections under the law against this type of abusive and misleading debt collection. The protections arise under both federal and most state laws.
The conduct described can subject the collectors to liability for any actual damages sustained such as emotional distress, statutory damages, and punitive damages. Under the federal Fair Debt Collection Practices Act, statutory damages can reach $1,000 in addition to any actual and punitive damages. Florida law also allows for $1,000 in statutory damages and recovery of actual and punitive damages for violations of the Florida Consumer Collection Practices Act. Both of these Acts allow a debtor successful in litigation to recover attorney’s fees and costs from the abusive debt collectors. The abusive collections can also subject them to civil penalties through actions brought by state attorney generals and the Federal Trade Commission.
So if the conduct is illegal and subjects the collectors to liability, why do they do it? Because it works. Under a cost-benefit analysis, these abusive debt collection companies make a lot of money by using illegal scare tactics. If it leads to a few lawsuits, their profits make the potential liability worth it. Or, the company is so small that once it is served with a lawsuit it can quickly close shop and disappear. Therefore, the best defense against these companies and their illegal ways is the knowledge that their representations of pending criminal charges are flat out lies.
Recently Carmen Dellutri was interviewed by Rachelle Grossman for Parr Legal. Parr Legal is a website developed for people to find attorneys and the consumer can watch the attorney before meeting them.
As a Board Certified Consumer Bankruptcy Attorney, I speak with many people about filing for bankruptcy and their debts. Medical Bill bankruptcies are a very real and growing problem. Don't get me wrong, this is not a new phenomena that suddenly came to rise like the epidemic or pandemic known as swine flu. People have always had to deal with medical bills when either they or a loved one became sick or were injured. However, it seems that over the last few years, medical bill bankruptcies have been on the rise.
I define a medical bill bankruptcy as a consumer bankruptcy where the medical bills incurred either directly or indirectly caused the individual to seek bankruptcy protection. Many people are forced to file for bankruptcy protection just for one illness or an injury that occurred after they lost their health insurance. Alternatively, other people file for bankruptcy after a long series of financial issues which started after a job related injury or medical problem and over time the financial hole became deeper and deeper.
Sometimes these medical bills are paid by health insurance or worker's compensation insurance, but, when a person is out of work because of a medical issue, how are they going to pay their other monthly obligations, like the mortgage, car payment, insurances, etc. What about the Dr. visits, co-pays, and prescriptions? What about the procedures that are not covered under the insurance policy? Can you imagine making a medical decision based upon whether your health insurer will cover the procedure because you cannot afford it? What if you cannot afford the procedure?
What about consumers who lose time from work because their spouse or child is sick? The stress of the illness alone will cause that person to become sick. Usually, that same individual may lose their job if they miss too much time from work. If you lose your job, you may also lose your health insurance. Even though health insurance isn't what it used to be, any health insurance is better than no health insurance. Still, many of our clients are incurring a significant amount of medical bills despite having private health insurance. They still face co-payments, sky high deductibles and non-covered procedures.
If we can learn one thing from medical bankruptcies, it should be that the health care system is broken, and it needs to be fixed. I don't know how to fix the problem, but I wish I could. I can only see how it changes people's lives forever.
Let's face it, bankruptcy is a very emotional issue. When you tack on medical bills, debt collectors hired by the medical providers, and the stress of knowing you cannot pay your doctor, it gets a bit overwhelming. Families on the brink of destruction often come into my office to discuss their horrifying experiences. No one wants to file for bankruptcy protection; however, bankruptcy provides the only glimmer of hope for many families. Bankruptcy can provide that fresh start that people need . I believe people are resilient and can bounce back from unbelievable circumstances.
Declaring Bankruptcy is one the most difficult decisions that a person will ever have to make in their lives. So, when you are faced with financial problems, the first decision you should make is to hire the attorney with the skill and experience to help you navigate through these unchartered waters. But where do you start. You start by looking for a Board Certified Attorney in Fort Myers, Port Charlotte, or Naples.
As the only Board Certified Consumer Bankruptcy Attorney in Southwest Florida who handles only consumer cases, I realize that Bankruptcy is much more than a financial issue.
Depending upon the individual, bankruptcy can be devastating emotionally, physically, and financially. Individuals who are experiencing the loss of a home need to take steps to regain control of their lives and their finances. The choice of which Bankruptcy Attorney you should use will be the first step on the road to recovery.
But the question is: How do you find an attorney who can help? First: You can ask around but that would let your friends and relatives know what is going on in your life. Many times, my clients want to avoid this option. Remember, the decision to attend a free consultation is really an interview. You, the client, are interviewing attorneys, so that you can make an informed decision about where to place your hard earned dollars.
Many of my clients have never been inside lawyer’s office before. Trust me, there is nothing to be scared of, without clients, we wouldn't have offices at all. Many people coming in for initial consultations are usually nervous and shy. This is not the time to be shy, you need to ask questions about the attorney's experience, firm and the handling of your file.
Second: Many people look in the phone book, or they ask a friend or google bankruptcy attorney on the internet. All of these methods will work with a varying degree of results.
In this instance, I would do as much research as you can on the attorney and the lawfirm. Read the firm's advertisements. Go to their website and really look it over. Is it helpful or is it generic? Has it been updated? Do they have a blog? Does the attorney write for other blogs? Is he or she a member of NACBA or NACA?
Once you have selected an attorney that you believe can help, you will need to take the next step on your adventure. Let's face it, you can read a web page, and it may sound good. But, a fancy website does not a good attorney make. In order to really get a sense of the law-firm’s culture, you will have to call and speak to someone. Once you take that next step, you will acquire more information that will be critical to your decision.
Ask yourself these questions, in no particular order:
What was the overall impression of the call? Cold or Warm?
Does the firm answer its own calls?
Did you speak to someone or were you sent to voice-mail?
Did the person greet you warmly?
Did the person sound sincere?
Did the person put you at ease?
Did the person work to schedule you an appointment at a mutually convenient time for you and the attorney?
Did the person offer free information by mail, e-mail or facsimile prior to the consultation, or, if you asked for information, how was your request received?
Could you feel the person’s smile on the other end of the line?
Did you leave the call with a good impression or a bad impression?
The answers to these questions will probably determine whether you will be attending a free consultation with that attorney or not.
