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Orlando Bankruptcy Law Blog

8-year home foreclosure case ends with couple losing house

Many Florida residents are able to diligently make their mortgage loan payments each month. They continue to do so believing that they will not have to face home foreclosure. However, one couple found out that mistakes were made by their mortgage loan servicing companies. Now, after eight years of fighting, they are being forced out of their home.

The couple was able to produce documentation that proves they made every mortgage payment. One of the loan servicing companies that owned their mortgage loan mistakenly applied one of the couple's payments to someone else's account. The victory was short lived, however.

Court rules that debt repayment plan can strip junior lien

When many Florida residents divorce, they have both senior and junior liens on the marital home for which both parties are legally responsible. If one ex-spouse files for Chapter 13 bankruptcy, he or she might wish to strip the junior lien as part of a debt repayment plan -- essentially treating it as an unsecured debt that will be given the same priority as any other unsecured debt. A bankruptcy court on the East Coast recently determined that making this proposal is allowed even when the other ex-spouse, who is not part of the bankruptcy, is still liable for the debt.

Part of what made the issue of the junior lien problematic is that when the ex-wife filed for Chapter 13 bankruptcy on Dec. 15, 2015, she and her ex-husband were both still on the title of the marital home. After that date, the ex-husband transferred his interest in the home to his ex-wife through a quitclaim deed, which made her the sole owner of the home. When she proposed to strip the junior lien, the lender objected, arguing that it was not permissible because the ex-husband was still liable for the debt.

Will filing for Chapter 7 bankruptcy hurt job prospects?

For years now, companies have run credit checks on job applicants in order to assess their susceptibility to embezzlement or theft. This knowledge can make many Florida residents hesitant to file for Chapter 7 bankruptcy because they fear that it will hurt their employment prospects. Fortunately, most employers do not put significant weight on an applicant's credit score.

Economists from two universities, the Social Security Administration and the Federal Reserve Bank of New York conducted a study to determine if credit scores had an impact on whether an individual would be offered employment by a company that runs credit checks on applicants. The study revealed that credit histories had only a minimal impact on the job market. Researchers compared the impact of a bankruptcy on an individual's job prospects before and after the bankruptcy appeared on his or her credit reports. No evidence was found that the existence of a bankruptcy had a significant impact.

Finding debt relief after a divorce through bankruptcy

When Florida couples divorce, each party will typically assume a portion of the marital debts. Doing so could put you in a precarious financial position. Fortunately, it may be possible for you to find debt relief through bankruptcy.

The primary question for each Florida resident in this position is whether it would be more advantageous to file before or after the divorce is finalized in order to receive the maximum benefit from filing. Sitting down with a bankruptcy attorney when you decide to file for divorce could help answer that question. In many cases, filing as a married couple could benefit both parties, but sometimes, that is not an option due to the circumstances.

Should you file for Chapter 13 bankruptcy instead of Chapter 7?

The simple answer to that question is that it depends on your circumstances. The primary reason that many Florida residents file for Chapter 13 bankruptcy (reorganization) over a Chapter 7 (liquidation) is that they want to retain as much of their property as possible that would not necessarily be considered exempt under a Chapter 7. It also might be possible to discharge debts that would not otherwise be eligible under the other chapter.

In a Chapter 13 bankruptcy, the filer proposes a repayment plan that must be approved by the court. Once that occurs, the filer's disposable income is paid to the trustee on the case who then distributes it to creditors in accordance with the plan. How long the plan lasts often depends on whether your income is above or below the median income for Florida. If you are above that number, the plan will usually last five years or 60 months. For those who are below the median, the plan generally last three years. 

South Florida home foreclosure rates went up in the last 6 months

The housing market in South Florida remains unstable despite recent gains in the rest of the state. This is partially evidenced by the fact that the home foreclosure rate in the area went up 6 percent in the last six months. Fortunately, even with that increase, the rate is still below what it was after the housing market crash and during the recession.

One source reports that the current foreclosure rate is actually normal for the area. Since the housing market bottomed out in 2011, it has slowly regained ground. At that time, buyers were able to purchase properties well below market value. Those homes have steadily increased in value and more people are back to work, which have helped to stabilize the number of people who become delinquent on their mortgage loan payments.

Looking for credit card debt relief after retirement

For many Florida retirees, the days of being financially secure are gone. Many people go into retirement with a significant amount of credit card debt that is a strain to keep up with when they are only receiving a portion of what they used to earn through either a retirement account or Social Security. To make matters worse, credit card debt is often not the only debt that people carry with them into retirement. Many have mortgages, car loans and other financial obligations as well.

For households here in Florida and elsewhere that carry rotating balances, the average amount of credit card debt as of March was $16,048. Even though that means that there are numerous households carrying less of this debt, there are also a significant number with more. That same month, people without revolving debt still had an average of $5,700 in credit card debt.

Why are condo foreclosures on the rise?

If you're facing foreclosure on your condo, the pressure probably started long before you were even in financial trouble. For many older condo communities, the effects of the 2008 recession never went away. These communities are faced with aging facilities in desperate need of repair, which, when coupled with declining cash reserves and stricter lending rules, have left many condo owners holding the bag in terms of supporting their facilities.

Do not wait too long to find a debt relief option

Research indicates that one out of every three Americans has saved for retirement, and approximately 62 percent have less than $1,000 in savings. The primary reason that most people here in Florida and elsewhere are unable to save money is due to their debts. Many people who are struggling to make ends meet also wait too long to find a debt relief option that will turn their finances around.

Part of the issue is that many Florida residents do not adequately understand when their financial situations have become dire. Furthermore, they might not be award of the options available to them. Simply put, if a person is living paycheck to paycheck, he or she is probably having financial issues.

Anyone can be overwhelmed by credit card debt

Many Florida residents are under the impression that only people who do not earn a substantial income, have a nice house or even a healthy retirement plan can experience financial hardship. Nothing could be further from the truth. Anyone can be overwhelmed by credit card debt and other debts to the point where they find themselves in financial distress.

Take for instance a family in which both parents have full-time jobs and they collectively earn approximately $90,000 a year. They seemed to be doing fine until the wife suffered a medical issue that kept her from work for approximately eight weeks. In addition, before surgery on her hand could be performed, the family had to pay some medical bills and the deductible on her insurance. Disability insurance only provided her with 60 percent of her normal income during that time as well.

Paul Urich
Orlando Office

Law Office of Paul L. Urich, P.A.
1510 East Colonial Drive
Suite 204
Orlando, FL 32803
Phone: 407-896-3077
Fax: 407-896-3041

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