Fort Lauderdale Bankruptcy Lawyer Blog

Your Chapter 13 bankruptcy plan is what tells the court and your creditors how you intend to repay your debts. The plan must be confirmed (approved) by the judge. To propose a plan that the Judge will approve, you must show that after deducting for living expenses (and other allowed expenses), you will have sufficient income to pay your creditors over the life of your plan. Some debts may be paid outside the plan but other debts must be paid within the plan to the trustee who will then disburse the money to the appropriate parties. The trustee gets 10% included in your plan as payment for administering the case.

What has to be paid through the plan and what can be paid outside the plan is a subject that can't be tackled fully through a blog posting. Finding out what would be included in a Chapter 13 plan for you is best discussed with a bankruptcy attorney during a free consultation such as the one we offer in our Davie or Coral Springs office.

U.S. Rep. Hansen Clarke has recently introduced a bill to Congress asking them to cut student loans, forgive other student loans and to allow the discharge of student loans through bankruptcy.

As stated in an interview to Arron Foley:
"The legislation I'm working on right now, it would allow student loan debt to be discharged in bankruptcy, but it would be much more than that. We're also going to be looking at a way for the federal government to use savings to transfer much of the student loan financing to a grant-based way of funding education. We're also working on a package of bills that would provide comprehensive relief for people struggling to pay their debt right now and those who have fallen behind."

Although the current bankruptcy code states that student loans are dischargeable, the discharge can only be obtained if there is extreme hardship. The courts have defined extreme hardship in the most extreme manner available and to qualify you must practically be comatose, intubated and on life support.

This bill is a call for all of us to write our congressional representatives and tell them that we want them to support this bill. Student loan debt is one of the biggest issues that I see in bankruptcy. Graduates today cannot buy homes, start businesses or take public service jobs because they are carrying a student loan payment the size of a mortgage payment. Yes, there are income contingent payment plans that offer loan forgiveness but that's after 20-25 years. We need relief now and college tuition just keeps rising - not lowering.

I wholeheartedly support this bill and urge everyone reading this to contact their representative and tell Congress and this administration that action is needed now. Bring back the meaningful option of making student loans dischargeable in bankruptcy, or at least define what "undue hardship" is in specific and less stringent terms than what we currently have.

Through the Federal Housing Authority (FHA), President Obama recently announced changes to the Home Affordable Refinance Program (H.A.R.P). This is a program that was meant to help Broward County homeowners refinance their existing adjustable rate mortgages to a fixed rate mortgage. Great? Not.

The Home Affordable Refinance Program was set up to help homeowners who cannot qualify for loans from private companies. The government-owned companies Fannie Mae and Freddie Mac agreed to offer loans at lower rates to borrowers with mortgage debts up to 125 percent of the value of their homes. It was just not realistic in today's market where most homes are valued at 125% under their loan balance.

The most significant change to HARP is the elimination of the 125% loan-to-value requirement for refinances. This allows all homeowners to refinance if they meet the other eligibility criteria - no matter how far their home value has fallen

Here are the changes announced by FHA:
• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Removing the current 125 percent loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
• Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
• Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Here is the new HARP criteria:
• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 month

That last one is a tough one to meet for most people. If you're behind on your mortgage and want to keep your home, you may have some options in a Chapter 13 bankruptcy. Call today and schedule a free appointment to discuss your case and review your options.

As part of your Chapter 13 plan, you will submit to the court a proposed amount that you will pay towards your unsecured debt (usually credit cards) on a monthly basis. Payments of the unsecured debts will be based on how "allowed claims" that are filed by the creditors. All creditors with allowed claims will be paid a share of the money that you are paying into the plan for unsecured creditors. Establishing an allowed claim is the only way a creditor can get paid any money in a Chapter 13 plan.

When you file a bankruptcy case, your creditors will receive notice of the filing. Unsecured creditors that want a share of the payments must file a "Proof of Claim." Once the creditor files the Proof of Claim, you or the trustee can object to the claim if you have a legal basis for doing so. For example, you can argue that you don't really owe the claim or that you owe less than what they are claiming. The bankruptcy code gives each claim a preliminary assumption of validity unless you object. You must have a valid reason for objecting under the bankruptcy code. If you object, the court will then decide which claims are allowed.

Last week, Federal regulators announced that 4 million borrowers who have faced foreclosure since 2009 are eligible for a review of their foreclosure. Regulators are looking for potential wrongdoing, errors and abuses by financial firms in the process of foreclosure.

Examples of financial injury might include unnecessary or miscalculated fees, a foreclosure that happened while in bankruptcy, or a foreclosure sale that happened while you were waiting for an approval or disapproval of a loan modification.

What is unknown right now is what compensation may be available and what rights do you have to sign away in exchange for that compensation.

This review is at no cost to you! Mortgage servicers are required to pay for the review which will be done by independent outside consultants.

Letters are being mailed out to eligible borrowers which will tell you how to request a review of your case. There is a deadline for requesting a review (April 30, 2012) so don't put off requesting a review if you are eligible to receive one.

To qualify, your mortgage loan would need to meet the initial eligibility criteria:
•Your mortgage loan was serviced by one of the participating mortgage servicers.
•Your mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010.
•The property was your primary residence.

Eligible customers will be mailed a letter by December 31, 2011 that explains the Independent Foreclosure Review process and a Request for Review Form that identifies some examples of situations that may have led to financial injury. The form must be completed and postmarked not later than April 30, 2012.

If you've decided that you need to file bankruptcy then there are definitely some things that you should and should not do. The first thing you should do is schedule an appointment with a bankruptcy attorney to discuss your case specifically, but the following list of items are also of paramount importance.

1. Don't borrow more money from anyone.
2. If you have personal loans from friends and family -- Do not make payments to cover these loans. One creditor (yes, your family and friends will be considered creditors) cannot be preferred over the others prior to filing.
3. Do not get married or divorced right before filing.
4. Don't transfer money or give away your assets in an attempt to hide it. We must report all transfers of property and most likely the bankruptcy trustee will take it back from whoever you gave it to.
5. Don't tell your creditors that you're thinking about filing bankruptcy, they may get the jump on you and escalate collection activities.
6. Do not transfer money to your IRA that isn't consistent with your regular contributions.
7. Do not take money out of your IRA accounts. As long as this money is in your IRA, it is "safe" money and cannot be used to pay creditors. If you take it out of the safety of an IRA account - then the creditors can take it.
8. Don't spend frivolously and rack up more credit card debt, you'll only have to repay that debt in the end.
9. Do not use your credit cards! If you know you are filing bankruptcy, do not use your cards to purchase anything.
10. Don't continue to make payments on your unsecured credit or debt. Credit card debt will usually be discharged so payments toward them is really just money you are throwing away.