MORTGAGES, STUDENT LOANS & BANKRUPTCY MORTGAGES

Two of our local judges recently posted an article regarding their travels through the Real Estate Collapse and resulting Foreclosure Crisis. Their analysis reassembles four chapters in a yet unfinished volume. Some of this insight follows:

In the first chapter  the jurists note, "Liberalized  credit, inflated  real estate appraisals, unsustainable repayment terms, securitization of mortgage loans, and sloppy lending practices gave rise to the Great Recession."

Next, they note, "In 2005, before the housing market crash, there were only 57,106 foreclosure filings statewide. By 2009, the number of filings exploded  to 399,118. Some law firms engaged in unethical practices, taking shortcuts in establishing the necessary proofs. There was massive fraud in preparing affidavits.Their clients also engaged in sloppy record keeping, which caused an inability to produce original notes, proof of ownership, and authentic records of payments."

Their version  of chapter  three in the story recalls, "In 2010, the Florida Supreme Court ordered mandatory mediation of all residential mortgage foreclosure cases, and local rules were adopted to facilitate mediation of mortgage foreclosure cases... the Federal Government was also encouraging settlements through the "HAMP" program. In December, 2011, the Florida Supreme Court terminated the managed mediation program for residential mortgage foreclosures. By June, 2012, there were 377,707 pending active mortgage foreclosure cases in Florida Circuit Courts, according to the Office of State Courts Administrator ("OSCA"), an agency of the Florida Supreme Court."  The unfinished  saga closes by discussing  Florida's recent "Foreclosure lnitiative."  They cite, "The Florida Legislature  modified foreclosure  laws. The Statute of Limitations  for deficiency  judgments was shortened from five years to one year as of July 1, 2013, through the Florida Fair Foreclosure Act." "Parties may agree to vacate a final judgment and reinstate the mortgage loan, no matter how old, if they can show 'compelling reasons' to do so. The result has been that pending cases gradually declined from 377,707 in June, 2012, to 329,171 in June, 2013, to 159,491 in June, 2014, and 94,419 in March, 2015. In the Nineteenth Judicial Circuit (lndian River, Martin, Okeechobee, and St. Lucie counties), the pending  cases declined from 13,699 in 2012 to 10,791 in 2013, to 4,370 in 2014, to 2,628 in March, 2015. Some problems involve cases which cause additional litigation, such as when the homeowner  is trying to get mitigation but the sale is not canceled  in time, and the property is unintentionally  sold to a third party bidder. The new owner may engage in litigation to confirm the sale. There are instances  of the wrong legal description having been used and not discovered  for many years." "The new procedures are posted on the Nineteenth Judicial Circuit's website at www.Circuit19.org. Each circuit judge who is assigned to hear residential foreclosure cases has posted his/her procedures on that website. lt is apparent that courts recognize the causes and effects of overly aggressive lending and legal maneuvering that resulted in financia! disaster for so many people. While many would like to believe that this was all a one-time "blip" in the history of real estate, as Judge McManus and Judge Cox point out, the future is yet to be seen. What's more apparent is that in spite of "best efforts," all parties were unprepared for the financia! ruin that followed. lt could be that bankruptcy would have been a better solution, as fewer people would still be carrying questionable burdens that would have been resolved long ago. 

STUDENT LOANS 

Last month I discussed a bankruptcy case where a 45-year-old woman was not allowed to discharge her student loans under the "undue hardship"  standard, because  the court felt she failed to pay a portion of a one-year increase in income of $1,000 toward her student loans. (The woman had never had income over $10,000 ayear, from public assistance).

 

This month we consider  another  case involving  a single mother with two sons, who was able to convince the court that over $112,000 in student loans should be discharged under the "undue hardship" standard.

The case is Acosta-Coniff v. ECMC. An article by Steve Rhode in the Huffington Post notes: 

According to court records, "Coniff is a 44-year-old single mother with two sons. She earned a Ph.D. from Auburn and teaches high school. At the time she filed her petition in bankruptcy, she had take­ home pay of $2,950 per month plus an additional $500 per month in child support. Based upon the evidence offered, the Court calculates that the monthly payment would be $915.00 per month." The Judge went on to say, "lt is readily apparent  that Coniff could not make that payment and support herself and her children with a minimal standard of living if torced to repay the loan."

 

lf anything, the two cases show that there is anything but a "standard," and such cases are largely left up to the individual judges' interpretations and opinions, thus furthering the case that Congress needs to amend the Bankruptcy Code to allow the discharge of student loans in a fashion that resembles the statutes pre-B.A.P.C.P.A., or at least turn the clock back to the 1978 rules.

 

The case is being appealed by the lender. For a more detailed review go to:

www.huffingtonpost.com/steve-rhode/teacher-discharges-loads-_b_7880712.html

 

 

As noted last month, everyone should be contacting their elected officials to seek allowance  of discharge of student loans in bankruptcy. lt touches everyone-students, graduates,children,parents, and in many cases even grandparents. lt's everyone's problem.

 

For more information contact Jon L. Martin, Chair, at (772) 419-0057.

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WHAT ALLOWS DISCHARGE OF STUDENT LOANS IN BANKRUPTCY?

BloomburgBusiness recently published an article that pretty much shows the reality of how much “hardship” is required under the “undue hardship” standard when determining if a debtor can discharge student loans in bankruptcy. The Headline read:

“Courts Rule That Disabled Woman Living Below the Poverty Line Must Repay Student Loans”

“Despite providing that paying back her student debt would leave her unable to afford basic living expenses, two judges ruled a woman could not discharge it in bankruptcy”

According to the article, an unemployed, disabled, 45 year old woman living far below the poverty line was not allowed to cancel more than $37,400.00 student debt in bankruptcy. That statement alone would suggest to most that under the “undue hardship” provision, she should be one of the rare few that are supposed to be allowed to discharge student loans in bankruptcy.

“NOT TO BE!” said the Judge, while acknowledging her income was only $10,000.00 per year derived from Social Security Disability and Public Assistance since 2008. Even though the debt had grown from the original amount of $13,250.00 to an astronomical $37,400.00 due to interest and late charges, the Judge ruled she didn’t satisfy the undue hardship test because one year she had earned an extra thousand dollars and had not paid any of it towards her student loans!!!??!!!

The court noted that she might be eligible for a Federal Loan Student Consolidation Program in which she would not be required to make ANY payment as long as her income didn’t increase! Then, in 25 years the loan would be forgiven!

Let’s see . . . she’s 45 now . . . in 25 years she’ll be 70. Then she’ll get her fresh start! Really? She might even be able by then to retrain and get a job that pays enough for her to live on, AND pay those student loans she’ll need to get the re-training she’ll need to get a job that will pay enough to cover it all! (Maybe you’d like to help her out by guaranteeing her new student loans since her credit will still be in the can and she won’t have enough income to qualify otherwise!)

At a time when student loan debt AND default has reached critical mass, this Judge has raised the bar even higher. Lack of employment opportunities that pay enough to retire the debt that was supposed to provide the means to pay the loans (which now are exceeded only by mortgage debt), has sentenced student loan borrowers (and in many cases their parents and even grandparents) to a life of indentured servitude to the government. (Or to the private investors who buy these loans!) Instead of Guaranteed student loans, we now have GUARANTEED STUDENT LOAN HARDSHIPS!

Need more information? Contact Jon L. Martin - Chair at 772-419-0057 or visit our website http://jonlmartinlaw.com/

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WHAT CONSTITUTES “UNDUE HARDSHIP”

WHAT ALLOWS DISCHARGE OF STUDENT LOANS IN BANKRUPTCY?

BloomburgBusiness recently published an article that pretty much shows the reality of how much “hardship” is required under the “undue hardship” standard when determining if a debtor can discharge student loans in bankruptcy. The Headline read:

“Courts Rule That Disabled Woman Living Below the Poverty Line Must Repay Student Loans”

“Despite proving that paying back her student debt would leave her unable to afford basic living expenses, two judges ruled a woman could not discharge it in bankruptcy.”

According to the article, an unemployed, disabled, 45 year old woman living far below the poverty line was not allowed to cancel more than $37,400.00 student debt in bankruptcy. That statement alone would suggest to most that under the “undue hardship” provision, she should be one of the rare few that are supposed to be allowed to discharge student loans in bankruptcy.

“NOT TO BE!” said the Judge, while acknowledging her income was only $10,000.00 per year derived from Social Security Disability and Public Assistance since 2008. Even though the debt had grown from the original amount of $13,250.00 to an astronomical $37,400.00 due to interest and late charges, the Judge ruled she didn’t satisfy the undue hardship test because one year she had earned an extra thousand Dollars and had not paid any of it towards her student loans!!!??!!!

The court noted that she might be eligible for a Federal Loan Student Consolidation Program in which she would not be required to make ANY payment as long as her income didn’t increase! Then, in 25 years the loan would be forgiven!

Let’s see . . . she’s 45 now . . . in 25 years she’ll be 70. Then she’ll get her fresh start!  Really? She might even be able by then to retrain and get a job that pays enough for her to live on, AND pay those student loans she’ll need to get the re-training she’ll need to get a job that will pay enough to cover it all! (Maybe you’d like to help her out by guaranteeing her new student loans since her credit will still be in the can and she won’t have enough income to qualify otherwise!)

At a time when Student Loan Debt AND default has reached critical mass, this Judge has raised the bar even higher. Lack of employment opportunities that pay enough to retire the debt that was supposed to provide the means to pay the loans (which now are exceeded only by mortgage debt), has sentenced student loan borrowers (and in many cases their parents and even grandparents) to a life of indentured servitude to the government. (Or to the private investors who buy these loans!) Instead of Guaranteed student loans, we now have GUARANTEED STUDENT LOAN HARDSHIPS!

Need more information? Contact Jon L. Martin- Chair at 772 419 0057. Better yet, if you’d like to change this before YOU end up the same, write your Congressman and your Senator to amend the bankruptcy code to allow discharge of student loans in Bankruptcy. It’s YOUR problem too!

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Top 3 Reason NOT to Reaffirm a Mortgage in Bankruptcy

  

1. Truth is, if the lender is not going to report to the credit bureau, the debt to income ration should be minimized by not reaffirming the mortgage.

2. Borrower's struggling through a Chapter 13 have a hard time making mortgage payments on time; thus the likely hood of negative information is high if reaffirmed.

3. If not reported, the borrower can name the payment here or there, catch up payment, and pay whatever late fees accrue; all without risking a negative trade line on a credit report.

Learn more about how our legal expert can protect you from debt and help you understand the bankruptcy process. Contact us today for more information.

Address: Bankruptcy Law Office of Jon L Marin Esq901 SW Martin Downs Blvd #309, Palm City, FL 34990Call Us: 772-419-0057 jlm@jonlmartinlaw.com

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4 Misconceptions About Credit Card Debt

  

1.    You only need to pay the minimum each month.  Your credit-card bill will show the total amount you owe and a minimum payment, typically about 4% of your bill. Paying at least the minimum payment by the due date keeps you current and helps your credit score, a key way lenders grade your financial behavior.

However, if you pay only the minimum, you'll still pay interest on the whole balance that you owe, at interest rates that are among the highest in the financial world.

Your bill must show how long it will take to pay off your debt if you make only the minimum payment each month—and that's usually a frightening amount of time.

In reality, the minimum payment is something of a ruse, essentially an enticement to get you to pay just enough to keep current while also running up high interest charges.

As you accumulate interest charges, your interest will actually begin to compound not just on what you owe, but also on your interest payments. In other words, you will be paying interest on interest.

 If you cannot pay the entire bill each month, pay as much as you possibly can.

2.    Your credit limit reflects what you can afford.  In reality, your credit limit has no relation to what you can afford—or how much you should spend.

The credit-card company has looked at your record of paying your bills and your other accounts and decided how much it is willing to loan you at one time. It doesn't have a clue if you really can pay off that much debt because it doesn't know how much income you have right now or your net worth.

You may be tempted to see a credit limit of $10,000 or more as a license to spend. But likely, that decision will put you in a financial hole—and maxing out your debt will hurt your credit score.

3.    The interest rate will stay the same over time. This isn't likely. The Credit Card Act of 2009 restricted how credit-card companies can raise fixed interest rates. In response, most companies that offered fixed interest rates changed them to variable rates; those variable rates will go up when other interest rates go up.

In addition, you will pay different interest rates on different kinds of borrowing. If you use your card to get cash— something you should do only in a true emergency—you may pay an annual interest rate above 20%, probably far more than what you pay for regular purchases.

If you are late making a payment or if your check bounces, your interest rate for new purchases can spike up to around 30%, and that rate can continue indefinitely.

4.    The interest rate is the only charge that I'll see.  No such chance. Credit-card companies will hit you up with all kinds of additional charges when you make a mistake. Did you make a payment after the due date or miss one altogether? You'll be assessed a late fee of as much as $35.

Transferring a balance from one card to another? You'll pay a fee of up to 5% of the balance. Using your credit card instead of your debit card to get cash? You'll pay another fee of up to 5% of the amount, or a minimum of $5 or $10. Using your card overseas? Foreign transaction fees of up to 3% of the transaction may be assessed.

In short, the more you rely on the credit card, the more you will pay for the privilege. Using a card that way may make sense in a real pinch, but it's a terrible habit to get into because the interest rates and fees are so high that it can be hard to dig out once you're in the hole. You'll pay more and more just to keep your debt from growing.

On the other hand, if you pay your bill in full every month, the credit card works for you, rather than the other way around.

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