Why am I Being Sued for Foreclosure After Getting a Discharge in Bankruptcy?

Many clients come return to our office after we have helped them successfully discharge their debts in bankruptcy.  Some ask, “Why am I being sued for foreclosure after getting a discharge in bankruptcy?”  “Didn’t I give that property back in the bankruptcy?”

This scenario highlights two important issues:  Does filing a bankruptcy change ownership of property? Has the bank violated my rights by suing me after I got my discharge in bankruptcy?

Does Bankruptcy Change Ownership?

Sometimes a Chapter 7 Trustee will take a property and sell it.  This clearly takes it out of the debtor’s name, but this is a rare occurrence.  Most people with equity in a non-exempt property will not file a Chapter 7.  Instead, they will opt for a Chapter 13 to save it.  In most Chapter 7s, the Trustee will not take the property, either because it is homestead or otherwise exempt, or because it has no equity (the property is “underwater”).

After the Debtor receives their discharge, if the Chapter 7 Trustee has not sold the property the bankruptcy closes without any transfer of ownership.  And although the Debtor no longer has an obligation to repay the money borrowed, the lender still has the right to take it back from the Debtor through a foreclosure.

Has the Lender Violated the Debtor’s Rights?

Perhaps more important is whether the bank has violated a Debtor’s rights by suing after entry of a bankruptcy discharge.  The discharge order creates an injunction against all creditors from trying to enforce a discharged debt against a Debtor.  Creditors can seek enforcement against property upon which they have a mortgage, but cannot seek payment from the Debtor.

Sometimes a lender will seek payment from a Debtor after entry of a discharge.  If this happens, the lender has violated the court’s discharge order and injunction.  The result can be that the lender will have to pay damages, and reimburse court costs and attorney fees.

Call Us

If a lender has sued you after you received your discharge in bankruptcy, cull us to discuss your rights.

 

bankruptcy attorneys

Why do Bankruptcy Attorneys ask so many questions?

Why do Bankruptcy Attorneys ask so many questions? Two words: due diligence. All attorneys have a duty under the Florida Bar to be candid with the court when making disclosures and presenting a client’s case, but Bankruptcy Attorneys have an even higher burden.

This means as Bankruptcy Attorneys, we are responsible for helping you in the bankruptcy process, but also ensuring that the bankruptcy schedules are accurate and correct. Bankruptcy is about disclosure. A debtor provides the required information and cooperates in exchange for a discharge of the debtor’s debts. Failure to make the disclosures or do the work necessary to get the information together can result in dire consequences for the client/debtor and for the attorney.

Bankruptcy Code section 11 U.S.C. 526(a)(2) requires Bankruptcy Attorneys as a debt relief agency to certify the bankruptcy paperwork by the client. By signing the bankruptcy paperwork, the Bankruptcy Attorney is certifying that he or she has done a reasonable investigation into the numbers and information in the bankruptcy schedules.

If a reasonable inquiry is not done by the debtor’s Bankruptcy Attorneys, then the attorneys themselves can be sanctioned by the court and have to pay back fees paid or pay civil penalties for misleading information or omission from the required disclosures.

This doesn’t mean amendments to the petition and schedules are not common place, it just means that the process needs to be taken seriously and the questions that Bankruptcy Attorneys ask are important! It may seems like we are being nosy, but we are really trying to protect you, give you good advice, and protect ourselves.

Call us today for your free consultation (305) 278-0811, but be prepared for some questions!

 

non-dischargeable debts

What is a non-dischargeable debt in bankruptcy?

When I first meet with a potential client, we discuss what debts are non-dischargeable debts under the bankruptcy code and what debts bankruptcy can help with. This is often the part of the consultation where we discuss the reason driving the client to file bankruptcy and the goals of the case. Bankruptcy can help with the client’s debts in most cases, but with certain debts the help is not in the form of a discharge of the obligation entirely.

What debts can bankruptcy help with?

Unsecured debts are debts that do not have collateral to look toward if the clients stops paying on the balance. These debts outside of bankruptcy could confiscate paid off cars, garnish wages, and/or freeze bank accounts for payment through a lawsuit and judgment. Unsecured debts in a chapter 7 bankruptcy often do not receive any payment. In a chapter 13 bankruptcy, this class of creditors often receives pennies on the dollar before the remainder of the obligation is discharged.

Unsecured Debts that can be discharged in bankruptcy:

  • credit cards
  • hospital bills
  • home or investment property foreclosure deficiencies
  • repossession deficiencies
  • business guarantees
  • IRS tax penalties

Secured Debts are obligations where if you stop paying the lender, the creditor/lender can repossess the collateral. The personal obligation can be discharged leaving only the lien for the following Secured Debts:

  • car leases
  • equipment leases
  • car loans
  • promissory note obligations to first mortgagees and/or second mortgagees (lien stays on property) on a property that client decides to surrender
  • HOA obligations on a property that client decides to surrender

What are non-dischargeable debts in bankruptcy?

There are other debts that may be unsecured, but are not dischargeable under the bankruptcy code provision 523.

These debts are examples of debts that cannot be discharged:

  • domestic support obligations (only child support and alimony in chapter 13; any DSO in a chapter 7)
  • IRS tax debt
  • student loans
  • trust account debts-Sales Tax and 941 obligations
  • debts procured from a misrepresentation or fraud

For more questions about your debts and whether bankruptcy can help, call the bankruptcy attorneys at the Bankruptcy Law Offices of James Schwitalla for your free consultation (305) 278-0811!

Workman's Comp Claim

Workman’s Comp Claim in Bankruptcy

Many people who file bankruptcy have a workman’s comp claim. Their other debts driving to bankruptcy for debt solutions, but client often are concerned that the bankruptcy will cause the client to lose the money coming to them from their workman’s compensation claim.

Good news! Florida provides an exemption for workman’s compensation claims. Florida statute 769.05 prevents courts from garnishing or executing against the funds received. This statute provides an exemption in bankruptcy that protects the asset from seizure by a chapter 7 trustee and consideration for an increase in plan payment by the chapter 13 trustee.

Florida’s exemption for workman’s compensation claims

This exemption has been strengthened by the Florida Supreme Court in Broward v. Jacksonville Medical Center held that the protection prevented judgment creditors and trustees tried to access the workman’s comp funds once the claimant received the claim funds and deposited them in a bank account. Broward v. Jacksonville Medical Center, 690 So.2d 589 (Fla. 1997). The important thing to note was that the funds were not commingled. This means the money was not deposited into a bank account with other money, so it is important to deposit the funds in its own account!

So if you are exploring bankruptcy, don’t worry because your workman’s comp claim is protected! To find out more about bankruptcy and what it can do to help you regain control of your financial situation, call to schedule your free consultation (305) 278-0811 or simply contact us here.

foreclosure

Modification after Foreclosure Judgment

Clients often come in for a consultation panicked that their lender has gotten a foreclosure judgment or a foreclosure sale has been set by the lender. The common concern by clients is can they get a modification after the entry of a foreclosure judgment or once the sale is set.

Time is of the Essence

The answer, like many legal questions, is maybe. Outside of bankruptcy, the lender may have a loan modification package that is pending review for approval of a mortgage modification, but understand that the lender will not hurry to process the package based on the judgment being entered or the foreclosure sale being set.

If the client is going to wait until the last minute to see if the modification is approved before the sale of the home, then it is important for the homeowner to know definitely the status of their loan modification package. If the package is deemed complete and the review has been pending for about a month, a modification could be on its way. If the lender is still asking for documents, then you are at a minimum 60 days out from receiving an approval letter. Sixty days is usually more time than exists before a foreclosure sale will be completed. Once the foreclosure sale is completed, a modification is not possible since the borrower is no longer the owner of the property. In the words of the lender, there is no obligation to modify for the borrower. Only a deficiency for the lender to pursue.

Modification inside of a Bankruptcy

When a foreclosure sale is set and time is of the essence, a bankruptcy can be a good vessel for the loan modification process. The bankruptcy stops the sale and efforts by the lender to take back the property through the bankruptcy filing’s automatic stay. The bankruptcy functions to allow a borrower time to go through the loan modification process to see if the borrower can save his or her home through the bankruptcy court’s Mortgage Modification Mediation program.

The court’s program allows the lender and the borrower to take 150 days to see if an agreement can be reached through mediation. The program enables to party’s to stick to a tighter time table than traditional loan modifications because the program’s portal allows the lender and the borrower’s counsel to communicate about documents, title issues, and programs are available to the loan and borrower.  Additionally, the mediations create a discussion forum to gain understanding about the loan and any modification that may be available. The open channel of communication and clarification limits the modifications that are denied based on lack of documents or technicalities from a failure to communicate.

If you have a foreclosure judgment or foreclosure sale set and want to keep your home, please call our office immediately to schedule a free consultation to see if bankruptcy and the Mortgage Modification Mediation program can help you to save your home. Our office can be reached at (305) 278-0811 or simply contact us here.

 

 

Tax Debt

Can I Discharge my Income Tax Debt?

Clients with income tax debt often come in for consultations feeling like there is no hope. Their tax debt could be based on 1099’s, penalties on past due tax debt, or a result of a business closing. Many people think you cannot discharge a taxes in bankruptcy because it is a debt owed to s government entity, but the bankruptcy code maps out the requirements for when taxes can be discharged.

If the taxes are not considered priority, then the tax debt can be discharged. For the tax debt to not be considered priority under bankruptcy code section 507(a)(8)(A), the below requirements must be met:

  1. The tax return was last due without penalty more than three years ago;
  2. The return was filed more than two years ago;
  3. The tax was assessed more than eight months ago; and
  4. You did not willfully attempt to evade or defeat the tax.  A recent opinion even held that the failure to file tax returns for years on end showed debtor did not try in good faith to comply with the tax laws and held the taxes non-dischargeable in bankruptcy even though conditions one through three, above, were met!

The most important thing is the returns MUST be filed. Often clients come in with tax debt and the client was too afraid to file the return knowing that tax debt would arise. Without a timely return, we cannot help, so the moral of the story: file your taxes even if you cannot pay them!

If you have tax obligations that you cannot pay, contact our office for analysis of how much of your taxes you have to pay and how much of it you can discharge in bankruptcy. The consultation is free. Contact us today to gain knowledge and information on how to gain back control of your financial life (305) 278-0811.

Bartram

Oral Argument heard on Bartram, what to expect?

Oral argument in the landmark Bartram case was heard by the Florida Supreme Court on November 4, 2015.  As you will recall, Bartram is the statute of limitations case that deals with whether a mortgagee is time-barred from foreclosing if its previous foreclosure was dismissed and more than five years has passed from the date the foreclosure was commenced.

What can we expect?  Well, with the amount of money at stake for the banks and homeowners likely in the billions of dollars, we can expect the court to take its time and consider the issues carefully.  Six months or more is not an inordinate amount of time for the Florida Supreme Court to render a ruling on a case of this magnitude.  That having been said, it has already been five months, so a ruling could come any day now!

For those you interested in watching the video of the oral arguments, click here.

It seems some of the Supreme Justices are leaning toward Bartram and some are leaning toward U.S. Bank, N.A.  The ruling, when it comes, will not likely be unanimous.

If you or your client has property that was the subject of a dismissed foreclosure that was begun more than five years ago, call our office on (30) 278 0811 for your free consultation.

At the Bankruptcy Law Offices of James Schwitalla, P.A., our Miami bankruptcy lawyers have been committed to helping people get debt relief through bankruptcy for over 18 years. Contact us to learn more about consultations with a Bankruptcy Attorney.

consultation

5 Reasons to Have your Consultation with an Attorney

Many bankruptcy law offices have assistants and paralegals conduct new client consultations. This should be a big red flag to a client contemplating bankruptcy.

5 Reasons your Consultation should be with a Bankruptcy Attorney

Here are 5 reasons that it is important for your initial consultation to be with a Bankruptcy Attorney.

  1. A consultation should involve the analysis of the prospective client’s situation and how bankruptcy could help. This means giving legal advice. Legal advice about bankruptcy can only come from an attorney. Legal advice coming from an assistant or paralegal is the unlicensed practice of law.
  2. The Bankruptcy Attorney is the one who goes to court. Seeing how cases play out in court and with the trustees gives the Bankruptcy Attorney first hand knowledge of how bankruptcy can work for you.
  3. The attorney’s office works together to collect documents, prepare the paperwork, and file your bankruptcy, but the Bankruptcy Attorney should be the one to work out the strategy of the case with you and discuss your goals in bankruptcy.
  4. Consultations let you know a lot about the service you will receive. If you are not important enough for the attorney to make time to an answer your questions at the beginning, then how confident are you that the attorney will have time for your questions during the bankruptcy process.
  5. You deserve to hear from your would be Attorney!

At the Bankruptcy Law Offices of James Schwitalla, P.A., our Miami bankruptcy lawyers have been committed to helping people get debt relief through bankruptcy for over 18 years. Contact us to learn more about consultations with a Bankruptcy Attorney.

bankruptcy attorney

Tips for Finding the Right Bankruptcy Attorney

Finding any bankruptcy attorney is easy, but find the right Bankruptcy Attorney can be challenging with so many attorneys and so much information available. Making the decision to explore bankruptcy is a big step. Before filing bankruptcy, one should research what bankruptcy attorney to use just as much as how bankruptcy works. Some believe that the attorney that files the bankruptcy is not important, but this is incorrect.

Bankruptcy can dramatically improve a person’s financial situation, but a bankruptcy done incorrectly can result in a bankruptcy client losing his or her home or possibly a lot more. There is so much on the line that the choice is an important one.

Questions when looking for the right bankruptcy attorney:

  1. Experience: Does the attorney have experience in bankruptcy? What is the attorney’s primary practice? How long has the attorney been practicing bankruptcy? Does the attorney file both chapter 7 and chapter 13 bankruptcies?
  2. Client Feedback: Do past clients have good things to say about the attorney?
  3. Opinions of other attorneys: Do attorneys that have worked with the attorney have good things to say about the attorney? Does an attorney you know trust the attorney?
  4. Explanations about Bankruptcy: Did the bankruptcy attorney try to explain the bankruptcy process in a way you can understand? Did you walk away from the consultation knowing more about bankruptcy and feel more comfortable with your decision?
  5. Answers your Questions: During the consultation, did the attorney answer all your questions?

James Schwitalla has more than 22 years of experience in bankruptcy. Our office specializes in helping individuals, families, and business owners file bankruptcy to help them with their debt problems and to get a fresh financial start. We do not advertise or have flashy advertising. Our clients and attorneys we work with are our best referral sources. During a consultation with one of our attorneys, Mr. Schwitalla and Ms. Roberts, all your questions will be answered and the attorney will educate you about bankruptcy and how it can work for you.

Call (305) 278-0811 or send us an e-mail to learn more about how we can help you.

chapter 13 bankruptcy

Why a Chapter 13 Bankruptcy is more Expensive than a Chapter 7

When clients come in for a consultation, clients are often focused and looking to file a Chapter 7 bankruptcy over a Chapter 13 bankruptcy because that is the bankruptcy chapter that they are most familiar with. Chapter 7 bankruptcies are a short road to bankruptcy relief since from start to finish the case is often about 5 months in duration. However, bankruptcy is very personalized and a chapter 7 bankruptcy is not a one size fits all remedy.

A chapter 13 bankruptcy case allows debtors (clients filing bankruptcy) to restructure secured debt and retain possession of their property while resolving their issues with their unsecured debts. One of the many differences in chapter 7 and chapter 13 bankruptcy is the cost. Clients are often concerned about the difference in the cost, but there are several reasons for the cost difference and not all these attorney’s fees need to be paid upfront like in a chapter 7.

Chapter 13 bankruptcy costs for several reasons:

  1. The bankruptcy lasts longer. The typical chapter 13 bankruptcy will last either 36 to 60 months (five years). While most of the work for the chapter 13 bankruptcy will be accomplished in the first year of the case, the job of the debtor’s attorney is not done. During the remaining years the debtor’s attorney will be monitoring the case, resolving issues with creditors, and answering questions for the debtor. Clients (debtors) often have questions and request updates during the course of the plan.
  2. The debtor has much more control of the bankruptcy process in chapter 13 which requires more explanation to the chapter 13 trustee and more proactive actions on the part of the debtor (debtor’s attorney) than in a chapter 7. Often once a chapter 7 case is filed, the bankruptcy schedules are filed, and documents are sent the chapter 7 trustee, the case is in the hands of the chapter 7 trustee. In a chapter 13 case, the debtor is in charge of keeping the plan/case on track.
  3. A chapter 13 bankruptcy plan/case changes with the debtor’s/client’s life. A debtor’s attorney needs to stay involved in the case and take great notes to be able to answer questions and access what life changes will affect the chapter 13 bankruptcy plan.

The standard practice is for a bankruptcy attorney to charge a portion upfront and include the remainder of the attorney’s fees in the bankruptcy plan. The debtor will then pay his or her attorney over time in the monthly bankruptcy payment that the client makes to the chapter 13 trustee.

A chapter 13 is highly personal and the cases are as different as the clients they help. To find out if a chapter 13 is the solution to your debt problems,call our office to schedule a free consultation.

Call (305) 278-0811 or send us an e-mail to learn more about how we can help you.