Five months later the Bank of New York filed an identical foreclosure against the home as part of its collection practices, relying on an assignment dated after the dismissal of the first case. Once again, the homeowner argued that the assignment was fraudulent and moved for sanctions. The case made it to the Court of Appeals before the parties settled.
]]> However, the Florida Supreme Court ordered the parties to continue the lawsuit because it involved a matter that the court says might affect many other additional parties. This case leads into the issue of debt relief generally, where foreclosure issues are usually a sign of an overall financial hardship.Although the Bank of New York apparently foreclosed upon the homeowner in this case improperly, for individuals facing foreclosure without a fraud defense, filing for Chapter 7 (debt liquidation) or Chapter 13 (debt reorganization) bankruptcy may be a good solution to bring a stop to creditor harassment.
Under both kinds of bankruptcy, the court will file an immediate automatic stay as soon as it receives a bankruptcy petition. Once the stay has been issued, creditors must immediately stop contacting the petitioner regarding his or her debt.
Chapter 7 enables debtors to potentially eliminate all of their debt. However, to be eligible, the debtor must first pass a means test.
If a debtor does not qualify for Chapter 7, he or she may file for Chapter 13 bankruptcy. Under Chapter 13, the debtor pays a pre-determined proportion of their debt for the course of three to five years. At the end of the designated time, what debts remain may disappear, giving the individual a fresh start.
Source: ABA Journal, "Top Fla. Court to hear landmark foreclosure fraud case this week despite parties' agreed dismissal," Martha Neil, May 8, 2012
]]>For instance, the Queens District Attorney recently charged a New York City businessman who owned Financial Institution Recovery Services, ostensibly a debt relief organization, with, among other charges, criminal possession of a forged instrument and grand larceny.
]]> The prosecution alleges that the man promised to help individuals rebuild their credit scores, but instead defrauded at least four people of around $8,000.Despite the issues that can be presented by some companies like this, debtors do have options to stop harassing phone calls and to get their finances going in the right direction.
The main two options involve filing for bankruptcy; Chapter 7 and Chapter 13. In both cases, as soon as the bankruptcy petition is received, the Bankruptcy Court files an automatic stay, which requires creditors to immediately cease contacting the petitioner about his or her debt.
Under Chapter 7, the debtor may be able to completely eliminate all credit card debt. To qualify for Chapter 7 bankruptcy, the debtor must pass the "means test."
Under Chapter 13 reorganization a debtor may repay a percentage of the debt for a period between three and five years. The percentage is calculated based on the level of income at the debtor's disposal during the bankruptcy period. At the conclusion of that period, the remaining debt disappears. Chapter 13 does not have a "means test."
Source: The Wall Street Journal, "NYC man charged in credit card scheme," May 3, 2012
]]>According to the attorney general, the debt collection agency embedded debt collectors within hospital staff and demanded patients prepay for treatments. These quasi-employees looked like normal hospital staff and may have even discouraged patients from getting emergency care.
]]> For example, they may have stalled patients from entering the emergency room until they paid previous debts. Company documents show that collectors were even instructed to tell patients they would wait for them if they retrieved their checkbook from their car.In other cases, employees with the debt collection agency had access to patients' health information, possibly a violation of privacy laws.
The attorney general is currently talking to federal regulators in order to establish a coordinated response to these and other coercive practices that have come to light as hospitals have increasingly employed debt collectors to deal with unpaid medical bills.
Despite the rise in strong-arm debt tactics, individuals with large medical bills have debt relief options available to them, such as filing for Chapter 7 or Chapter 13 bankruptcy protection. Individuals that file for bankruptcy may be able to eliminate all of their medical debt.
Source: The New York Times, "Debt collector Is Faulted for Tough Tactics in Hospitals," Jessica Silver-Greenberg, April 24, 2012
]]>
Two pieces of data in particular support that prediction. First, as many as a million homes could have been lost to foreclosure last year, but people were allowed to stay in their homes because banks were worried they would be scrutinized more closely because of their previous robo-signing activities. Second, in the first quarter of 2012, foreclosure filings were up 10 percent in 26 states where courts analyze foreclosures more closely.
]]> Despite the predicted rise in foreclosures, individuals at risk of foreclosure because of a lost job, an adjustable rate mortgage or other circumstances, have options to help them stop the foreclosure process. Indeed, even homeowners who have received a notice of default have options for preventing foreclosure.Options to stop a home foreclosure include Chapter 13 bankruptcy, loan modification and short sale.
Under Chapter 13 bankruptcy, the debtor enters into a three-to-five year repayment plan with his or her creditors. A skilled attorney may be able to negotiate even more favorable repayment terms for the debtor.
Debtors preferring to avoid bankruptcy may be able to negotiate a lower monthly payment or reduce their interest rate. In certain cases, a lender may even reduce the principal of the loan.
A third option is to conduct a short sale. Though not the proper choice in all circumstances, a homeowner may negotiate with the bank or lender.
Because of the importance of a home, individuals facing the threat of foreclosure may benefit from the assistance of an experienced attorney.
Source: KRDO, "Flood of Foreclosures to Hit the Housing Market," Les Christie, April 13, 2012
]]>Warren Sapp, who played for the Tampa Bay Buccaneers and Oakland Raiders and recently competed as a contestant on ABC's "Dancing with the Stars," filed for Chapter 7 bankruptcy late last month. He reportedly owes almost $7 million to creditors as well as in back child support and alimony.
]]> New Yorkers pressed with debt can learn from Warren Sapp by taking advantage of the protections afforded to them by filing for Chapter 7. Bankruptcy provides consumers with legal protection from their creditors, halts creditor harassment and can eliminate much of their debt.As part of filing for Chapter 7 bankruptcy, many of the filer's assets will be liquidated to repay creditors. What debt remains after dispersal of the liquidated assets will be discharged. In other words, the remaining debt will be forgiven, which means debtors no longer have to worry about past bills, harassing letters and phone calls or compounding delinquencies on their credit report.
Although most of a filer's assets may be liquidated, a person may be able to keep their home. For more information on Chapter 7 bankruptcy an individual would be wise to consult with an experienced attorney who can explain the process and what people can expect after they have filed for bankruptcy.
Source: Boston.com, "Warren Sapp files for bankruptcy in Florida," April 7, 2012
]]>Similar to the foreclosure horror stories of recent years, many banks have outsourced their dirty work to debt collection agencies, which often harass, sue, and generally make borrowers' lives miserable.
]]> Rather than working with borrowers to help repay or eliminate their credit card debt, banks will instead sell off their worst credit card receivables for mere pennies on the dollar to these collection agencies. The banks, however, do not guarantee the accuracy of their records to the collection agencies. When the agency goes after the credit card user, the user must point out any errors in the record often after the debt buyer has already sued for recovery.Worse yet, the report indicated that the banks' records were often faulty. For example, at JPMorgan Chase, the report concluded that the records the debt collectors received from the bank "sometimes differed from Chase's own files at an alarming rate."
For individuals with substantial credit card debt that they simply cannot repay, filing for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy may offer lasting debt relief. In such cases, filing for bankruptcy puts an immediate stop to debt collector harassment as well as a variety of legal actions including foreclosure, garnishment of wages and motor vehicle repossession.
Source: The New York Times, "Why People Hate the Banks," Joe Nocera, April 2, 2012
]]>In September of last year, student-loan debt totaled $848 billion nationally. With that unprecedented debt level, about five million borrowers have defaulted on their student loans. Default rates have now climbed to $67 billion.
]]> Although borrowers are often frustrated and overwhelmed, their misfortune has benefitted debt collectors who earned about $1 billion in commissions last year. Many of the debt collection companies are contracted through the Department of Education. Debt collectors are reportedly encouraged to insist borrowers agree to higher payments. In return, debt collectors get bonuses, gift cards to restaurants and even trips.Borrowers in need of a fresh start have certainly not enjoyed the debt collectors' good fortune. Indeed, creditor harassment by debt collectors is the most common complaint received by the Federal Trade Commission. Last year alone it received nearly 181,000 complaints. Laws require that collectors offer borrowers "reasonable and affordable" payment options. While debt collection companies say they haven't broken any laws, some borrowers may disagree.
Although petitioning for bankruptcy could put an immediate halt to calls and letters from collectors, it does little to help people dismiss their student loans since student-loan debt is rarely discharged through bankruptcy. However, bankruptcy may offer borrowers a necessary reprieve from other forms of debt. By eliminating credit card debt, car loans and large medical bills, borrowers may have an easier time paying down their student loans.
Because of the complexities involved in the bankruptcy process, borrowers would likely benefit from consulting with an experienced attorney who can help determine the best course of action based on an individual's specific situation.
Source: Bloomberg, "Obama Relies on Debt Collectors Profiting From Student Loan Woe," John Hechinger, March 25, 2012
]]>A recent study by the Centers for Disease Control and Prevention attempted to quantify just how large that burden has become. According to the study, one in five Americans has significant medical debt. In the first half of 2011 alone, one third of all Americans were in families burdened by the cost of medical care. Of that group, 20 percent had difficulty paying their medical bills, 25 percent had an installment plan, and 10 percent could not make any of their debt payments at all.
]]> The escalating cost of medical care has made it one of the top reasons that people file for bankruptcy. About a third of all personal bankruptcies result from mounting medical bills.Fortunately, medical debt is one of the easiest types of debt to eliminate through bankruptcy. Because of the unexpected nature of injuries and illnesses, judges and creditors understand the need for a debtor drowning in medical debt to file for bankruptcy.
A Chapter 7 petition enables a debtor to ask the court to completely discharge qualified debt. To qualify, the person will take a "means test" calculation which governs under which Chapter the debtor is able to file.
If the debtor does not qualify for Chapter 7, they may seek relief under Chapter 13, which allows the debtor to make monthly payments for a period of three to five years. All remaining debt after that period may be discharged if the debtor follows through with the plan. An experienced attorney who is experienced in handling bankruptcy cases is best-suited to take the debtor through this complicated process.
Source: UPI.com, "Medical debt burdens 20 percent in U.S.," Mar. 12, 2012
]]>Pawning is just basic banking, according to Rick Harrison, star of the History Channel's "Pawn Stars." People who need a loan provide the pawn shop with collateral. If the owner of the collateral pays back the loan, the pawn shop returns the collateral. If not, the pawn shop keeps the collateral. The shop will not tell a credit reporting agency, sue or garnish the borrower's wages. Approximately 80 percent of people who pawn return to recover their items, according to the National Pawn Brokers Association
]]> In addition to collateral, the borrower agrees to pay interest on the loan. Each state regulates the rate a pawn owner may charge. Some states allow pawn shops to charge up to 25 percent per month. In contrast, New York limits pawn shops to 4 percent per month interest.For individuals in need of more debt relief than a short-term loan can provide, bankruptcy may be the answer. These individuals can file for either Chapter 7 or Chapter 13 bankruptcy petitions. A Chapter 7 petition seeks debt liquidation while a Chapter 13 petition asks the court to allow structured debt reorganization over a defined period of time, usually two to three years. At the end of the payment plan, the remaining debt may be discharged.
Residents of New York interested in filing for bankruptcy would be wise to consult with a bankruptcy attorney. An attorney can help determine what the best course of action is for an individual based on their specific situation.
Source: CNN, "Pawn shops' popularity rises with TV shows, down economy," Mar. 9, 2012
]]>During the recession, the six largest credit card companies wrote off more than $75 billion in credit card debt for people who could not pay off their balances. About 6.4 million people will receive a 1099-C tax form from their lender this year. Taxpayers who receive a 1099-C must pay the added tax liability from their cancelled debt unless they filed for bankruptcy or were insolvent at the time of the debt's cancellation.
]]> Even for individuals theoretically not liable, headaches abound. People have received 1099-C forms for credit card debt discharged in bankruptcy in the early 1990s. After twenty years, these individuals often no longer have the necessary paperwork on hand and have had little success clearing up the issues with the responsible financial institutions.In addition, many of the 1099-C forms contain errors. According to one tax advocate, U.S. Treasury regulations encourage financial institutions to issue the form for both forgiven debt, as well as all debt not collected in the previous three years. Some taxpayers may receive a 1099-C by mistake. Other taxpayers may receive duplicate 1099-C forms for the same debt.
Worse yet, the problems could expand in the future. Currently, the government has exempted forgiven mortgage debt as the result of short sale, foreclosure, or loan modification, but absent congressional action, the exemption will expire at the end of this year.
For New Yorkers already struggling with their finances, a large tax bill is the last thing they need. For those who find themselves unable to climb out of mounting debt, a consultation with an experienced bankruptcy attorney may prove to be highly beneficial. Additionally, those who previously filed for bankruptcy who have received a 1099-C form may wish to contact an attorney.
Source: USA Today, "Canceled credit card debts come back to haunt taxpayers," Sandra Block, Mar. 5, 2012
]]>In coming to that conclusion, the report compared the program's generous eligibility requirements to the low percentage of eligible patients receiving aid. Anyone at 400 percent of the poverty level or below qualifies for the program, yet hospitals report that few people take advantage of the aid that is available to them.
]]> Likewise, other eligibility requirements fail to explain the gap. Eligible groups include the uninsured and underinsured, as well as individuals who have exhausted their insurance coverage or cannot pay their deductible or copayment.A hospital's failure to inform and help in the application process is of concern. When an eligible patient is approved for financial aid, his or her medical debt is reduced. However, according to the report, most eligible patients do not apply. Therefore, they do not receive a discount which leads to the patient taking on extra debt. When they fail to pay their soaring medical bills, the hospital turns to collection services to secure the money.
That cycle of illness followed by high medical bills is one of the most common causes for bankruptcy and other financial hardships in America. In fact, 62 percent of personal bankruptcies and 23 percent of home foreclosures and liens are the result of large medical debt.
Source: The Daily Mail, "Report indicates CMH used patient aid to reduce bad debt," John Mason, Feb. 25, 2012
]]>According to a survey by the Federal Reserve Bank of New York, consumer debt declined 1.1 percent in the fourth quarter of 2011 bringing it down to $11.53 trillion. In addition, mortgage debt and home-equity lines of credit decreased by $146 billion. Delinquency rates also saw a slight decline.
]]> It appears that Americans are feeling more optimistic about the economy, however, some are concerned that people are becoming more comfortable living with debt. Despite a decline in the overall delinquency rate, the rate at which people are paying back their debt seems to have leveled off.Although people may be feeling better about the overall financial picture, there were close to 300,000 new foreclosure filings in the fourth quarter, an increase of about 9.5 percent from the third quarter.
Things have slowly improved since the start of the recession in 2007, but many people in New York and beyond continue to struggle to pay back mounting debt. People in that situation may find that bankruptcy is the best option. Whether an individual files for Chapter 7 or Chapter 13, bankruptcy allows people to pay off their debt and get back to a normal life.
Source: Bloomberg, "Household Debt in U.S. Declined 1.1% in Fourth Quarter, New York Fed Says," Caroline Salas Gage, Feb. 27 2012
]]>"Lethal Weapon" star Gary Busey is living proof that even celebrities are susceptible to poor financial planning. In early February, Busey filed for Chapter 7 bankruptcy stating that his debts greatly exceed his assets.
]]> Reportedly, Busey has roughly $50,000 worth of assets, a mere fraction of the up to $1 million that he reportedly owes various entities. These entities include Wells Fargo, the IRS, medical centers and more.Chapter 7 bankruptcy is designed to protect the consumer. The hand that fate deals can result in extremely costly expenses. Medical bills can quickly mount and a loss of job can hugely impact an individual's ability to live at the level they have become comfortable with.
In New York, debt does not mean the end, and it does not spell certain disaster. There are laws in place to protect consumers and the road to rebuilding your life starts by knowing your rights.
If you are in a position where you have sustained loss of job or a medical illness and find yourself facing bills that you can't pay, you would do well to seek legal advice. A knowledgeable attorney can stop creditor harassment and guide an individual through the repayment process. After liquidation any remaining debt may be written off and an individual would be free to begin a new life down a path to financial success.
Source: Reuters, "Gary Busey Bankruptcy Shocker: Actor Files for Chapter 7 Protection," Tim Kenneally, Feb. 9, 2012
]]>Slightly more than 600 homes were forced into foreclosure last month in New York City. That is a whopping 53 percent decrease compared to the number of foreclosures in January 2011. However, with the $25 billion settlement between 49 states and five of the nations largest mortgage lenders, banks now have a clear set of guidelines and they could begin ramping up the number of foreclosure filings.
]]> In New York City, Brooklyn had 292 foreclosure filings during the month of January. In the Bronx, there were 99 foreclosure filings. Both boroughs saw a 47 percent decline in foreclosure filings compared to last year, but a slight increase in the number of filings compared to December.Although the decline in foreclosures likely gives people hope that things could be turning around, close to 95,000 warning notices were sent to homeowners in 2011. From these numbers it is clear that the housing crisis is anything but over.
A home is a sacred place for many people. As people get farther and farther behind on their mortgage payments, they may feel helpless and overwhelmed. Fortunately, there are places to turn for help.
Residents of New York City facing foreclosure would likely benefit from consulting with an attorney. An attorney can help people determine what the best course of action might be. For some, bankruptcy is the best option. For others, a loan modification may be the answer. Whatever the case may be, an attorney can help people get back on track.
Source: NY Daily News, "NYC foreclosures are down sharply, but will likely start to go up again as banks get back to business," Phyllis Furman, Feb. 16, 2012
]]>The National Association of Consumer Bankruptcy Attorneys is a group that represents consumers and their attorneys. The group completed a survey of close to 900 bankruptcy attorneys from across the country. Of those 900, about half reported that more people filing for personal bankruptcy are doing so because of student-loan debt.
]]> "Take it from those of us on the frontline of economic distress in America," the president of the group said. "This could very well be the next debt bomb for the U.S. economy."In 2010, student-loan debt exceeded credit-card debt for the first time. According to one source, student-loan debt is at an all-time high at close to $1 trillion. Some believe this amount of debt could cripple the U.S. economy just as the mortgage crisis did.
Although bankruptcy is often a good option for those with large amounts of credit-card debt or mortgage-loan debt, student-loan debt is often not eliminated through bankruptcy.
Despite that, anyone in New York who is faced with mounting debt may benefit from consulting with an experienced bankruptcy attorney. An attorney will be able to evaluate an individual's situation and help them determine what the best course of action is. With the right help, an individual may be able to get a fresh start and begin down a path of financial security.
Source: Bloomberg, "Student Debt Could Be Next 'Bomb,' U.S. Bankruptcy Lawyers Say," Janet Lorin, Feb. 7, 2012
]]>