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The Home Affordable Modification Program (HAMP) expired December 31st. After eight years of assisting underwater homeowners save their homes from foreclosure, the program has now ended.
Approximately 10 million homes were lost to foreclosure in the past decade. HAMP helped lessen the mortgage meltdown, but its job is now complete. Foreclosure sales have diminished and home prices are now almost equal to the market prices just prior to the housing market bubble bursting in 2008.
So now what?
According to the folks I chat to in the foreclosure industry, expect mortgage service companies to tighten standards and foreclosures to gradually increase during 2017.
Without HAMP, homeowners seeking loan modification will be left at the mercy of lenders.” Dillon Graham, Florida foreclosure defense attorney.
The Consumer Financial Protection Bureau has issued lending guidelines to help reduce the number of foreclosures in the future, including an emphasis on loan affordability, but those guidelines will do little to help current homeowners who fall behind on their mortgage payment.
I expect to see a new foreclosure trend emerging in 2017:
- Banks will be quicker to initiate foreclosure actions when a homeowner falls 2 to 3 payments behind.
- Foreclosure Forbearance Agreements will emerge from an 8-year hibernation and be the primary loss mitigation tool offered by mortgage lenders.
- Chapter 13 bankruptcy case filings will increase as it provides the the best option to give homeowners 3 to 5 years to cure delinquent mortgage payments.
- Foreclosures on long-forgotten 2nd mortgage debts will pick up as surging home prices enable banks to recoup some recovery for loans previously underwater.
This cat is now away. Time for the mice to play again?
Image courtesy of Flickr and frankieleon.
The Home Affordable Modification Program (HAMP) expired December 31st. After eight years of assisting underwater homeowners save their homes from foreclosure, the program has now ended.
Approximately 10 million homes were lost to foreclosure in the past decade. HAMP helped lessen the mortgage meltdown, but its job is now complete. Foreclosure sales have diminished and home prices are now almost equal to the market prices just prior to the housing market bubble bursting in 2008.
So now what?
According to the folks I chat to in the foreclosure industry, expect mortgage service companies to tighten standards and foreclosures to gradually increase during 2017.
Without HAMP, homeowners seeking loan modification will be left at the mercy of lenders.” Dillon Graham, Florida foreclosure defense attorney.
The Consumer Financial Protection Bureau has issued lending guidelines to help reduce the number of foreclosures in the future, including an emphasis on loan affordability, but those guidelines will do little to help current homeowners who fall behind on their mortgage payment.
I expect to see a new foreclosure trend emerging in 2017:
- Banks will be quicker to initiate foreclosure actions when a homeowner falls 2 to 3 payments behind.
- Foreclosure Forbearance Agreements will emerge from an 8-year hibernation and be the primary loss mitigation tool offered by mortgage lenders.
- Chapter 13 bankruptcy case filings will increase as it provides the the best option to give homeowners 3 to 5 years to cure delinquent mortgage payments.
- Foreclosures on long-forgotten 2nd mortgage debts will pick up as surging home prices enable banks to recoup some recovery for loans previously underwater.
This cat is now away. Time for the mice to play again?
Image courtesy of Flickr and frankieleon.
Persons filing for bankruptcy in Florida generally use the exemptions provided by Florida law in the Florida Constitution, Florida Statutes and common law. Certain further exemptions are also provided by non-bankruptcy federal law.
Exemption
Certain real property, such as a homestead, and personal property are "exempt" - that is, exempt from administration by a chapter 7 bankruptcy trustee or otherwise not taken into consideration in a chapter 13 as to the amount required to be repaid to unsecured creditors.
Homestead
Article X, section 4 of the Florida Constitution provides for the exemption of a Florida homestead with an unlimited value. The maximum size of the land is limited to 1/2 acre if located within a municipality and 160 if located outside of a municipality.
Personal property of $l,000.00 and $4,000.00 value
Each debtor may "exempt" $l,000.00 of personal property. Another statute also allows each debtor to “exempt” a further $4,000.00 of personal property if he does not claim or receive the benefits of a Florida homestead exemption.
Cars and other Motor Vehicles
In addition to the above general personal property exemption, $l,000.00 in equity, in one car (two for a joint case) or other motor vehicle (such as a motorcycle, truck, trailer, semi-trailer, truck tractor, semi-trailer combination, recreational vehicle, etc.) is "exempt" from the bankruptcy estate. Often this is not even used as many vehicles have no net value (equity) as more is owed on them than they are worth (i.e. you are "upside down"). During and after the bankruptcy, you must, of course, continue to make any payment due for a lien on the vehicle.
Pension Plans, IRAs, and other Retirement Plans
Pension plans, I.R.A.'s, and other retirement plans are generally not part of the estate or may be exempted from the estate (including under the exemption provided in the Bankruptcy Code itself 522 (b)(3)(C)) .
Earned Income Credit Refund
An interest in an IRS earned income credit ("EIC") whether received or yet to be received is exempt. It also applies to funds in a bank account traceable to such EIC. This exemption does not apply to collection for child support or spousal support.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Persons filing for bankruptcy in Florida generally use the exemptions provided by Florida law in the Florida Constitution, Florida Statutes and common law. Certain further exemptions are also provided by non-bankruptcy federal law.
Exemption
Certain real property, such as a homestead, and personal property are "exempt" - that is, exempt from administration by a chapter 7 bankruptcy trustee or otherwise not taken into consideration in a chapter 13 as to the amount required to be repaid to unsecured creditors.
Homestead
Article X, section 4 of the Florida Constitution provides for the exemption of a Florida homestead with an unlimited value. The maximum size of the land is limited to 1/2 acre if located within a municipality and 160 if located outside of a municipality.
Personal property of $l,000.00 and $4,000.00 value
Each debtor may "exempt" $l,000.00 of personal property. Another statute also allows each debtor to “exempt” a further $4,000.00 of personal property if he does not claim or receive the benefits of a Florida homestead exemption.
Cars and other Motor Vehicles
In addition to the above general personal property exemption, $l,000.00 in equity, in one car (two for a joint case) or other motor vehicle (such as a motorcycle, truck, trailer, semi-trailer, truck tractor, semi-trailer combination, recreational vehicle, etc.) is "exempt" from the bankruptcy estate. Often this is not even used as many vehicles have no net value (equity) as more is owed on them than they are worth (i.e. you are "upside down"). During and after the bankruptcy, you must, of course, continue to make any payment due for a lien on the vehicle.
Pension Plans, IRAs, and other Retirement Plans
Pension plans, I.R.A.'s, and other retirement plans are generally not part of the estate or may be exempted from the estate (including under the exemption provided in the Bankruptcy Code itself 522 (b)(3)(C)) .
Earned Income Credit Refund
An interest in an IRS earned income credit ("EIC") whether received or yet to be received is exempt. It also applies to funds in a bank account traceable to such EIC. This exemption does not apply to collection for child support or spousal support.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Persons filing for bankruptcy in Florida generally use the exemptions provided by Florida law in the Florida Constitution, Florida Statutes and common law. Certain further exemptions are also provided by non-bankruptcy federal law.
Exemption
Certain real property, such as a homestead, and personal property are "exempt" - that is, exempt from administration by a chapter 7 bankruptcy trustee or otherwise not taken into consideration in a chapter 13 as to the amount required to be repaid to unsecured creditors.
Homestead
Article X, section 4 of the Florida Constitution provides for the exemption of a Florida homestead with an unlimited value. The maximum size of the land is limited to 1/2 acre if located within a municipality and 160 if located outside of a municipality.
Personal property of $l,000.00 and $4,000.00 value
Each debtor may "exempt" $l,000.00 of personal property. Another statute also allows each debtor to “exempt” a further $4,000.00 of personal property if he does not claim or receive the benefits of a Florida homestead exemption.
Cars and other Motor Vehicles
In addition to the above general personal property exemption, $l,000.00 in equity, in one car (two for a joint case) or other motor vehicle (such as a motorcycle, truck, trailer, semi-trailer, truck tractor, semi-trailer combination, recreational vehicle, etc.) is "exempt" from the bankruptcy estate. Often this is not even used as many vehicles have no net value (equity) as more is owed on them than they are worth (i.e. you are "upside down"). During and after the bankruptcy, you must, of course, continue to make any payment due for a lien on the vehicle.
Pension Plans, IRAs, and other Retirement Plans
Pension plans, I.R.A.'s, and other retirement plans are generally not part of the estate or may be exempted from the estate (including under the exemption provided in the Bankruptcy Code itself 522 (b)(3)(C)) .
Earned Income Credit Refund
An interest in an IRS earned income credit ("EIC") whether received or yet to be received is exempt. It also applies to funds in a bank account traceable to such EIC. This exemption does not apply to collection for child support or spousal support.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Persons filing for bankruptcy in Florida generally use the exemptions provided by Florida law in the Florida Constitution, Florida Statutes and common law. Certain further exemptions are also provided by non-bankruptcy federal law.
Exemption
Certain real property, such as a homestead, and personal property are "exempt" - that is, exempt from administration by a chapter 7 bankruptcy trustee or otherwise not taken into consideration in a chapter 13 as to the amount required to be repaid to unsecured creditors.
Homestead
Article X, section 4 of the Florida Constitution provides for the exemption of a Florida homestead with an unlimited value. The maximum size of the land is limited to 1/2 acre if located within a municipality and 160 if located outside of a municipality.
Personal property of $l,000.00 and $4,000.00 value
Each debtor may "exempt" $l,000.00 of personal property. Another statute also allows each debtor to “exempt” a further $4,000.00 of personal property if he does not claim or receive the benefits of a Florida homestead exemption.
Cars and other Motor Vehicles
In addition to the above general personal property exemption, $l,000.00 in equity, in one car (two for a joint case) or other motor vehicle (such as a motorcycle, truck, trailer, semi-trailer, truck tractor, semi-trailer combination, recreational vehicle, etc.) is "exempt" from the bankruptcy estate. Often this is not even used as many vehicles have no net value (equity) as more is owed on them than they are worth (i.e. you are "upside down"). During and after the bankruptcy, you must, of course, continue to make any payment due for a lien on the vehicle.
Pension Plans, IRAs, and other Retirement Plans
Pension plans, I.R.A.'s, and other retirement plans are generally not part of the estate or may be exempted from the estate (including under the exemption provided in the Bankruptcy Code itself 522 (b)(3)(C)) .
Earned Income Credit Refund
An interest in an IRS earned income credit ("EIC") whether received or yet to be received is exempt. It also applies to funds in a bank account traceable to such EIC. This exemption does not apply to collection for child support or spousal support.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
The existence of a Federal Tax Lien in a Chapter 7 bankruptcy case is a dangerous thing. Especially in cases where a debtor has substantial equity in a home or other assets.
Why are tax liens so dangerous? Because property exemption laws, such as the Homestead Exemption, do not apply to federal tax liens.
Exemption laws protect a debtor’s property when they file bankruptcy. For example, the Nebraska Homestead Exemption protects up to $60,000 of home equity (the difference between the home’s value and the balance of the mortgage). So, if a debtor owns a home worth $100,000 and the home is subject to a mortgage loan of $40,000, the home is generally protected in chapter 7, unless a federal tax lien is present.
What is alarming is that most bankruptcy attorneys seem to be oblivious to the fact that federal tax liens are not subject to state exemption laws. In fact, I have spoken to attorneys who falsely believe a federal tax lien actually protects a home since the lien takes away the home equity. Yes, the lien takes away equity, but it also puts a mighty power in the hands of the Chapter 7 Trustee.
What drives this dangerously false idea of a tax lien protecting property is that few attorneys have witnessed a bankruptcy trustee use the power of bankruptcy code Section 724(b). I’ve never seen a Nebraska trustee tap the power of 724(b), nor is there any case I’ve seen in Nebraska where a trustee took away a home with this power. Yet, cases exist in other jurisdictions where debtors have lost homes due to the trustee’s use of 724(b).
Martin and Elvira Laredo owned a home in Illinois valued at $320,235 that was subject to a mortgage loans of $245,000. They owed the IRS $282,268 and reported that a federal tax lien was filed against their home. The debtors claimed a $15,000 homestead exemption. In re Laredo, 334 B.R. 401 (2005). The Chapter 7 Trustee motioned the court for a ruling to determine that the homestead exemption was subordinate to the federal tax lien and the administrative expenses the trustee would incur in selling the home. The court agreed with the trustee and ordered the home sold even though the only parties who benefited were the IRS and the Trustee.
This result should not surprise bankruptcy attorneys. Those who represent debtors in Chapter 13 cases should be aware that the IRS will file a secured claim on exempt property when federal tax liens are present. So, why would the result in a Chapter 7 be any different? In theory, the payments to creditors in Chapter 13 should be no less than payments made in Chapter 7 under what is known as the “best interest of creditors test“, so this result should not be surprising.
At least one Nebraska case has spoken to the power of 724(b), In re Netal, Inc., Case #09-82992.
I suspect the reason we do not see Chapter 7 Trustee’s use the power of 724(b) more is that although the bankruptcy schedules may report that federal tax debts are present, they debtor may not be reporting that a federal tax lien has been filed prior to the bankruptcy. The debtor’s attorney may also be unaware of the presence of the tax lien unless they perform a public records search. However, given the duty of a bankruptcy attorney to perform a “due diligence” investigation of the debtor’s assets, income and debts, there is probably a duty to search for and report the existence of such liens. Also, unless the Trustee seeks out independent confirmation of the existence of the lien, he or she may be ignorant of its presence. A smart trustee should assume the presence of a tax lien when substantial tax debt is reported even if the lien itself is not disclosed.
A second reason for the lack of 724(b) seizures in Nebraska is the lack of prior history of using this tool. There is no tradition of 724(b) property seizures in Nebraska, but I suspect that tradition will change over time, especially in a rising housing market.
In conclusion, when substantial tax debts exist, be careful when filing Chapter 7. Choose your Nebraska bankruptcy attorney carefully.
The existence of a Federal Tax Lien in a Chapter 7 bankruptcy case is a dangerous thing. Especially in cases where a debtor has substantial equity in a home or other assets.
Why are tax liens so dangerous? Because property exemption laws, such as the Homestead Exemption, do not apply to federal tax liens.
Exemption laws protect a debtor’s property when they file bankruptcy. For example, the Nebraska Homestead Exemption protects up to $60,000 of home equity (the difference between the home’s value and the balance of the mortgage). So, if a debtor owns a home worth $100,000 and the home is subject to a mortgage loan of $40,000, the home is generally protected in chapter 7, unless a federal tax lien is present.
What is alarming is that most bankruptcy attorneys seem to be oblivious to the fact that federal tax liens are not subject to state exemption laws. In fact, I have spoken to attorneys who falsely believe a federal tax lien actually protects a home since the lien takes away the home equity. Yes, the lien takes away equity, but it also puts a mighty power in the hands of the Chapter 7 Trustee.
What drives this dangerously false idea of a tax lien protecting property is that few attorneys have witnessed a bankruptcy trustee use the power of bankruptcy code Section 724(b). I’ve never seen a Nebraska trustee tap the power of 724(b), nor is there any case I’ve seen in Nebraska where a trustee took away a home with this power. Yet, cases exist in other jurisdictions where debtors have lost homes due to the trustee’s use of 724(b).
Martin and Elvira Laredo owned a home in Illinois valued at $320,235 that was subject to a mortgage loans of $245,000. They owed the IRS $282,268 and reported that a federal tax lien was filed against their home. The debtors claimed a $15,000 homestead exemption. In re Laredo, 334 B.R. 401 (2005). The Chapter 7 Trustee motioned the court for a ruling to determine that the homestead exemption was subordinate to the federal tax lien and the administrative expenses the trustee would incur in selling the home. The court agreed with the trustee and ordered the home sold even though the only parties who benefited were the IRS and the Trustee.
This result should not surprise bankruptcy attorneys. Those who represent debtors in Chapter 13 cases should be aware that the IRS will file a secured claim on exempt property when federal tax liens are present. So, why would the result in a Chapter 7 be any different? In theory, the payments to creditors in Chapter 13 should be no less than payments made in Chapter 7 under what is known as the “best interest of creditors test“, so this result should not be surprising.
At least one Nebraska case has spoken to the power of 724(b), In re Netal, Inc., Case #09-82992.
I suspect the reason we do not see Chapter 7 Trustee’s use the power of 724(b) more is that although the bankruptcy schedules may report that federal tax debts are present, they debtor may not be reporting that a federal tax lien has been filed prior to the bankruptcy. The debtor’s attorney may also be unaware of the presence of the tax lien unless they perform a public records search. However, given the duty of a bankruptcy attorney to perform a “due diligence” investigation of the debtor’s assets, income and debts, there is probably a duty to search for and report the existence of such liens. Also, unless the Trustee seeks out independent confirmation of the existence of the lien, he or she may be ignorant of its presence. A smart trustee should assume the presence of a tax lien when substantial tax debt is reported even if the lien itself is not disclosed.
A second reason for the lack of 724(b) seizures in Nebraska is the lack of prior history of using this tool. There is no tradition of 724(b) property seizures in Nebraska, but I suspect that tradition will change over time, especially in a rising housing market.
In conclusion, when substantial tax debts exist, be careful when filing Chapter 7. Choose your Nebraska bankruptcy attorney carefully.
Can I file? For the most part, when people seek out bankruptcy relief they are seeking the type of relief offered through chapter 7. To file, you must:
• Reside, be domiciled, or have property or a place of business in the United States (U.S.). A person does not have to be a U.S. citizen to file, nor live in the U.S., as long as they have assets in the U.S.
• You are able to file if you do not have a prior Chapter 7 discharge or it has been more than 8 years, or 6 years since a Chapter 13 discharge.
• Within 180 days before filing the bankruptcy petition, you must receive credit counseling briefing from one of the approved nonprofit agency that focuses on budget and counseling.
• Be subject to a means test to determine how your income compares to Arizona’s median income and whether or not you qualify to file under Chapter 7.
The post Pursuing Bankruptcy under Chapter 7 appeared first on Tucson Bankruptcy Attorney.
Can I file? For the most part, when people seek out bankruptcy relief they are seeking the type of relief offered through chapter 7. To file, you must:
• Reside, be domiciled, or have property or a place of business in the United States (U.S.). A person does not have to be a U.S. citizen to file, nor live in the U.S., as long as they have assets in the U.S.
• You are able to file if you do not have a prior Chapter 7 discharge or it has been more than 8 years, or 6 years since a Chapter 13 discharge.
• Within 180 days before filing the bankruptcy petition, you must receive credit counseling briefing from one of the approved nonprofit agency that focuses on budget and counseling.
• Be subject to a means test to determine how your income compares to Arizona’s median income and whether or not you qualify to file under Chapter 7.
The post Pursuing Bankruptcy under Chapter 7 appeared first on Tucson Bankruptcy Attorney.
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