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Miami Florida Bankruptcy Law (10)

Countrywide Drama Also Opens in Florida

Posted: July 1st, 2008, 9:08am PDT by Jordan E. Bublick, Bankruptcy Attorney

The Countrywide drama also opened on June 30, 2008 in Florida.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
The Drama of Countrywide Financial Corporation Opens in Los Angeles and Chicago

Posted: June 27th, 2008, 9:17am PDT by Jordan E. Bublick, Bankruptcy Attorney

The drama of Countywide Financial Corporation is now playing in the Superior Court of the State of California in and for the County of Los Angeles and the Circuit Court of Cook County, Illinois.

The California Attorney General's website summarizes the allegations against Countywide as follows:

• Encouraging borrowers to refinance or obtain financing with complicated mortgage instruments like hybrid adjustable rate mortgages or payment option adjustable mortgages

• Marketing complex loan products by emphasizing a very low “teaser” rate while misrepresenting the steep monthly payments, increased interest rates and risk of negative amortization

• Dramatically easing underwriting standards to qualify more people for loans

• Using low or no-documentation loans which allowed no verification of stated income

• Hiding total monthly payment obligations by selling homeowners a second mortgage in the form of a home equity line of credit

• Making borrowers sign a large stack of documents without provider time to read the paperwork

• Misrepresenting or hiding the fact that loans had prepayment penaltiesJordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Federal Criminal Conduct with Regard to Mortgage Loans

Posted: June 25th, 2008, 2:09pm PDT by Jordan E. Bublick, Bankruptcy Attorney

A review of recent federal indictments provides a overview of some of the types of conduct in the mortgage origination process that may be regarded as criminal.

Materially false and fraudulent mortgage loan applications and related documents such as the uniform residential loan application
False employment verification
False verification of income and funds on deposit
False rent verification
False assertions such as living in the property as a primary residence
False assertions of amount of funds on deposit in the bankStraw buyer and identity theft
Concealment of material information
Misrepresentation of price
Concealment of "kicker fees"

The following are some of the federal statutory provisions that may be involved:
18 U.S.C. 1343 - wire fraud
18 U.S.C. 1344 - financial institution fraud
18 U.S.C. 1349 - conspiracy to commit wire and financial institution fraud
18 U.S.C. 1028 (A)(1) and (2) - aggravated identity theft
19 U.S.C. 981, 982, and 21 U.S.C. 853 - forfeiture
Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Court Considers Income of Chapter 7 Debtor's Non-Filing Spouse

Posted: June 22nd, 2008, 2:56pm PDT by Jordan E. Bublick, Bankruptcy Attorney

The Court in the case of In re Coup, 2008 WL 2388114 (Bankr.N.D.Ohio)(Whipple, J.) recently examined the issue as the degree that a non-filing spouse's income is taken into consideration when only one spouse files for Chapter 7 relief in the context of a motion to dismiss as an "abuse" based on the "totality of the circumstances." Section 707(b)(3)(B). In this case although the debtor passed the "means test", the UST moved to dismiss the case based on the "totality of the circumstances." The Court ordered the case dismissed unless the Debtor converted the case to chapter 13.

The Court set forth the following factors in makings its determination: the neediness of the debtor, the ability to repay debts out of future earnings, the enjoyment of a stable source of future income, eligibility for Chapter 13, the availability of state remedies, relief obtainable through private negotiations, the ability to lower expenses, and the ability to fund a Chapter 13 plan. The Court found that the debtor and his wife enjoyed a stable source of income and that he was eligible for Chapter 13 relief. The Court also found that although the debtor's budget in schedules I and J reflected a negative monthly cash flow, that the debtor now had a monthly surplus which could be applied t repay a portion of his unsecured debt.

Significantly, the Court noted that there are differing opinions as to the degree of relevance of the non-filing spouse's income. The Court stated that some of the varying opinions are that the non-filing spouse's income is only taken into consideration only to the degree that it is regularly contributed to the household expenses, that it should be considered only if it is so substantial that it would raise the debtor's standard of living to the excess, and that it should be taken into consideration only to the extent of the debtor's living expenses that benefit the non-filing spouse. The Court decided that the most persuasive position is that the non-filing spouse's income must be reviewed to determine what degree a debtor's daily living expenses are shared as co-obligations of the non-debtor spouse or are assumed completely by the non-filing spouse. But the Court made clear that the non-filing spouse's income is not being rendered liable for the debts of the debtor, but is being considered in determining whether the debtor has available discretionary income by virtue of the fact that the debtor and non-filing spouse share a joint household. The Court noted that the case of In re Falke, 284 B.R. 133 (Bankr.D.N.D.1991) held that although Congress did not express an intention to require a non-filing spouse to assist the debtor in paying his debtor, that the non-fling spouse's income should be reviewed in determining whether there is discretionary income available to a debtor. The Falkecourt opined that a court should assume that both parties to a relationship share equally in the family living expenses and that the appropriate measure of a debtor's income for purposes of Section 707(b) would be the debtor's sole income less one-half of the family living expenses.

Based on the application of these principles, the Court found that the debtor's Chapter 7 case was an "abuse" and the case was ordered dismissed unless the debtor converted the case to Chapter 13 within 30 days.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Ninth Circuit Court of Appeals Rejects Approaches of Hardacre and Jass

Posted: June 5th, 2008, 12:54pm PDT by Jordan E. Bublick, Bankruptcy Attorney

The Ninth Circuit Court of Appeals issued its decision in In re Kagenveama, 2008 WL 2278681 (Ninth Circuit, June 5, 2008)(Silver, J. sitting by designation) and upheld the Arizona Bankruptcy Court's decision that "projected disposable income" means "disposable income" projected over the "applicable commitment period" and that the five-year "applicable commitment period" was inapplicable as the debtor's "projected disposable income" was a negative number. The court rejected the trustee's argument that the phrase "projected disposable income" indicates a "forward looking concept" that uses the "disposable income" calculation only as a starting point. The debtor in this case was an above-median income debtor. The debtor's schedules I and J reflected a net surplus amount of about $1,500.00 but the debtor's Form B22C showed a "disposable income" of -$4.04. The debtor proposed a chapter 13 plan paying $1,000.00 a month for 36 months.

The court noted that "projected disposable income" is not a defined term in the Bankruptcy Code but that "disposable income" is defined in section 1325(b)(2). The court stated that reading the statute as requiring "disposable income" to be projected out over the "applicable commitment period" to derive the "projected disposable income" amount is the "most nature reading of the statute."

The court rejected the In re Hardacre and In re Jass lines of authority. The Hardacre court held that the calculation of "projected disposable income" must be based on the debtor's anticipated income during the term of the plan and that "projected disposable income" is not related to "disposable income". In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006). The Jass court held that the calculation of section 1325(b)(2) for "disposable income" was merely a presumptively correct starting point for deriving "projected disposable income" that can be rebutted or supplemented by other evidence of historical or future finances to arrive at "projected disposable income." In re Jass, 340 B.R. 411 (Bankr. D. Utah 2006).

Although the court agreed with the chapter 13 trustee that the term "applicable commitment period" is a temporal measure of the time in which the debtor is required to pay his unsecured creditors, the court held that if the debtor's "projected disposable income" is zero or below, the "applicable commitment period" requirement is not applicable. The court held that only "projected disposable income" is subject to the "applicable commitment period" requirement. The funds that the debtor proposed to pay over the proposed 36 month plan were not "projected disposable income." The court stated that there is no provision in the Bankruptcy Code that requires a chapter 13 plan to be held open for the entire "applicable commitment period" and that the "applicable commitment period" is not a plan length requirement but that its purpose is solely to perform the section 1325 (b)(1)(B) calculation of the amount required to be paid to unsecured creditors. The court noted that the Eight Circuit BAP's decision in In re Frederickson, 375 B.R. 829 (2007) supports its interpretation.

The court did note that if the debtor's income increases after confirmation of the plan, a trustee may seek plan modification under section 1329.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
City of Vallejo California Files for Chapter 9 Bankruptcy

Posted: May 24th, 2008, 5:56pm PDT by Jordan E. Bublick, Bankruptcy Attorney

On May 23, 2008, the City of Vallejo filed for chapter 9 municipal bankruptcy relief in the Eastern District of California, Sacramento Division in case #08-26813. Vallejo, a city of about 120,000 people, is located about 30 miles northeast of San Francisco. Vallejo is the largest California city to file for bankruptcy relief.

Vallejo's bankruptcy filing was widely anticipated in the media since February as tax revenues fell and employee labor costs remained high. The LA Times reports that "eighty percent of the city's budget goes to police and firefighters, far above the norm for most California cities." The largest creditor listed is the California Public Employees Retirement System for retirement health benefits for about $135 million and unfunded pension plan benefits for about $84 million. The City requested the court to set June 9, 2008 as the deadline for objections to its bankruptcy filing.

The city has set up a website to provide information on its bankruptcy filing.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Some U.S. Municipalities on Brink of Default and Consider Chapter 9 Bankruptcy

Posted: May 16th, 2008, 4:22pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

It was reported this week that Jefferson County, Alabama reached a two week extension with its Wall Street bankers to avoid a default on its outstanding debt of $4.6 billion. Jefferson County is reported to be one of the most indebted municipalities in the United States due to its expensive overhaul of its sewage system. It has been reported that the county could face chapter 9 municipal bankruptcy.

Earlier this month it was reported that the City Council of Vallejo California voted to file for chapter 9 municipal bankruptcy due to unaffordable labor contracts and unfunded pension liabilities. Its reported that the Chapter 9 bankruptcy filing is expected any day. Vallejo was once a prosperous city of 117,000 and is facing police, fire and staffing costs in excess its ability to pay. Today's Daily Business Review reports that the case has become a national bellwether [sic] for financially shaky local governments considering the pitfalls of filing Chapter er9 municipal bankruptcy."

The city reportedly faces a $16 million deficit for the upcoming fiscal year due to a decrease in tax revenues as property values have fallen. Vallejo has a population of 117,000 people.

An example of a recent municipal chapter 9 bankruptcy case was that filed in December, 2001 by the City of Desert Hot Springs California in the Bankruptcy Court of the Central District of California. The city of about 17,000 people was $8 million in debt including $6 million owed on a Fair Housing Act lawsuit. Another notable municipal bankruptcy was that of Bridgeport, Connecticut in 1991. The largest municipal bankruptcy filed to date was that of Orange County, California which filed for chapter 9 bankruptcy in 1994. In 1975 New York City teetered on the edge of filed for bankruptcy and appealed to the federal government for a bailout. In the end, New York City with assistance from Washington, including the creation of the Municipal Assistance Corporation, was able to avoid bankruptcy.

The Daily Business Reivew also reports that "San Diego, the nation's eight largest city, has been on the brink of a financial abyss for several years."

The first municipal bankruptcy legislation was enacted in 1934 during the Great Depression. A revised Municipal Bankruptcy Act was enacted in 1937 which has been amended several times. Under chapter 9 bankruptcy, the municipality is protected from its creditor while it negotiates a plan to adjust its debts. There is no provision in chapter 9 for the liquidation of the assets of a municipality.

A "municipality" that may file for relief under chapter 9 is defined in the bankruptcy code as a "political subdivision or public agency or instrumentality of a State." This definition is broad enough to include cities, counties, townships, school districts, public improvement districts, bridge authorities, highway authorities, and gas authorities. In order to be eligible to file for chapter 9 the municipality must be "insolvent" as defined in the bankruptcy code. An interesting distinction in chapter 9 is that the clerk of the court does not assign the case to a particular judge. Instead the chief judge of the circuit's court of appeals designates the bankruptcy judge to conduct the case. The Bankruptcy Code allows objections to the chapter 9 petition and the court may dismiss the petition if it determines it was not filed in good faith.

The bankruptcy court's powers over the operations and revenue of the municipality are limited under the bankruptcy code. These restrictions avoid the possibility that the court may substitute its control over the governmental affairs for that of the elected officials.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Statutory Personal Property Exemption

Posted: May 11th, 2008, 6:19am PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

In re Franzese, 383 BR 197 (Bkrtcy. M.D. Fla. 2008) - if use tenants by entireties no eligible for 4,000 exemptionJordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Modify Mortgage During Chapter 13 Bankruptcy

Posted: May 4th, 2008, 3:01pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

One possible avenue to save your home from foreclosure may be to file for Chapter 13 bankruptcy relief and then to negotiate with the mortgage servicer for a mortgage modification while the Chapter 13 bankruptcy is pending. The filing of the bankruptcy stops the progress of the foreclosure action and may give the homeowner many months to negotiate a modification. Perhaps the mortgage company may be more willing to allow a mortgage modification if faced with the alternative of a Chapter 13 bankruptcy plan.

As an example, a mortgage company recently modified the mortgage for one of this firm's clients to add the $50,000.00 arrearage to the back of the mortgage and changed the interest rate from an adjustable rate mortgage presently at 11% to a 7% fixed rate.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Home Foreclosure in Miami by Miami Bankruptcy Lawyer Jordan E. Bublick

Posted: May 4th, 2008, 2:58pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

If a homeowner falls behind with his mortgage payments, the mortgage company will usually declare a default and begin a mortgage foreclosure case. The foreclosure cases for homes in Miami-Dade County are usually filed in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County located in downtown Miami at 73 W. Flagler Street.

The foreclosure case is started with the filing of a "complaint". The mortgage holder or its servicer is usually the plaintiff in the case and the defendants are the homeowner and any other entities that may have an interest in the real estate such as junior mortgage holders, judgment holders, and even tenants. Often the foreclosure complaint will complain numerous defendants if the homeowner has a common name as the mortgage company needs to include all potential judgments against the homeowner and it is unable to distinguish whether the named person is actually the homeowner.

The complaint may contain one or more "counts" for relief, such as for foreclosure, for a judgment on the note, and to reestablish a lost instrument. The count for foreclosure asks the court to determine that the homeowner is in default and that the mortgage company is entitled to have the home sold to satisfy the mortgage debt. Often the mortgage company will add a count to reestablish a lost instrument if it is unable to find the original mortgage note. Furthermore, sometimes the mortgage company will add a county for a money judgment for the amount of the mortgage note.Jordan E. Bublick, Miami, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983

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Miami Florida Bankruptcy Law (10)

Posted: July 1st, 2008, 9:08am PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: June 27th, 2008, 9:17am PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: June 25th, 2008, 2:09pm PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: June 22nd, 2008, 2:56pm PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: June 5th, 2008, 12:54pm PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: May 24th, 2008, 5:56pm PDT by Jordan E. Bublick, Bankruptcy Attorney

Posted: May 16th, 2008, 4:22pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

Posted: May 11th, 2008, 6:19am PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

Posted: May 4th, 2008, 3:01pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar

Posted: May 4th, 2008, 2:58pm PDT by Jordan E. Bublick, Miami Bankruptcy Lawyer, Member of Florida Bar