Miami Bankruptcy Law Blog

For Florida homeowners receiving checks through the Independent Foreclosure Review Payment Agreement, the money may feel inadequate, to say the least. Many foreclosures during the 2009 to 2010 period were the direct result of predatory lenders looking to take advantage of borrowers in difficult circumstances and essentially steal their home equity. Lenders used a dual-track process, in some cases, to foreclose on a home even while negotiating a loan modification with the owner. Millions of Americans lost their homes due to this and other underhanded tactics, including the imposition of additional fees.

The Office of the Comptroller of the Currency reported that a third set of over 200,000 checks were mailed on the second of May, and the final checks are due to be mailed this summer. The settlement reached with 13 mortgage servicers totaled $3.6 billion. According to one homeowner in receipt of a $3,000 check, the money is incapable of undoing the "heartache we experienced in having our house sold out from under us."

A construction company in North Carolina is filing for bankruptcy. The company had reported over #3 million in revenue for the previous two years and is filing for Chapter 7 bankruptcy, saying that they cannot pay their debts. The company has a liability of $1.2 million, according to its reports. Included in that debt is a loan from BB&T for just over $150,000, secured with a lien on its general assets. The company's other liabilities include its employees and local loans.

With Chapter 7 petitions, assets are liquidated in order to pay the creditors. When a business files for Chapter 7, the court assigns a trustee to oversee the liquidation of assets and stops the operation of the business. The trustee sells off the company's assets and distributes the money to the creditors. Will the employees lose their jobs? Not necessarily. The trustee may sell parts of the business to other companies.

Many Floridians with debt may be subjected to unfair debt collection practices. When businesses such as a hospital or credit card company stop trying to persuade Floridians to pay debts owed, they often sell the debts to debt collectors. These debt collectors often purchase delinquent accounts in bulk and for pennies on the dollar. The debt collection agencies then attempt to collect on the entire amount the people owe. For example, if a person owes one company $300 and a debt collector buys the debt for $30, it will seek the full amount of the debt.

Debt collectors, making their money in volume, may often use bad and unfair practices that amount to creditor harassment. The Fair Debt Collection Practices Act was enacted to protect people from the sometimes unscrupulous ways debt collectors try to collect debts. A debt collection agency may only call between 8:00 a.m. and 9:00 p.m. Also, a collector cannot repeatedly harass customers by making their phones ring continuously. 

In a case that may inspire some Florida homeowners facing foreclosure, a U.S. bankruptcy judge granted a Detroit resident a 30-day adjournment on April 4 to prevent him from being evicted from his home. The man, who was severely injured in an accident in 2005, fell behind on mortgage payments for his home as he waited for his Social Security payments to start. He sought forbearance from his lender, Wells Fargo Bank, but did not receive any help, and his home was foreclosed on.

The disabled man subsequently filed a lawsuit against Wells Fargo Bank and Fannie Mae to stop the eviction and foreclosure process. During the hearing, he addressed the judge and explained his circumstances. The lawyer for Fannie Mae argued that all the correct legal steps were taken in the foreclosure. Although the judge agreed that the law was clear and the man didn't make his payments, law wasn't everything.