Student loans are extremely difficult to discharge in bankruptcy.  The standards for discharging student loans are discussed in detail in a prior article. Under the present law, to discharge your student loan you must prove that repayment would impose undue hardship on you and your dependents, i.e., you will have to show that 1) you cannot maintain, a “minimal” standard of living if forced to repay the student loans; 2) additional circumstances show that this state of affairs is likely to persist for a significant portion of the repayment period; and 3) you have made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less. This is a very difficult burden.

H.R. 2028, the Private Student Loan Bankruptcy Fairness Act of 2011, has been referred to the House Committee on the Judiciary. This legislation would make private student loans (as opposed to government-made or guaranteed student loans) dischargeable in bankruptcy. Referral to committee is the first step in the legislative process. This legislation, like the majority of bills, may never make it out of committee.

Below are the members of the House Committee on the Judiciary.

Rep. Lamar Smith [R-TX21] Ranking Member

Rep. John Conyers [D-MI14]

Rep. Sandy Adams [R-FL24]

Rep. Howard Berman [D-CA28]

Rep. Steven Chabot [R-OH1]

Rep. Jason Chaffetz [R-UT3]

Rep. Judy Chu [D-CA32]

Rep. Howard Coble [R-NC6]

Rep. Steve Cohen [D-TN9]

Rep. Ted Deutch [D-FL19]

Rep. Randy Forbes [R-VA4]

Rep. Trent Franks [R-AZ2]

Rep. Elton Gallegly [R-CA24]

Rep. Louis Gohmert [R-TX1]

Rep. Robert Goodlatte [R-VA6]

Rep. Trey Gowdy [R-SC4]

Rep. Tim Griffin [R-AR2]

Rep. Darrell Issa [R-CA49]

Rep. Sheila Jackson-Lee [D-TX18]

Rep. Henry Johnson [D-GA4]

Rep. Jim Jordan [R-OH4]

Rep. Steve King [R-IA5]

Rep. Zoe Lofgren [D-CA16]

Rep. Daniel Lungren [R-CA3]

Rep. Thomas Marino [R-PA10]

Rep. Jerrold Nadler [D-NY8]

Rep. Mike Pence [R-IN6]

Rep. Ted Poe [R-TX2]

Rep. Ben Quayle [R-AZ3]

Rep. Mike Quigley [D-IL5]

Rep. Tom Reed [R-NY29]

Rep. Dennis Ross [R-FL12]

Rep. Linda Sánchez [D-CA39]

Rep. Robert Scott [D-VA3]

Rep. James Sensenbrenner [R-WI5]

Rep. Debbie Wasserman Schultz [D-FL20]

Rep. Maxine Waters [D-CA35]

Rep. Melvin Watt [D-NC12]

Res.Com. Pedro Pierluisi [D-PR]

You are encouraged to contact these representatives to express your opinion concerning the proposed legislation.

11 U.S.C. § 523(a)(7)  of the bankruptcy law provides that a Chapter 7 bankruptcy does not discharge an individual from any debt that is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty. Therefore, traffic tickets are clearly not dischargeable in a Chapter 7 filing.

There are, however, alternative approaches.

Under Chapter 13, certain fines are dischargeable. Where the fine is imposed as a criminal penalty, it will be non-dischargeable; however, non-criminal fines will be dischargeable. The key is determining whether the parking or traffic violations are deemed “crimes” under the state law where the offenses occurred.

In Florida, traffic offenses are divided into two categories: crimes and civil (non-criminal) infractions. Examples of criminal traffic offenses include DUI, reckless driving, leaving the scene of an accident and knowingly driving with a suspended license. Civil traffic offenses (i.e., non-criminal offenses) include speeding, running a red light or stop sign, illegal U-turns, failure to yield to emergency vehicles and non-moving violations.

In a Chapter 13 bankruptcy, non-criminal traffic fines will be paid as part of a plan that will decrease the amount of ticket and allow for payment at levels that the debtor can afford by extending the debt over a period of three to five years.

So what can you do about non-dischargeable criminal fines or penalties? You can make payments for a portion of what you owe through a Chapter 13 Plan over a period of 3-5 years. The balance remaining at the conclusion of the Plan will not be discharged.

BNY Mellon filed an action to foreclose a mortgage against the defendant. The mortgage attached to the complaint named another entity, Silver State Financial Systems, as lender and still another, Mortgage Electronic Registration Systems (the infamous MERS), as mortgagee. The complaint alleged that BNY Mellon owned and held the note and mortgage by assignment, but failed to attach a copy of any document of assignment. At the same time, it alleged the original promissory note itself had been “lost, destroyed or stolen.”

The defendant filed a motion to dismiss the complaint arguing that since the plaintiff had lost the note and mortgage, it would at least have to produce the assignment to support its claim of ownership. BNY Mellon, in response filed an amended complaint and attached a new unrecorded assignment, which it had suddenly found and which happened to be dated just before the original complaint was filed.

In response to this amendment, defendant alleged that the newly produced document of assignment was false and had been fraudulently made, pointing to the fact that the person executing the assignment was employed by the attorney representing the mortgagee, and the commission date on notary stamp showed that the document could not have been notarized on the date in the document. The defendant argued that the plaintiff was attempting fraud on the court and that the court should enter sanctions, such as dismissal of the foreclosure with prejudice (which would prevent plaintiff from filing a new complaint). The defendant scheduled depositions of the person who signed the assignment, the notary, and the witnesses named on the document—all employees ofFloridacounsel for BNY Mellon

Before the scheduled depositions, BNY Mellon filed a notice of voluntary dismissal of the action. Apparently, the risk of exposure of fraud outweighed the benefits of foreclosure.

Pino is an example of aggressive foreclosure defense forcing a lender to dismiss a foreclosure action. A defendant in a foreclosure case should always take the position that there has been some misconduct by the lender/Plaintiff; fraud or misconduct can be raised either by way of motion to dismiss or affirmative defense, or both. See my Blog, Foreclosure Defense and the Value of Time for more insights.

Generally, married couples will file joint bankruptcy petitions; a joint filing saves a filing fee and often a second attorney’s fee. The Justice Department (through the U.S. Trustee) had routinely intervened to stop joint bankruptcy cases filed by same-sex couples because Section 302(a) of the bankruptcy code allows a joint bankruptcy case to be filed only by debtors who are legally married,

California’s Supreme Court’s recent decision to legalize same-sex marriage has resulted in challenges to the filing requirements under the bankruptcy law.

The United States Bankruptcy Court for the Central District of California (the nation’s largest bankruptcy court) in the case of In re Balas and Morales has now decided that the Defense of Marriage Act as applied to a same-sex couple legally married under state law, violated the couple’s equal protection rights afforded under the Fifth Amendment of the United States Constitution.

ANew Yorkbankruptcy court has likewise ruled that a same sex married couple can file a joint bankruptcy case, just the same as a heterosexual married couple, regardless of the existence of the federal Defense of Marriage Act.  These cases are the first instances whereU.S.bankruptcy courts have approved the filing of joint bankruptcy petitions by same sex married couples.

DOMA has come under increasing pressure since the Obama administration said in February that it would no longer defend its constitutionality, a significant change in Justice Department policy.

It now appears that same sex couples married under state law are entitled to the same filing benefits as are generally available to married heterosexual couples.

To get a foreclosure judgment, the plaintiff must prove that it owns the loan. Very often, the Plaintiff is not the original lender, but purchased your mortgage, bundled it in a pool with a billion dollars worth (not an exaggeration) of other mortgages and resold it to investors. In many cases, the original note signed by the homeowner was lost or destroyed. Proving ownership of the loan can often be difficult.

It now appears that in many cases, the affidavits and documents submitted to the court to prove ownership of the note and mortgage are false and fraudulent. The plaintiffs have come to court with documents that were either back-dated (in an attempt to prove that the plaintiff actually owns the property), signed by ‘robo-signers’ (stamped signatures that allowed the filing of a high volume of foreclosures. often with little if any oversight) or just fraud.

So what happens to the property if the Plaintiff cannot produce documents that they ‘own’ the property?There are so many foreclosures currently being processed in Florida that the law firms hired by the Plaintiffs are called foreclosure mills. As a result of court decisions throughout the country and the Florida Attorney General’s investigation into the ‘foreclosure mills’ (high volume foreclosure filers, e.g., the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A., the Law Offices of David J. Stern, P.A., and Shapiro & Fishman, LLP), the fraud is now being exposed.

Florida’s attorney general stated, “On numerous occasions, false affidavits and fabricated documents have allegedly been presented to courts in foreclosure actions to obtain final judgments against homeowners.” In order to process cases on a wholesale basis, Plaintiffs had mid-level bank executives sign thousands of affidavits (so-called ‘robo-signors’) saying that they had personal knowledge of the facts of a case when they could not possibly have that knowledge. Executives at JP Morgan Chase have confessed to signing tens of thousands of foreclosure documents without reading them and temporarily suspended mortgage foreclosures in 23 states, including Florida.

A Circuit Court of Duval County, based on ‘clear and convincing evidence’, found that Plaintiff’s attorneys, Shapiro and Fishman LLP, committed fraud upon the Court and created false documents.

Recently, Fannie Mae, the federal mortgage giant, became aware of similar problems at another foreclosure mill in Broward County. A Miami judge found the firm’s founding partner in contempt of court for filing “sham” foreclosure documents and “wasting the court’s time.”The judge dismissed the foreclosure case and banned the lender from refiling it.

In November of 2010, Fannie Mae fired David J. Stern’s Plantation-based law firm, probably the largest of the foreclosure mills, on charges of falsifying documents used to complete foreclosures.

In our foreclosure cases, we often discover questionable or obviously fraudulent documents submitted to the court to support foreclosure; these become the basis of aggressive defense. Retaining an experienced Florida foreclosure defense attorney is often the most important step you can take to protect your property from unscrupulous lenders.

Fibromyalgia is a rheumatic disease that can produce muscle and joint pain, stiffness and fatigue and a pattern of sleep disturbance. If the symptoms are sufficiently severe, it can be disabling. For a general overview of Social Security Disability, please see the main article in Legal Information under “Social Security’.

While fibromyalgia is often quite painful, the diagnosis of fibromyalgia alone does not necessarily mean that the SSA will find that you are disabled under Social Security definitions. The SSA or an Administrative Law Judge at a hearing must make a determination as to the severity of your symptoms and limitations. Your statements about pain or other symptoms will not alone establish disability. There must be medical evidence that reasonably would be expected to produce the pain or other symptoms that you are complaining of.

If not diagnosed through objective testing, such as X-rays or blood tests; the diagnosis of fibromyalgia is made entirely on the basis of your reports of pain and other symptoms. Physical examinations of claimants who suffer from fibromyalgia usually yield normal results, such as full range of motion, no joint swelling, and normal muscle strength and neurological reactions.

More specifically, there are 18 fixed points on the body that when pressed firmly cause the patient to flinch. The general rule is that a patient must have tenderness at 11 of these 18 locations in order to be diagnosed with fibromyalgia. The American College of Rheumatology guidelines for diagnosing fibromyalgia include primarily widespread pain in at least 11 of the 18 specified tender points on the body. This method of diagnosis has been accepted by the SSA. The lack of objective testing to prove the diagnosis of Fibromyalgia and the difficulty in objectively determining the severity of the pain and other symptoms are the reasons that winning a fibromyalgia case can be difficult. Nevertheless, if presented properly and with supporting medical records, these cases can be won and social security awarded.

Social Security law is complex; at Hoffman, Larin and Agnetti, PA we offer a free consultation so that you can learn your rights. There are no fees for representation before the Social Security Administration in disability claims, unless we win. We have offices throughout south Florida,  in Dade, Broward and Monroe Counties for your convenience.

In order to obtain Social Security benefits for a child, you must be able to show a physical or mental impairment which results in ‘marked and severe functional limitations’ and which can be expected to result in death or which has lasted or is expected to last a continuous period of not less than 12 months.

For children from birth to 3 years old, a child has a ‘marked impairment’ if he/she is functioning at more than one-half but not more than two-thirds of the child’s chronological age; or, for a child age 3 to 18, a limitation which is more than moderate but less than extreme. Marked limitation may exist when several activities or functions are limited and interfere seriously with the child’s functioning

The Social Security Administration (SSA) has interpreted this standard to require that in order for a child to be eligible for SSI, the child must establish that he or she meets, or medically or functionally equals, a ‘Listing’. SSA has published a Listing of Impairments (conditions) for 14 body systems and the required medical proof to show that a listing is met.  If a child meets or functionally equals a listing, this will be considered as conclusive proof of disability.

HIV infection (AIDS) is a listed impairment for both adults and children. The HIV listings, one for children and one for adults, are part of the new Immune System Listing, section 14.00. The final regulations also contain provisions regarding the particular conditions of women with HIV infections. Important factors to be considered in evaluating the functioning of children with HIV infection include, but are not limited to, symptoms, frequency and duration of manifestations of disorder, periods of exacerbation and remission, and the functional impact of treatment, including the side effects of medication. If the child’s impairment does not meet the criteria of this HIV, consideration must be given as to whether the child has an impairment that satisfies the criteria of a listing in another body system. For example, a child with HIV infection may showsigns and symptoms of a mental impairment or of another physical impairment.

A continuing disability review is required for all childhood disability recipients once every three years if their impairment is likely to improve.

For additional information regarding Social Security Disability or Medicaid, please follow this link.

Social Security law is complex; at Hoffman, Larin and Agnetti, PA we offer a free consultation so that you can learn your rights. There are no fees for representation before the Social Security Administration in disability claims, unless we win. We have offices throughout south Florida in Dade, Broward and Monroe Counties for your convenience.

Very often in our law practice, more so in these troubled economic times, a parent with whom the child spends the most time will ask me whether they can relocate for economic, social or other reasons.

“Relocation” means a change in the location of the residence of at least 50 miles from the previous residence (or the residence of the other parent) and must be for at least 60 consecutive days, not including a temporary absence from the principal residence for purposes of vacation, education, or the provision of health care for the child. Relocation to a place less than 50 miles from the former residence is permitted at any time.

There are only two ways that you can relocate under Florida law. You must either (1) enter into a voluntary written agreement to the relocation with the other parent (or person who has time sharing rights) which requires approval by the court, or, in the absence of an agreement, (2) ask the court to allow relocation, in which case the court will hold a hearing to decide whether relocation is in the best interests of the child(ren).

Court involvement begins with a petition (formal request) to permit relocation. Your petition will let the court know the location of the intended new residence, the expected date of relocation, the reasons for relocation and a proposed time sharing schedule. The other parent has 20 days to give specific reasons to the relocation.  The nonrelocating parent will also have to describe his or her involvement with the child (why should an uninvolved parent who rarely visits be able to object to relocation?) If no objections are filed, the court must presume that the relocation is in the child’s best interests and will approve your relocation. Hearings on relocation are usually held within 30 days.

If objections to relocation are filed, you may not relocate and will go to a temporary hearing or trial to get the judge’s permission to relocate. A court may enter a temporary order allowing relocation if it determines at a preliminary hearing that the likelihood is that the court will approve the relocation at the final hearing.

You will have to show the court that relocation is in the best interests of the child; the objecting person will have to convince the court that the proposed relocation is not in the child’s best interests.

The court looks at a variety of factors in deciding whether to permit relocation, including the quality of the child’s relationship with the other parent, the age, needs and preferences of the child, the probability of a continuing meaningful relationship between the child and the nonrelocating parent, whether the relocation will improve the general quality of life for both you and the child, and any history of substance abuse or domestic violence by either parent.

Relocation is complex and often requires attorney involvement. For detailed information, see Parental Relocation.

She wants to know how she can hire me since she has no money. She wonders how she will survive and keep the mortgage current during the divorce proceeding (he already told her ‘I am not giving you anything’.)

This scenario and the questions relating to temporary alimony or support are common.

Temporary alimony is money paid by one spouse to another to provide for his or her living expenses such as food, clothing, and housing and to maintain his or her lifestyle during the action for dissolution of marriage.

The Judge has broad discretion in awarding temporary alimony and there are no specific guidelines. Rather, temporary alimony is based on the traditional standards of one spouse’s need, the other’s ability to pay and the standard of living established during the marriage. Put another way, a supported spouse is entitled to a continuation of the style and standard of living during the divorce litigation as was enjoyed during the marriage. A person’s needs include those non-essentials and luxuries that he or she enjoyed during the life of a marriage. Each family, then, has a unique standard of living and although one family’s standard of living may seem extravagant or overwhelming to others, it will still be the basis for determining the amount of temporary support in that case.

The court also has the discretion to award temporary attorneys’ fees, suit money, and costs. The purpose of an award of interim (temporary) attorneys’ fees is to make sure that one party will not be placed at a disadvantage by the financial resources of the other (i.e, the court will ‘level the playing field’.)

A hearing for temporary alimony and temporary attorneys’ fees (generally an emergency or high priority hearing) may be held either before the court or a master appointed for that purpose when the court docket is crowded and getting a hearing before the court would result in a delay.

For more detailed information about temporary alimony and temporary support in Florida, follow this link.

THE PROBLEM:

Consider the following (unfortunately) common situation faced by many homeowners: their home in the current depressed real estate market is worth $150,000. They have two mortgages on the property that they obtained during the real estate boom several years ago. The have a first mortgage of $160,000 (they are a little ‘underwater’, that is, they owe a little more than the property is worth). They are not happy, but can manage the payments. The problem is the second mortgage of $100,000 that they put on the property when it was worth much more; they are not able to keep up with this mortgage and just received a notice of acceleration and imminent foreclosure from the lender.

THE REMEDY:

There is a remedy for these homeowners which will allow them to keep their home- CHAPTER 13 BANKRUPTCY.

In a Chapter 13 bankruptcy, a debtor can wipe out or strip off these second (and third, etc.) mortgages where the home is worth less than the amount owed on the first mortgage. Many homes are saved from foreclosure with this cram down or strip off strategy.

A LITTLE BIT OF LAW

A Chapter 13 bankruptcy is also called a wage earner’s plan. It allows individuals with regular income to develop a plan to repay all or part of their debts through a repayment plan providing for installments payments to creditors over three to five years.

You are eligible for Chapter 13 relief as long as your unsecured debts are less than $360,475 and secured debts are less than $1,081,400 (these amounts are adjusted periodically to reflect changes in the consumer price index.)

Filing the petition under chapter 13 “automatically stays” (stops) most collection actions against you and your property. As long as the stay is in effect, most creditors may not initiate or continue existing lawsuits, wage garnishments, or even make telephone calls demanding payments. The automatic stay stops all foreclosure proceedings.

SO LET’S GET RID OF THE SECOND MORTGAGE (and more)

Where the property’s fair market value has gone down to an amount equal to or less than the amount owed on the first mortgage, in a Chapter 13 proceeding the second (or third…) mortgage will no longer be treated as a secured loan (mortgage) against your property, i.e., it will be ‘stripped out’. The mortgage will be treated in the same way as an unsecured debt (e.g., credit cards, medical bills, etc.,), which are not liens against your home and will not support a foreclosure. As a general rule, a Chapter 13 bankruptcy discharge releases the debtor from all debts provided for by the plan, including the second mortgage.

Often, a loan modification can also be negotiated in a Chapter 13 Bankruptcy. Loan Modifications may reduce the principal amount owed and/or the interest rate and eliminate arrearages.

For investment property, first mortgages can be crammed down in a Chapter 13 Bankruptcy. Cram down means that the Chapter 13 bankruptcy will reduce the principal mortgage balance to the property’s current market value, and the mortgage debt above market value will be treated as an unsecured debt.

The option of lien stripping is also available for car loans. If you owe more on a car loan than the car is worth, the overage can be stripped off. For example, if a present value of a car is $11,000 but the lender holds a claim of $15,000 secured by the car, then the lender holds an unsecured claim of $4000. Thus, while reorganizing the debts in a Chapter 13 bankruptcy, this $4000 will be stripped off the car loan. There are certain limitations on lien stripping on vehicles that are purchased within 910 days of the filing.

Look for an attorney or firm that has experience not only in bankruptcy, but also in loan modification, short sales, foreclosure defense and workouts; these may be the better approach alone or in combination. You need a lawyer who can offer global solutions, not just a bankruptcy filing. To learn more on how to select a bankruptcy attorney, click here.