Each case is different.  Under chapter 7 bankruptcy, the debtor gets a fresh start.  Under chapter 13 bankruptcy, the creditors get paid a certain percentage on the dollar over a three to five-year payment plan. The reason why one person would have to back a creditor and another would not is based on equity, income,+ Read MoreThe post My friend filed for bankruptcy not too long ago and he got a complete fresh start. Why do I have to pay back to my creditors? appeared first on David M. Siegel.

Chapter 7 bankruptcy allows for a fresh start.  It also allows for you to keep a certain amount of property known as exempt property free and clear from creditors and from the long arm of the trustee.  In terms of real estate, you can protect up to $15,000 worth of equity.  In the case of+ Read MoreThe post Am I going to lose my house, car and other valuables if I file for bankruptcy? appeared first on David M. Siegel.

Well, all of your assets must be listed on a bankruptcy petition and this is true under chapter 7 or under chapter 13.  If you are joint on a bank account, that basically means that you and the other party on the account both have equal rights to that money.  If the sum is in+ Read MoreThe post I share a bank account with my brother. Is that money going to be at risk if I file for bankruptcy? appeared first on David M. Siegel.

You lost your job or your pay was cut. You have medical bills pilling up. You paid for your living expenses with your credit cards and they are now maxed out. Calls are coming in from creditors and y you’ve been threatened with repossession of your car or foreclosure of your home.   As you fight large [...]

If you are behind on your second mortgage, you technically can be foreclosed upon by that second mortgage and eventually lose the home.  The second mortgage might not be the one who gets paid or made whole but they can push the issue and actually do the bidding for the first mortgage company in a+ Read MoreThe post Can I lose my house if I am behind on my second mortgage? appeared first on David M. Siegel.

This is the case of Carla Salerno from Chicago, Illinois who is interested in filing for bankruptcy.  Ms. Salerno does not own any real estate.  She is currently renting from a landlord at the same address as her but on the second floor.  It is a month-to-month lease.  She does not own a vehicle.  She+ Read MoreThe post Chapter 13 Is Possible With Extra Income appeared first on David M. Siegel.

This is the case of José Manuel Verones who comes to me with Wauconda, Illinois seeking debt relief.  Mr. Verones is not a homeowner and he currently lives with his parents so he doesn’t have a formal lease.  He’s got a 2000 Chevy Malibu which is worth $2000 and it is paid for. He has+ Read MoreThe post Bankruptcy Case Study For Jose Manual Verones appeared first on David M. Siegel.

The simple answer is yes, the condo associations can be put in a Chapter 13 bankruptcy and be repaid over a 3 to 5 year period.  Much like a mortgage that you fell behind on, the condo association is a secured debt, secured by your property that you need to pay in order to keep+ Read MoreThe post I am behind on my condo association fees. Can I put those in a bankruptcy? appeared first on David M. Siegel.

    One of the hot topics in Florida now is the stripping of subordinate liens of homeowners associations and condominium associations on homesteads.   The associations had been initially alleging that the liens were covenants running with the land, and not subject to motions to strip or value.   It appears all the decisions are rejecting this argument.  The most extensive analysis of this argument was in Judge Williams very recent  decision in In re Plummer. 2013 WL 163479 (Bankr. M.D. Fla. 2013).  While the Bankruptcy Code does not separately discuss association liens, it defines liens broadly as either a judicial lien, a security interest, or a statuory lien.  Assessment liens could be either described as a security agreement pursuant to the acceptance of a deed with constructive notice of the lien provision in the covenant; or a statutory lien under §718.116 of the Florida Statutes.   In either case the assessment lien falls within the Code's definition of liens which are subject to the application of §506.  Congress has given special rights to landlords under §365 and utilities under §366, and given priority status to various creditors under §507, yet has declined to give special status to prepetition association liens.  While association liens are given special status under §523, this status is limited to assessments that become due and payable after the bankruptcy filing.  The next argument of the associations is based on provisions of the Florida Statutes.  §718.116(5)(a) provides:   (5)(a) The association has a lien on each condominium parcel to secure the payment of assessments. Except as otherwise provided in subsection (1) and as set forth below, the lien is effective from and shall relate back to the recording of the original declaration of condominium, or, in the case of lien on a parcel located in a phase condominium, the last to occur of the recording of the original declaration or amendment thereto creating the parcel. However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located. Nothing in this subsection shall be construed to bestow upon any lien, mortgage, or certified judgment of record on April 1, 1992, including the lien for unpaid assessments created herein, a priority which, by law, the lien, mortgage, or judgment did not have before that date.Fla. Stat. Ann. § 718.116 (West)     Since this section limits its applicability to first mortgages that are recorded prior to the lien, it cannot be applied to give priority of the assessment lien over that of the mortgage.  This is in accordance with the notice provisions under Florida real estate law.   Where the declaration of covenants, recorded prior to the mortgage, does not contain a provision that the lien relates back to the date of the filing of the declaration, the mortgage cannot be charged with constructive notice of the association's lien.  In re Holly Lake Ass'n v. Fed. Nat'l Mortgage Ass'n, 660 So.266, 267 (Fla. 1995).  As many declarations contain a specific provision subordinating the liens to the first mortgage on the property (thereby making it easier for potential owners to finance the purchase of the property) it would seldom allow the associations priority over the first mortgage.Another provision of §718.116 is also cited by the condominium associations as giving them a lien that takes priority over first mortgages.  §718.116(b)(1) providesb) 1. The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee's acquisition of title is limited to the lesser of:a. The unit's unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; orb. One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.Fla. Stat. Ann. § 718.116 (West)  Judge Williamson rejected this argument except where the claim of lien is filed prior to the date the mortgage is recorded.  This simply gives the  association to counterclaim against the mortgage holder under this statute upon entry of a foreclosure by the mortgage.  The same conclusion was reached by Judge Cristol in In re Gonzales, 2010 WL 1571172, 22 Fla. L. Weekly Fed B423 (Bankr. S.D. Fla. 2010) in referencing  §718.116(b)(1).   Section 718.116(b)(1) gives associations the right to be paid the lesser of six months unpaid assessments or 1% of the original mortgage even if the first mortgagee becomes the owner of the property and even if there is no equity in the property.  But this does not create an additional lien against the owner, but rather is part of the secured claim of the first mortgagee, to be paid for by the first mortgagee or whoever obtains title to the property at a foreclosure sale. Homeowners associations have another statute they argue gives them a superior lien status to the first mortgage.  §720.3085 provides(1) When authorized by the governing documents, the association has a lien on each parcel to secure the payment of assessments and other amounts provided for by this section. Except as otherwise set forth in this section, the lien is effective from and shall relate back to the date on which the original declaration of the community was recorded. However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the parcel is located. This subsection does not bestow upon any lien, mortgage, or certified judgment of record on July 1, 2008, including the lien for unpaid assessments created in this section, a priority that, by law, the lien, mortgage, or judgment did not have before July 1, 2008.Fla. Stat. Ann. § 720.3085 (West)The courts reject this argument on similar grounds as §718.116(5)(a).  The section cannot apply retroacatively to improve a lien's priority to a position it did not have prior to July 1 2008.  Evoventure WGV, Ltd. v. Saint Johns Northwest Residential Ass'n, Inc., 56 So.3d 126 (Fla. 5th DCA, 2011).  Thus Judge Jennemann has allowed the stripping of a homeowners association lien where the prior mortgage was owed more than the value of the property in In re Jimenez, 427 B.R. 106 (Bankr. M.D. Fla. 2012).  Debtor's counsel should pull the declaration of condominium and dates of recording of the mortgages.  Where the value of the property is more than the first mortgage, but less than the second, it may not be possible to strip the 2nd mortgage depending on the terms of the association covenants.  If any mortgage is recorded after the date of the assessment, or if the covenant shows liens relate back to the date of the recording of the covenant, with no subordination provision, the association may not be subject to stripping.

When you file for bankruptcy, which type of bankruptcy you can qualify for and how much you can keep are all dependent on the amount of income you are deemed to have under the eyes of federal bankruptcy law. Many people depend on Social Security to survive from month to month, and still others use [...]