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Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision

By Jonathan on August 3, 2017

A 2017 ruling by the Georgia Supreme Court most likely represents a significant weakening to a consumer protection provision contained in Georgia’s home foreclosure law.

Georgia law allows what is known as a non-judicial foreclosure. This means that if you fall behind on your mortgage payments, your mortgage company does not have to go to court to seize possession of your home.

Instead, buried deep in the fine print of your mortgage paperwork is language that allows your lender to foreclose on your property simply by giving you written notice and thereafter advertising a foreclosure sale in the legal newspaper of the county where the property is located.

In Georgia, a lender can seize your house in less than 40 days if you are in default. Compare this to a home foreclosure process that typically lasts a year in a judicial foreclosure state like Florida. [Read more…] about Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision

What Happens After Your Chapter 13 Plan is Confirmed?

By Jonathan on July 24, 2017

When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.

In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.

While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan. [Read more…] about What Happens After Your Chapter 13 Plan is Confirmed?

What is the Secret to Making Your Chapter 13 Plan Work?

By Jonathan on July 5, 2016

After 25+ years representing hardworking but financially struggling men and women in the Atlanta area, I can report to you that the #1 secret to surviving Chapter 13 is living below your means. This can mean you have to make some difficult choices.

Chapter 13 Trustees are Increasingly Demanding

When you enter Chapter 13, you need to eliminate the “wants” in your life in exchange for the “needs.” I advise my clients that if you find yourself meeting with a bankruptcy lawyer, everything needs to be on the table. And this includes your cars, home, furniture, jewelry and just about any other type of property you are financing. You will also find that your Chapter 13 trustee likely has a much more restrictive view of what constitutes a true “need:”

if you find yourself paying more than $300 per month for a car or truck, you need to consider giving that vehicle back to the creditor and buying a car for cash or financing a vehicle and keeping the payment below $300 per month
if you are financing vehicles, furniture or jewelry for your children or other relatives, you should be prepared to surrender that property and let your relative work out a deal on his/her own
if your budget includes out of pocket payments for your children’s college expenses, expect push back from the trustee. The trustee’s position will generally be that your child needs to use loans and grants to finance his/her own higher education and that your child may need to seek a less expensive education. Trustees generally do not agree with including someone else’s education costs in your budget
if your budget includes private elementary or high school for a child, you will need to produce evidence that your child has special educational needs that make public school insufficient
do not plan on keeping time shares or other non-essentials when you file Chapter 13

Comedian John Oliver Explains the Debt Buying “Industry” and Zombie Debt

By Jonathan on June 10, 2016

Late night comedian John Oliver recently offered his unique and humorous take on the debt buying industry, noting that collection agencies are responsible for more lawsuits than any other type of plaintiff, and that many of these lawsuits claim money damages for zombie debt. Zombie debt is debt that is not legally collectible because the statute of limitations has run.

Debt buyers rely on intimidation and ignorance, and obtain legally legitimate judgments when consumer defendants fail to answer a lawsuit.

Here’s how it works: let’s assume that you visited a hospital or otherwise incurred a debt back in 1995 that you never paid. Under Georgia law generally the statute of limitations on an unsecured debt like a medical bill or a credit card debt would be no longer than 6 years. So, by the end of 2001, your 1995 debt would no longer be legally collectible. This means that if someone sued you in 2010 for the 1995 debt, you could answer the lawsuit by stating “this statute of limitations for collection of this debt ran in 2001 and plaintiff’s claim should be dismissed.”

If you answered a lawsuit using language like this, any Georgia state or magistrate court judge would dismiss the debt buyer’s claim and you would be done. You could also counterclaim the plaintiff for frivolous litigation, but that is a story for a different day.

However, if you fail to answer the 2010 lawsuit, the attorney for the debt buyer would go to court and say, “your Honor, the defendant has failed to answer our complaint and we are requesting a default judgment.” The judge would have no choice but to grant this request. [Read more…] about Comedian John Oliver Explains the Debt Buying “Industry” and Zombie Debt

Relief From Your 72 Month Car Loan

By Jonathan on June 6, 2016

Financial experts bemoan the “crisis” in student loan debt (over $1.2 trillion as of 2015) and the rising rates of credit card debt ($733 billion as of 2015) but no one seems to be talking about yet another debt bubble – the huge rise of auto loan debt.

In 2012, total auto loan debt in the United States passed $1 trillion. Currently, the average household owes over $27,000 to vehicle lenders. More problematic, many of these loans extend well beyond 3 or 4 years. According to Edmunds.com, as of 2014, over 60% of auto loans were for terms over 60 months, with nearly 20% of these loans using 72 to 84 month terms.

60 months, of course, equals 5 years. 72 months equals 6 years, and 84 months equals 7 years.

Why a Long Term Vehicle Loan Means Trouble

You may ask “why should I be concerned about signing a 60 or 72 month car loan if I can afford the payment?” The answer, in a word, is “depreciation.”

Cars and trucks are depreciating assets. This means that they go down in value with each day and each mile of wear and tear. When you sign off on a 5 year or longer loan, you won’t be break even on your loan for at least 3 years. All your payments through at least year 3 (and most likely longer) will be applied to interest only. And my experience has been that folks who pursue long term vehicle loans often have less than perfect credit such that their interest rates are 7%, 8% or even higher.

This means that if your vehicle breaks down, or if you want to replace your car or truck 3 or 4 years into the loan, you will have to come out of pocket to satisfy the loan. If your vehicle is totaled in a wreck before the break even point, you will have to come out of pocket to pay off the loan because insurance companies pay property damage settlement based on “low retail” value.

If the dealership offers to “roll your existing payment” into a new loan, you’ll end up paying even more, because the new loan will include the leftover finance costs from the original loan plus the unfavorable terms from the new loan.

In essence, a 5 year or longer car loan equals a long term rental, except that you bear all the risk of loss. In case I am not being clear, a 5 year or longer loan is a toxic loan, and almost never a good idea. Even 4 year loans are less than ideal. [Read more…] about Relief From Your 72 Month Car Loan

Georgia’s Likely New Pre-Garnishment Notice Not All Good News

By Jonathan on February 3, 2016

Georgia may soon have a new law governing wage garnishments and bank account levies. But the news is not all good.

You may recall that back in September, 2015, I reported that federal judge Marvin Shoob had issued a ruling that invalidated on Constitutional grounds bank account levies in Gwinnett County, Georgia. A man named Tony Strickland sued the Gwinnett County clerk of court after his bank account containing workers compensation and Social Security funds was seized by a credit card company that had sued him. Mr. Strickland argued, and Judge Shoob agreed, that the credit card company had an affirmative obligation to notify debtors like Mr. Strickland that certain funds (like workers’ compensation benefits, Social Security benefits, welfare payment and similar benefits) were exempt from garnishment. [Read more…] about Georgia’s Likely New Pre-Garnishment Notice Not All Good News