One of the issues faced by a judgment creditor in pursuing collection of the judgment is the amount of attorney’s fees and costs that will be incurred in the collection efforts. They can be substantial and are generally not recoverable. There are, however, a few statutory provisions which may facilitate recovery of fees and costs… Continue Reading
Category Archives: Debt and Judgment Collection
Subscribe to Debt and Judgment Collection RSS FeedMunicipal Liens vs. Mortgages: Florida’s Supreme Court Rules on Superpriority Issue
Posted in Debt and Judgment Collection, Special Assets LitigationIn my April 18th post, I discussed the recent trend of municipalities enacting ordinances designed to give their code enforcement liens “superpriority” over prior-recorded mortgages. Basically, the municipalities have sought to achieve for their liens the same priority as that afforded liens for unpaid real estate taxes. In 2011, the 5th District Court of Appeal… Continue Reading
Magistrates to Handle Florida Residential Foreclosure Actions – Florida Supreme Court Amends Rule 1.490 and Significantly Changes Landscape of Residential Foreclosure Litigation
Posted in Debt and Judgment Collection, Residential Foreclosure, Special Assets LitigationIt is no secret that Florida consistently ranks among the worst states in the union in regards to the mire of the residential mortgage foreclosure case backlog. From 2007 to 2013, approximately 1.5 million foreclosure cases have been filed in Florida alone. As of February 2013, nearly 360,000 cases remained pending in Florida courts, and… Continue Reading
HB 87 – Florida’s Foreclosure Bill Is Back (Part 2)
Posted in Debt and Judgment Collection, Special Assets LitigationIn a prior post, we discussed two of the four main components of HB 87, the foreclosure reform bill presently under consideration in Florida. The remaining sections of the bill which merit consideration involve a revised “show cause” procedure and provisions designed to protect third parties who have purchased foreclosed property. The bill proposes to… Continue Reading
Municipal Liens vs. Mortgages: Which Has Priority?
Posted in Debt and Judgment Collection, Special Assets LitigationI have recently encountered several situations in which local governments are claiming, under ordinances they have enacted, that their liens and fines have “superpriority” status over existing mortgages, regardless of when the liens were recorded and whether or not the mortgage holder ever was given notice of the liens. It seems that these claims are… Continue Reading
Debts Non-Dischargeable When Use of Proceeds Intentionally Misrepresented
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionWhen an individual obtains a loan with no intention of repaying the lender, it is well established that such a debt is not dischargeable in bankruptcy. If, however, a debtor does not misrepresent its intent to repay the lender, but instead materially misrepresents the purpose of the loan, is the debt dischargeable in the debtor’s… Continue Reading
A Potential End-Around McNeal: Liens Partially Secured by Personal Property
Posted in Bankruptcy, Debt and Judgment CollectionWhen the time comes to collect a debt, few organizations are as accomplished as the Internal Revenue Service. The IRS showed just such guile in the case of In re Williams, a recent Chapter 7 proceeding in the Middle District of Georgia, in which the creditor raised an interesting, and more importantly, successful defense to… Continue Reading
In re Davenport: The Eleventh Circuit sets Minimal Standards for Creditor Reliance in Fraud Case
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionThe Bankruptcy Code protects lenders which reasonably rely upon a debtor’s financial statements when approving a loan. The Eleventh Circuit was recently faced with an “enterprising” debtor who attempted to challenge the reasonableness of a bank’s reliance on his falsified financial statements. Ultimately the court rejected the debtor’s arguments that the bank should have more… Continue Reading
HB 87 – Florida’s Foreclosure Bill is Back
Posted in Debt and Judgment Collection, Special Assets LitigationOn February 7, the House Civil Justice Subcommittee voted to pass Florida’s newest bill designed to improve the efficiency of mortgage foreclosures: House Bill 87. While it is still early in the legislative process, this is a good time to examine the four main components of the bill. First, the new bill limits the time… Continue Reading
In re Sundale, Ltd.: Bankruptcy Court May Have Final Say in Certain State-law Counterclaims
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionAs we have discussed in previous posts, the Supreme Court has held that not all counterclaims which arise within the context of a bankruptcy case are “core” proceedings, such that the bankruptcy court may make a final and binding determination on the claim. This is troublesome to creditors because further litigation of the claim has… Continue Reading
Radlax
Posted in Bankruptcy, Debt and Judgment CollectionCan a Chapter 11 debtor propose a plan to sell a lender’s collateral free and clear of the lender’s lien without allowing the lender to credit bid? The Supreme Court says “no”—unless there’s cause. There are three ways for a debtor to confirm a plan without the affirmative vote of a secured creditor: (1) the… Continue Reading
Florida Deficiency Proceedings: Establishing the Value of the Property
Posted in Debt and Judgment Collection, Special Assets LitigationFollowing a foreclosure sale, a secured creditor may seek a monetary judgment for the deficiency amount that remains owed to it by the borrower. If the creditor was the successful bidder at the foreclosure sale, it has the burden of proving that the fair market value of the property foreclosed upon, as of the date… Continue Reading
Foreclosure Strategies for Second Mortgage Holders
Posted in Debt and Judgment Collection, Special Assets LitigationLenders holding second mortgages will, assuming the first mortgage is in default, face decisions as to how to best protect their interests in the property. These questions typically come to the forefront when the first mortgage holder files a foreclosure suit and names the second mortgage holder as a defendant. The bank in second position… Continue Reading
Florida Foreclosure Sales: Developing a Maximum Bid
Posted in Banking Operations, Debt and Judgment CollectionA secured creditor who obtains a foreclosure judgment has the ability to “credit bid” at the foreclosure sale up to the full amount indicated in the judgment, without being required to deposit any funds with the Clerk of the Court. After the entry of the foreclosure judgment and prior to the scheduled sale, a creditor… Continue Reading
Surcharge of Debtor’s Exempt Assets Allowed when Debtor Willfully Conceals Non-Exempt Assets
Posted in Bankruptcy, Debt and Judgment CollectionConcealing assets from the Bankruptcy Court rarely, if ever, turns out well for a debtor. In a recent First Circuit case, a debtor concealed proceeds from prepetition sale of his former marital home, claiming that all of the proceeds were paid to his former wife. Nevertheless, the debtor actually received nearly $27,000, which he used… Continue Reading
Florida Deficiency Proceedings: Effect of Bids at the Foreclosure Sale
Posted in Debt and Judgment Collection, Special Assets LitigationDuring a deficiency proceeding, once a creditor introduces the foreclosure sale price, the borrower technically has the burden of presenting evidence to establish the fair market value of the property. In the absence of such evidence, the trial court has the power to act upon the assumption that the sale price reflects the fair market… Continue Reading
Insiders as Equity Investors: Competition Protects Lenders from Absolute Priority Rule Circumvention
Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection, Loan WorkoutsUnder the absolute-priority rule, unpaid creditors normally receive the equity in a reorganized business. If a plan of reorganization proposes a “new value” investment in exchange for equity, however, the rule does not strictly apply. In the case of Bank of American National Trust & Savings Ass’n v. 203 North LaSalle Street Partnership, the Supreme… Continue Reading
Forward Contracts for Commodities not Avoidable as Preferential Transfers
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionBecause debtors may avoid certain transfers and contracts entered into during the ninety days before they filed their bankruptcy petition, trade creditors are understandably nervous about entering into contracts with customers who may appear to be on the edge of insolvency. Such anxiety is especially acute when the nature of the creditor’s business necessitates entering… Continue Reading
Minimizing Delay in Owner Occupied Commercial Real Estate Foreclosures
Posted in Debt and Judgment Collection, Special Assets LitigationThis article is an update of an article which some of our blog readers may have received by email. Based on recent experience that I have had with this statute in circuit court, I have revised the original article. On average, a Florida foreclosure can take nearly two years from service of process to final… Continue Reading
Though not Precedent, McNeal Proves Persuasive in Southern District of Florida
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionMortgage modification has long been an angst-ridden topic for consumer creditors. The issue once again rose to the forefront in May of 2012, when the Eleventh Circuit issued the unpublished opinion of In re McNeal, wherein the court allowed a Chapter 7 debtor to “strip off,” or avoid, a wholly unsecured junior mortgage. As discussed… Continue Reading
The Status of Florida Foreclosures
Posted in Debt and Judgment Collection, Special Assets LitigationRecently, The Wall Street Journal published an editorial discussing the status of mortgage foreclosure litigation. The purpose of the article was to extol the alleged benefits of non-judicial foreclosure over judicial foreclosure. Without getting into the politics or relative merits of the contrasting systems, let’s take a quick look at some of the reported statistics… Continue Reading
A Troubling Interpretation: Prepetition Foreclosures as Preferential Transfers under § 547
Posted in Bankruptcy, Debt and Judgment CollectionAs stated in Doug Waldorf’s post below, the concept of property valuation in regards to a deficiency judgment is well established within the Eleventh Circuit. The fair market value of the property is established at the foreclosure sale. When foreclosure and bankruptcy cross paths, however, other considerations come into play, and it is important that… Continue Reading
Fair Debt Collection Practices Act (FDCPA): Applicable to Institutions that Acquire Loans from the FDIC?
Posted in Banking Operations, Debt and Judgment CollectionIn the wake of bank failures, some institutions have acquired failed bank assets, including loans, from the Federal Deposit Insurance Corporation. Such institutions should exercise caution when collecting on consumer loans that were in default at the time they were acquired, because the institution may be viewed by courts as a “debt collector” for purposes… Continue Reading
Formal Objection to Confirmation not Necessary to Appeal “Absolute Priority” Violation
Posted in Bankruptcy, Commercial Lending, Debt and Judgment CollectionCramdown. The very word makes the hair on the back of lenders’ necks stand up, because in the past, there was little a lender could do once the bankruptcy court confirmed a Chapter 11 plan. However, in the 2011 decision of In re Lett, the Eleventh Circuit loosened the stranglehold and allowed a creditor to appeal the confirmation… Continue Reading