Tag Archives: lender

What you need to know about Auto Loan Deficiency Balances

If you are delinquent on your auto loan or your case has been seized and auctioned off, it is time to seek legal help. We can review your individual circumstances and help you understand all of the debt relief options available to you. The quicker you contact us, the sooner we can provide you with the help you need.

auto loan pic

What is a auto loan deficiency balance?

You are probably aware that your vehicle starts to lose its value as soon as you drive it off of the dealer’s lot. Thus, when your auto lender repossesses your care and sells it, the proceeds from the sale are rarely enough to pay the full amount of what you owe on the loan. This means that there is a deficiency balance left due and you are usually still obligated to pay it.

How does the auto auction work?

Each state has its own laws governing how secured lenders can sell repossessed collateral. Generally speaking, the lender is typically required to provide you with a written notification that your car will be sold. The notice will list the date, time and location of the auction or other type of sale. The borrower should also be informed of whether he or she will remain liable for any remaining deficiency balance, as well as how the borrower can find out how much is still owed on the loan.

Asset sales can be private or open to the public. A private sale is conducted for certain parties who the lender believes will be interested in buying the collateral being sold, while a public sale is open to anyone. Private sales are only allowed in certain circumstances, but many cars are routinely sold at private sales to auto dealers. If the sale notification fails to inform you of the date or location of the sale, you should contact the lender and request that the information be given to you. A borrower has the right to attend either type of sale of his or her own vehicle.

What does “commercially reasonable” mean?

The lender must sell a repossessed vehicle in a ‘commercially reasonable’ manner. There are numerous interpretations of this standard, but because most car sales are primarily attended by used car dealers, the bids are low and the sales are still considered to be commercially reasonable. This means that most borrowers are left owing a pretty substantial deficiency balance.

How is the deficiency balance calculated?

When the sale has ended and your case has been sold, the sale price is subtracted from the total amount you owe on your vehicle loan. The remaining amount plus the expenses incurred by the lender in seizing, storing and selling the vehicle are added together for the total deficiency balance.

If you have questions about your auto loan or a deficiency balance, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

Speak with an experienced Auto Loan Attorney at Faro & Crowder, PA 321-784-8158

We offer a free initial consult for foreclosure defense or bankruptcy.

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Faro & Crowder, PA
Phone: 321-784-8158
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

We are a debt relief agency. We help people file for bankruptcy under the bankruptcy code.

Can your Credit Card Lender Seize your assets?

According to Creditcards.com, there are numerous credit card lenders that are using their agreements as authority to seize things you buy with your credit card if you do not pay your bill in full. Typically, credit card debt is unsecured debt, which means that no assets were pledged as collateral to the lender. However, clauses that permit the lender to seize goods may alter this classification for credit card debt.

credit card lender pic

Creditcards.com reports that in excess of 200 publicly filed card contracts have provisions that grant the lender a security interest in goods purchased by the holder of the credit card. Examples of this type of card included stores that were financially backed by Capital One, including Big Lots and Costco.

If your card agreement contains a security interest clause, it could mean that the lender retains the right to seize purchased items even if you file a personal bankruptcy. This could be quite shocking since most consumers are not aware that their contract with their credit card lender contains this type of clause (or that they consented to it!).

Among Creditcards.com’s other discoveries were the following:

  • There has been a significant increase in popularity in credit cards that postpone interest payment for six months or more. It is important to understand, however, that these types of cards usually include contract language that charges the consumer all accumulated interest if a payment is missed.
  • An estimated 70% of the credit card agreements use variable interest rates linked to the U.S. prime rate or to Europe’s LIBOR index.
  • Credit card agreements are increasingly using mandatory arbitration clauses. This type of provision typically prevents the cardholder from filing lawsuits in court and/or creating a class action with other cardholders against the lender.

How can this type of credit card agreement impact your bankruptcy filing? If your agreement includes a security interest clause, it is possible that certain goods usually exempted from the bankruptcy process are not protected. In other words, the lender may be allowed to seize those items even though you filed for bankruptcy.

It is important to note, however, that most credit card lenders do not enforce their security interest clauses. In the majority of the cases, the items that the lender could repossess are not worth the time and expense it would take to seize them. Consider the following example:

An individual purchases a mattress for $400 and the lender offers a financing option that includes no interest or payments for 36 months. The purchaser does not make any payments over the 36 months and the accrued interest and balance now due total $1100. The purchaser still does not make a payment and the lender starts collection efforts, including telephone calls threatening to seize the mattress. The purchaser contacts an attorney who calls the lender to negotiate by offering $50 to settle the debt as the mattress is now over three years old. The lender stops calling.

To learn more about your credit card agreements or the benefits of filing a personal bankruptcy, call Faro & Crowder today!

Foreclosure versus Deed-in-Lieu

House changing hands

If you are struggling to make your house payments, you are probably investigating all of your debt relief options. There are several options that may be available to you, but this blog focuses on the pros and cons of foreclosure versus a deed-in-lieu of foreclosure.

Some mortgage-holders offer a deed-in-lieu to their borrower as a means for avoiding the foreclosure process. A deed-in-lieu is another name for surrendering your property back to your mortgage lender. Although it has its benefits, it is important to understand that a deed-in-lieu also has some significant disadvantages.

A lender benefits from obtaining a deed-in-lieu because it saves it the time and money expended in the foreclosure process. In order to avoid foreclosure, your mortgage-holder may ask that you sign over the deed to your house. This legally transfers title to the property to your lender. As the borrower, it allows you to handle the transaction quickly and privately. A homeowner may be able to negotiate certain benefits with the lender in exchange for the transfer. Of primary concern is negotiating a waiver or a reduction of the deficiency balance that you will otherwise remain liable to pay after the property has been auctioned.

Another important factor to consider is that if you use the deed-in-lieu process, the Internal Revenue Service (IRS) considers it “debt forgiveness.” This means that the amount forgiven by your mortgage lender will be considered as income by the IRS and you will be taxed on it. If you are not prepared, this can be financially devastating.

If you are facing a foreclosure and trying to decide whether or not to give your lender a deed-in-lieu, you may want to consider filing a personal bankruptcy. A Chapter 7 or Chapter 13 case could allow you to discharge or eliminate the deficiency balance that is left owing after your home is auctioned. A bankruptcy may also help you deal with your taxes.

To learn more about your debt relief options, contact the legal team at Faro Crowder, PA. We will review your individual circumstances and help you understand the best strategy for dealing with your debt.

How Can You Defend a Foreclosure Lawsuit?

Home being sold

There was a time when homeowners had few defenses available when it came to foreclosure actions. However, times have changed and now there are numerous defenses that allow a homeowner to successfully defend a foreclosure lawsuit. Below are a few examples:

  • Unfair mortgage terms. If a provision of your mortgage loan “shocks the conscience” of the court, you have a valid defense to the foreclosure action. We can review when your mortgage was signed and the circumstances surrounding it to determine whether there are unconscionable terms in your loan agreement.
  • Insufficient documentation. As soon as your lender begins threatening a foreclosure lawsuit, you should request that your lender proves it owns the mortgage. Most mortgages are assigned numerous times and it is common for errors to occur in the documentation. You have a valid defense if the plaintiff seeking to foreclose your home does not have the proper paperwork to support the action.
  • Active military. There are special protections afforded to active duty service-members. For example, The Service Members Relief Act (SCRA) allows military personnel a nine month postponement if the foreclosure lawsuit is initiated while they are on active duty.
  • Unfair lending practices. If your mortgage lender violated the law in extending your loan to you, it is a valid defense to a foreclosure lawsuit.
  • Procedural requirements. You may be able to defend a foreclosure suit if the lender failed to follow certain procedural requirements.
  • Personal bankruptcy. When you file a bankruptcy, all collection efforts against you (including the foreclosure) must come to a stop. This may only provide temporary relief, but it will give you time to understand all of your available options, as well as negotiate with your lender.

Don’t assume you cannot defend a foreclosure lawsuit! Let us review your individual circumstances and help you understand what defenses are available to you. Contact the skilled attorneys at Faro & Crowder to schedule a free consultation.

Florida’s Mortgage Modification Mediation Program

Auction house

The United States Bankruptcy Court for the Middle District of Florida, as well as the other districts of the state, has initiated the Mortgage Modification Mediation (MMM) program (also referred to as the Loss Mitigation Mediation program) in an effort to assist individuals with obtaining mortgage modifications. The program allows debtors who own an interest in real property with a mortgage on it, to explore modifying the mortgage loan.

Orlando launched the pilot program for MMM and kept statistics regarding the outcome of its mediations, which show a loan modification average success rate of 70%. This is significantly better than the state court mediation system which averaged less than a 3.6% success rate.

The MMM program can assist a debtor as follows:

  • Currently, an individual Chapter 7 debtor may request MMM to modify a mortgage or surrender any real property that the debtor has an interest in.
  • An individual Chapter 11 debtor can request MMM to modify a mortgage or surrender real property that the debtor has an interest in and is used as the debtor’s primary residence.
  • An individual Chapter 13 debtor may request MMM to modify a mortgage or surrender any real property that the debtor has an interest in.

The debtor, the lender, or the court may request referral to MMM. If you participate in the program, MMM provides an online portal which allows debtors and lenders to submit documents via a secure website and correspond online with each other and a mediator. The goal of the website is to allow the parties access to easily view all documentation and avoid multiple submissions or lost records. The MMM program also requires all parties to act in good faith and diligently work to modify the debtor’s loan and avoid foreclosure. Finally, the MMM program allows a neutral mediator to supervise the negotiations, which increases the likelihood of a resolution being reached.

If you are have questions regarding the MMM program or how bankruptcy could benefit you, contact us for a free consultation.

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