Welcome to the NEWSLETTER of Fisher’s Law Office, providing you with legal information you can use in your everyday life. In this newsletter we discuss issues of consumer debt. If you have credit card debt, an automobile loan or a home mortgage, this newsletter is for you! Any questions about any of the articles in this newsletter please don’t hesitate to contact us.

1. THE CREDIT CRISIS IN AMERICA

For years, the U.S. Federal Reserve kept interest rates at 1%, well below the rate of inflation. As a result, lenders from foreign countries and the U.S. extended credit to anyone and everyone.

Result? Americans today owe more money than at any time in history. And with the credit market in shock over the number of unpaid loans, new credit is almost impossible to obtain.

Creditors are hiring lawyers and suing to collect the money owed them. Many of our clients have found themselves in Court as defendants in lawsuits.

These matters are very serious and you should consult with legal counsel if you are sued for failure to pay your credit cards, car loans or home mortgage.

2. WHAT IF YOU ARE SUED FOR A CREDIT CARD DEBT?           

Many banks that issue credit cards do not sue you when you default.  Instead, the bank will send you a letter demanding payment. The bank might even call you and threaten suit, but after a while they’ll “write off” the debt.

Several years later they will “sell” the unpaid debt to a “debt scavenger”- a company that specializes in debt collection.  Typically, the bank will sell the credit card debt for pennies on the dollar. 

For example, if you owe $1,000.00 on your credit card, the debt scavenger might pay $20 or $30 for the debt. The purchaser will then sue you to collect the $1,000.00 and hope to make an enormous profit.

3. HOW CAN YOU DEFEND YOURSELF AGAINST A CREDIT CARD LAWSUIT?
 
Many times the company suing you does not have any legal documentation to “back up” their claim in court or they wait too long to file a lawsuit in court.

For example, many debt scavengers do not have any of the following documents:

• The original credit card agreement
• Credit card statements detailing the history of the account
• An assignment or contract evidencing the purchase of the credit card debt.

Practice hints:

If you are sued for an old credit card debt your lawyer should answer the lawsuit and send a “Request for Production” demanding the credit card agreement, a history of charges and payments on the account and a copy of the assignment documents.

He should also send a “Request for Admissions” that the debt is stale and that the Plaintiff doesn’t have the documentation to prove its case. If the documents are missing, chances are the creditor will dismiss the case against you.

Lastly, many creditors wait too long to file a lawsuit to collect the debt.  The “Statute of Limitations” for suing on a breach of contract in Florida is five years under F.S. section 95.11

If you’ve had no activity on your account for the past five years, your lawyer should file an “Affirmative Defense” stating that the debt cannot be collected because it is too old. 

4. ATTORNEY’S FEES IN CREDIT CARD CASES

Most credit card agreements have an attorney’s fees clause giving the bank attorney’s fees if it is required to file a lawsuit to collect on the debt.  Be aware that under Florida Statute Section 57.105(7), a bank is liable for your attorney’s fees if it dismisses the case against you. Therefore, if the case against you gets dismissed, you may have a right to seek attorney’s fees. 

Warning!  You must request attorney’s fees in your answer to the lawsuit. Also, a motion for attorney’s fees should be filed  within 30 days of the date the case ends.

Credit card debts are rarely as straight forward as they seem; the debts are old, there is no paperwork to back up the claim and the party that is suing you cannot prove their status as assignee of the debt.  Always seek legal counsel whenever you are sued for a credit card debt. 

5. AUTOMOBILE LOANS

Automobile loans carry high interest rates and often, the loan balance exceeds the value of the vehicle. 

If you own an SUV (Sport Utility Vehicle) or pickup truck, your vehicle loan balance is probably much greater than the value of your vehicle.

If you are sued for failing to pay on the vehicle, remember the following:

• Most car loan companies will not sue you immediately, but will attempt to repossess and sell the vehicle first.  You should be given notice of the sale. 
• You need to go to the sale to verify that the vehicle is sold for its full value.
• The loan-company has the right to sue you for the balance owed on the loan after selling the vehicle.  If this happens, the creditor can obtain a “Final Judgment” against you for the balance due.

6. HOW DO FINAL JUDGMENTS “EXPIRE”?

Judgments that are recorded in the public records act as a lien on any property that you own. 

If you have a judgment against you, consider the following:

• The judgment is only good for ten years and must be renewed for it to continue to be enforceable as a claim against your property. 
• Your homestead is generally protected from creditors.
• There is a provision in Florida Statute Section 222.01 that allows you to sell your house and not pay most judgment liens that appear in the public records as a lien against your property.
• A creditor can use various methods to collect on a judgment, including taking your deposition, garnishing your wages, garnishing your bank account or seizing your personal property.
• Most creditors will not be interested in seizing your personal property because it is expensive to pay the sheriff to levy on personal property. 

7. EXEMPTIONS THAT PROTECT YOU FROM JUDGMENT CREDITORS

 Florida is one of the most debtor friendly places to live in America. We enjoy many exemptions that protect us from creditors:

• For example, under Art. X, section 4(a)(2) of the Florida Constitution,  up to $1,000.00 worth of personal property is exempt from seizure by a  creditor.
• Note that under a recent change in the law, if you do not own a homestead, the personal property exemption is $4,000.
• Judgment creditors will often attempt to garnish your wages.  Fisher’s Law Office, P.A. has noticed a trend by which creditors garnish the wages of people who are supporting dependants.  If this happens to you, you should immediately ask that the garnishment be dissolved.  Such garnishments are illegal in Florida.
• If you receive a notice of the garnishment of your wages, there will be a form included that will allow you to ask for an immediate hearing on the issue of stopping the garnishment.  Fill out this form and send it to the court. 
• If you have any questions, you should seek legal counsel.  Remember: A creditor cannot legally garnish your wages if you are the “head of a household.”

8.  CASE OF THE MONTH

Our client was supporting her two children.  A creditor garnished over $5,000.00 from her wages over the course of a year.  Fisher’s Law Office, P.A. reviewed the documents and the garnishment and realized that the garnishment was inappropriate and illegal!

Fisher’s Law Office filed a Motion to Dissolve the Writ of Garnishment alleging that our client was a “head of household” because our client was providing more than one half of the support for her two children. (Note that the children do not have to be minors.)

The judge ruled that the garnishment was not only inappropriate but that the $5,000 that had been previously taken from her must be returned to her! 

Moral? Never ignore a Writ of Garnishment.  Take action to protect yourself when a judgment creditor garnishes your wages.

9. ONE THIRD OF ALL HOMES IN AMERICA PURCHASED BETWEEN 2003 AND 2008 ARE “UPSIDE DOWN”

What does this mean?  It means that over 33% of homes purchased in the last five years are worth less than the mortgage balance. 

As homeowners’ homes have declined in value, adjustable rate mortgages are resetting upward. Meanwhile, the cost of homeowner’s insurance and property taxes continues to skyrocket.  

As a result, many working class families cannot afford to pay their home mortgage or simply refuse to pay for an asset they will never be able to completely own.  No wonder the foreclosure rate in America is at the highest rate on record.

10. HERE ARE SOME POINTS TO REMEMBER IF YOU ARE ABOUT TO ENTER THE FORCLSOURE PROCESS

• In many of cases, the bank filing the foreclosure lawsuit is not the originator of the debt.  Moreover, many times the bank loses the paperwork including the promissory note that evidences ownership of the debt. 
• Many banks filing a lawsuit to foreclosure have failed to obtain an “assignment” of the debt. If this happens, the foreclosure lawsuit is subject to dismissal!
• If you are sued, you should read the paperwork attached to the lawsuit. Look for a copy of a recorded “assignment”. If there is no assignment, see a lawyer right away. You might have a defense to the case.
• For example, in the case of Jeff-Ray Corp. vs. Jacobson, 566 So. 2nd 885, 886 (Fla. 4th DCA, 1990) the Court ruled that the note was assigned to the suing bank after the lawsuit began! Based on this, the court declared that the bank filing the lawsuit did not have “standing” to sue. End result? The bank had its foreclosure case dismissed and it had to start the case all over again!
• Other defenses might include failure of the assignee bank to give notice to the homeowner under Florida Statute 559.715 of an assignment of the consumer debt within thirty days.  
• In other cases, a mortgage may reference property in one county, when in fact the property is located in another county. 
• If you have a valid defense in your foreclosure case, the foreclosure process can be lengthy. 
• During this time, most homeowners are not paying the mortgage, insurance or real estate taxes. This gives them time to save money to buy another home or to rent an apartment or house.
• The delay might also give the homeowner time to work out a reinstatement of the mortgage. For example, under recent changes in Federal Law, there is an FHA (Federal Housing Administration) program by which the bank “writes off” part of the mortgage balance and FHA makes a new loan equal to 80% of the home’s value. (Under this new law, when the home is sold, part of the profit goes to the FHA.).

11. WHAT SHOULD YOU DO WHEN YOU ARE SERVED WITH A FORCLOSURE COMPLAINT?

The worst thing that a homeowner can do is to panic and move out the moment he is served with a lawsuit for foreclosure.

Instead, if you are sued in a foreclosure action, you should seek legal counsel. Your lawyer might suggest filing a “Motion to Dismiss”, if there are problems with the bank’s paperwork.

The lawyer might also file an “Answer and Affirmative Defenses” and ask for “Discovery” from the bank consisting of Interrogatories and Requests for Production.

Practice tip: At a minimum, your lawyer should request a history of the mortgage account and a copy of all assignments from the loan originator to the current owner of the mortgage and note.
Also consider setting the case for mediation and asking the bank to reduce the loan balance or allow a reinstatement. Call the FHA and see if the new Federal Law will help you.

There are literally millions of Americans who are involved in the foreclosure process and it is expected that it will take many years for the foreclosure mess to be sorted out.  Because some banks fail to follow the law, represented homeowners may have extra time to make a plan.  Under a recent change in the federal law, 400,000 families could be held by a FHA Refinancing Program.  The program will call for your lender to reduce the balance of your loan to 80% of the fair market value of your house.  If you sell your home for a profit in the future, the FHA will participate in the profit that you make from the sale of your home.  This program may be the answer if you are unable to make payments on your home.

12. DO YOU SELL ON EBAY? IF SO, WATCH OUT!