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If you closed on a short sale in the last five years and did not obtain a waiver of the unpaid balance owed to the first mortgage holder, you are at risk of now being sued for the difference – called a deficiency balance.  This could be for tens or hundreds of thousands of dollars.

Lawsuits for deficiency judgments are likely to pick up in Florida following a recent case which held that the statute of limitations is five years following the short sale rather than the one year after a foreclosure sale.  We were afraid this might happen and we advised our clients during the height of the short sales not to close without a deficiency waiver.

So any short sale that occurred before mid 2012 would be safe, those short sales that closed after mid 2012 are at risk.

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What should you do if you are sued by NCSLT for student loans?

In recent years, lawsuits brought by the National Collegiate Student Loan Trusts (NCSLT) has become an epidemic. Defending these cases can be fun and rewarding. Often, consumers are faced with a lawsuit for tens of thousands of dollars on a loan they barely remember, from a trust they have never heard from.  They are often sued in multiple cases.  The deficiencies in the collectors’ proof have been well documented.  We raise many evidentiary and standing issues and conduct discovery to prevent a judgment.   Some clients are simply not collectible.  Between the legal problems with the cases and often times the financial condition of our clients, we can often obtain dismissals with prejudice – meaning they forgive the debt in full and agree not to come after our clients in a future case.

We had nine dismissals today.  This is life changing for our clients.  It can change your life too for the better.  These cases can be defended and can be settled for reasonable amounts.  If you haven’t been sued yet, please consult with an attorney about your rights – you’ll likely be sued in the next year as we are seeing more and more of these cases be filed.  For more information, we offer a free consultation and have tons of information on our blog and website at Christie D. Arkovich, P.A.

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Bankruptcy enables you to write off income taxes more than three-years old. However, bankruptcy cannot get rid of all back taxes. There are many qualifications and stipulations regarding what taxes you can and cannot write off under bankruptcy.  Our Florida bankruptcy clients are often able to discharge more taxes than they previously thought – see our website or contact us for a free consultation.

Federal and State

Because there are two different types of income tax: state and federal. The specific bankruptcy guidelines between state and the federal government vary as well.

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In examining the typical debt that a person lives with nowadays, Sorboni Banerjee, Fox News Consumer Reporter, interviewed Tampa, Florida Student Loan Attorney Christie Arkovich for a news story on Monday.  The portion dealing with student loan debt is copied below:

Christie Arkovich specializes in helping people negotiate their student loans down.  She says when students first graduate it’s usually not that bad, but as they push back payments, the problem balloons.  “When grads first graduate, it’s mid 30’s and that’s actually sustainable if you have a job that pays $30,000 to $35,000.  That’s a one-to-one ratio that’s usually OK.  But people run into trouble, they do forbearances where the balance keeps increasing, so most of what we see are 50 or 100 or beyond 100.”

That’s 100k people.  That’s a house for many people.  And many of these people received only two year degrees or may have even dropped out.  Sorbani goes on to point to a recent study that found 70 percent of people said the reason they were delaying buying a house was because they’re swamped by their student loans.  Americans owe more than $1.4 trillion in student loans which is about $620 billion more than the total U.S. credit card debt.

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The bankruptcy laws do not require married couples to file bankruptcy together. This is one of those things that people do because they just assume they have no choice, and you can bet that one, two, or five knowledgeable people (none of them bankruptcy lawyers) told them they absolutely had to file jointly. If you are going to declare bankruptcy, and you are married, then several circumstances dictate the outcome of your filing.

When One Spouse Has Much Better Credit Than the Other

Credit ratings are as unique as fingerprints, so the odds are good that either you or your spouse will have a better credit rating. If the difference is quite a bit, then it might be a good idea to file the bankruptcy under that person’s name only. However, you can only write off debts under that bankruptcy if the debt account is under that person’s name individually or jointly. So, just for example, if your spouse has old medical bills (in their name only, from before you married them) that would be eligible for discharge under a bankruptcy, the only way to write those debts off is for either them to file bankruptcy alone or jointly with you. Therefore, you alone cannot write those debts off, because your name is not connected to them in any way. In most cases that I handle, married couples file together, simply because the majority of their debts are jointly held, and thus they want to fix both of their credit ratings and protect their jointly held assets.

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Personal Property

Bankruptcy is a way for you to actually keep most of your personal assets and say goodbye to the creditors and debt collectors. The truth is that debt collectors cannot touch MANY of your assets when you declare bankruptcy, most are protected. The magic of this protection is exemption. Yes, some assets are exempt from seizure under the protection of the local bankruptcy laws. Now, the keyword in that last sentence was “local”. The bankruptcy exemption laws differ from jurisdiction to jurisdiction, so that means an asset exempt in Dallas might not be in New York; it all depends on the local laws. Sound complicated? Well, it can be, but that is even more reason to retain a law firm that specializes in your local bankruptcy laws.  In Florida, the state law exemptions can be found in Florida Statutes Section 222.  However, if you have moved to Florida within the past two years, you may instead be governed by the State you moved from or the federal exemptions.  It is important to use the correct exemptions or you could waive your right to keep your personal property, vehicles or even your home.  To understand the exemption process, it helps to know what type of debt you have. In bankruptcy, there are two types of debt: secured and unsecured.

Secured Debt

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Fannie Mae introduced new programs on April 25, 2017 allowing student loan borrowers to refinance their student loans into their home mortgage.  Fannie Mae explained that this would open home ownership to more candidates and reduce interest rates from what is often 6-8% to a more manageable 4% under present 30 year fixed rates.  The headline reads:  Innovations Help Borrowers Pay Down Student Debt and Overcome Debt Related Obstacles When Buying a Home – See more at this link.

While this will help many young borrowers I’m sure, I’m also cautious in that borrowers are giving up important federal rights in doing so.  For instance, if older Americans elect to refinance their Parent Plus loans into their mortgage as they downsize to a more affordable smaller home, they are giving up the right to an income based plan (often 0-$100 a month) and trading that in for a sizable chunk of their home equity.  Home equity that could have been used to help fund their retirement.

Even a younger person should be careful as they too are giving up important rights in the event they lose their job, have a drop in income or become disabled.  The present income based/debt forgiveness plans allow for a re-calculation of a student loan payment for all of these events.  A federal loan can also be discharged in its entirety under the Total and Permanent Disability Discharge program.  A refinance of a student loan, while it may sound inviting due to a lower interest rate, will result in the loss of these federal benefits.  It will also cause the student loans to now be collateralized by their home and the loss of a down payment or equity in that home should a calamity occur.

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UT-IMG_1477Last week we were invited to speak to students at the University of Tampa regarding their student loans and what to expect.  We presented a Powerpoint on Mastering Your Student Loans and held a small workshop for students afterwards.  Fox News Channel 13 was there covering the event as well.

I think it is great that college campuses are trying to raise awareness in this area.  It really is in their students’ best interest to stay on top of their loans.  I think my feelings are fairly well known by now, the loans servicers do not represent the student borrowers.  They are debt collectors pure and simple.  They do not owe a fiduciary duty to evaluate and explain all things student loan related to the borrower.  While a borrower may believe they are the “customer”, in reality, the client is the Department of Education or whoever owns the debt.

So I’d like to say “Thank you” for this move by more reputable schools taking the reins and bringing in sources of information to help their students with the next step in their lives.

Published on:, when we apply for an income based plan with debt forgiveness, our clients do not have be current in their student loan payments.  They cannot be in default, but up to 270 days delinquency is fine.  We request a hardship forbearance to cover the missed payments.  In many cases, the loan servicer would automatically apply any unused forbearance time.  However, I received word today from a fellow attorney that this may be changing – and for the worse.  Navient is now claiming that a borrower must be current in their payments to qualify for IDR.

Unfortunately the standard form for requesting IDR payments (despite being 12 pages long) does not have a place to request a retroactive forbearance and many people will likely be denied if such a request is not made separately.  So borrowers beware, if your request for IDR payments under IBR, Repaye, ICR or any of the other income based plans is denied, it may still be possible so please inquire further or consult a professional student loan attorney.

Navient’s position is contained in their FACT SHEET on Legal Action released March 21, 2017 in response to the recent CFBP Complaint.

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ch-13-bkWith the property market continuing to improve in Florida, we are seeing more lenders delay and place obstacles in front of borrowers trying to modify their home mortgage in an effort to keep their homes.  There are certain court rules and CFPB rules regarding modification that an attorney may be able to help ensure that the lender properly reviews a loan mod package.  When that fails, an appeal or online complaint to the CFPB may help.  When that fails, a very good way to make a lender accept your mortgage payments, is to file a Chapter 13.

First there is a modification process available in many bankruptcy courts, including the Middle District Tampa Division that works pretty well.  There is a good faith requirement that does not exist in state court.  So some mods that may be denied outside of court, or in the state court, may actually be approved in a Chapter 13.

A relatively foolproof way to keep a home is also to use a Chapter 13 plan to catch up on the missed payments.  This may be really good for a borrower who had a prior loan modification (with principal reduction) that they fell behind.  A Chapter 13 should be able to revive the terms of the favorable loan mod.  The catch is that the total arrearage (missed payments, and any foreclosure fees/costs) must be paid within no more than five years, while at the same time the regular monthly payment is also made.  A mortgage company cannot object to a plan like this that provides “adequate protection” to the lender.  Many people cannot afford this, but an easy way to see if you can is to check your last mortgage statement for the balance due (not the principal amount).  If it says $20,000, then divide $20,000 by 60 months which is $333.  So if your mortgage payment is $1,500, you would add $333 to catch up and another 10% for the trustee’s fee for a monthly total of $1,983.  If you can afford this, then your mortgage company must accept it — even though they may really want to foreclose.

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