Pay your real estate taxes before the York County Judicial Tax Sale: June 20, 2013

The York County Tax Claim Bureau has published notice that the Judicial Sale will take place on June 20, 2013 at 9:00 a.m. If your property is on this list, it is important for you to understand that if you do nothing before the sale, that you will likely lose your property.   

The Judicial sale is distinguishable from the "Tax Upset Sale" that occurs in the fall every year because at the judicial sale, properties are sold "free and clear" of mortgages and other encumbrances.  The properties are sold in order that the County's municipal and school taxes can be paid.

If your property is on the sale list, you may be interested in learning how the “Automatic Stay” under the Bankruptcy Code will stop the Judicial Sale.  In addition to stopping the  Judicial Sale, Chapter 13 of the Bankruptcy Code allows individual property owners the opportunity to pay back their delinquent real estate taxes (as well as any mortgage arrears) over a payment period lasting as long as five years.   Other remedies are available under the Bankruptcy Code for business organizations (such as corporations, partnerships and Limited Liability Companies).  If you do not have the funds to pay back the real estate taxes before the Judicial Sale, relief under the Bankruptcy Code may be your only remedy to prevent sale of your property.

Below is the link to the York County Tax Assessment Office where you can find out how much is owed on the delinquent real estate taxes.

http://yorkcountypa.gov/property-taxes/assessment-and-tax-claim-office/delinquent-tax-information-payment.html

Stay Violation Costs Creditor $3,000

This is a case where I represented the Debtor in which I litigated in bankruptcy court earlier this year in the Middle District of Pennsylvania.  

The Court held that a creditor in possession of property of the bankruptcy estate must immediately and unconditionally turn over the property to the estate once the petition is filed. Having failed to do so, the defendant was liable for the damages caused by his violation of the automatic stay. 

The bankruptcy court previously ruled that the defendant willfully violated the automatic stay by refusing to return the debtor's car to her after she filed for bankruptcy.  The defendant loaned the dbetor the money she needed to recover her car after she defaulted on the payments.  The parties agreed that the debtor would repay hte loan, and that the defendant would have an interest in the car.  When the debtor moved out of the area, she left the car with the defendant.  She then told the defendant that she wanted the car back, but the defendant refused to give it to her.  The debtor filed for bankruptcy relief, and demanded that the defendant refused to return the car.  More than one year later, the defendant returned the car after the bankruptcy court ruled that his continued retention of it violated the automatic stay.  In this ruling, the court awarded the debtor actual damages of $2,500 for attorney's fees and $500 for punitive damages.   

Dean v. Carr Opinion (J. France) - Stay Violation Costs Creditor $3,000 by Brent Diefenderfer

Bullock v. Bankchampaign - Supreme Court defines state of mind for "defalcation" for purposes of non dischargeability

Earlier this week, the Supreme Court held that the term “defalcation” in the Bankruptcy Code (for purposes of non-dischargeability) includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior.   Previously, it was somewhat unclear as to what state of mind was required to prove defalcation of funds in a fiduciary capacity.
 
SCOTUS - Bullock v. Bankchampaign

Bankruptcy Court's Ability to Determine Tax Liability.

While it has not often been utilized, bankruptcy courts have been given limited jurisdiction under Section 505 of the bankruptcy code to determine the amount or legality of any tax, with certain limitations. This includes the ability of the bankruptcy court to reduce property tax assessments for prior years. Nevertheless, this jurisdiction has been strictly limited by the BAPCPA amendments which require that the challenge be made “timely.” 11 U.S.C. § 505(a)(2). The majority of bankruptcy decisions have concluded that Bankruptcy Code § 108(a) can provide no relief in extending that time limit for bankruptcy cases. 5-11-bk-05550-JJT_Airport__5-11-ap-00244-JJT_Ray

In Re Michael: funds acquired by the debtor for eventual disbursement to creditors by the Chapter 13 Trustee must be returned to debtor at the time of conversion

On October 26, 2012 the 3rd Circuit held in the case of In Re Michael, No. 11- 1992, that when a debtor converts their case from Chapter 13 (Adjustment of debts) to a Chapter 7 (Liquidation of Assets), funds acquired by the debtor for eventual disbursement to creditors by the Chapter 13 Trustee must be returned to debtor at the time of conversion. In other words, if the Chapter 13 Trustee is holding funds contributed by the debtor, those funds must be returned to the debtor upon conversion of the case to Chapter 7, instead of being disbursed to creditors. In Re Michael (3rd Circuit)

Erie v Dombroski: Choice of Law Standards Discussed

Judge Opel in a recent opinion discusses choice of law issues for bankruptcy cases involving an issue where there is a conflict between state laws.

The Court must undertake a choice-of-law analysis to decide which law will determine whether the alleged choice-of-law provision is enforceable.  To answer a choice-of-law issue, federal courts are required to apply the choice-of-law rules of the “state in which it sits. Pennsylvania’s standard for choice-of-law questions is a hybrid of two tests: the “most significant relationship” approach of the Restatement (Second) of Conflicts of Law and the governmental interest approach.  The Pennsylvania approach is a two-step analysis. First, the court must determine whether there is a true conflict of laws or merely the existence of a “false conflict.”  If a true conflict exists, the reviewing court then determines which state has the greatest interest in the application of its law through use of then “most significant relationship” test of the Restatement (Second) of Conflict of Law.  To resolve whether a true conflict exists, courts compare the competing state laws and the governmental interests they represent.

 

12-AP-156 Erie v Dombroski Summary Judgment Opinion

Another "Mortgage Relief Company" shut down for alleged violations of State Consumer Protection Laws

Another "Mortgage Relief Company" has been shut down for violating several State Consumer Protection Laws.  On Monday, September 24th, 2012, the United States District Court for the Southern District of Florida entered a Temporary Restraining Order  which prohibits Prime Legal Plans LLC, together with its related entities, and the individuals who control and/or work for Prime Legal Plans LLC from contacting homeowners and seeking to or collecting any monies from consumers for mortgage assistance relief related services.  Based upon information provided by the Court Appointed Receiver, the Prime Entities offered to help people resolve mortgage foreclosure issues and charged consumers anywhere from $595 to $750 per month for their "services." Based in Florida, the company apparently solicited clients from around the country making unrealistic promises to save their homes from foreclosure.  Unfortunately, the company took the money but did nothing to help their clients.  Here is the link the the Receiver's website:  www.primelegalreceivership.com.

This is one of many "Mortgage Relief Companies" which are currently operating in the present economic environment.  They prey on people who are afraid of losing their home and make promises they can't possibly hope to fulfill.  Many of my clients have received solicitations from this company and similar organizations.  Because I was concerned about the reputation of these companies and the promises being made, I wrote a newsletter article concerning the Federal Trade Commission's adoption of the Mortgage Assistant Relief Services Rule (MARS).  The rule was adopted to protect distressed homeowners from mortgage relief service providers that claim, that for a fee, they will negotiate with consumer’s mortgage lender or service to obtain a loan modification, a short sale or other relief for the home owner, or foreclosure.  The changes are a result of a flood of complaints by consumers that many of these companies are bogus or have made false or misleading claims and representations.

Under MARS Rule, mortgage relief companies may not collect any fee until they have provided consumers with a written offer from their lender or service that the consumer deems acceptable. The written offer must describe the key changes to the mortgage that would result if the consumer accepts the offer. Mortgage relief companies also must remind consumers of their right to reject the offer without any charge. Under the new rules several disclosures are necessary, including:

• Mortgage relief companies must not state that they are associated with the government, and their services have not been approved by the government or the consumers’ lender.

• That the lender may not agree to change the consumer’s loan.

• If the mortgage relief companies tell consumers to stop paying their mortgage, they must tell them that they could lose their home and damage their credit rating.

• Mortgage relief companies also must explain in their communication and to consumers that the consumers may stop doing business with the mortgage relief company at any time.

Homeowners who are struggling with their mortgage should also be aware of how a  Chapter 13 Bankruptcy might save the family home from foreclosure. Unlike promises made by mortgage relief companies such as Prime, the Bankruptcy Code provides a safe, predictable and cost effective method of saving the family home.  One of the more well known uses of a Chapter 13 is that the homeowners can stop foreclosure and pay back all of the mortgage arrears over a period of 3-5 years. Another option that may be available to some consumers is the possibility of “stripping off” totally unsecured second and third mortgages. For instance, if a home is presently worth $100,000.00, is subject to a first mortgage in the amount of $105,000.00, in addition to a home equity line-of-credit (HELOC) of $20,000.00, the home owner could propose a Plan inside Chapter 13 to “strip off” the HELOC and have it treated as a totally dischargeable debt in bankruptcy.