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Is Mediation a Waste of Time?

Monday, 10 September, 2012 06:00 Written by Aaron B. Thalwitzer 0 Comments
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The unspoken rule is that lawyers have to profess an affection for mediation. Naysaying runs counter to mediation’s self-professed mantra to “just give it a chance”. And it’s true, you don’t know until you try. But, we usually have a good idea.

In Florida, in most civil cases in which the parties cannot resolve their differences themselves, the court will eventually refer the case to mediation. And sometimes it works. The parties each take a hit, accept more or less than they wanted to, and go their separate ways. But this is often not the case. For a variety of factors, mediation may be, well, pointless. The parties may not yet be appropriately “softened up”, it may be more of a “winner takes all” type of case, or a party simply has nowhere near the money needed to make a meaningful settlement offer. What to do if you don’t want to mediate, or want to, just not until later?

Pursuant to Florida Rule of Civil Procedure 1.700, any party may, within 15 days after the order of referral, move to dispense with mediation or arbitration if:

(1) the issue to be considered has been previously mediated or arbitrated between the same parties pursuant to Florida law;

(2) the issue presents a question of law only;

(3) the order violates the rules pertaining to exclusions from mediation or arbitration; or

(4) other good cause is shown.

Any party may, within 15 days of the order of referral, file a motion to defer the proceeding. The motion must set forth in detail the facts and circumstances supporting the motion, set the motion to defer for hearing prior to the scheduled date for mediation or arbitration, provide notice of the to all interested parties, including any mediator or arbitrator who has been appointed. Mediation or arbitration will be tolled until the disposition of the motion.

Subsection (4) is of interest because it is open-ended. What is “good cause”? I can’t find a single case construing “good cause” in the context of Rule 1.700(c). But, I would argue that a belief that compromise is very unlikely and mediation a waste of time could be good cause.

Don’t get the wrong impression. In the right circumstances, mediation is great. It takes pressure off the courts and resolves some cases. My point is that in some cases, the parties are too far apart, or there can be little to no compromise (e.g. an eviction). In those cases, mediation may not waste the court’s time, but it may waste the parties time, and their money.

Attorney Aaron Thalwitzer practices law in Melbourne, Brevard County, Florida in the areas of civil litigation, real estate law, and intellectual property.

 

Debtor-Creditor Law: What is considered a Violation under FDCPA?

Monday, 03 September, 2012 08:02 Written by Aaron B. Thalwitzer 0 Comments
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Under the Fair Debt Credit Protection Act (“FDCPA”), the below activities are violations. It is a FDCPA violation to make misleading or false representation through a phone call, email, voice mail or letter. Misleading information or FDCPA violations can include.

  • Threatening to sue or pursue any type of legal action, damage your credit rating, impose any type of property repossession, or wage garnishment which the collection agency does not intend to pursue is a FDCPA violation of consumer’s right.
  • Mislead the consumer with the amount or the status of the debt.
  • Contacting someone other than the actual debt holder or cosigner for debt collection. This can include: neighbors, friends, employer or relatives.
  • Calling on multiple occasions at inappropriate times. The FDCPA defines inappropriate times as any contact after 9:00 PM or before 8:00 AM.
  • If the collection agency calls an individual at work they may not notify an employer of the reason for the call before being asked.
  • Making misleading statements to make an individual believe the collection agency is affiliated with the state of federal government and the debt collection documents are official government documents such as a subpoena or court order to pay.
  • Making any type of inappropriate racial slur, insult or obscene comment in letters, calls or emails.
  • Making the individual think they have committed some type of crime by failing to pay their debt obligations.
  • Collecting information under false pretentions such as conducting “surveys”.
  • Suing you in a court unusually far from your home.
  • Charging interest or fees not allowed under state laws or outlined in contracts.
  • Calling an individual at inconvenient locations such as work when an individual has asked the debt collection agency not to call them in either written or verbal form.
  • Making threats to violently harm an individual if they fail to pay their debts.
  • Publishing the names of the people who fail to pay their debts (other than by giving the information to a credit reporting agency).
  • Using a false company name.
  • Providing incorrect information about an individual to someone else.
  • Depositing a post dated check early in efforts to get the check to bounce.
  • Contacting an individual via postcard.

A “debt collector” is someone who regularly tries to collect debts owed to others. A debt collector may contact you if you are behind in your payments to a creditor on a personal, family or household debt, or if an error has been made in your account.

Make no mistake, a debt collector may contact you in person, or by mail, email, telephone, fax (and even telegram, for those of you in the old west).

A debt collector is required to send you a written notice within five days after you are first contacted, telling you the amount of money you owe. The notice must also specify the name of the creditor to whom you owe the money and what action you should take if you believe you do not owe the money.

Question: What can I do to make them leave me alone?

Answer: Two things. Settle the debt, or write them a letter telling them to stop.

Once the debt collector receives your letter, they may not contact you again except to say there will be no further contact, or to notify you if the debt collector or the creditor intends to take some specific action.

If you do not believe you owe the debt, you may write to the collection agency within 30 days after you are first contacted, saying you don’t owe the money. The agency may not contact you after that unless you are sent proof of the debt, such as a copy of the bill.

In addition, debt collectors are required to accurately disclose their identities to the person at the called number, though in practice you are just as likely to hear a dial tone if you ask for the name of the actual human being calling you.

A debt collector may not use false statements, such as falsely implying that they are attorneys, that you have committed a crime, or that they operate or work for a credit bureau or misrepresenting the amount of your debt, the involvement of an attorney in collecting a debt, or indicating that papers sent to you are legal forms when they are not.

There are obvious advantages to writing a cease and desist, but a less obvious one is that violations of the FDCPA can be a basis for a lawsuit, or used as a setoff to lessen the amount you might owe to a creditor such as a credit card company or bank threatening foreclosure. In other words, when they sue you, you can tell the court that they have been harassing you. If the judge finds that you are right, he or she should deduct the damages from your debt. For credit card companies, this could be a large fraction (or even all) the debt, and for mortgage foreclosure cases, it provides a basis to ask for a jury trial (more on that later), and gives the bank a lot to think about if they haven’t been willing to discuss settlement.

Foreclosure Defense and Short Sales: Tax Consequences

Monday, 27 August, 2012 06:00 Written by Aaron B. Thalwitzer 0 Comments
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Question: Do I have to pay taxes on the amount the bank forgave when they foreclosed on my house?

Answer: Sometimes. It depends on a lot of factors, but for many residential homeowners, the answer may be No.

Many homeowners default on their mortgage and note. Often, these homeowners (or their attorneys) will negotiate with the bank to receive a principal reduction on the amount of the loan, or give the bank a deed in lieu of foreclosure, or do a short sale.

This will help you how to find out whether you have to pay taxes on the amount of the loan that was forgiven.

First, an example. Let’s say that in 2007 you took out a $200,000 loan to buy your home. You’ve paid down $20,000, and still owe $180,000.  The payments have increased, your paychecks decreased (or stopped coming altogether) and despite your best efforts, you ended up missing several payments and defaulted on the loan.

Under the Mortgage Forgiveness Debt Relief Act of 2007 (“MFDRA”), the homeowner may be eligible for an exclusion if:

  1. the property is residential, and
  2. the balance on the loan is $2 million or less, and
  3. the mortgage or mortgages was/were used to buy or improve the property, and
  4. the owner lived there for at least 2 out of the last 5 years, and
  5. the debt was non-recourse (i.e., foreclosure was the bank’s only remedy after homeowner default), and
  6. the discharge is related to a decline in value or the homeowner’s financial condition, and
  7. the discharge is not related to services performed for the lender.

The MFDRA expires at the end of 2012 (though President Obama has included an extension to 2015 in his 2013 budget proposal). The exclusion limit is $1 million for a married person filing separately. Equity used for other purposes (e.g. paying off credit cards, other loans) may not be excluded. The MFDRA applies to foreclosures and modifications which qualify as above.

After the reduction, the lender is required to send the homeowner a 1099-C, Cancellation of Debt form. The homeowner must fill out IRS Form 982 when filing taxes that year.

If the MFDRA doesn’t apply, the homeowner may also exclude if he or she is insolvent (total debts exceed the total fair market value of all assets), at which point bankruptcy may be worth considering.

The IRS has some useful information on their web site which goes into much more detail. If you decide to take advantage of the income exclusion, I strongly recommend that you consult with an attorney. Whatever you decide, the government has provided an excellent tool to save you money.

ZIES WIDERMAN & MALEK is a law firm practicing civil litigation, real estate, and intellectual property law in Melbourne, Florida. To contact Mr. Thalwitzer, call (321) 255-2332 or email him at Aaron@LegalTeamUSA.com.

Foreclosure Defense: The Loan Modification Dilemna

Monday, 20 August, 2012 06:00 Written by Aaron B. Thalwitzer 1 Comment
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I hear it almost every day. “Should I keep trying to get a loan modification?”

Invariably, a homeowner has sent the financial disclosures to the bank several times, and the bank claims there are deficiencies, that the documents are out of date, or just admits that they lost the documents. My heart goes out to homeowners in this predicament. They are being abused. As a result, they are frustrated and feel either angry and/or nihilistic about the whole thing. My advice is usually the same: keep trying. Get help. Document every phone call, letter, fax, and email. Over explain everything. Treat the bank like a child. Check up constantly and memorialize every conversation with a letter (sent via Certified Mail).

There’s nothing to lose (besides than your tenuous grip on sanity). Remember that there is nothing to stop the bank from foreclosing on you while you are attempting modification. However, it is my observation that attempting a loan modification tends to delay the filing of a foreclosure lawsuit. The delay may vary. Sometimes it will take months, but in some cases years may pass before you are served. Of course, the bank can file at any time after default (i.e. missing a payment).

Another frequent question is what role a lawyer plays in loan modification. This varies widely from case to case. Sometimes, it is best for a lawyer to handle everything. In other cases, the lawyer reviews all documents to ensure compliance with the modification requirements, while documenting each transaction and stepping in as issues arise.  There are distinct advantages in retaining a competent foreclosure defense attorney to facilitate your loan modification.

In one case, a foreclosure lawsuit had already been filed. We went to two mediations with the bank. At the first one, the bank didn’t bother to show up. At the second, they claimed the documents were incomplete. We had meticulously documented the 10 or 15 times we sent the documents. The bank told us before mediation that the documents were in order. Later, the bank agreed to abate (put on pause) the lawsuit while we tried working things out. The bank later reneged on this promise. We failed a motion for sanctions and attorney’s fees for mediating in bad faith and wasting our client’s time and money. The judge agreed. Our client was awarded attorney’s and costs, and the bank was sanctioned. Although this is atypical, it is happening more often. Now, the bank has again promised to give our client a fair shake, and will have to pay for another mediation. Nothing is guaranteed, but we now have better leverage to negotiate a favorable settlement.

Don’t waste your opportunity. If you are contemplating loan modification, engage a competent foreclosure defense attorney in your area.

Attorney Aaron Thalwitzer practices civil litigation, real estate law, and intellectual property law in Melbourne, Brevard County, Florida.

I Got a Florida Foreclosure Lawsuit: What Now?

Monday, 13 August, 2012 06:00 Written by Aaron B. Thalwitzer 0 Comments
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Most of the time, people call me in time when they’re served with a lawsuit. But often enough, they wait until the last minute or beyond. Usually, they’re sticking their head in the sand, ignoring the problem, deluding themselves into thinking that there’s nothing they can do — or nothing they should do. It’s only when things get real that they get moving. In a foreclosure case, that’s usually a few days before the home they’re living in is going to be sold, or at best a week before summary judgment. But if you wait that long, chances are, it’s too late.

A recent Florida appeals case (Phadel v. Deutsche Bank, 83. So. 3d 893 (Fla. 4th DCA 2012) illustrates this all too common scenario. The homeowners failed to defend themselves and a foreclosure judgment was entered. Later, they asked the judge to vacate (cancel) the judgment. They even had what appeared to be good defenses, but they didn’t raise them at the onset, and the Court said, to paraphrase, “too bad, so sad, next case.” Don’t make that mistake.

Being an attorney, let me lay out an exception to the rule. If there’s real fraud (not ‘they don’t have the note’ “fraud”) or if the bank didn’t serve you properly you might have something even very late in the game. But don’t count on it.

A lot of people think that “since the bank doesn’t have the note, they can’t foreclose”. There are many issues with this statement, but my main concern is that people are being led to believe that they don’t need an attorney, because, well, the judge won’t let the bank take my house when they don’t even have the note, right? Wrong.

Judges are not and usually should not be advocates for either side. The judge isn’t your lawyer. He is not the bank’s lawyer either. When you don’t defend yourself, the judge is usually not much more than a ministerial paper-signer (with all due respect to the judges). You have to defend yourself, and I promise you, you don’t want to go it alone.

On the balance, defending a foreclosure is a solid economic investment. But if you do nothing, or wait until it’s too late, don’t count on the judge, or anyone, coming to your rescue.

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