Who Cares About My Bills When I Am Gone?-----CREDITORS DO!

Like most South Floridians, you probably go crazy during the holidays and for birthdays and charge everything to your credit card. You dine at fancy restaurants. You take out loans to purchase luxury cars and buy big houses in Miami, Fort Lauderdale, or Boca Raton.

You live the life and then one-day life ends. You have outstanding bills and those surviving you worry about who will be responsible for your spending habits.

“If you are co-signer on your spouse’s credit card or mother’s credit card. You are required to pay back anything they owe when they die.”

I get asked the question all the time: “Do I have to pay off my dead relative’s debts?”

Most of the time, the answer is no. When someone dies, their estate is responsible for paying off the debts. That means that debt collectors can go after bank accounts, or assets that the deceased person owned individually.

The next question often asked is, “ What if the estate does not have enough money to pay the debts?”  Then the collector is out of luck because they cannot go after other people to collect. The debt will go “unpaid”.

Like most legal matters, there are exceptions to the rule that do allow collectors to collect from others.

CIRCUMSTANCES YOU MAY BE RESPONSIBLE FOR THE DEBT OF OTHERS

Joint Accounts: Co-Signer on loan, credit card, mortgage, medical bills

(Not responsible if just an authorized user)

Ex: If you are co-signer on your spouse’s credit card or mother’s credit card. You are required to pay back anything they owe when they die.

Stole assets from the estate of the deceased

Ex: You are in charge of handling the decedents estate and you failed to pay or prevent debtors from collecting by illegally using the assets.

** Pay back debt with your own money

Debt collectors are very creative and persuasive. Even if you are not responsible for the debt, they may use terms such as ‘moral responsibility’ and use guilt to make family members feel they have to pay debts.

BEWARE: Creditors always come before heirs. That is why it is extremely important to protect your assets and start estate planning today!

If you live in Miami-Dade, Broward, or Palm Beach counties it is time to start discussing with loved ones their estate planning needs. You can’t predict the future, but you can plan for it.

Contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs

How does a loan modification affect my credit score?

Most people who attempt a loan modification are homeowners who are already delinquent on their payments. One missed mortgage payment will have a negative affect on your credit score. Whether or not a loan modification will affect your credit score depends on the kind of program you are being offered and how the lender reports the account.

Loan modifications, particularly those endorsed by the US Government, such as Home Affordable Modification Program (HAMP), may have no impact at all. These programs include loan-reporting requirements that result in the mortgage continuing to be reported as current and paid in full, if the requirements of the program are met by the homeowner.

“If the account is reported as anything other than “paid on time” and “in full” it will have a negative impact on your credit score.”

Other “loan modifications” could hurt your credit score because they are actually debt settlements. Three pieces of information associated with the loan modification affect your score:

(1)   Credit inquiry

(2)   Change to the loan balance

(3)   Changes to the term of the loan

If the account is reported as anything other than “paid on time” and "in full" it will have a negative impact on your credit score. If it is reported as a “new” loan, your score could still be affected by the inquiry, balance, and terms of the loan- along with the additional impact of a new “open date”. A new or recent open date typically indicates that it is new credit obligation, and as a result, can impact the score more than if the terms of the existing loan are simply changed.

Before entering a “loan modification” in Fort Lauderdale or Miami, be sure to have an experienced South Florida loan modification attorney carefully review the terms of the modification and understand how your payment history will be reported.

 For more information on how to protect yourself from the consequences of a loan        modification,  contact The Hershey Law Firm, P.A. at (954) 303-9468.

First Is the Worst, Second Is the Best, Third is the One With…? Lien Priority in Foreclosure Actions

You are at the department store getting ready to walk into the checkout lane, when a pair of shiny sunglasses lined up near the checkout line catch your eye.  You spend the next 45 seconds debating whether you need a 3rd pair of sunglasses that you will eventually lose. You decide you don’t need them, look up, and see a line 5 people deep waiting to check out.  When you got there, there was no line. Although you were first, you will have to go to the back of the line. In this case, “first come, first served” does not apply.  

“Typically, the matter of priority comes up in foreclosure actions because if a senior lien holder forecloses, it wipes out any junior liens.”

The concept of “first come, first served” is very important when it comes to lien priority.  A lien is a claim on residential or commercial property for certain legal obligations of the owner. These obligations can vary, from unpaid charges for maintenance and improvements, to outstanding balances on mortgage loans and taxes.  A valid lien must be satisfied either by full payment of the obligation or by satisfaction when the property is sold.

Generally, lien priority is determined by the recording date of the lien. The general rule is first in time, first in priority. Some liens, such as property tax liens, have automatic superiority over essentially all prior liens. Typically, the matter of priority comes up in foreclosure actions because if a senior lien holder forecloses, it wipes out any junior liens. However, if a junior lien holder forecloses, its foreclosure is subject to the senior lien.

If you fail to make your homeowner’s association (HOA) payments, the HOA has the right to file a lien against the property. The HOA (lien) foreclosure will wipe out any liens recorded after it was recorded in the public records (possibly a second mortgage). All liens recorded prior to the HOA lien will survive.  Keep in mind the first mortgage will not be extinguished from an HOA foreclosure.

If you have stopped paying your HOA dues and are facing an HOA foreclosure in Miami-Dade, Broward, or Palm Beach County contact The Hershey Law Firm, P.A. at (954) 303-9468 to help protect you from any potential consequences.