Archive for April, 2009

Flagstaff Divorce Attorney Discusses Orders of Protection in Family Law Cases:

Friday, April 24th, 2009

Many of my divorce or family law clients have questions regarding obtaining an Order of Protection in their case.  Because each case is unique, you should discuss an Order of Protection with an attorney before proceeding.

 

Orders of Protection are intended to protect victims of domestic violence.  To obtain an order of protection, the Court must find that domestic violence has or is likely to occur.  Domestic violence includes more than just physical violence, such as verbal abuse, threatening behavior, and intimidation.

 

Because of the very nature of a divorce, with escalated conflict and volatile emotions on both sides, many family law cases also involve issues of an Order of Protection.  While an Order of Protection can be helpful in some cases, they are often overused and misused.  Even in cases where an Order of Protection is justified, there may be reasons to proceed without the Order of Protection.  Additionally, there are other options available through temporary orders in the underlying family law matter, which are much more flexible and can be specifically tailored to fit your case much easier than an Order of Protection.

 

Advantages to obtaining an Order of Protection include:  obtaining a prompt order giving one party exclusive use of a house; obtaining a prompt order precluding one parent from having parenting time (visitation) with a child; and precluding one party from visiting the other party’s work, school, or other frequented locations. 

 

Disadvantages to obtaining an Order of Protection include:  escalated attorney’s fees and court time; escalated emotions leading to retaliatory behavior in the family law matter; and requirement of third party involvement to exchange children, personal items, and information.  Finally, putting it bluntly, an Order of Protection is just a piece of paper, and it will not stop a bullet.  Even with an Order of Protection you must take safety precautions.

 

If you are considering obtaining an Order of Protection, you should speak with a family law attorney prior to proceeding.  If you spouse or significant other has obtained an Order of Protection, you legally have the option to request one hearing to challenge the Order of Protection.  Because you are only able to challenge an Order of Protection one time, you should consult with an attorney and involve your attorney in your case.

 

For more information, please visit our WEBSITE.

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Possible Deal in the Works on Bankruptcy Cram-Down bill.

Wednesday, April 22nd, 2009

Below is the text of a recent story about the possibility of so-called “cram down” legislation finally making its way through Congress. If the legislation passes it will benefit many homeowners in Arizona who seek bankruptcy protection. The bill would allow a bankruptcy Judge to potentially “cram down” the principal balance on a residence, subject to various limitaitons. The article states:

Wednesday, April 15, 2009
by Bill Swindell

After weeks of negotiation, a compromise may have emerged over Senate legislation that would give bankruptcy judges greater power to modify home mortgages, including reducing the principal. Lenders have been fighting the proposal, arguing that it would bring more uncertainty to the mortgage market and result in higher interest rates. But bank critics say such powers, especially allowing a judge to reduce the principal, are necessary to help homeowners on a wide basis and halt declining prices. The potential deal, according to sources, would add teeth to a House-passed bill that would allow a judge to consider whether the lender has offered the homeowner a new Obama administration plan to help up to 9 million borrowers avoid foreclosure by allowing them to refinance at lower interest rates. The Senate compromise would mandate that if a lender offered a modification through the Obama plan or a program included in last year’s housing bill, called the Hope for Homeowners Act, the homeowner would be ineligible to modify their loan through bankruptcy.

The possible deal has other provisions. At-risk low-income borrowers and those who pay less than 31 percent of their income for mortgage payments would be ineligible for principal reduction, but they could have their rates reduced or their loans amortized over a longer time. If a homeowner opted for a modification under the Obama plan and wound up paying a quarter of income or less for the mortgage, he or she would be ineligible for any bankruptcy modification. If the principal is reduced by a judge, the possible compromise would allow the lender and borrower to evenly split any profit up to the original amount of the loan if it is sold while the homeowner is still in bankruptcy. Only loans that originated before 2009 and amount to less than $729,750 could be modified in bankruptcy. The program would end in 2014.

All sides cautioned that no final deal has been struck and that negotiations could easily fall apart, especially as banks, credit unions and consumer activists each stake out their position in negotiations led by staffers for Senate Majority Whip Durbin. Citigroup Inc. signed on to an earlier compromise, but other lenders have argued that more limitations need to be placed on the availability for principal reduction. Rep. Brad Miller, D-N.C., has said that banks are reluctant to write down such losses through a process known as “cram-down” because it would show up on their already battered mortgage portfolio. “There are a variety of different proposals that are in writing. Nothing has been agreed to,” said Durbin spokesman Max Gleischman. “We were exactly at the same place we were at last week.” The measure is likely to be combined with other banking provisions, including lifting the cap on the number of business loans that credit unions can make. It would also likely expand eligibility for Hope for Homeowners and increase the FDIC’s borrowing authority up to $500 billion for a limited time to give the agency resources to address the banking sector’s problems. The FDIC language would allow the agency to lower fee assessments that it had recently increased on banks to handle the rise in failing institutions. One source said the banks believe that whatever they may lose via the expanded bankruptcy process could be made up through the lower fee assessment. Another source said the banks made the offer to Durbin and felt that he would likely accept the language.

Follow the blog to keep up to date on this pending legislation. You can also visit ourwebsite to learn more about loan modificaiton and bankruptcy.

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ARIZONA DIVORCE ATTORNEY DISCUSSES ALTERNATIVES TO TRADITIONAL DIVORCE:

Wednesday, April 22nd, 2009

  Under Arizona law, a marriage may be ended through a dissolution (divorce) or an annulment.  Another alternative occasionally used is a legal separation. 

 

            Each of these methods have much in common.  For example, in a divorce, annulment, or legal separation, the Judge must equitably divide any community property and community debts.  The Judge must make a determination of any custody and child support issues.  In a divorce or a legal separation (but not in an annulment), the court must make a determination on the issue of spousal maintenance.

 

            To obtain an annulment, a party must demonstrate that factors exist that renders the marriage void.  This may be demonstrated by showing that one of the parties was already married.  This is also demonstrated by showing significant fraud or misrepresentation prior to the marriage.  Such a showing of fault is not necessary in a divorce or legal separation.  Arizona is a no-fault divorce state, meaning that neither side must prove any specific wrong-doing by the other party to proceed with a divorce.  To obtain a divorce, all that must be shown is that one or more of the spouses believes that the marriage is irretrievably broken.  For a legal separation, a party  may demonstrate that the marriage is irretrievably broken, or simply that the parties desire to live separate and apart.

 

            Annulments are often sought after a very short term marriage, or when it is later discovered that one of the parties was still married when the parties were married.  One strategic benefit for seeking an annulment is when one party wishes to avoid paying spousal maintenance (alimony), as the Court cannot do so in an annulment case.  With an annulment, the Court retroactively eliminates the marriage, as if it never occurred.

 

            Legal separations are typically sought for religious or financial reasons.  Some individuals have religious beliefs against a divorce, and therefore prefer to become financially separated rather than divorced.  Because they are not divorced, neither party can remarry.  There may be financial advantages for a legal separation also.  For example, legally separated couples may still file taxes jointly, and may still include the spouse on medical insurance. 

 

            Ultimately, each case must be individually analyzed by an Arizona Attorney experienced in divorce and family law.  While most cases proceed with a standard dissolution (divorce), there may be some advantages to exploring these other legal options.

For more information, please visit our Website.

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ARIZONA FAMILY LAW ATTORNEY DISCUSSES NEED FOR ATTORNEY IN UNCONTESTED DIVORCE CASES:

Thursday, April 16th, 2009

I am often asked in divorce consultations if an attorney is really needed if the parties believe that their divorce case or legal separation case will be uncontested. Generally, it is advantageous to both parties to have an attorney involved even in uncontested cases. Furthermore, many cases that initially appear to be uncontested still require extensive negotiations on the specific agreement detail, and in a small percentage of cases, the parties are unable to maintain the agreement as one or both parties back out for an assortment of reasons.

Because of ethics issues and the conflict of interest, one attorney cannot represent both husband and wife in a case, even if it is uncontested. However, having at least one attorney involved from the beginning of the case, representing either party, provides the benefit to both parties of having the appropriate legal requirements in the pleadings filed with the court to commence the case.

Generally, uncontested divorces are resolved by having both parties and any attorneys involved sign settlement documents. These settlement documents would include a Consent Decree in all cases, and in certain cases would include a Stipulated Parenting Plan and/or a Property Settlement Agreement. Having an attorney involved in the drafting of these settlement documents ensures that the documents are properly prepared, contain the necessary legal requirements, and facilitates placing the agreement of the parties into the proper legal wording. Furthermore, experienced divorce attorneys have the benefit of hundreds of prior divorces and understand various issues that are likely to go wrong. With this knowledge, the settlement documents can be prepared in such a way to address various contingencies and potential future problems, thus avoiding future litigation between the parties.

Finally, an attorney involved in your divorce case will provide you with the knowledge of maneuvering through the court system, and can often facilitate an uncontested divorce without either party being required to appear in court at any time.

If your spouse has hired an attorney, and that attorney is preparing the pleadings and settlement documents, that attorney should inform you that he cannot represent you because he/she represents your spouse. That attorney should inform you that you have the right to hire your own attorney, and that you may take any documents to your own attorney for review prior to signing any settlement documents. Because experienced divorce attorneys have advanced legal training, years of experience, hundreds of divorce and family law cases behind them, it would be wise to hire your own attorney to represent you in the case. At a minimum you should have your own attorney review any settlement documents with you prior to signing them. Your attorney can point out potential pitfalls, discuss with you likely outcomes if your case were to proceed to trial, ensure that you understand your legal rights, and discuss with you how close the agreed upon provisions approximate what a court would likely decide if your case went to trial. Having this knowledge provides you with the assurances that the settlement documents are fair and equitable and in your children’s best interest before you sign them, or provides you an out if these settlement documents are not as fair and equitable as you previously believed.

If you are faced with a divorce, legal separation, or custody case, please call me today for a free initial telephone consultation to discuss how hiring an attorney will benefit you in your family law case.

For more information, please visit our WEBSITE.

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Flagstaff Lawyer Explains Loan Modification Program

Tuesday, April 14th, 2009

President Obama recently implemented a mortgage relief plan called the Homeowner Affordability and Stability Plan. As I researched President Obama’s mortgage relief plan I found a majority of the information provides a great broad overview but neglects to explain the ground level elements that each borrower should understand when considering a loan modification. My intent in this post is to outline those basic facts and thereby enable individuals to take control and get the financial relief that’s available.

The Homeowner Affordability and Stability Plan aims to help up to 9 million struggling homeowners. The plan has set aside $275 billion to help homeowners in one of two ways, through refinancing or through a loan modification. I will breakdown the basic facts you need to know under each plan.

REFINANCING:

The White House provided an Executive Summary of the Homeowner Affordability and Stability Plan. In it, President Obama’s administration describes the need to help individuals refinance:

“Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time refinancing. Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates.”

The Mortgage Relief Plan makes a simple change the rules and allows individuals to refinance at the market’s current rates even if they owe up to 105% of their homes value.
To find out if you are likely to qualify for refinancing under the plan it is easiest to go through this checklist.

□ Is this your primary residence?

This can include 1-4 unit homes, condominiums, and manufactured homes.

□ Is your Loan owned or guaranteed by Fannie Mae or Freddie Mac?

You can find out by going to http://loanlookup.fanniemae.com/loanlookup/ or https://ww3.freddiemac.com/corporate/, or by calling 1-800-7FANNIE or
1-800-FREDDIE, or you can contact your loan service provider.)

□ Are you current on your loan payments?

Current means that you haven’t been more than 30 days late on your mortgage payments in the last twelve months.

□ Do you currently owe less than 105% of the value of your home?

Without obtaining an appraisal it is difficult to know home’s value but there are several places to find a pretty good estimate. Zillow.com provides estimated home values based upon sales of similar homes in your area. The State of Arizona recently sent out notices of assessed tax values. These sources can provide some understanding of what percentage of your home’s value you owe.

□ Do you have a stable income?

In order to qualify you must have some stable income.

LOAN MODIFICATION:

The Whitehouse’s Executive Summary states that “the Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels.” In the past banks have been unwilling or financially unable to modify loans, but now, due to the fallen home prices it is often financially irresponsible for a bank to foreclose upon a home if some reasonable modification can be made to the loan. In addition to the poor housing market President Obama’s Mortgage plan provides specific financial incentives to banks who work with individuals in obtaining loan modifications.

Again, to find out if you are likely to qualify for a loan modification you can use the following checklist.

□ Is this your primary residence?

Your primary residence can include 1-4 unit homes, condominiums, and manufactured homes.

□ Did you obtain your mortgage on or before January 1, 2009?

□ Is the unpaid principal balance equal to or less than?:

 $729,750 (1 Unit)
 $934,200 (2 Units)
 $1,129,250 (3 Units)
 $1,403,400 (4 Units)

□ Can you demonstrate significant hardship such as a loss of an income?

If you have liquid assets that can be used to pay your mortgage you will not qualify.

□ Can you sustain a mortgage payment that is 31% of your gross income?

If you can answer yes to all of these questions you may qualify. The key to modifying your loan is demonstrating for the bank that a reasonable reduction is feasible. Now, the Federal Government will step in and help individuals reach that threshold. Under the plan loans should be modified so that the payments on principal, interest, taxes, insurance and HOA payments total 31% or less of the borrower’s gross income. The government will then provide additional funds to the bank increasing the amount that the bank would receive to 38% of the borrower’s gross income.

In addition to providing banks with some extra fund on each payment the Federal Plan will pay $1,000 on your principle per year for up to five years. In order to receive this benefit you must remain current on the modified loan.

There are additional aspects of the Homeowner Affordability and Stability Plan which are not covered here. As I noted above I hope that this serves to inform those individuals who may be wondering if they qualify for help under the new Mortgage Plan. Below are some additional links which may help you understand the process and the implementation of the Plan.

The White House: Homeowner Affordability and Stability Plan. Executive Summary:

http://www.treasury.gov/press/releases/tg33.htm

Three Example Cases provided by the Federal Government: http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/HousingExampleSheet.pdf

Freddie Mac’s Eligibility for Refinance Questions and help with the process:

http://makinghomeaffordable.gov/refinance_eligibility.html

You can always visit our WEBSITE to learn more about loan modification and other options.

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McGuire Gardner Announces Bankruptcy and Foreclosure Seminars:

Wednesday, April 8th, 2009

The law firm of McGuire Gardner P.L.L.C. has announced the commencement of bankruptcy and foreclosure seminars to assist individuals in difficult financial situations understand their legal rights under federal bankruptcy law.

 

Clients, potential clients, and general members of the public are invited to these educational seminars.  Topics to be discussed will provide answers to the following questions, along with a question and answer session at the conclusion of the seminar: 

 

What types of bankruptcy are available?

What type of bankruptcy fits my financial situation?

Is bankruptcy legal, ethical, moral?

Who may file bankruptcy?

What assets can I keep if I file bankruptcy?

What debts can I discharge (eliminate) in bankruptcy?

What will my creditors receive if I file bankruptcy?

Will bankruptcy allow me to keep my house?

Will bankruptcy allow me to catch up on my house payments?

What may I transfer or sell prior to filing bankruptcy?

If I intend to file bankruptcy, what debts can I stop paying?

If I intend to file bankruptcy, what debts should I continue to pay?

What is the bankruptcy process?

Will I have to go to court?

How long will it take to complete a bankruptcy case?

What does a bankruptcy cost?

How do I pay for my bankruptcy if I am already broke?

How do I get started with a bankruptcy?

 

 

            To reserve your seat at the next bankruptcy seminar, please call (928) 225-2597, or call us today to set up a free personalized consultation regarding your individual case.  For more information about the seminars, or to learn about our firm and get answers to your questions about bankruptcy, visit our Website. 

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Phoenix Bankruptcy Attorney Pernell McGuire quoted in Arizona Republic.

Tuesday, April 7th, 2009

Phoenix and Flagstaff bankruptcy attorney Pernell McGuire of McGuire Gardner, PLLC was quoted in the Arizona Republic today discussing the recent rise in bankruptcy cases in Arizona.  Mr. McGuire also noted that many individuals are waiting to see whether Congress will pass new laws allowing judges in bankruptcy Court to “cram down” a mortgage on a primary residence.  You can read the full text of the article here.  For more information about bankruptcy, visit our Website.

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FLAGSTAFF ATTORNEY DISCUSSES TIMING ISSUES FOR A BANKRUPTCY AND A DIVORCE:

Monday, April 6th, 2009

 With increasing frequency, our clients must decide if they should pursue a bankruptcy before or after a divorce case.  In making this determination, there are several areas that you should discuss with your attorney.

 

            In relatively amicable cases, there are several advantages of completing the bankruptcy prior to filing for a dissolution.  Most bankruptcy attorneys will charge the same price to a single person filing a bankruptcy as to a married couple filing a bankruptcy.  Additionally, the couple would only pay a single filing fee to the court.  If the bankruptcy is completed prior to the dissolution proceeding, the elimination of the majority of the community debt (and possible reduction of assets) significantly simplifies the equitable division of assets and debts.

 

            In many cases, however, the urgency of the family law matter or the level of acrimony between the parties makes it unrealistic to ask the couple headed for a dissolution of marriage to work together gathering the necessary information to file a bankruptcy, while putting the dissolution of marriage on hold for several months.  The same issues that arise in dissolutions regarding the hoarding of documents and information or the hiding of assets and income may arise in the bankruptcy setting.  Lack of information or improper information regarding assets, debts, and income will result in the bankruptcy stalling or derailing, the case being dismissed, or the bankruptcy discharge being denied.  In high conflict cases, the family law practitioner may need to counsel the client to proceed first with the dissolution of marriage, with the understanding that the client may need to file for bankruptcy at the conclusion of the family law matter.  

 

            Occasionally, a party to a pending dissolution will file for bankruptcy, or a party in an ongoing bankruptcy will file for a dissolution of marriage.  The family law practitioner must proceed cautiously when both cases are pending.  Immediately upon filing a bankruptcy, an Automatic Stay is issued under federal bankruptcy law.  Similar to a Preliminary Injunction, the order is automatic and does not require a request to a judge or a judge’s signature to take effect.  The filing of a bankruptcy has the effect of placing all of the filer’s assets and debts into a “bankruptcy estate.” Without getting into the details, bankruptcy’s Automatic Stay prevents any person from commencing or continuing any action that would affect the bankruptcy estate.  This injunction prohibits the Superior Court from entering any temporary or permanent orders allocating assets or debts during the pendency of the bankruptcy, unless the stay is lifted by the bankruptcy court after a request has been filed.  The filing of a bankruptcy during a dissolution of marriage proceeding will therefore require hearings on property issues to be held in abeyance. 

 

A dissolution proceeding can be filed while a bankruptcy is pending, and the Petition may request the Superior Court to equitably divide community property.  The statutory language establishing the automatic stay 11 U.S.C. § 362 specifically allows for the commencement or continuance of a dissolution or paternity, or the establishment or modification of child support, spousal maintenance, custody and visitation issues.  However, the superior court is temporarily divested of jurisdiction to determine the division of property and debts included in the bankruptcy estate.  The division of assets and debts can only proceed once the automatic stay is lifted, either at the conclusion of the bankruptcy or by order of the bankruptcy court after a request has been filed.

 

            Tremendous problems can arise when the bankruptcy is filed shortly after the dissolution of marriage.  A party taking a greater part of the marital debts and a larger share of the marital assets may appear to be getting a fair and equitable division of the net assets and debts.  However, if the debts are then discharged in a subsequent bankruptcy, this party has obtained an inequitably larger share of the marital assets.  The inequity is worsened in cases where spousal maintenance is forever waived based upon a perceived distribution of assets and debts.  Furthermore, a payment owed to another party to equalize the division of assets and debts in a dissolution of marriage (“equalization payment”) can be discharged in a Chapter 13 bankruptcy.  When these issues arise, individuals should get a bankruptcy attorney involved immediately to assist in challenging such a scheme in the federal bankruptcy court.

 

            Ultimately each case must be individually assessed to determine the best timing for a dissolution of marriage and a related bankruptcy.  Please call us at 928-225-2597 to discuss your situation.  You can also visit our Website to find more information on divorce and bankruptcy issues.   

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