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While it is true there are special requirements to meet in order to get student loan debt discharged in bankruptcy, more debtors are being granted elimination of the debt. Recent reports have reviewed a number of previous bankruptcy filings by consumers over the last few years that have included student loan debt, and the outcome [...]
We have all heard about the pending legislation to increase student loan interest rates on new student loans, however, there is an even more important bill pending in Congress which may actually help people with their student loan debt.
The bill is the Fairness for Struggling Students Act of 2013, Senate Bill 114, and it will allow private student loans to be discharged in bankruptcy. Currently, the bankruptcy code excludes both private and government student loans from discharge in bankruptcy except in very rare circumstances. Private student loans are those student loans which are credit based, have a market based interest rate which is not government regulated and are generally considered the sub-prime loans of the college world.
A 2012 Consumer Protection Bureau report found that although private student loans make up about 7% of the student loans originated between 2011 and 2012, however 42% of undergraduates at for-profit colleges used a private student loan, compared to just 14% of undergraduates overall.
Senator Jeff Sessions will hear this bill when it comes before the Senate Judiciary Committee. This week fellow bankruptcy attorney and NACBA member Amy Tanner and I met with a representative from Senator Sessions office who seemed genuinely surprised when we explained the escalating problem with student loans. Senator Sessions needs to hear from you if you have a private student loan even if you would never even consider bankruptcy. Here are the main reasons Senator Sessions needs to hear from you:
1. Citizens are just as important as businesses – The Senator needs to understand that Alabama citizens are struggling to make ends meet in this economy. The Senator is pro-business, however, he needs to understand that individuals drive small businesses and no one is starting a business when they are living paycheck to paycheck.
2. Private student lenders are some of the harshest debt collectors – Tell the Senator your experience with harsh student loan collectors.
3. Private student loans that fund for-profit online universities should be treated just like a credit card. If bankruptcy protection is extended to include private student loans, the lenders will be more willing to work with students to set up favorable payments arrangements.
Call Senator Sessions office today and let him know your student loan experience. I am also including Senator Shelby’s contact information as well.
Senator Jeff Sessions — (202) 224-4124
Senator Richard Shelby — (202) 224-5744
The bankruptcy court doesn’t send you mail unless it’s important.
Sometimes creditors just can’t help themselves from running afoul of the bankruptcy laws.
My client owed $78 to her dermatologist. She had a host of other overdue debts that led her to my office and, after realizing she was over $50,000 in the red she decided to file for bankruptcy.
The Chapter 7 case went smoothly, and she got her discharge about four months after filing.
From there, she went about her business.
Unfortunately, so did the dermatologist.
Collections Ramped Up After The Bankruptcy
After the bankruptcy, the dermatologist continued to send collection letters. My client figured it was a mistake, so she didn’t make a big deal of it.
A few months later, she got served with a lawsuit demanding $575 – $78 for the original bill plus collection costs and finance charges for nonpayment.
This Was A Problem
Under the U.S. Bankruptcy Code, all collection efforts must stop once the case is filed. That’s a temporary solution which is made permanent by the discharge order.
In other words, the collection efforts were illegal. My client didn’t make any noise about it, but once things turned ugly and legal action was commenced, she’d had enough.
By the way, the doctor’s collection agency had been reporting the debt as past due on her credit report as well. Had she checked her reports before the lawsuit was started, she would have known that as well. Also illegal, by the way.
So We Sued The Doctor
When you’ve got a creditor who takes illegal action against you, there’s no real way to protect your rights but to sue. That’s exactly what we did.
As an aside, when we sue for a violation of the bankruptcy court’s discharge order we do so without any upfront fee from our client. Instead, we are compensated at the end of the case by receiving a portion of any money damage award or settlement. So we don’t take these cases lightly – it’s got to have a reasonable chance of success for us to take action.
A Defense Of Stupidity
We served the lawsuit on the doctor, and he didn’t answer it. In fact, it wasn’t until the judge called him into court for contempt did he bother paying attention.
The doctor’s attorneys confirmed that they’d received the bankruptcy court notices but tossed them out. The notices, they thought, somehow didn’t apply to them.
In court, the doctor told the judge he thought his bill wasn’t covered by the bankruptcy because he was outraged that my client would dare to file for bankruptcy in the first place.
As to the reason why he didn’t answer the lawsuit we filed against him? He claimed that it was a bogus lawsuit that wasn’t worth his time or energy.
This Ended Badly For The Doctor
In ruling in my client’s favor, the judge ordered the doctor to pay the following:
- $10,000 to my client; and
- $10,000 to me for legal fees.
This served to underscore to the doctor that bankruptcy court is not an entity to be ignored.
Your Lesson For The Day
The bankruptcy court is a real place – with real powers. When you’re told to do something by the court, you do it.
If you disagree, you respond appropriately.
If you ignore the court, you will lose.
Whether you’re filing for bankruptcy or are a creditor in a bankruptcy case, the rules are the same.
Image credit: K!T
Why You Should Always Read Mail From The Bankruptcy Court was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Advantages of Bankruptcy As part of our work with clients considering bankruptcy, we want to make sure you understand all of your options. When you are faced with stress and overwhelming debt, bankruptcy can be one option that can quickly end creditor harassment. When you file for bankruptcy, your creditors must stop calling or [...]
Advantages of Bankruptcy As part of our work with clients considering bankruptcy, we want to make sure you understand all of your options. When you are faced with stress and overwhelming debt, bankruptcy can be one option that can quickly end creditor harassment. When you file for bankruptcy, your creditors must stop calling or […]The post Advantages and Disadvantages of Bankruptcy appeared first on Tucson Bankruptcy Attorneys Trezza & Associates.
Filing for bankruptcy with limited income is possible, but it often depends on personal circumstances. In such situations, debtors may qualify to file Chapter 7 instead of Chapter 13 bankruptcy. In Chapter 13, you agree to a repayment schedule approved by the court based on your ability to repay. If your debt obligations qualify for [...]
Take three simple steps and your risk of identity theft plummets.
Identity theft can ruin your financial life, so you do what you can to minimize the risks.
You check your credit report, dispute the errors and keep tabs on your day-to-day finances.
You pore over your credit card statements each month to ferret out anything that looks amiss.
Still, the risks remain.
How about we make it even easier?
What’s In Your Wallet?
You carry a lot in your wallet.
You’ve got your driver’s license, credit cards, and medical insurance card.
You may carry your Social Security card with you.
If you lose your wallet, think of the treasure trove of information someone receives.
Your name, address, date of birth, and Social Security number are all neatly packaged and delivered into the hands of the identity thief.
With that information, a thief can do pretty much as he or she pleases with your credit identity.
If you remove your Social Security card from your wallet, identity theft becomes more difficult.
If you keep your driver license at home or in your car with your vehicle insurance card, your home address disappears from an identity thief’s view.
Cut down the number of credit and debit cards you carry to pare it down even further.
Shred It To Forget It
Look at your garbage bins and consider the wealth of personal information that’s there for the taking. Credit card statements, bank statements, and more are readily available to anyone who grabs a bag of trash.
Buy an inexpensive shredder at your local office supply store and shred it before tossing out those statements.
Never just throw that stuff away. You never know who is going through your garbage.
Lock It Up
Now take a walk through your home and think about the documents you’ve got in various nooks and cubbyholes, drawers and such. Credit cards, Social Security cards, birth certificates, passports and more are there for the taking.
One break-in and you’re at risk in a big way.
Buy an inexpensive safe, mount it in a safe place, and tuck away your documents and important papers. Best if the safe is fireproof and waterproof just in case the house is damaged by fire or flood.
Lock It Down
Finally, let’s talk about your computer. If you lose your laptop or someone steals your desktop, you’re up the creek.
Passwords, scanned files and emails are ripe for the picking. Couple that with the photos you’ve got on your computer of your smiling face, and all a thief needs to do is search your hard drive.
Consider encrypting your computer’s hard drive and password-protecting the system. It will keep your data – and your identity – safe from prying eyes.
In the end, there’s nothing you can do to guarantee the safety of your identity. But if you take these three simple steps, you’ll reduce your risk significantly.
Image credit: Dunechaser
Guard Against Identity Theft With These Three Easy Steps was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for July 11, 2013 Debt collectors and credit reporting companies bracing for intense scrutiny after the government’s watchdog group unveiled broad plans to regulate financial firms Corporate Insiders Shift From ‘Buy’ to ‘Sell’ as Bankruptcy Nears Court Rejects Bid to Put [...]
When considering bankruptcy as an option to get you the financial relief you are seeking, taking the time to consult with a bankruptcy expert can make a big difference in how you proceed in choosing the best solution. This is the perfect opportunity to gain clarity about the process and whether it is the best [...]
Written by: Robert DeMarco
United States Bankruptcy Laws – The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) (Pub.L. 109–8, 119 Stat. 23, enacted April 20, 2005) was actually first drafted in 1997 and was passed by the 109th United States Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005.. The House of Representatives approved a version titled the “Bankruptcy Reform Act of 1999″ and the Senate approved a slightly different version in 2000. After reconciliation, Congress passed the “Bankruptcy Reform Act of 2000″, but President Clinton, vetoed the bill by waiting for the “lame-duck Congress” to adjourn without signing it. The bankruptcy bill was subsequently re-introduced in each successive Congress, but was continuously shelved due to significant opposition and threats of a filibuster. Things changed in 2004 as the Republicans took control of both the Senate and the House of Representatives. The revised bankruptcy bill was introduced by the chairman of the Senate Finance Committee, Republican Senator Chuck Grassley of Iowa and was supported by President George W. Bush. The bill passed by large margins: 302-126 in the House; and 74-25 in the Senate. The Bill was later signed by President Bush.
BAPCPA made several significant changes to the Bankruptcy Reform Act of 1978. Some of the more significant change BAPCPA made to the Bankruptcy Reform Act of 1978 are as follows:
Means Testing: BAPCPA implemented a process of means testing in an effort to limit access to the bankruptcy process. The means testing focuses primarily upon a variety of budget issues such as income, household expenses, car payments, house payments and the like. However, the means test is not based entirely upon reality. The means test allows for the prospective debtor to make use of certain actual expenses (i.e. mortgage payments), but otherwise requires the use of standardized expenses (i.e. vehicle maintenance). Depending upon the results of the means test there could arise a presumption of abuse which must be rebutted if the bankruptcy is to proceed.
Automatic Stay: The automatic stay provisions of the Bankruptcy Reform Act of 1978 were modified significantly by BAPCPA. There is now a presumption that repeat filings constitute bad faith and require the party seeking to impose the stay (usually the debtor) to rebut the presumption by clear and convincing evidence. BAPCPA also limited the applicability of the automatic stay in eviction proceedings.
Credit Counseling: BAPCPA also requires that all individual debtors (chapter 7, 11, or 13) complete a credit counseling course as a condition precedent to filing bankruptcy. Further, chapter 7 and 13 debtors must, as a condition to obtaining a discharge, complete an instructional course concerning personal financial management. 11 U.S.C. §§ 727(a)(11); 1328(g)(1).
Discharge: BAPCPA also provided more protections to creditors because it expanded the exceptions to discharge. The presumption of fraud in the use of credit cards was expanded. BAPCPA amended § 523(a)(8) to broaden the types of educational (“student”) loans that cannot be discharged in bankruptcy absent proof of “undue hardship.” The nature of the lender is no longer relevant. Thus, even loans from “for-profit” or “non-governmental” entities are not dischargeable.
Moreover, the Chapter 13 “super-discharge” that was available under the 1978 Bankruptcy Code is greatly reduced under BAPCPA. As such, BAPCPA no excepts from discharge in a chapter 13 most tax obligations and debts stemming from fraud and false statements; unscheduled debt; obligations stemming from defalcation by a fiduciary; domestic support obligations; student loans; damage claims stemming from drunk driving injuries; criminal restitution and fines; and damages rewarded for willful or malicious personal actions causing personal injury or death.
Exemptions: BAPCPA made significant changes to the exemption provisions that existed in the Bankruptcy Reform Act of 1978. One purpose in doing so was to prevent prospective debtors from forum shopping. Exemptions define the amount of property a debtor may protect from levy and garnishment. Typically, every state has exemption laws that define the amount of property that can be protected from creditor collection action within the state, and as one can imagine each state’s exemption laws differ. Further, there is, depending on the state, a federal exemption statute that that might be used in bankruptcy cases.
Under BAPCPA, a debtor who has moved from one state to another within two years of filing (730 days) the bankruptcy case must use the exemption laws from the place of the debtor’s domicile for the majority of the 180 day time period preceding the two years (730 days) before the filing [11 U.S.C. § 522(b)(3)]. If the new residency requirement would render the debtor ineligible for any exemption, then the debtor can choose the federal exemptions.
BAPCPA also, implemented a “cap” on homestead exemptions. Where the prospective debtor, within 1215 days (about 3 years and 4 months) preceding the bankruptcy case added value to the homestead in excess of $125,000 that value cannot be exempted. The only exception is if the value was transferred from another homestead within the same state or if the homestead is the principal residence of a family farmer [11 U.S.C. § 522(p)]. This “cap” would apply in situations where a debtor has purchased a new homestead in a different state, or where the debtor has increased the value to his/her homestead (presumably through improvements or paying down the mortgage).
Thus is the terse and convoluted history of American Bankruptcy Law. While it might not be the most glamorous of tales to tell, it was critical to the development of trade and commerce in the western world. “The power of establishing uniform laws of bankruptcy is so intimately connected with the regulation of commerce, and will prevent so many frauds, where the parties or their property may lie, or be removed into different states, that the expediency of it seems not likely to be drawn in question.” Madison, James, The Federalist No. 42, The Powers Conferred by the Constitution Further Considered (Tuesday, January 22, 1788).
DATED: July 11, 2013
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