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How can a bankruptcy help reduce your student loan debt?

We’ve been making great strides in obtaining student loan debt relief in bankruptcy lately.  Most people think only of whether their student loans can be discharged in bankruptcy.  Usually the answer is “no”.  But that’s not where the focus should be in most cases.

Our goal is simple:   reduce student loan debt to manageable and sustainable levels with an end in sight.  We do this for both our bankruptcy and non-bankruptcy clients.  This may include discharging some private student loans in bankruptcy.  It may include taking advantage of all income based/debt forgiveness opportunities for federal loans, both in and outside of bankruptcy.  Just selecting the right program can make a huge difference.  At least half the clients who come and see us are in the wrong program costing them hundreds more per month in some cases.  Public service loan forgiveness is a huge mess.  New grounds exist to object to private debt owned by NCSLT that can be used to strike their debt – called proofs of claim — in bankruptcy.  All this can add up to hundreds of dollars of savings per month, and possibly tens or more thousands of dollars over a Chapter 13 bankruptcy plan.

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you-got-this-fist-bumpThis could easily be you!  This is a word-for-word review posted this week by a satisfied student loan client:

Christie Arkovich and her team changed my life for the better. I went to her stressed because I couldn’t afford my monster student loan payment any longer (and getting a deferment or forbearance would give me temporary relief, but my already huge monthly payment would go up over 60% after the two year term). Christie assured me there were other alternatives and ended up getting my monthly payment reduced by an astonishing 88% AND emancipating me from having to deal with awful, %#@$ Navient. The process was very smooth, easy and inexpensive (she even offers a payment plan). If you are in despair over your student loans, give her a call – seriously. I’m NOT stressed about my loan for the first time in over ten years, it’s incredible – thank you, Christie!!!

Own your Student Loans — Rather than Owing them.

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All debtors must appear at a meeting called the “341 meeting of creditors”.  Creditors may, but usually do not appear, and it is the Trustee asking most of the questions.  This 341 must occur for a bankruptcy to be successful and applies in both a Chapter 7 and 13.

The trustee will first verify your identity.  While this sounds simple, you must bring an original social security card or an original government issued document that shows your full social security number.  You’d be surprised at how many people think they know where they keep their original SSN card, but can’t find it when they are in a hurry about to leave to the 341 meeting.  So look for it early.  The meeting cannot be held without that documentation.

Also, make sure that your driver’s license has the exact name that is listed on your petition for bankruptcy.  If it is different, you’ll likely need to amend your petition to show that name and any other iterations of your legal name that you may use (“a/k/a”).

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After experiencing the dreaded foreclosure or bankruptcy, you might worry that mortgage lenders will reject you when you attempt to buy another home. Anxiety over, “Will they think it’ll happen again and not give me a chance?” is perfectly logical. Luckily, you have no need to worry. Buying a home after bankruptcy is still a real possibility.

Foreclosure or Bankruptcy is Not the End of Homeownership

While your foreclosure did mean the loss of your first home, it will not thwart your ability to buy a new one. Mortgage programs today all include guidelines for those who’ve experienced bankruptcy to qualify. There are several ways you can recover from your setback.

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I’ve blogged about the new CFPB Consent Orders here, against both NCSLT and TSI which requires a halt to all collection activities for the vast majority of NCSLT trusts for private student loans, but what might it mean for pending bankruptcies?

First, the Consent Orders require the payment of millions of dollars in damages in some cases, so Schedule B must reflect the possibility of recovery against NCT, collectors and law firms.  It may be awhile before the Judge signs off on the Proposed Judgment due to several Motions to Intervene filed by various involved parties on the collection side.  But the Agreed Consent Order itself makes certain admissions of liability in the meantime.

The debt should be listed as disputed pending outcome of an audit (required to be completed within 180 days for accounts currently in litigation, within 365 days for all other accounts).

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It’s simple.  If you are wronged, you should be able to pick the forum to go after the lender, bank, student loan company, credit card company, car rental company, credit bureau, you name it — and that forum should include the local courthouse and not just arbitration.  The CFPB recently ruled that mandatory arbitration clauses in the fine print of your contract is wrong.  Now Congress wants to repeal that rule.

Call Your Senators; Tell Them NOT to Take Away Your Day in Court Against Big Banks.

For too long, Wall Street lawyers and lobbyists have used a secret tactic, fine print contracts, to take away Americans’ constitutional right to go to court. After more than five years of studying and working on the problem, the Consumer Financial Protection Bureau issued a rule to restore our right to join together and hold big banks and lenders accountable in court for unlawful behavior that rips us off and puts the American economy at risk. When financial bad actors are not held responsible for their bad behavior, disasters like the Equifax data breach and Wells Fargo fake-account scandal occur.

Published on: you being sued by NCSLT as many of our clients are?

You should be aware that the CFPB just entered an Order requiring NCSLT to halt collections per the NYT.  The Consent Order is effective immediately although the Judgment itself still needs to be approved and signed by the Delaware Judge.

This “halting of collections” is most assuredly temporary.  The trusts “must suspend all further collection efforts until a compliance plan has been approved and implemented.”  It’s unknown how long that may take.

Published on:, don’t give up.  You may have numerous defenses available – we are a law firm that helps student loan borrowers.

Don’t let them get a default judgment against you where they can garnish 25% of wages and seize your bank accounts.  Over 90% of these cases go to default judgment.  Judgments last 20 years.  They are normally bankruptcy proof.  This does not need to happen.

There are many ways to defend these cases and we can help!  Some or all of these defenses may be applicable to your case:

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Hurricane Irma has caused an interruption in income for many people in Florida and elsewhere.  This information may be helpful for those who cannot make their mortgage or student loan payment when due:

For those in a rehab agreement on federal student loans to avoid wage garnishment:

Payments to Rehabilitate Defaulted Loans (§674.39).  During the time a borrower is affected by a disaster, an institution should not treat any scheduled payment the borrower fails to make as a missed payment in the stream of nine on-time, consecutive, monthly payments required for the borrower to rehabilitate the defaulted loan.  When the borrower is no longer affected by the disaster, the required sequence of qualifying payments may resume at the point at which it was discontinued.

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bankrupty-7Property owned by a husband and wife is ordinarily protected in Florida from creditors of only one spouse.  There are requirements to being able to use what is called the Tenancy by Entireties Exemption such as the property must have been acquired at the same time etc.

One question that was recently addressed by a bankruptcy court dealt with what happens if a debtor has exempted real or personal property in a Chapter 7 bankruptcy and his or her spouse dies during the bankruptcy.  Is the exemption then lost?

The Chapter 7 debtor’s right under Code § 522(b)(3)(B) to exempt real property owned in a tenancy by the entireties with the debtor’s non-filing spouse was not extinguished by the postpetition death of the spouse. The rights of sole creditors against property held by the debtor as a tenant by the entireties are fixed as of the petition date, and the Bankruptcy Code does not provide for those rights to expand or contract upon the postpetition death of the non-filing spouse.

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