Articles Posted in Chapter 13 Bankruptcy

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Christie_1I just wrapped up an interview for for a story that they will run sometime in Nov or early December about the new rules allowing someone to discharge student loans in bankruptcy.  I’ll post links here when that story is ready.

Bottom line is that there is a growing awareness that private student loans can often be discharged in a bankruptcy as a non-education loan.  You’d be surprised at the results that we see!  Often a full discharge, or getting the balances dropped by 50-70% and interest reduced from 10-15% to 1-2%.  Very small payments spread over 20 or even more years.  And the kicker is that any discharge in bankruptcy is tax free forgiveness.  Who wouldn’t want to kick their private student loan to the curb…

But what about federal student loans?  In the past, we simply did not file these cases – it was nearly impossible to win a discharge of federal student loans.  I used to work for the other side running around the State of Florida trying these cases.  I think I lost one down in Miami.  One.  All the rest resulted in a win for the creditor (my client at that time before I moved to the consumer side of things).  But now since the new DOJ process is available, it is finally possible, if not probable.  Here’s the new results – see for yourself:

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arkovich_law-narrowHave you received a verbal forbearance of your mortgage payment?  But nothing else?  Mortgage servicers have certain responsibilities by law.  If you have received a verbal approval of your mortgage forbearance, but haven’t received anything in writing confirming this, not to mention advising what terms are, payment restart date etc. you have recourse under various consumer laws.

Reg X 1024.41(c)(2)(iii) requires a servicer to confirm the terms of the forbearance in a written notice sent to the borrower promptly after the forbearance is granted.  A servicer is also required to continue to send periodic statements while you are in forbearance at least until the effective date of any servicing transfer to another party.

If you have questions about your mortgage, and how to catch up or reduce your payments via a forbearance, loan modification or even a Chapter 13 bankruptcy, please consider reaching out to us.  Also, it’s often far cheaper to address problems early if you can and you may have more options the earlier you reach out.

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Re: Youssef v. Navient Solutions LLC, et al., Adv. Pro. No. 17-1085, in the U.S. Bankruptcy Court for the Eastern District of New York.


Borrowers are eligible for free money under $16 million student debt settlement – but you need to file a valid Claim Form by November 20, 2023.  There is no cost to do so.

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The new means test numbers came out:

It hasn’t changed much for Florida except – down 3k for family of 3 though.  Very odd, but whatever.

New as of Nov 1:

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Christie_1I ran across this statistic and wanted to share with you about the DOJ attestation process to discharge federal student loans. A great many are still pending.
From 12/5/2022 through 7/15/2023 nationwide:
409 new complaints
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Christie_1Say you have a private student loan and you have previously filed a bankruptcy.  Was your private student loan discharged?  I’m presuming you did not file an adversary case to obtain a specific ruling as to dischargeability of these loans.

  • What is Homaidan?

Loans that could have been discharged as beyond the cost of attendance, that portion that was over and above tuition, books, room and board etc. may be the subject of Homaidan.  My understanding is that you can remain a class member for a discharge of any amounts that are outside of the cost of attendance and you’d remain responsible for anything else.  You can also opt out and pursue relief on your own of that or the remainder of the loans, or seek alternative grounds for relief such as ineligible institution, non-dependent borrower or undue hardship.

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arkovich_law-narrowThe Supreme Court decision of United Student Aid Funds v. Espinosa (2010) 559 U.S. 260 is usually cited for the proposition that a court may not make an order on whether student debt is discharged without an adversary proceeding.

In USAF v. Espinosa, the issue was whether confirmation of a chapter 13 plan which provided for discharge of the student loan debt could be reversed. Rafael “Ted” Cruz lost in his quest to convince the Supreme Court to void the plan by means of FRCP Rule 60(b)(4).

But bankruptcy judges and practitioners were cautioned to always use an adversary proceeding for determinations on whether educational debt is discharged by § 523(a)(8).

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arkovich_law-narrowI just put a client together with a reporter doing a story about high interest vehicle loans.  I’ll leave the details to him and post here when the story comes out — but I did want to remind folks that there are ways out of these loans.

This particular loan was for 17.45% interest loan.  The client made low six figures in income from a very reputable employer at the time.  Why such high interest?  I’m not sure what her credit score was at the time, but the incredibly high interest rate caused her to pay $58k for a used vehicle she bought at $35k.  She made payments for approximately two years, but with a mortgage, and everyday expenses going up, she couldn’t keep it up.

Her solution was to file bankruptcy and surrender the car.  This way they couldn’t come after her for the deficiency balance.  Other things were addressed in the bankruptcy as well.  But this vehicle and the 17.45% interest rate was a leading cause.  We assist clients in obtaining other more sustainable vehicles during the bankruptcy – usually with a reasonable interest rate, warranty, sustainable payment.  We get that you need a vehicle.  You just need one that makes financial sense.

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arkovich_law-narrowThe Navient settlement today reflects a broad shift in the understanding of higher education debts that can be summarily discharged in bankruptcy.

The case is Homaidan v. Sallie Mae Inc., Bankr. E.D.N.Y., No. 17-01085, motion filed 7/21/23.

If you are considering bankruptcy to fix your finances, make sure to get your student loans taken care of also.  We do both, and if you’d like to set up a strategy session to discuss your specific situation (credit card debt, house, student loans, income and assets) and understand your options (and you’re in the Tampa area or its surrounding counties), please see the link below.  We freely discuss any options you can take advantage of if bankruptcy is not a good option as well.

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arkovich_law-narrowParent Plus loan borrowers and grad loan borrowers have received the short stick for all the recent announcements post the Supreme Court decision on student loan forgiveness.  The new bankruptcy rule will allow debtors to create a Chapter 13 Plan to easily provide IDR credit:

Changes:  We have revised §685.209(k)(4)(iv)(K) to provide that the Department will award credit toward IDR forgiveness for months where the Secretary determines that the borrower made payments under an approved bankruptcy plan.

While there is a process for this to occur now it is not widely understood and rarely used.  In most cases, borrowers owe more in federal student loans when they exit bankruptcy than what they owed before filing.  There is no reason why borrowers should not receive IDR credit towards their student loans during a Chapter 13 bankruptcy which often is five years.  This has been a big bone of contention of ours for several years.  Depending upon how the new change will be applied (the regs aren’t out yet), debtors should be able to obtain IDR credit while making a court approved payment plan which could be substantially lower than the normal IDR payment amount outside of bankruptcy.  This may be the only recourse available to those with Parent Plus loans who don’t or can’t double consolidate their loans in time to avoid ICR.  It may also be the only way to address a high payment for those with grad loans who have high medical, housing or family expenses and are stuck with an unaffordable IDR payment even under SAVE.  It will be particularly good for those in the next 12 months who won’t see the SAVE payment reductions until July 2024.

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