Chapter 13 Bankruptcy

Published on: October 20, 2019

How to Avoid Arbitration Clauses in Consumer Contracts — Bankruptcy Court Can Help!

Are you looking down the barrel of an arbitration clause in your consumer/creditor agreement? I’ve posted before (Arbitration Clauses in Consumer Contracts – How to Avoid Being Thrown out of Court) on some local case law here in Florida to help avoid arbitration clauses – but here’s a new case in the consumer’s favor in Bankruptcy Court for the Middle District of Florida.

The Bankruptcy Court ruled that an arbitration clause did not constrain the court’s contempt powers, “[w]ords in a consumer agreement cannot deprive the bankruptcy court of the inherent power to enforce compliance with an injunction.” Verizon Wireless Personal Communications, LP v. Bateman, No. 14-5369, Adv. Pro. No. 18-1394 (M.D. Fla. Sept. 24, 2019).

So if you’re in bankruptcy, or had a previously filed one that you can reopen (without a filing fee), challenge the arbitration clause in bankruptcy – you may be much more likely to win!

Continue reading →

Published on: September 27, 2019

Ever Wonder Which States are most Impacted by Student Loan Debt? You Guessed it Florida is Right Smack in it. Good Thing I Don’t Practice in South Dakota, I’d be Bored.

By Christie D. Arkovich, P.A.

This is a pretty cool map that shows the southeastern U.S. as ground zero for the student loan crisis. Most all of Florida shows this to be a High, Very High or Extremely High debt level according to this map.

I’m glad our bankruptcy court for the Middle District of Florida is taking this very important step to implement a new Student Loan Management Program for all debtors in Tampa, Orlando, Jacksonville and Ocala – and surrounding areas in between. The program goes live on October 1 — and anyone who is a debtor in a pending case is eligible for this relief, as well as all future debtors!

Please reach out to us if you want to know more about the student loan program now being offered by our bankruptcy court. We are also available to co-counsel on any cases with bankruptcy counsel who may be unfamiliar with the options available under this program.

Published on: August 25, 2019

Any Vets Out There Needing to File Bankruptcy – A New Door Has Just Opened!

By Christie D. Arkovich, P.A.

On Friday, August 23, 2019 President Trump signed H.R. 2938, the “Honoring American Veterans in Extreme Need Act of 2019” or the “HAVEN Act,” into law. HAVEN Act excludes from the calculation of monthly income, for purposes of the Bankruptcy Code’s means test, certain benefits paid by the Department of Veterans Affairs and the Department of Defense. The law takes effect immediately.

Additionally, the President also signed into law: 1) H.R. 2336, the “Family Farmer Relief Act of 2019”; 2) H.R. 3304, the “National Guard and Reservists Debt Relief Extension Act of 2019”; and 3) H.R. 3311, the “Small Business Reorganization Act of 2019″.

For a quick summary: please see this announcement.

Continue reading →

Published on: July 10, 2019

What Happens to Student Loan Debt in a Divorce?

By Christie D. Arkovich, P.A.

Rogers v. Rogers, 12 So.3d 288 stands for the general proposition that student loan debt incurred during the marriage is a marital liability. See, e.g. Smith, 934 So.2d 636, at 641; Adams v. Cook, 969 So.2d 1185, 1187 (Fla. 5th DCA 2007); Banton v. Parker-Banton, 756 So.2d 155, 156 (Fla. 4th DCA 2000); see also Section 61.075(5)(a)(1). Thus, in the absence of specific findings supporting the unequal distribution of a student loan debt, such debt must be equitably distributed between the parties. See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187.

The fact that one party will not receive any benefit from the other party’s education because of the dissolution is NOT a factor to be considered when allocating a marital debt for student loans. See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187. Thus, absent some other justification for an unequal distribution, controlling case law forbids a trial court from awarding student loan debt incurred during the marriage solely to one party or the other.

If the loans were taken out before the marriage, then they would be non-marital debt.

Continue reading →

Published on: July 1, 2019

Debt Settlement or Consolidation Versus Bankruptcy

By Christie D. Arkovich, P.A.

Which is the better option?

Debt management plans have no guarantee that the creditor will accept a negotiated discount. Debt consolidators charge a fee regardless of whether a settlement is reached and often years go by with credit scores dwindling each month. It’s often better to reach a deal with the creditor directly then try to include them in a debt consolidation plan. Lump sums are needed. 1099s are sent for any forgiven amounts leading to a tax bill. Any negotiated agreement must be in writing preferably with a line item deletion with the credit reporting agencies or at least reflecting the debt as paid in full.

Bankruptcy, particularly a Chapter 7, is often much faster — only three months for a Chapter 7 discharge. While a Chapter 7 will remain on someone’s credit for 10 years, most people are able to get their credit score back up to high 600s or low 700s within six months to two years. Bankruptcy is a legal mechanism intended to let people start fresh and credit rebuilding takes much less time than most people think.

Continue reading →

Published on: April 15, 2019

Bankruptcy Payments Permitted to be Directed Toward Principal During Plan

By Christie D. Arkovich, P.A.

Faced with a nearly impossible standard to discharge federal student loan debt in bankruptcy due to undue hardship, creative debtors’ attorneys and the bankruptcy courts are continuing to create pockets of relief wherever possible.

Finding that “non-dischargeability does not immunize the student loan claim from modification,”a bankruptcy court confirmed the debtors’ plan under which their payments would go to the principal on their student loan debt with accumulated post-petition interest to be paid post-discharge. In re Duensing, No. 18-10201 (Bankr. D. Kans. Feb. 22, 2019).

The guarantor of the loans, ECMC, objected to the debtors’ proposed treatment of the student loan debt arguing that, because the reduction of principal would result in declining post-petition interest, the proposed plan effectively discharged her student loan without a finding of undue hardship.

Continue reading →

Published on: April 6, 2019

New Median Income Figures are Out for Florida Bankruptcy Debtors – How to Qualify for a Chapter 7

By Christie D. Arkovich, P.A.

The new median income figures are out this week. Whether you are above or below these figures is not the only factor that is looked at however. But many of the expenses allowable under the Means Test have increased and if you were borderline last year, you may qualify for a Chapter 7 now. Or have a lower plan payment in a Chapter 13 bankruptcy.

Florida single wage earner – $49,172.

Family of two – $60,400

Continue reading →

Published on: March 22, 2019

Reboot Your Life: Use Debt Sparingly

By Christie D. Arkovich, P.A.

Debt is to be used sparingly. It allows you to make purchases which you cannot afford. In other words, debt allows people to live beyond their means or to spend more than they earn. While this may appear to be a good thing when an emergency arises, there are serious side effects. These side effects include 1) paying more for an item than what it’s worth in the form of interest; 2) possible inability to pay off the debt; 3) added pressure and stress which can lead to medical and relationship problems; and 4) being a “slave” to your debt.

While some debt will always be necessary such as a home loan, usually a car loan, and a reasonable amount of student loans, it’s important to only take on a modest amount of debt and have a plan for repayment. Just because a lender wants to loan you money is not a good reason to take it. Many college students took out excess student loans to pay for all kinds of stuff. Unnecessary stuff. With private loans in excess of 10% interest, that $5 latte easily turns into a $10 latte after a few years!

One client this week advised that she had incurred over 200k for a two year AA degree over a long period of time. She’s had a difficult life, and had to retake many courses and change degrees/schools etc. That’s perhaps one of the worst places to find yourself. She cannot afford to return to school, and has almost no education to show for that debt.

Continue reading →

Published on: February 6, 2019

Great New Opinions for Discharging Private Student Loan Debt in Bankruptcy

By Christie D. Arkovich, P.A.

On January 31, 2019, Judge Stong of the Eastern District of New York denied the Motion to Dismiss filed by SLM Corporation, Sallie Mae, Inc., Navient Solutions, LLC and Navient Credit Finance Corp. In this Memorandum Decision, the Court dealt a blow to the private student loan defendants when it permitted Plaintiff to proceed with its case (note a Motion to Dismiss is a preliminary motion and the case is far from over). In re Homaidan, Adv. Pro. No. 17-01085 (E.D. N.Y. 2019).

A nearly identical ruling was made the same day in In re Tashanna Golden, Adv. Pro. No. 17-01995 by the same Judge.

These cases dealt with Tuition Answer loans which the Plaintiff alleges are not “qualified education loan[s]” under the Bankruptcy Code Section 523(a)(8)(B), and for that reason, they were discharged in his Chapter 7 bankruptcy case. The Plaintiff argues that loans of this nature are excluded from the scope of his bankruptcy discharge and therefore any attempt to collect the debt after the bankruptcy discharge amount were impermissible and a violation of the discharge order.

Continue reading →

Published on: January 15, 2019

Can I Obtain Federal Student Loans During or After a Bankruptcy?

By Christie D. Arkovich, P.A.

Generally, approval is needed from the bankruptcy court to take on any new debt in the form of a new federal or private student loan. This would include the filing of a refinance or even a consolidation application – as these are considered new loans.

ECMC, the guarantor of FFEL government backed loans, has a specific policy regarding regaining Title IV eligibility during a bankruptcy. Whether a borrower is in a Chapter 7 or 13, they are required to make six consecutive payments in order to regain Title IV eligibility.

If the student loan debt is not listed, or if it is listed in the bankruptcy, but the plan provides for 0% to be paid to general unsecured creditors, then the borrower is not considered to have established a “satisfactory repayment arrangement” through their bankruptcy plan.

Continue reading →