Articles Posted in Chapter 13 Bankruptcy

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consumer-law-with-bkWhen you are thinking about hiring a bankruptcy attorney, what should you consider? – besides all the regular stuff like client reviews, years of practice, cost, availability, knowledgeable, friendliness of attorney and staff etc.

One thing to keep in mind is what other areas does that law firm handle and could that help you fix your situation.  As you can see from the chart above, many bankruptcy attorneys just take bankruptcy cases.  While that’s fine, most people facing a bankruptcy also have issues with their credit report, foreclosures, debt collection violations, robo calls, student loans etc.  We handle all of that.  We also have a class action team.  One consumer area we don’t handle is vehicles – I don’t know a thing about our lemon laws or other issues regarding vehicles for instance.

I’m not suggesting you hire someone who dabbles in bankruptcy to file your bankruptcy.  That is probably the worst thing you can do.  But hiring a firm that is experienced in bankruptcy plus the other issues you are facing is probably best.  We have over 25 years experience in bankruptcy plus a myriad of other consumer related issues commonly faced by our clients.

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Most of us still use the New Year as an opportunity to review the past year and set goals for the New Year.  My own practice has grown tremendously from this goal setting.  We target the best strategies to grow our practice and help our clients to get back on track financially.

As most of you know, we practice bankruptcy and foreclosure defense as we have for many years, but since student loan debt has become such a crisis, much of our work is focused on eliminating that debt.  We have developed different strategies both inside and outside of bankruptcy to reduce student loan debt.

A new tool we are adding this year involves the misreporting of student loan debt on credit reports.  Put quite simply, the student loan servicers often can’t get it right.  They send bills with different amounts owed, transfer the debt so often that it appears duplicate times on a credit report, inaccurately reports payments etc.  We intend to hold them accountable.  Stay tuned as we hope to blog about this regularly to help our readers recognize when their credit reports may be in error and costing them real money – by denied credit or increased cost of credit, insurance etc.

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bank-owned-foreclosureThere a lots of reasons a debtor needs to file a bankruptcy.  However, debtors should be warned that they are likely giving up valuable rights to fight a foreclosure of their home if they do so — unless they reaffirm the mortgage.  Over the last few years, many debtors elected not to voluntarily reaffirm an underwater home — this would allow them to be personally sued for any deficiency balance even after the bankruptcy was over.  Another problem is the decision to reaffirm sometimes comes up before a loan modification review is complete and debtors aren’t sure whether reaffirmation is in their best interest.

Bankruptcy case law has been building in various Florida jurisdictions over this conflict.  Many courts have seen this as an issue of debtors “having their cake and eating it too” when debtors are released of their liabilities under the mortgage, but yet they can continue to fight the foreclosure and live rent free.

In response to this dilemma, Governor Scott just signed a bill on March 26, 2018 that stops defendants from defending a foreclosure if they have previously agreed in bankruptcy to surrender the property to their lenders.

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oopsWould you know what to do if the Social Security Administration mailed you a letter stating that you have been overpaid and that you owe the government tens of thousands of dollars?  No problem, this oversight can be eliminated in a bankruptcy filing.  My colleague, attorney Jonathan Ginsberg in Atlanta, Georgia practices both bankruptcy law and Social Security law and I asked him to answer the question “can bankruptcy help you if you owe Social Security for a disability overpayment?”  Here is what Jonathan says:

Surprisingly, the answer is yes – as a general rule Social Security disability overpayments are dischargeable in bankruptcy.  You can use Chapter 7 to wipe out overpayment claims or Chapter 13 to pay back these claims as general unsecured debts.

Why Social Security Disability Overpayments Happen

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Reports have been surfacing that the Department of Education is kicking borrowers out of Income Driven Plans when they file bankruptcy.  It makes no difference if they are in a Chapter 7 or 13.  It also doesn’t matter if the debtor is current in their payments.  The National Association of Consumer Bankruptcy Attorneys (NACBA) views this as a direct violation of 11 U.S.C. 525 (Protection against Discriminatory Treatment).

There are ways to counter this and remain in an Income Driven Plan to continue progress toward debt forgiveness including Public Service Forgiveness.  A new development is spreading across the country to file what is called the Buchannan provisions in a Chapter 13 Plan.  We have recently adopted this in Tampa, Florida.

On January 5, 2018, Trustee John Waage and Judge Catherine McEwen agreed to the following Non-Conforming language in In re Hyland, 8-17-bk-01564-CPM that now allows for Income Driven Repayment Plans concurrently with a Chapter 13.

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Ignoring your debtor’s federal student loans in their Chapter 13 bankruptcy can have catastrophic circumstances.  While fixing vehicle, credit card and mortgage debt, you may have inadvertently allowed a debtor’s $100,000 federal student loan to balloon into nearly $150,000 by doing nothing.  This is because the standard procedure of the Department of Education is to place these loans into forbearance during a bankruptcy.  However, now in Tampa, we are permitted to use the following Non-Conforming Provision in Chapter 13 Plans to permit our clients to enroll in Income Driven Plans and even Public Service Loan Forgiveness whenever eligible.

On January 5, 2018, Trustee John Waage and Judge Catherine McEwen agreed to the following Non-Conforming language in our client’s case, In re Hyland, 8-17-bk-01564-CPM that now allows for Income Driven Repayment Plans concurrently with a Chapter 13.

The permitted language:

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There are a ton of people who believed their student loans were discharged when they loans were simply listed in their bankruptcy.  It may have been years before the private student loan companies started to communicate with the borrowers to collect this debt which added to that impression.

As it turns out, there may be a way to argue this after all – in instances involving private loans.  Private student loan lenders have to prove their loans are in fact “qualified education loans” and meet other criteria in order to be exempt from a general discharge.  We are now filing cases where we do not believe the private lenders can meet this burden and the loans are and should have been considered discharged all along.  This opens the lender and servicer to a potential FDCPA and FCCPA case if it has tried to collect on previously discharged debt.  Moreover, it also opens up the lender to potential claims to refund monies paid toward these loans since discharge.

An easy way around this would have been for the private student loan lenders to have filed their own adversary actions in the debtor’s bankruptcy to obtain a declaratory judgment that its loans were excepted from the general discharge.  However, this was never done.

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Are you expecting a large tax refund this year?

If so, and you have had some financial difficulties this year, do NOT file your tax return if you are in default on your federal student loans OR about to file bankruptcy.

Instead, some pre-planning is in order.  For federal students loans, cure the default before you file your taxes.  File an extension if you must to gain some additional time.

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auto-stayThe automatic stay that normally applies when a debtor files bankruptcy, does not work the same in a second or even third bankruptcy case.  This has caught many debtors unaware and may cause the loss of a home.

In a 2nd bankruptcy filing, the automatic stay expires after 30 days.  During that time you have to get it extended.  We recommend filing a motion to do so when the case is filed to have enough time to get an order entered before the stay expires.

Sometimes debtors find it necessary to file a 3rd bankruptcy.  Perhaps a job loss or insufficient paperwork caused the prior bankruptcies to be dismissed.  If so, it’s important to know that the automatic stay does not apply at all for a 3rd bankruptcy.  As soon as possible, the debtor would want to file a motion to impose the stay, even to the point of filing a request for an emergency hearing if a foreclosure sale is looming.  It’s also important to note that you cannot file bankruptcy on the eve of a foreclosure sale because there is no stay until you can get one in place.  Typically you would have to identify factors in the motion and at the hearing as to why this third case will be more successful than the prior ones that were dismissed, as well as show the feasibility of any plan to keep the home (which could include a loan modification at an estimated payment of 31% of your gross income).

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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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