Articles Posted in Chapter 13 Bankruptcy

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Christie_1Right now, there is a lot of confusion regarding our federal student loan program.  There are multiple federal cases and several injunctions that have pretty much frozen federal student loans.

A couple things are still working.  Total and Permanent Disability discharges of federal student loans, and filing bankruptcy on them.

We’ve written a summary published in the quarterly Cramdown publication for our readers which are primarily bankruptcy attorneys and judges in the Middle District of Florida – located here.  We discuss what’s working now in bankruptcy and how to obtain a discharge or IDR credit for Plan payments.  Please take a look and if this helps you – you can do this now and not wait for the elections or U.S. Supreme Court rulings.

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arkovich_law-narrowBankruptcy is all about full disclosure.  Tell the trustee or court whatever assets you have and in return you receive a full discharge of most debt.  The reason I say most debt is because there are rules re: IRS debt, student loan debt and secured debt such as vehicles, 401k loans, etc.

One thing that is often overlooked is potential consumer claims that a debtor may have in bankruptcy.  Things like claims against credit furnishers, debt collectors etc.  Not only should you disclose these potential claims in order to receive the discharge in bankruptcy, but by failing to disclose the claims you will face hurdles in pursuing them later.

Often a bankruptcy trustee doesn’t want to pursue the claim and simply abandons it.  Then you are free to pursue either during the bankruptcy or thereafter.  You also may have unused exemptions to protect such a claim in case you want to raise it later.

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arkovich_law-narrowThe debt limits of a Chapter 13 bankruptcy are dropping considerably tomorrow, June 21, 2024.  The Bankruptcy Courts are reverting back to a two part test that limits eligibility to a maximum of $465,275 for unsecured debt and $1,395,875 for secured debt.  Importantly, there is no talk of an extension for this federal mandate.

What will this mean?  Well, many with high debt will be forced into a much more expensive Chapter 11 bankruptcy if they cannot swing a Chapter 7.  Also, there will be a few who are presently in a Chapter 13 bankruptcy who do not want to dismiss because their high debt would prevent them from re-filing.  And having too high of debt is not an automatic qualifier for a Chapter 7.  Instead, in Florida like elsewhere, we look at someone’s actual income and expenses and determine if they are eligible.  Filing a Chapter 7 is most beneficial as there is no plan payment but it can be risky in that there is no automatic stay for co-borrowers, no automatic right to dismiss and you can lose non-exempt assets to the bankruptcy trustee.  Many other differences also exist.

It’s important to have an experienced bankruptcy attorney on your side.  We’ve been filing cases for years.  If you’d like to know what your particular situation would look like, please reach out to us.  We have a free consultation – we charge for those with student loans as those are much more difficult cases – but it’s still free for others.

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We will be speaking at the Orlando Student Loan and Bankruptcy Workshop on June 7, 2024 along with Laurie K. Weatherford, Chapter 13 Trustee, Orlando Division, and Robert and Tammy Branson.  For our fellow attorneys who practice bankruptcy, this is not one to miss.  The cost to attend is only $350 for an attorney and will offer 6.0 CLE credits.

  • The 2022 guidelines from the Department of Justice on federal student loan adversaries are working. Don’t be left behind!
  • Debtors are receiving discharges.
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FTX wants to pay customers back but based on crypto prices at the time of its bear market bankruptcy. So, not good.

In paperwork filed on December 27, FTX proposed prices for around 500 crypto assets. This includes:

  • Bitcoin at $16,871
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Christie_1Despite lots of changes in the landscape allowing the discharge of both federal and private student loan debt under the right circumstances, many people still believe that student debt survives a bankruptcy.

Private loans follow very different rules then federal as you probably know.

One thing I haven’t written much about are private loans for these vocational schools such as those for coding, helicopter, cosmetology etc.  If the school is NOT on the federal Title IV list for the years of attendance, those are dischargeable in a bankruptcy.

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Christie_1I just wrapped up an interview for badcredit.org 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.

CLAIM SITE: NavientStudentLoanSettlement.com

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:  https://www.justice.gov/ust/eo/bapcpa/20231101/bci_data/median_income_table.htm.

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