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Credit-ReportWhat are the most common errors on a credit report that lead to FCRA claims — and resulting damages?

  1. Status Disputes – error/inaccuracy standards which give rise to valid disputes:
  • these are things that are factually inaccurate such as:
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facemask-mortgage-relief-covidSome creditors and loan servicers are jumping the gun in pursuing foreclosures, HOA liens, COA liens.  The federal government is also taking the position that it’s okay to pursue cases already in litigation.  We had to file a motion to abate arguing that the moratorium preventing involuntary collection activity includes cases already in litigation — which is well supported by case law.

None of these things should happening while the moratoriums are still in place.  For mortgages and tenant evictions in Florida, that means we are in a holding pattern until July 2 when the foreclosure and eviction moratorium is set to expire.  This includes actions on other liens as well.  Florida Statute Section 702.09 defines mortgages to include HOA and COA liens so they have to put things in park, same as other traditional mortgages.

It also appears that certain banks are not honoring mandatory forbearance requirements — if you have received any messages, letters or phone calls re: SPECIAL FORBEARANCE options, please reach out to us asap to help make sure that this goes smoothly.

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pslfThe American Prospect published an article yesterday about our Lawson-Ross Public Service Loan Forgiveness (“PSLF”) success in the 11th Circuit – which was very persuasively argued by Dan Zibel of National National Student Loan Defense Network.

Two quotes that should give student loan borrowers comfort and should give pause to servicers spewing false promises:

Yet, too often the loan servicers have every incentive to put their financial needs ahead of borrowers’ best interests. Servicers are paid a flat fee per loan in their portfolio, leading to chronic underinvestment in customer service. This dynamic leads the loan servicers to shunt students into less affordable plans or botch simple paperwork rather than take the time to get consumers into the right plans that best match their individual situations.

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Covid-CARES-ActThe CARES Act was designed to help protect consumers’ credit reports from the massive job loss and economic harm caused by COVID-19 business shutdowns.  The idea is to ensure that someone’s credit is not impacted by a temporary inability to pay bills.  While the CARES Act is helpful for this, there are a couple gaping holes as explained below that will not protect everyone’s credit during these times.

Basically, this Act added a new subparagraph (F) to 15 U.S.C. Section 1681s-2(a)(1) of the Fair Credit Reporting Act (“FCRA”).  This applies for anything that is a credit obligation including credit cards, auto debt, medical debt, home mortgages etc.

These temporary protections are only in effect for 120 days from March 27, 2020.  A couple areas of concern are in bold below:

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heroes-actWe’ve been advocating for the Public Service Loan Forgiveness (“PSLF”) to be fixed for a few years now.  Our class action lawsuit against Navient went nowhere, but the one against Great Lakes has been commended for a ruling last month by the 11th Circuit to help hold federal student loan servicers accountable when they talk to their borrowers:  like how their loans would be impacted by various programs for instance.  Something you’d expect a servicer to get right.  So when a servicer tells someone that their payments count toward PSLF, you can rely on that.

It’s now possible that Congress may work to fix the very serious problem where not all federal loans are treated the same.  Fixing this via legislation will impact a whole lot more borrowers than individual or even class action lawsuits.

Enter the proposed HEROES Act which would address problems with the Public Service Loan Forgiveness (PSLF) program, which allows qualifying public servants to get their federal student loans forgiven after 10 years of repayment. Currently, only Direct federal student loans are eligible for forgiveness under the PSLF program. Borrowers who have commercially-held FFEL-program federal student loans and Perkins loans do not qualify unless they consolidate those loans via the federal Direct consolidation program. By consolidating, however, they would erase any progress towards the 10 year repayment period and would effectively be starting over. The HEROES Act would allow payments made prior to consolidation to count towards PSLF.

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this-way-that-wayIt can be risky to reaffirm a mortgage in a bankruptcy, particularly when the property is underwater (worth less than what is owed), or you may need to move and sell quickly.  A reaffirmation agreement puts you back on the hook to pay for the full amount of the mortgage, including interest, taxes, insurance, foreclosure fees and costs after a bankruptcy, if you elect to keep the home.  Why would someone ever sign one of these?  Well, most mortgage companies do not report payments being made on a non-reaffirmed mortgage.  So how do you avoid the risk, while at the same time, benefit from timely payments being made which rebuilds credit?

SELF REPORTING MORTGAGE PAYMENTS

WHEN YOUR LOAN WAS NOT REAFFIRMED

The bankruptcy code does not require that you reaffirm, or sign a court order agreeing to continue the payments on your mortgage. But unless you are surrendering your house, you will want to continue paying because the house will eventually be foreclosed if you do not.

Mortgage companies will not report your payments to the three major credit reporting agencies (Experian, TransUnion, and Equifax) if you have not reaffirmed. It is possible, nonetheless, to still get your payment history included in your credit report, as follows:

  1. Request a payment history from the mortgage company. (The mortgage company is required by law to provide one every year free of charge.) There is no special form – just call your mortgage company and be persistent.
  2. File a dispute with the three credit reporting agencies, attaching a copy of the payment history.
  3. The credit reporting agency is required to verify the accuracy of the debt with the mortgage company within 30 days.
  4. At that point, the mortgage company can either:
  • Remain silent – the credit reporting agency must accept the information you provided; or
  • Accurately report information. The mortgage company would be hard pressed to explain how a payment history it prepared was inaccurate.
  • Repeat this process on a regular basis, to update the information.

Additionally, you should keep the payment history, since that can be provided to anyone you’re applying to for new credit.

To Schedule a Consultation
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bank-drowningDespite early applications and full financial documentation (sometimes submitted within hours of portals opening), some banks, who will remain nameless for now, dropped the ball and did not timely process PPP applications on behalf of scores of small businesses who had been loyal customers for years.  I am one of these such businesses in Tampa Bay, Florida.

So I’m beginning to ask myself, what did these banks who failed their customers have to gain – while they strung the little guys along?  If I had known my application would sit untouched for two weeks, I could have gone elsewhere, I have several banking relationships.  But I chose to stay with the one application I filed with my primary banker.  I counted on that bank.  I was let down.  Many more share my story.

I will soon have to draw down my line of credit at approximately 8% interest.  That money goes to my bank – those funds will help their bottom line.  These banks have profited by “dropping the ball”.  Many small businesses will fail.  Local businesses.  Mom and pops.  Despite filing an early application with a trusted banker.

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small-bus-and-coffeeMany small businesses will take advantage of Paycheck Protection Program (PPP) and other measures to keep afloat for the next couple months.  These plans hopefully will result in forgiveness of any funds used for payroll, rent and utilities.  But as we all knows, running a small business involves lots of other expenses.  Many businesses will draw down lines of credit while credit is still available.  Seeking forbearances for various business expenses may also be possible to conserve cash.  Owners may not take paychecks for awhile.

But eventually, shelter in place orders will subside.  What then?  Revenues won’t be what the once were for quite some time:  at least for the entertainment, travel and restaurant industry.  Many other industries too I’m sure.

How will these businesses remain in business?  Fortunately, the new Subchapter V Small Business bankruptcy rules went into effect in mid-February.  These weren’t caused by COVID-19, but the timing couldn’t have been better.  The debt cap was raised by the CARES Act from $2.7 million to $7.5 million for eligibility.  These small business Chapter 11 cases are streamlined and less expensive.  They are a means to reduce debt and the cost of carrying that debt — while remaining in business!

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ffcraOur firm used to do a lot of employee rights cases, but we reduced that area of practice when we elected to focus on foreclosure defense and student loan work.  Recently though, we have had a few clients with questions about what happens to their income if they or an immediate family member should get sick with COVID-19.  One of our attorneys suggested I post the following to help answer these questions:

WHAT ARE YOUR RIGHTS UNDER THE FAMILY FIRST CORONAVIRUS RESPONSE ACT (FFCRA)?

The Act requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons relating to COVID-19.  These provisions are applicable between April 1, 2020, through December 31, 2020.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgHow do you determine if the COVID-19 federal law waiving interest applies to your federal student loans?  The most recent changes are summarized here in a nice Q&A format:  https://studentaid.gov/announcements-events/coronavirus.

My take on all this:  The Act suspends student loan payments and interest accrual through September 30. For those in federal loan forgiveness programs, those months will count as months in which payments were made.

Now for the finer points:  for the interest waiver, not all federal loans count, only Direct Loans and those Federal Family Education Loans (FFEL) which are owned by the government.  Most FFEL loans are owned by third parties and only guaranteed by the government.  Perkins Loans are owned by the institution and the interest waiver does not apply either.  Eighty percent of all federal loans were FFEL loans before the FFEL program was discontinued in 2010.  I’d estimate one-quarter to one half of all federal loans are still FFEL loans.

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