Articles Posted in Chapter 7 Bankruptcy

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arkovich_law-narrowBig things are happening regarding Discover’s portfolio of student loans.  If you have one of these, please follow along and see what can be done.

Specifically, Discover is getting out of the private student loan business.  Fully.  They are sending letters to borrowers in a bankruptcy that they are forgiving the loans.

What does this mean?  Well, I would want to get in on this immediately and get a bankruptcy filed to take advantage of this situation.  I expect someone will come along to buy their portfolio.  Why not get a court order that says this debt is gone while you can??

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arkovich_law-narrowSo what exactly does a Chapter 13 do with regard to debt that is co-signed by someone who did not file bankruptcy?  What about debt that survives a bankruptcy such as many (but not all) student loans?

First off, a co-debtor stay is imposed immediately when a Chapter 13 is filed.  That means any collection action, including phone calls, are supposed to cease immediately for the co-borrower even though he or she did not file their own bankruptcy.

Second, a Chapter 13 bankruptcy plan payments appear to toll the statute of limitations whether or not the trustee makes the payments once a creditor files its proof of claim that survives any debtor objections.

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arkovich_law-narrowThe SBA is sending out e-mails that seem to indicate that even though the signature block for the borrower is a corporate entity or LLC, the individual signing is also somehow liable in a personal capacity. But they also confirm that loans up to $200,000 require no personal guaranty. The language is as follows:

Personal Guaranty:

$0 – $200,000: No personal guaranty required

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arkovich_law-narrowSection 524(c) of the Bankruptcy Code sets forth the procedures in which a discharged debt may be reaffirmed. Creditor’s solicitation to reaffirm a discharged debt which does not comply with 524(c) is a violation of the discharge injunction. In re Latanowich, 207 BR 326, (Bankr.D.Mass.1997).

Any time you are asked to repay a debt that was discharged in a bankruptcy, you should consult with an attorney to see if that is legal.  Often it is not.

We represent consumers in the Tampa Bay Florida area – in most surrounding counties.  Reach out to us if you have questions about your prior bankruptcy, or are considering getting rid of debt now.

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arkovich_law-narrowThe Federal Reserve is meeting today and widely expected to start to reduce interest rates.  I last heard that there was a 55% likelihood for a .50 cut.  Frankly, I’d expect a .25 cut.  But if they want to reach a goal of 100 basis points cut by year end, they almost have to do a .50 cut today.

So one big question: how much and how quickly will that trickle down to ordinary consumer debt?

A lot of people would like to avoid bankruptcy.  I get it.   The Wall Street Journal published an article yesterday that while consumer credit debt is up 11% over last year, other sources of credit are drying up and no reasonable alternatives exist.

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arkovich_law-narrowWant to get out of debt by the end of the year?  It’s possible.  Really!  How, you ask?

File Chapter 7.  These bankruptcy cases only last three months –  90 days.

Wouldn’t it be nice to stop trying to juggle everything?  Feeling overwhelmed with your finances?

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arkovich_law-narrowThis month, lots of debt collectors are filing cases.  You may have been served recently.  First, don’t ignore it.  If you ignore a summons, it’s easy for the debt collector to get a judgment and start to garnish your wages or bank accounts.  Don’t do it.  We call that “low hanging fruit”.  They like when you default.  It’s an automatic win for them.

There are many possible defenses.  Perhaps their paperwork is bad.  Perhaps they tried to collect too aggressively and violated our consumer laws.  Maybe they waited too long to sue and the statute of limitations ran.  Something.  Anything.

You can also settle.  A settlement before they win.  After they win, they no longer want to settle on terms that you may find attractive.

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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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