Chapter 7 Bankruptcy

Published on: February 6, 2019

Great New Opinions for Discharging Private Student Loan Debt in Bankruptcy

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.

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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.

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Published on: January 8, 2019

What to Look For In Hiring a Bankruptcy Attorney?

By Christie D. Arkovich, P.A.

When 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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Published on: January 3, 2019

Hope Everyone has Recharged and Regrouped After the Holidays!

By Christie D. Arkovich, P.A.

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.

Published on: December 11, 2018

How to Make a Debt Collector Cease Collection Calls and Efforts

By Christie D. Arkovich, P.A.

The Fair Debt Collection Practices Act (“FDCPA”) and its Florida counterpart, the Florida Consumer Collection Practices Act, (“FCCPA”) require a debt collector or creditor to cease all collection efforts once a consumer acts to preserve their rights. But you have to ask first, and in writing by sending a cease and desist.

Under 15 U.S.C. Section 1692c(c) if a consumer notifies the debt collector, in writing, to cease further communications OR if the consumer notifies the debt collector, in writing, that he or she refuses to pay the debt, the debt collector cannot communicate with the debtor, with 2 exceptions.

(a) to advise consumer collection efforts will cease; or

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Published on: April 2, 2018

Bankruptcy Debtors Affected by New Florida Law Prohibiting Fighting Foreclosure

By Christie D. Arkovich, P.A.

There 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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Published on: March 25, 2018

Social Security Disability Overpayments Can be Eliminated in Bankruptcy

By Christie D. Arkovich, P.A.

Would 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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Published on: March 12, 2018

Student Loan Debtors Getting Kicked Out of Income Driven Plans in Bankruptcy

By Christie D. Arkovich, P.A.

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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Published on: February 19, 2018

What to Do When You Believe(d) Your Student Loans Were Discharged in a Prior Bankruptcy

By Christie D. Arkovich, P.A.

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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Published on: February 7, 2018

Do Not File Your Tax Return If You Are In Default on Your Federal Student Loans: File an Extension and Cure the Default First

By Christie D. Arkovich, P.A.

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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