Chapter 7 Bankruptcy

Published on: July 1, 2019

Debt Settlement or Consolidation Versus Bankruptcy

Which is the better option?

Debt management plans have no guarantee that the creditor will accept a negotiated discount. Debt consolidators charge a fee regardless of whether a settlement is reached and often years go by with credit scores dwindling each month. It’s often better to reach a deal with the creditor directly then try to include them in a debt consolidation plan. Lump sums are needed. 1099s are sent for any forgiven amounts leading to a tax bill. Any negotiated agreement must be in writing preferably with a line item deletion with the credit reporting agencies or at least reflecting the debt as paid in full.

Bankruptcy, particularly a Chapter 7, is often much faster — only three months for a Chapter 7 discharge. While a Chapter 7 will remain on someone’s credit for 10 years, most people are able to get their credit score back up to high 600s or low 700s within six months to two years. Bankruptcy is a legal mechanism intended to let people start fresh and credit rebuilding takes much less time than most people think.

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Published on: April 15, 2019

Bankruptcy Payments Permitted to be Directed Toward Principal During Plan

By Christie D. Arkovich, P.A.

Faced with a nearly impossible standard to discharge federal student loan debt in bankruptcy due to undue hardship, creative debtors’ attorneys and the bankruptcy courts are continuing to create pockets of relief wherever possible.

Finding that “non-dischargeability does not immunize the student loan claim from modification,”a bankruptcy court confirmed the debtors’ plan under which their payments would go to the principal on their student loan debt with accumulated post-petition interest to be paid post-discharge. In re Duensing, No. 18-10201 (Bankr. D. Kans. Feb. 22, 2019).

The guarantor of the loans, ECMC, objected to the debtors’ proposed treatment of the student loan debt arguing that, because the reduction of principal would result in declining post-petition interest, the proposed plan effectively discharged her student loan without a finding of undue hardship.

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Published on: April 6, 2019

New Median Income Figures are Out for Florida Bankruptcy Debtors – How to Qualify for a Chapter 7

By Christie D. Arkovich, P.A.

The new median income figures are out this week. Whether you are above or below these figures is not the only factor that is looked at however. But many of the expenses allowable under the Means Test have increased and if you were borderline last year, you may qualify for a Chapter 7 now. Or have a lower plan payment in a Chapter 13 bankruptcy.

Florida single wage earner – $49,172.

Family of two – $60,400

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Published on: March 22, 2019

Reboot Your Life: Use Debt Sparingly

By Christie D. Arkovich, P.A.

Debt is to be used sparingly. It allows you to make purchases which you cannot afford. In other words, debt allows people to live beyond their means or to spend more than they earn. While this may appear to be a good thing when an emergency arises, there are serious side effects. These side effects include 1) paying more for an item than what it’s worth in the form of interest; 2) possible inability to pay off the debt; 3) added pressure and stress which can lead to medical and relationship problems; and 4) being a “slave” to your debt.

While some debt will always be necessary such as a home loan, usually a car loan, and a reasonable amount of student loans, it’s important to only take on a modest amount of debt and have a plan for repayment. Just because a lender wants to loan you money is not a good reason to take it. Many college students took out excess student loans to pay for all kinds of stuff. Unnecessary stuff. With private loans in excess of 10% interest, that $5 latte easily turns into a $10 latte after a few years!

One client this week advised that she had incurred over 200k for a two year AA degree over a long period of time. She’s had a difficult life, and had to retake many courses and change degrees/schools etc. That’s perhaps one of the worst places to find yourself. She cannot afford to return to school, and has almost no education to show for that debt.

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Published on: February 6, 2019

Great New Opinions for Discharging Private Student Loan Debt in Bankruptcy

By Christie D. Arkovich, P.A.

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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