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“Ten Years of Garnishment Down the Drain”:

In this series of Real Life Examples, I would like to highlight a potential client who came to us after ten years of wage garnishment at $400 a month.  They were upset that the loan balance had not gone down at all, but rather actually went up.  To top if off this client works for the local school system and would be eligible for Public Service Loan Forgiveness (PSLF) had they not been in garnishment.

We put together a plan to cure the default, put them on the best income based plan for their family with an estimated payment of $167-$324 depending upon how they file their taxes and how many children the borrower claims on his tax return as dependents.  And they will be enrolled in the PSLF program which will allow for a full discharge of any loan balance including unpaid and accruing interest after ten years.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgThe Wall Street Journal reported today that the current administration intends to roll back some of the protections put into place by the Obama administration such as the gainful employment rule.  This will enable hundreds of for-profit schools to remain open that were at risk of closing.  Not sure if that is such a good thing.  If the employment rate is so low following graduation from some of these schools, perhaps these schools should be put down – rather than allowing their marketing machines to pull in more vulnerable students to waste years of their lives obtaining a worthless degree.  But I digress.

The important thing is Ms. DeVos indicated that the Department of Education fully intends on discharging applications pursuant to the Borrower Defense to Repayment under the rules established by former President Obama.  The Obama administration used the borrower defense regulation to cancel the debt burdens of former students at schools found to have committed fraud.  In early 2017, the DOE had approved claims from thousands of borrowers to erase $655 million owed by former ITT and Corinthian students.

It is unknown whether Mrs. DeVos will set too high a threshold for students to prove they were defrauded and get reimbursed.  However, it is good news that the current rule will be followed rather than dismantled.  “Promises made to students under the current rule will be promises kept,” Mrs. DeVos.

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“The Lost Ten Years”:

Sometimes I get a little focused on the more unique and “outside the box” solutions that I tend to blog about, and I forget that little things are just as important to obtaining the right result.  So I hope to publish a series of Real Life Examples of how people have inadvertently screwed up their student loans – mostly due to the non-transparency of the student loan system – and this has cost them dearly.  The point is that maybe our readers will catch something they haven’t done or checked into, or at least help encourage them to email or call a student loan attorney to get a checkup and make sure everything is going according to plan — or make a plan if none exists now.

In this example, someone who consulted with me had recently submitted their Public Service Loan Forgiveness (PSLF) Discharge Application and it was denied.  He had worked ten years for the federal government in public safety.  He then came to me.  I wish he had come to me earlier.  After I researched the matter, it turned out that while he had consolidated his loans, the consolidation was done too early in 2005 and well before the Direct loan program even existed.  Only Direct loans, and not FFEL loans, are eligible for PSLF.  So in order the obtain a discharge of his federal loans, he has to consolidate to the newer loan type, and then wait another ten years (while working full time for the government entity) to apply again.  This gentleman is turning 60 this year.  It’s extremely unlikely he will still be working in the same position when he is 70.

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For anyone who reached out to file a comment with the FCC as we requested, we thank you.  The FCC received over 10,000 comments filed by consumers opposing ringless voicemails, plus actions were filed against this change in the law by the Attorney Generals in NY, MA and Kentucky.

A change to the TCPA (Telephone Consumer Protection Act) to exclude ringless voicemails would give free rein to debt collectors and creditors to relentlessly invade every consumer’s privacy, and deluge their private voicemail with unlimited, harassing messages.  Consumers could easily check their phone and have hundreds of voice messages at the end of a workday.

Fortunately, the news media has picked up on this story as well and is helping to get the word out for people to oppose this change to the TCPA.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgOne of our most successful cases this month was the discharge of private student loans for our client who attended a Caribbean medical school.  The key was that the foreign medical school was not listed on the Federal Schools Codes List as being eligible for federal funding.  That particular fact allowed us to obtain a full discharge of several hundred thousand dollars in private student loans.  The loans were not “qualified educational loans” as that term is defined by the Internal Revenue Code and therefore were dischargeable under Section 523(a)(8) in an adversary proceeding.

This case, In re Lysiuk, Case No. 6:16-ap-00124-CCJ is available here.  It was decided by Bankruptcy Judge Cynthia Jackson out of Orlando, Florida.

This case was not brought as a typical undue hardship.  I felt it would be exceedingly difficult to prove under the existing Bruner Standard that our client met the burden to discharge his loans based upon hardship.  While he was only making $10/hour when we filed the case, he was potentially capable of much more (despite being unable to pass the medical boards) and was young and healthy.  So instead we chose to go the route of a more technical argument that was gaining ground in the United States but was still an issue of first impression in Florida.

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Having a watchdog such as the Consumer Financial Protection Bureau (CFPB) out there looking out for consumers’ interests is a good thing.  Please call your representative THIS WEEK.

The U.S. House of Representatives will vote this week on H.R. 10, the Financial Choice Act sponsored by Congressman Jeb Hensarling (R-TX).  PLEASE CALL your representative and tell him or her to vote against the WRONG Choice Act.

Among many other dangerous elements, this radical bill eliminates the Consumer Financial Protection Bureau’s power over:

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magnify-glassIt is very important to correctly reflect the assets of your bankruptcy estate and your intentions as well as meet all the other requirements to properly file a bankruptcy.  Documents that appear thorough, accurate and complete when filed, tend to receive far less scrutiny.  When in doubt, disclose, disclose and disclose.  If the bankruptcy trustee believes a debtor, or even worse, debtor’s counsel, has not fully and truthfully disclosed all of the requested information, that trustee will question the debtor endlessly, and will also request documents from the debtor to prove the information in the petition.  It’s important to hire competent and experienced bankruptcy counsel who has a good relationship of trust with the Chapter 7 and 13 trustees for this reason.  Proper preparation of a bankruptcy petition is one of the most important things a debtor and debtor’s counsel can do:

  • It ensures a quick and smooth 341 examination;
  • The more complete the documentation is, the less questions a trustee needs to ask;
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I implore you to go to the link below and provide a brief comment – we need help from consumers to keep the cell phone laws intact to stop invasive robocalls:

CBS News ran a terrific prime-time piece last night, featuring NCLC’s Margot Saunders, on TextCaster’s request that the FCC rule that the TCPA does not apply to ringless voicemail.  It’s just a bit over two minutes long and is worth viewing:

http://www.cbsnews.com/videos/companies-want-robocalls-to-go-straight-to-your-voicemail/

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According to the US Census Bureau, and their latest full year of researched data on child support payments (2007), of the $34 billion dollars in child support that was owed, nearly 62% of it was reported as received by the end of the year. What does that tell us? Well, it means that the United States Family Court system puts an extremely high priority and value on a parent’s child support obligation. This is a good thing, but if you believe that bankruptcy absolves your child support obligations, then this might be a sobering moment for you. Let me explain what happens with child support during bankruptcy.

Domestic Support Obligation

Child support is classified as a Domestic Support Obligation (DSO), and is therefore not protected under the umbrella of bankruptcy; it is referred to as a non-dischargeable debt. This applies to past, present, and future support payments. In addition, the “automatic stay” technique cannot halt or delay the collection efforts of DSOs. Nationally, you will find the same regulations, even though different jurisdictions have their own terminology for it.

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