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christie_d._arkovich_p.a_1_smallIn my continued efforts to help student loan borrowers understand why hiring a student loan attorney is a good idea, I’d like to post some of the cases we are working on this week.  Some of these are a little out of the ordinary and I’m hoping that other potential clients who have similar difficulties will contact us to help after they read this.

  1.  We settled a case for a client who came to us with a private student loan default a couple months back.  He had accidentally defaulted when he tried to put two student loans into forbearance.  He was told to send a certain sum of money, and sign and return two forbearance agreements.  He did that.  Despite both agreements being placed in the same envelope, the unnamed bank claimed it had received only one.  And they argued that two payments were due, not just one.  So they put the default on his credit.  Unfortunately, this default would prevent him from applying and obtaining a federal attorney position with a security clearance.  He offered to pay them in full.  No can do.  The default would remain.   He hired us.  We tried to talk to the bank but we also hit a brick wall.  So we sued.  Within two weeks of hearing from the attorney representing the bank, we agreed to a removal of the default and a 50% settlement in exchange for a waiver of our claims.  We sued under theories of negligence, negligent misrepresentation and the FCCPA.  Our client is up for consideration for a federal job now, and we’ve asked that the default removal request be expedited so that it won’t come up in the background search.  While we will never know for certain, the litigation we filed allowed the bank to “act outside of the box” and get this rectified.
  2. Another client came to us after being garnished on her federal loans for 8-9 years at $500 a month.  I could hardly believe this had gone on for so long, but she didn’t think anything could be done since it was a student loan.  She’s not alone, many people think that, including attorneys who don’t do student loan work.  She is a teacher making $30k or so a month.  She owes 82k and her loan balance despite the $500 wage garnishment is not going down and she feared having to pay it forever.  With two kids of her own about to go to college, she couldn’t afford for this to continue.  Our plan is to rehab the default to cure it, then consolidate the loans to re-characterize her FFEL loans so they are eligible for public service and then apply for a certain income based plan with debt forgiveness that would forgive the balance after 10 years under the public service program without considering her husband’s considerable income.  When the dust settles we estimate her payment will be $300 for 10 years.  She is good with that.  The amount is based on her income (not her husband’s which is over 100k), is affordable and the best thing is it’s over in 10 years with no tax forgiveness.
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How many consumers are sued every day by a debt buyer they’ve never heard from in the past?  This is extremely common and presents an excellent defense for those knowledgeable enough to use it.

One of the best tools we have as a consumer lawyer fighting collection actions brought by companies such as Cach, Asset Acceptance, Sherman Financial Group etc. is Florida Statute Section 559.715.  It requires notification of any assignment of the right to bill and collect the debt be given to the consumer prior to filing a lawsuit in an attempt to collect the debt.  It acts as a condition precedent to filing suit and requires a case to be dismissed if properly asserted.

A case we had last week is a perfect example.  Our client was sued by Cach LLC for an old credit card debt and she represented herself for two years.  Not much was done other than an answer was filed.  However, the debt buyer recently started working on the file again and a motion for summary judgment was filed.  Our client hired us in February of this year to fight that MFSJ.  Once we reviewed the file, we determined that we could file our own Motion for Summary Judgment for failure of the debt buyer to send the notice required by Florida Statute Section 559.715.  We did and we won.   Case dismissed.  The Plaintiff’s Motion for Summary Judgment hearing already set a couple weeks later was removed from the calendar as the case was now over.  The statute of limitations was still open for the debt buyer to re-file for a few more months.  So we next offered to waive our entitlement to attorney’s fees in exchange for the debt buyer releasing their claims against my client.  They agreed.  Problem solved.  No low hanging fruit here Cach decided and they moved on.

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mortgage lenders
Consumer debtors routinely have various related difficulties with mortgages following the filing of a Chapter 7 bankruptcy.  Unfortunately, the first thought is that the bankruptcy attorney messed up when that really is not the case.  They think the attorney put the home into the bankruptcy when it was meant to be left out.  However, all debt and assets must be listed and included for disclosure purpose in a bankruptcy.  Debtors who want to keep their home, have a choice to reaffirm the debt by signing a Reaffirmation Agreement or by simply continuing to make monthly payments.  In most cases, it is advantageous for a debtor not to reaffirm a mortgage debt, but rather just continue to maintain payments, particularly when the home is under water and no equity exists in the property.  If they reaffirmed the debt and eventually had to give up the house because they moved to take another job for instance, they would be back on the hook for the mortgage debt.

So what kind of problems come up when a debtor does not formally reaffirm the debt in bankruptcy, but their intention is to keep the property and continue making payments:

  • Whether or not a reaffirmation of a mortgage is required
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christie_d._arkovich_p.a_1_smallYesterday I was back for a full day after being sick with the flu for a few days.  The day was surprisingly productive.  Many people have asked me what we can do for people with student loans.  This question is often combined with a statement that they thought nothing could be done.

To the contrary, here are the results for our Tampa Bay clients just yesterday.  First I received an email from a client who thanked our law firm for greatly improving the quality of his life.  You see when this client initially contacted us six months ago he owed over six figures in private student loans and could see no end in sight – he was in his late 50s.  The student loan companies were always asking him to make payments for more than he could afford.  He was single, healthy and able to work making 40k a year.  Despite this, we put him in a bankruptcy and filed an adversary proceeding asserting that he was due a partial discharge due to the non-affordability of the private student loans among other things.  Within a few months, we had negotiated settlements with both servicers of his student loans which included substantial principal  (50% or greater) and interest rate reductions (to 0-2%) and an affordable monthly payment plan.

Another client returned a signed rehab agreement to us today where she accepted the $10 a month payment plan we had negotiated for her to bring her federal loans current and remove the default on her credit report.  She had narrowly avoided garnishment by hiring us just in time.  When her rehab is done, we’ll put her into a specific income based debt forgiveness plan that takes into account her loan types,  marital status and type of employment for the best result.

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christie_d._arkovich_p.a_1_smallTax Relief for Certain Students Whose Education Loans Were Discharged:  The IRS has announced that taxpayers, who took out Federal student loans to finance attendance at schools owned by Corinthian Colleges, Inc., and whose loans were discharged under the Department of Education’s Defense to Repayment or Closed School discharge processes, will not have to recognize gross income as a result of the debt discharge. Furthermore, these taxpayers will not be required to increase their taxes or income if they claimed Section 25A education credits or took Section 221 interest deductions or Section 222 higher education expense deductions in a prior year for payments made with proceeds of these discharged loans. This tax treatment is effective for tax years beginning in 2015. Rev. Proc. 2015-57, 2015-51 IRB .

This is great news for our Tampa Bay clients who had the back luck to go to one of these schools.  Similar to letting an underwater home go, the tax forgiveness is potentially huge for student loans, principal reductions on mortgage modifications, short sales and foreclosures.  Normally, a person would have to file bankruptcy to discharge the potential tax debt for written off or forgiven debt.  For more information, please contact Arkovich Law

 

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cell phone in hand  Our Tampa Bay area clients are still in good shape under the recent court and FCC rulings under the Telephone Consumer Protection Act (TCPA).  Oral revocation is alive and well in Florida (although it’s always good to follow up in writing that you’ve asked a debt collector to stop calling your cell phone).  Many other favorable rulings have come out in the past couple years some of which are now being appealed to the U.S. Supreme Court by various debt collectors and creditors.

A number of federal district courts have recently stayed TCPA cases pending the outcome of Supreme Court proceedings in Robins v. Spokeo, Inc. and Campbell-Ewald Co. v. Gomez, and the outcome of petitions seeking review of the FCC’s July 10, 2015 Declaratory Ruling and Order (“FCC Order”) that are currently pending before the United States Court of Appeals for the District of Columbia Circuit. See ACA Int’l, et al. v. F.C.C., No. 15-1211 (D.C. Cir. 2015).

On April 27, 2015 the Supreme Court granted certiorari in Robins v. Spokeo, Inc. to address whether “a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court” can bring a private right of action based solely on a technical violation of a federal statute. 742 F.3d 409 (9th Cir. 2014) cert granted, 135 S. Ct. 1892 (2015).

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christie_d._arkovich_p.a_1_small Unfortunately, student loan borrowers in default on federal loans are experiencing tax intercepts around this time of year, sometimes for the first time ever.  Some tips:  1) if we can cure the default before your taxes are filed and the intercept occurs, we can stop it from ever happening; 2) if you can’t cure the default, there is a 20 day period to request a hearing, but ultimately unless you are completely destitute they will be able to keep your tax refund.  We recommend that if you know this is coming, delay filing your tax return and request an extension until you can cure the default.

Curing a default in federal student loans does not mean you have to bring it current and pay all missed payments.  Instead what we do for clients is negotiate a rehabilitation plan or sometimes a consolidation of certain loans to cure the default.  Often the payments to rehab a loan are as little as $5 and it does take into account your income and expenses.  We have a very thorough budget we like to use in negotiations so the debt collector can see what your true disposable income is.

You can also stop a tax intercept by filing bankruptcy.  If you have have enough personal property exemptions, you would be able to keep a portion or the entire tax refund.  Filing a bankruptcy petition before the offset activates causes the automatic stay to stop all collections even those initiated by the federal government.

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telephone

Communications with a homeowner when a debt collector is aware that the homeowner is represented by counsel is a violation of the FDCPA.  15 U.S.C. 1692c(a)(2).  This includes any mortgage servicer who has acquired a defaulted mortgage loan.  It is also a violation of our Florida Consumer Collection Practices Act (“FCCPA”).

Furthermore, if the mortgage servicer is calling you constantly, take a moment and take one of their calls:  tell them to stop calling your cell phone.  This invokes protection under the TCPA (Telephone Consumer Protection Act).  This protection from continued cell phone harassment can result in significant statutory damages of $500-$1500 per call.

Our Tampa, Florida law office, Arkovich Law, pursues violations of the FDCPA, FCCPA and TCPA for our clients who are delinquent in their mortgage or who have debt that is no longer enforceable such as when the statute of limitations has expired or a bankruptcy is filed.

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While not a Florida case, the Fourth Circuit ruled today that the arbitration provision of Western Sky Payday Loans is unenforceable.  This may be a sign of expanding consumer protections in the future, although it is very early to tell.  Mandatory arbitration clauses force a consumer to give up their right to go to court, participate in a class action, pay expensive filing fees of sometimes thousands of dollars, pay an arbitrator $300-$400 a hour (a Judge is free!) as well as other drawbacks.

Quick summary of the highlights:

  • No one appears to seriously dispute that Western Sky’s payday loans violated a host of state and federal lending laws. Indeed, a quick glance at Western Sky’s loan agreement suggests that Western Sky was keenly aware of the dubious nature of its trade.
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Phone-Police-150x150

Last week on January 20, 2016, in Campbell-Ewald Co. v. Gomez, ___ U.S. ___, 2016 WL 22835 (Jan. 20, 2016), the Supreme Court issued several important rulings in a TCPA class action.  These rulings will help consumers in cases where they are receiving unwanted text messages; being contacted by various parties seeking to collect a debt and debt collection by federal contractors.

  • “A text message to a cellular telephone … qualifies as a “call” within the compass of” the TCPA’s prohibition against autodialed or prerecorded calls to cell phones without the consumer’s prior express consent.
  • A defendant can be liable for another’s TCPA violations based on common law principles of agency.
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