Tuesday, July 25, 2017

Student Loan Debt Holders Could Be In Trouble

I recently received an email from Bobby Wilbert's Facebook account referencing private student loan debts, and how the holders of these debts could be in trouble.  Student loans have been bundled and sold. 

Remember the mortgage loan crisis. 

The following article addresses an impending similar crisis for private student loan holders:

http://www.dailynews.com/opinion/20170722/student-loan-bundlers-scheme-blowing-up-in-their-faces-james-poulos

Wednesday, June 28, 2017

11th Circuit Upholds Use Of Means Test In Converted Cases from Chapter 13 To Chapter 7

The 11th Circuit Court of Appeals recently decided Stratton C. Pollitzer, vs. Guy G. Gebhardt, which upheld the use of the means test in a converted case from Chapter 13 to Chapter 7 under §707(b).  Although the bankruptcy code does not state the means test is to be used in a converted case, it does not deny its usage, and the 11th Circuit concluded it was congresses intent for it to be used.  

The case can be viewed in its entirety at http://media.ca11.uscourts.gov/opinions/pub/files/201611506.pdf

Monday, May 15, 2017

Midland Funding LLC v. Johnson: OK to file Proof of Claim on Time Barred Debt


Today, May 15, 2017, the Supreme Court of the United States decided Midland Funding, LLC v. Johnson, 581 U.S. ___ (2017).

Holding: The filing of a proof of claim that is obviously time barred is not a false, deceptive, misleading, unfair or unconscionable debt-collection practice within the meaning of the Fair Debt Collection Practices Act.

Midland Funding filed a proof of claim in Johnson’s Chapter 13 bankruptcy case. It asserted that Johnson owed Midland debt on a credit card. The last time any charge appeared on Johnson’s account was more than 10 years ago. The relevant statute of limitations under Alabama law is six years. Johnson objected to the claim, and the Bankruptcy Court disallowed it.

Johnson sued Midland, claiming that its filing a proof of claim on an obviously time-barred debt was “false,” “deceptive,” “misleading,” “unconscionable,” and “unfair” within the meaning of the Fair Debt Collection Practices Act, 15 U. S. C. §§1692e, 1692f. The District Court held that the Act did not apply and dismissed the suit. The Eleventh Circuit reversed. The Supreme Court reversed, holding the filing of a proof of claim on a time barred debt is not a false, deceptive, misleading, unfair or unconscionable debt collection within the meaning of the Fair Debt Collection Practices Act.

While the decision has not been published yet, the Syllabus containing the decision can be viewed at https://www.supremecourt.gov/opinions/16pdf/16-348_h315.pdf

Saturday, March 18, 2017

Bankruptcy Fees Likely to Increase in 2017

set of american dollar bills as background stock photo
According to President Trump's budget proposal, the filing for bankruptcy would likely cost more.

The budget includes a provision that would raise an additional $150 million in 2017 through higher filing fees. The budget aims to generate an additional $150 million in 2017, and $289 million in 2018, in addition to the $138 million already generated.

Although it is too early to know which filing fees will increase, the increased fees would go to the Department of Justice's United States Trustee Program. The Trustees oversee bankruptcy filings.
Currently, the filing fee for Chapter 7 bankruptcy, the most common type of petition, is $335. Other filing fees range from $310 for Chapter 13 to $1,717 for Chapters 9, 11 and 15. Additional costs come from attorney's fees and required financial counseling.

It will be interesting to see if anyone challenges the fee on the basis of restricting access to the Courts. Should this pass, it will be interesting to see how much of an increase in filing of fee waiver applications.

So, what are the fees now?  Let's take a look.

According to President Trump's budget proposal, the filing for bankruptcy would likely cost more.
The budget includes a provision that would raise an additional $150 million in 2017 through higher filing fees. The budget aims to generate an additional $150 million in 2017, and $289 million in 2018, in addition to the $138 million already generated.
Although it is too early to know which filing fees will increase, the increased fees would go to the Department of Justice's United States Trustee Program. The Trustees oversee bankruptcy filings.
Currently, the filing fee for Chapter 7 bankruptcy, the most common type of petition, is $335. Other filing fees range from $310 for Chapter 13 to $1,717 for Chapters 9, 11 and 15. Additional costs come from attorney's fees and required financial counseling.
It will be interesting to see if anyone challenges the fee on the basis of restricting access to the Courts. Should this pass, it will be interesting to see the increase in the filing of fee waiver applications.
So, how much does it currently cost to file Let's take a look.

New Petition Filing Fees (as of 3/18/2017)
Chapter 7 Voluntary or Involuntary
$ 335.00 [$245 filing fee + $75 administrative fee + $15 trustee surcharge]

Chapter 9
$1,717.00 [$1167 filing fee + $550 administrative fee]

Chapter 11 Voluntary or Involuntary
$1,717.00 [$1167 filing fee + $550 administrative fee]

Chapter 12
$ 275.00 [$200 filing fee + $75 administrative fee]

Chapter 13
$ 310.00 [$235 filing fee + $75 administrative fee]

Chapter 15
$1,717.00 [$1167 filing fee + $550 administrative fee]

Monday, February 27, 2017

Bankruptcy: An Effective Social Policy That Reduces Stress, Live Longer

Over the past 15 years or so, people have come into my office to file bankruptcy for many different reasons.  While no 2 bankruptcies are the same, they generally wind up falling into one of two distinctive categories: financial or debt relief, and relief for medical reasons.

While the first of these 2 categories may seem obvious, as that is what is disseminated through the various news agencies, the other is rarely, if ever, mentioned.  Financial or debt relief is obvious, and is centered around the construction, and reconstruction, of the bankruptcy code, its rules, and most case law, while the two are actually inextricably intertwined.  The other being medical, does not appear to have been contemplated  by congress.

There are two forces at work here.  The first is on the debt collection side.  They are either trying to collect on money lent to the debtor, or collecting on moneys owed to the creditor for some other reason, such as a judgment.  The creditor simply wants to be paid moneys owed to them, and when the debt is beyond a debtor's means of being able to pay, the debtor is forced to look at other means of relief, such as bankruptcy.

The other construct being medical, is almost exclusively from the debtor's side.  Collection efforts are initiated with little regard to a particular debtor's circumstances.  A debtor may have medical bills resulting from heart or blood pressure issues, or the debtor may have unresolved mental issues.  The tactics used by debt collectors push people to resort to legal remedies, including bankruptcy, to reduce stress, lower blood pressure, and conform mentally with doctor's recommendations.

According to a paper released by the National Bureau of Economic Research, "economists Will Dobbie and Jae Song examine 500,000 bankruptcy filings in the United States to measure the effect of bankruptcy laws on consumers. They found that the bankruptcy code is an incredibly effective social insurance policy. According to their findings, getting approved for Chapter 13 bankruptcy protection 'increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.'"

"The paper's authors argue that bankruptcy protection helps workers earn more by removing the disincentive to work resulting from creditors garnishing worker's paychecks. If a person's wages are garnished to the point that it didn't pay to continue working, they often decide to stop working altogether.

The study also found that bankruptcy also helps people live longer, due likely to the fact that dealing with debt problems, rather then letting them fester, significantly reduces stress. Chapter 13 bankruptcy also allows people to stay in their homes because it is designed specifically to allow borrowers to avoid foreclosure."

To read the complete article, see bankruptcy-law-inequality-income

Sunday, February 26, 2017

Lee Ann Bennett Appointed To Administrative Office of US Courts



Congratulations to Lee Ann Bennett in her appointment by Supreme Court Chief Justice John G. Roberts, Jr. as the new deputy director of the Administrative Office of the U.S. Courts.  Bennett will serve as deputy to AO Director James C. Duff.  On behalf of the bankruptcy attorneys that practice in the Middle District of Florida, Jacksonville Division, we thank her for a job well done, and wish her much success in her new job.


For more information, see

http://www.uscourts.gov/news/2017/02/23/new-ao-deputy-director-named