What Does A Chapter 13 Cost?

It seems the #1 question from some clients is, how much will a Chapter 13 cost. I personally don't think an attorney should be picked based on price. The feedback I have received from people picking attorneys based on price is along the lines of “I guess I got what I paid for”. OK, enough of my soap box. As for attorney fees, within the Jacksonville Division of the Middle District in Florida, as in many jurisdictions, there are presumptively reasonable fees. Today, the Chapter 13 Trustee in the Jacksonville Division disseminated the following email:

“Please be advised that effective March 1, 2015, the Chapter 13 Trustee considers the presumptively reasonable fee for Mortgage Modification Mediation to be $1,850.00 and the presumptively reasonable fee for Chapter 13 Debtors engaged in and operating a business to be $4,000.00. Accordingly, no fee application is necessary for these services in these amounts and no objection will be filed. The increase for cases where a Chapter 13 Debtor is engaged in and operating a business is intended to compensate for the collection and production of profit and loss statements, bank accounts and tax returns for debtors engaged in businesses. This is not an increase for 1099 employees or contract employees who do not operate a business. All other presumptively reasonable fees regarding non business debtors, post confirmation services, administrative fees for collection and review of tax returns, and adversary proceeding fees shall remain unchanged.”

 
"The increase for cases where a Chapter 13 Debtor is engaged in and operating a business is intended to compensate for the collection and production of profit and loss statements, bank accounts and tax returns for debtors engaged in businesses."
If you are considering the filing of a Chapter 13 bankruptcy, you should contact a local bankruptcy attorney in your area for a consultation.

Congressman Delaney Introduces Student Loan Forgiveness During Bankruptcy Bill

Rep. John K. Delaney (D-Md.) introduced H.R. 449, the "Discharge Student Loans in Bankruptcy Act," to allow student loan debt to be treated like other forms of debt that can be discharged in bankruptcy proceedings, AccountingToday.com reported today.   

According to a study by the Institute for College Access & Success, 69 percent of graduates from the class of 2013 graduated with student loan debt, owing an average of $28,400.

"Student loan debt is dragging down economic growth, keeping the American Dream out of reach for many and is a monthly strain for millions," said Delaney. "Right now, there is effectively a huge student loan loophole in bankruptcy law that's hurting real people. . . It doesn't make sense for students with heavy debt burdens to be worse than someone with credit card, auto loan debt or mortgage debt."

Body Central Corp. Expected To File Bankruptcy

Bloomberg recently published an article indicating Body Central Corp (BODY), a mall based clothing retailer, is preparing to file bankruptcy within the next week. 

The company lost $70.2 million in the 12 months ending September.  The company sells young women's clothing, and has 265 stores in 28 states.  Body Central is based in Jacksonville, Florida, and received notice of default on $18 million in debt.  The company's stock lost 97% of its value last year.

Credit Card Accountability Creates Shift To Debit And Prepaid Cards

In 2009, Congress passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which requires issuers to disclose to the CFPB the terms and conditions of any college credit card agreement, the number of new credit card accounts, and the compensation paid by issuers to institutions of higher education in the previous year. In order for students and the public to identify marketing agreements currently in effect, Congress further required that colleges and universities also publicly disclose these agreements. The CFPB is required to submit an annual report to Congress about these agreements, and to make the report publicly available.

The Consumer Financial Protection Bureau (CFPB) released its annual report on college credit card agreements, which shows a nearly 70 percent decline in the number of agreements since Congress passed new disclosure requirements in 2009. These findings highlight the trend of shifting from credit cards toward other products such as debit and prepaid cards. The report also found that most colleges with credit card agreements do not make those agreements readily accessible to students and families. 
BRIEF HISTORY

A lack of transparency in the student loan and credit card markets led Congress to enact reforms to help the public better understand the marketing partnerships between colleges and lenders. In 2008, Congress passed a law requiring schools to disclose preferred lender arrangements with student loan providers and establish a code of conduct for school officials.


REPORT

The CFPB found that:

• College credit card agreements continue to decline: In recent years, there has been a steady decrease in both the number of college credit card agreements and open accounts. In 2009, some 1,045 agreements were in effect. In 2013, 336 agreements were in effect; around a 70 percent drop.
  

• College debit and prepaid card agreements are now more common than credit card agreements: According to a report from the Government Accountability Office, there were at least 852 schools that had agreements with companies to market debit or prepaid cards to students in 2013. Unlike credit cards, these products do not have specific requirements in federal consumer financial laws to disclose their marketing partnerships.
  

• College credit card agreements are not readily accessible: The CFPB reviewed 35 college and university websites to determine if they made their credit card agreements easy for students and families to find and access. The Bureau found that 80 percent of these institutions—28 of 35—do not put their agreements, or information about how to request them, on their websites.
  

The CFPB’s public database on college credit card agreements is available at: http://www.consumerfinance.gov/credit-cards/college-agreements/

Can You Try Too Hard To Avoid Bankruptcy?

People you usually of the mindset to do everything possible to pay all your bills, liquidating everything possible to try to avoid filing bankruptcy, and then, as a last resort, file bankruptcy. Bankruptcy should be a last resort, referring to a financial plan, and doing things according to the plan, not just doing things to do things. Last resort does not mean do everything you can think of, regardless of what it is.

You have heard the phrase you should do things Smart, not just Busy.

The thing about the bankruptcy code, it does not necessarily make logical sense. Often one can do something whereby they think they are helping themselves, just to find out later they were actually hurting themselves, both financially and emotionally. And all because they did not take advantage of a free bankruptcy consultation.

An example

The following is a general scenario that is not uncommon given the following general facts:

• Double wide mobile home (12 months of payments left);
• 5 acres of land in a rural part of county in Florida (paid for);
• $30,000 in a retirement fund;
• a vehicle - owed $25,000, worth $17,000; and
• significant debt on credit cards and medical bills.

One other small fact, a recent downgrade in jobs; lower income.

Does this sound remotely familiar?

After liquidating retirement funds, refinanced the home to include the land for some money to pay bills. Later ran low on money, vehicle repossessed, and the real property sold at a Short Sale.

A bankruptcy consultation would have revealed the retirement funds could have been saved, and the home probably could have been saved. The car, depending on income and equity in the vehicle, could have probably been saved. Credit card and medical debts, most probably discharged in bankruptcy.

This is an example of waiting too long to receive a consultation so one can plan their affairs around the filing of a bankruptcy.

Please keep in mind, no 2 cases are the same. Every case is different, and you should seek the advise of a local bankruptcy attorney in your area.

Bank of America In Talks To Pay $12B Fine

The Wall Street Journal recently reported that Bank of America Corp. is in talks to pay at least $12 billion to settle civil probes by the Justice Department and a number of states into the bank's alleged handling of shoddy mortgages, an amount that could raise the government tab for the bank's pre-crisis conduct to more than $18 billion. At least $5 billion of that amount is expected to go toward consumer relief — consisting of help for homeowners in reducing principal amounts, reducing monthly payments and paying for blight removal in struggling neighborhoods. As the negotiations with the government heat up, the bank is being pressed to pay billions more than the $12 billion it is offering. The North Carolina bank's total tab to end government probes and lawsuits related to its conduct in the runup to the financial crisis is increasingly likely to surpass the record $13 billion that JPMorgan Chase & Co. paid last year to settle similar allegations. Bank of America has already struck a $6 billion settlement, by the Justice Department's measure, with the Federal Housing Finance Agency.

Volusia County Moving To Orlando Division

As of August 1, 2014, Volusia County is being removed from the jurisdiction of Jacksonville Division of the Middle District of Florida, and being reassigned to the Orlando Division. To view all the counties assigned to the various divisions within the Middle District, please review Local Rule 1071-1 as amended.

To view the local rule amendments taking effect on August 1, 2014, Click Here