Blogs
The majority of clients we work with in our bankruptcy practice would be considered “consumer” debtors. Credit card debt, home equity loans, car loans, and medical bills often make up the majority of what they owe to creditors. Bankruptcy laws are written to allow consumer debtors to exempt much of the property they have acquired. The ability to retain property is often a major factor in deciding to file bankruptcy. How much property is exempt under the bankruptcy law is also one of the determining factors in deciding whether to file chapter 7 or chapter 13 bankruptcy.The post Property Exemptions in Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Until a private student loan lender decides to file a lawsuit against you, there’s nothing but chaos and uncertainty. That’s all replaced, for better or worse, the instant the case is filed.
There’s a natural order to things. Up is above, and down is below. For every day there is night. That’s the concept of Tao, and it enables us to walk through the world with a sense of certainty.
That certainty, unfortunately, is thrown out the window when it comes to dealing with a past due private student loan. Consider all the points of uncertainty when your student loan goes into default:
- Will the student loan go to collections and, if so, when?
- Will the collectors call you at work?
- Will you get fired because your boss doesn’t want you to get non-work calls during the business day?
- Will the lender sue you, or let it go?
- If there’s a lawsuit, when will it happen?
- Will they settle, or will they play hardball with you?
- When will this all be over?
Wipe Away The Uncertainty
When you’re sued for a private student loan, it’s understandable to feel the rise of panic in your chest. You need to act quickly in order to avoid a default judgment, and beyond that you’ve got to deal with litigation.
But at least there’s certainty. If not of outcome, then at least of, “what happens next.”
Finally, we’re dealing with lawyers representing the private student loan lender. Gone are the cut-rate bottom-feeding collection agents, toiling in anonymity behind glowing computer screens in boiler rooms across the nation, sweating as they contemplate their meager existence and self-loathing between phone calls designed to scare the last few dollars out of your pockets.
Say farewell to the people who have no information about your student loan beyond what’s provided on their screen, powerless to give you copies of your documents or an accounting of how they arrived at the amount they claim is due.
In their place we’ve got lawyers with a direct line to the lender – usually a trust like National Collegiate Student Loan Trust or a “too big to fail” lending institution. They can provide copies of the Note you signed, an accounting of how the balance due is calculated, and proof that the entity suing you is legally entitled to collect the student loan debt.
There is a court system that provides deadlines and procedures for getting to the final decision. A judge to sort through evidence and make rulings.
Certainty.
Accept It – And Deal With It
Now that we’ve got some certainty, we need to accept the reality of the situation. The lawsuit isn’t going to go away, and ignoring it won’t make things better.
Once you’ve accepted that reality, you can deal with it. File a response, invoke the magic words, and be a part of the process.
It may not be fun or easy, but at least you know what’s going to happen next.
Did you know that two magic words can help you defend – and possibly win – a collection lawsuit?
Whether you’re being sued for a private student loan, a credit card debt gone bad, or a bank loan it’s unbelievable that the lender or debt buyer can be scared off so easily.
At least, that’s the sense Ira Glass gives in the prologue to the episode of This American Life that aired on August 15, 2014. Relaying a story by Jake Halpern, Glass tells of a Georgia couple who had fallen on hard times. They went past due on their credit cards and got sued by LVNV Funding – an entity they’d never heard of.
Rather than do what over 95% of people do – that is, nothing at all – the consumers went to court to try to make some sense of the lawsuit. They didn’t necessarily deny that they’d fallen behind on their American Express debt, but they wanted to figure out how LVNV Funding fit into the picture.
Standing before the judge, they demanded that LVNV’s lawyer prove the case and show evidence of their ownership of the debt. In response, LVNV’s attorneys (who had previously not been particularly nice to them) dropped the case.
Just like that.
Here’s a copy of the entire show, by the way. I’m a huge fan of This American Life and recommend that you listen to the entire episode, but if you’re here for the collection lawsuit stuff then you’ll find that at the very beginning.
So What Are The Two Magic Words?
The two magic words to help you defend a debt collection lawsuit more effectively are:
prove itWhen you make the collection company prove the case, that means you want the other side to provide you with the following:
- you signed the application
- the entity suing you purchased the right to collect on the debt
- the balance claimed as being due is calculated properly
- the loan has not been rendered unenforceable due to the expiration of the statute of limitations
Why It’s Magic
It’s only by using these magic words that the creditor is forced to do anything beyond filing the complaint against you.
Failing to utter those words allows a default judgment to be taken against you.
In that way, using these magic words when you’re being sued for a debt will instantly turn the tables on the debt collection lawyer. They go from a position of strength to one of being on the run.
Why The Magic Works
I’ve talked about the fact that debt collection lawyers often don’t get more than a name, creditor, and balance due before starting a lawsuit to collect an unpaid debt. If the creditor is a company that’s purchased the debt, that debt buyer hasn’t gotten any proof in the form of the Note, billing statements or an accounting.
In other words, more often than not the creditor doesn’t have a shred of legal proof to counteract your magic words.
They can’t prove the debt. And that frequently means that if you push them hard enough, they may lose in court.
When the debt collector loses, you win.
Use The Magic Sparingly
You may be tempted to fall behind on your debts and wait for the collection lawsuits to come, if only to beat them at their own game.
It’s understandable, but remember that the result of any debt collection lawsuit is firmly in the hands of the judge. Though their proof may be weak, a judge may see things their way.
And if you’re going to fight the collection lawsuit, you’d be wise to hire a lawyer rather than roll the dice on your own.
Finally, you don’t want to defend the case if you acknowledge that you owe the debt. After all, doing so would be lying.
But for the right situation and the right time, these two magic words are some of the handiest you can find.
Many
students don't realize the scope and extent of the lifelong financial burden
they saddle themselves with when taking out student loans. It is only after
getting into the "real world" that they realize that living expenses
are higher, and after tax income is lower, than they anticipated, making
student loan debt repayment difficult if not impossible.
Some
look to bankruptcy for relief and a fresh start. But all debt is not treated
equally in bankruptcy. Student loan debt is not the same as, for instance,
credit card debt. It is not dischargeable pursuant to Bankruptcy Code section
523(a)(8) except in one narrow circumstance. Specifically, to discharge student
loan debt, a debtor must show undue hardship - a very high bar. Read More ›
Tags: Chapter 7, Western District of Michigan
If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers,... Read more »
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on AllmandLaw.
If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers,... Read more »
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on Allmand Law Firm PLLC.
If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers, […]
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on Allmand Law Firm PLLC.
There are things I haven’t told you about the world after you get out of debt.
That nobody else has told you is at once a source of vindication and shame. I’m not the only one who’s left out the tidbits, so that’s good – but someone should have clued you in.
Rather than let it drag on even longer, I thought I’d give you a quick rundown. This way you’ll never again be able to point your finger at me and claim I was somehow untruthful.
- You won’t be better looking. When you get out of debt, the years won’t fall off you like fairy snowflakes. You won’t be taller, nor will people swoon as you approach (unless they are already doing so). That said, once you’re out of debt you will probably be able to afford a haircut. You won’t be paying back those overdue debts anymore either, so you can start saving up to replace those threadbare jeans and worn-out shoes.
- You won’t be in better shape. Your belly won’t shrink, your butt won’t grow (or shrink), and those six-pack abs will remain out of reach. But without continually juggling overdue bills, you may have money left over to eat healthy food rather than cheap, unhealthy packaged meals.
- You won’t be healthier. If you’ve got high cholesterol, diabetes, ingrown toenails, cavities or any other health issues then I’ve got terrible news for you. Once you’re out of debt, those problems aren’t going away. You will, however, be better able to afford critical medication, dental care, and doctor visits.
- You won’t get smarter. Sorry, but your intelligence is limited by genetics and history. Don’t expect to solve a Rubik’s Cube unless you were able to do it before (don’t be sad – I can’t solve it either). You will, however, be able to afford books for school and pleasure. Taking a trip to the movie theater (for a documentary, of course) will be easier as well.
- You won’t have more fun in bed. You will, however, be better able to afford to replace those old pillows and mattress with something that won’t leave you with an achy neck in the morning.
- You won’t be a better parent or spouse. Your child will still act up at the worst possible times, and your spouse will not magically remember to handle their part of the household chores. You will, however, be better rested and less stressed because you won’t be worried about how you’re going to pay all the bills.
But one thing is for sure …
Once your debts are behind you, you’ll be able to focus more on yourself as well as your loved ones and your future. What you do with that freedom is up to you.
Who wouldn’t want to win a student loan lawsuit?
If you’re being on your student loans, you’re at constant risk of being sued.
And if you’re sued, you stand an excellent chance of losing the case. But not for the reason you think.
Why Most People Lose When Sued For A Student Loan
Law firms that sue for past due student loans do so in the hopes that you won’t file a response to the case. If that happens, the law firm will be able to get a default judgment against you and seize a portion of your wages, freeze your bank accounts, and put a lien on your property.
You’d think with consequences like that, most people would fight. But you’d be wrong.
In fact, more than 90% of people sued for student loans do absolutely nothing. So rather than being forced to prove the case, lawyers for the student loan companies win without doing more than filing some boilerplate documents with the court.
Here’s What To Do Instead
Rather than putting the court papers to the side, do these two things:
- read the court papers with a calendar handy; and
- file a response within the time specified by law.
Here’s Why You Need The Calendar. Under California law, you’ve got 30 days (including weekends and court holidays) to file an answer to the student loan lawsuit. If the court papers were given to someone else in your household or your place of work, and another copy was mailed to you, you have 40 days from the date of the mailing to file your response.
Other state have different rules on your time to file a response. In New York, for example, you’ve got 30 days to file an answer to the lawsuit if the court papers were given to someone else in your household or at your job, and 20 days from the date of filing of the affidavit of service if you got the papers personally.
A word of caution: don’t try to dodge the process server or pretend you didn’t get served properly. There’s no requirement that you get served with any formality, or that the court papers be mailed by certified mail, or that it look at all like it does in the movies or on TV.
When you get the lawsuit papers, consider yourself served. If you think service was somehow flawed, bring it up in the context of your response.
File Your Response. A complaint filed by a student loan company is flimsy at best, and makes claims without any proof. By filing a timely response and forcing the law firm representing the student loan company to prove the case, you’re way ahead of the game.
For example, consider these points that the student loan company must prove (if you force them to do so):
- Does the company suing you have the legal right to collect from you?
- How did they calculate the amount they claim to be due?
- Is all their paperwork in order such that they can prove they own the debt?
- Has the time to sue you expired under the law?
Make the student loan company prove every single element of the case. You can do that only if you file a response to the lawsuit – if you don’t, they win automatically.
This isn’t to say that filing a response will be enough to win the student loan lawsuit, but it’s a vital step in the right direction.
By Lindsay Nass
After waiting almost six years, unsecured creditors of Lehman Brothers Holdings' Inc. will finally see an initial payment of $4.62 billion next month.
Trustee, James Giddens, filed a notice August 15th regarding the distribution of owned payment to Lehman's creditors. Former employees, pension funds, banks and investment firms are among the creditors who will see money starting September 10th.
The payment denotes roughly 17% of total unsecured claims against the brokerage, according to the Wall Street Journal.
Lehman Brothers Inc. filed for Chapter 11 bankruptcy protection on September 15, 2008. The firm's filing was the largest bankruptcy in US history and is generally credited as a major turning point in the 2008 financial collapse.
Upon filing, Lehman claimed $613 billion in total debt and $639 in total assets, as well as $150 billion in outstanding bond debt according to a 2008 article on MarketWatch. The firm listed over 10,000 creditors in the filing.
The upcoming September payment has been postponed until the brokerage's customers were fully reimbursed: $105 billion to 111,000 former customers, according to Reuters. The 1970 Securities Investor Protection Act put into law that customer claims are to be fully repaid before creditors.
"That such a distribution is even possible represents an extraordinary achievement that was far from certain when the liquidation began," Giddens said in a news release Friday.
Additional payments are likely in the future, Giddens stated. After the initial payment to creditors, Lehman will have paid over $110 billion; $20.4 billion in claims have been processed against the brokerage and $6.8 billion in claims are still unsettled, according to the Wall Street Journal.
On August 5th, Barclays Plc. was allowed to keep about $6 million of disputed assets after its speedy purchase of the bulk of Lehman -- money Giddens was attempting to recover.
Lehman was Wall Street's fourth largest investment bank before the 2008 Chapter 11 filing.
The post Lehman Brothers Inc. to Pay $4.6 Billion to Creditors appeared first on The Bankruptcy Blog.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.