Here at Shenwick & Associates, it is our experience that student loan debt is the fastest growing debt many people are burdened with. As of September 2016, outstanding student loan balances were $1.279 trillion and counting. This month, we're going to take another look at student loan debt, its dischargeability in bankruptcy and other potential tactics debtors can use to cope with it. Earlier this month, the New York Times reportedon an effort by former students of ITT Tech to intervene in its bankruptcy to be recognized as creditors and to resolve their claims against ITT Tech for loan cancellation.
As many of our readers are aware, defaulted student loans are generally not dischargeable in bankruptcy except in special circumstances. The debtor must show that: (1) he or she cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off the student loan; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loan; and (3) that the he or she has made good faith efforts to repay the loans. That was the holding in Brunner v. New York State Higher Education Services Corp., 831 F.2d. 395 (2nd Cir. 1987), the leading case on student loans and bankruptcy, and its reasoning has been adopted by most federal appellate courts.
However, non-bankruptcy remedies are available under federal and state law for student loan debtors, including loan consolidation, deferment, forbearance or a workout. These solutions may be better for many student loan debtors than bankruptcy.
- Loan consolidation. Most federal student loans (except private loans) are eligible to be consolidated. However, if your loans are in default, you must meet certain requirements before you can consolidate your loans. Loan consolidation greatly simplify loan repayment by centralizing your loans to one bill and can lower monthly payments by giving you up to 30 years to repay your loans. You might also have access to alternative repayment plans you would not have had before, and you'll be able to switch your variable interest rate loans to a fixed interest rate.
- Deferment. Deferment is a period during which repayment of the principal balance of your loan is temporarily delayed. Also, depending on the type of loan you have, the federal government may pay the interest on your loan during a period of deferment. The government does not pay the interest on your unsubsidized loans (or on any PLUS loans).
- Forbearance. If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).
- Workout. With the encouragement of federal banking regulatory agencies, some financial institutions that make private student loans offer workouts and loan modification programs. Your lender or servicer should be able to tell you the options available, general eligibility criteria and the process for requesting a workout or modification.
For more information about possible solutions to coping with your student loan debts, please contact Jim Shenwick
Nobody sets out with the goal of wanting to file for bankruptcy relief. However, things happen in one’s financial life which can lead to that eventuality. For many, there is an unwillingness to jump in and do what makes financial sense. Many people put off filing with the hope that somehow, someway, either their ship+ Read More
The post Hesitating To File Bankruptcy Can Cost You Thousands Of Dollars appeared first on David M. Siegel.
Short sale tax forgiveness has expired. If your house is “under water” you need to read this. The general rule of tax law is that debt forgiveness is income—if I lend you $1,000 and then say you don’t have to pay me back, you’ve made $1,000. And you’re subject to tax on that. That matters […]The post Short sale tax forgiveness has expired by Robert Weed appeared first on Robert Weed.
Difficult Trustees Nobody likes difficult people. Nobody likes to feel that they have been put through the ringer. Nobody wants to feel that they have been harassed, abused, and given an unnecessarily rough ride in the process. Unfortunately, this is a common occurrence in some Will County chapter 7 bankruptcy cases. Let me cite a+ Read More
The post Simple Chapter 7 Bankruptcy Filing Can Become Difficult Depending Upon The Trustee appeared first on David M. Siegel.
Attorneys Get Started with Team India
Published by Actuit India on 20th January 2008
Hire Bankruptcy Petition Preparation Services
Since 2008 Actuit has a disciplined team of paralegals to help your bankrutpcy practices. Our digital outsourcing process make sure that team is efficient with your time and you get the best of the outsourcing experience. We make sure that you get benefited from the highest quality system design we have to offer. So that each new client experiences the best that our offshore expert paralegal has to offer
We do limit the number of clients handled by each team.
Save time to manage your bankruptcy practice, spend less & watch your practice grow while we work as your paralegal back office form New Delhi, India.
Is that how you want your bankruptcy case prepared? Do you want your most personal financial information stored on computers located in India or China?
There is a lot of economic incentive for lawyers to outsource this service:
- Outsourcing removes the number one overhead cost of most law firms: employee wages.
- Outsourcing transforms paralegal costs from a fixed overhead item to a variable cost expense.
- Outsourcing means you need less office space, so you save on rent.
- Paralegals in India do not receive overtime.
- Payroll tax burdens are eliminated with overseas outsourcing. It eliminates the need to file quarterly reports with the IRS.
- The burden of hiring and firing is eliminated.
I’ve never outsourced my paralegal staff. I doubt I ever will. Why not?
For starters, I have found the cost savings illusory. Sure, I can outsource the labor cost of preparing a bankruptcy petition for maybe $100 to $150 per case. But outsourcing has many drawbacks.
- Quality Suffers. Workers in India simply do not understand life in America (and we don’t fully understand their life either). When you don’t understand your client fully, how are you to ask the client questions to fully explain their financial situation to the court? Paralegals from India are probably fine technicians, but they don’t get the culture and they do not have the experience to explain and document my client’s financial situation.
- Communication Problems. I believe that one attorney and one paralegal should be assigned to each client. You speak to the same team every time you call our office. You know your attorney/paralegal team and they know you. They know your kids names and your favorite football team and a million other details about your family. Bankruptcy cases can last for up to 5 years. That’s an important relationship. Because we know you better we can serve you better. Do you think a worker from India can match that?
- Cost Savings are Illusory. It may cost less to outsource case preparation, but knowledgeable workers save money in other ways. By providing one-on-one interaction with clients, they perform their job better and that leads to more client referrals. They do their job more efficiently because they have a fuller understanding of the client’s background.
- Protecting Confidential Client Information. Bankruptcy attorneys gather a lot of personal information, including tax returns, paycheck stubs, bank account statements, retirement statements, etc. You want that information stored on some computer in India?
It’s one thing to have a car part or a computer chip manufactured overseas. As a consumer I benefit from the cost savings. But when it comes to legal services, the push to outsource work is inherently risky. When I hire a local attorney I don’t want my file sent overseas.
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Bankruptcy Is A Service Business As bankruptcy attorneys, we are in the service business of getting people out of debt. This could come in the form of a chapter 7 bankruptcy or a chapter 13 bankruptcy depending upon the facts of the case. We have the solutions available at our disposal thanks to the bankruptcy+ Read More
The post Where Has Salesmanship Gone Among Bankruptcy Attorneys? appeared first on David M. Siegel.
To what extent must a debtor’s attorney personally meet with the client prior to filing the petition on behalf of the client, and how meaningful should the meeting be?
More specifically, how much can the attorney safely and ethically delegate to non-lawyer staff: Intake interview? Filling out forms? Obtaining and reviewing documents like mortgages and paystubs? Telling the client that s/he needs to file chapter 7 or 13? Telling the client what the attorney’s fee will be and getting the client to sign the retainer agreement? Going over the petition and schedules with the client and getting the client’s signature? If the attorney is reviewing the non-lawyer’s work along the way but does not personally meet or talk with the client, is that adequate supervision? What if the only contact the attorney has with the client prepetition is one “facetime” or skype video call, but the non-lawyer assistant does everything else?”
Let me answer the first question very directly: An attorney must substantially communicate with a client prior to filing a bankruptcy petition. In fact, the communication must be more than just chatting about filing a petition. It goes much deeper than that. Should the client even consider filing bankruptcy as opposed to some other debt solution, like consumer credit counseling or debt settlement or lifestyle downsizing?
Beyond the discussion of which debt solution is best for the client, it is important for the attorney to figure out the real cause of the money problem. Financial problems are often secondary to a more general personal or family problem. I may have two clients with identical financial problems but may recommend completely different courses of action based on their personality, education level, age, physical condition, emotional issues, etc. You must understand the client before you can really understand their financial problem.
Having said that, I am a big believer in building high quality systems of practice. Delegating tasks to paralegal staff is essential. In fact, to be unable to delegate is in its own way failing the client. If an attorney cannot return phone calls because they are too busy doing clerical tasks that could and should be delegated, that is a problem. Building standard operating procedures driven by checklists and attorney review procedures benefits clients. Having a paralegal staff trained to think as lawyers and who can respond to client requests quickly is appreciated by clients. Systematically training of staff on all parts of the bankruptcy process is at the core of building a great firm. Delegation is not the problem.
Bankruptcy practice is susceptible to machine-driven operation for many reasons. Bankruptcy petitions are prepared on standardized federal forms. The process is basically the same from state to state since it is a federal law that plugs in local state exemptions that are very similar, so forming firms that operate in multiple states is common. Most bankruptcy firms utilize the same computer software packages as well, so the work performed by an attorney or paralegal in New York is almost exactly the same as those who work in California. Client management software and cloud computing and internet-based telephone systems increasingly allow attorneys to expand geographically. The Matrix is real.
The problem is not caused by staff delegation or the use of technology. The problem associated with diminishing attorney-client contact is decisional. The attorney either decides to stay connected to the client or they decide to bum off the job to staff and technology. You decide to be accessible or you do not. You can build a system either way.
I’ve chosen to build a firm that uses every ounce of talent my staff has and to utilize technology to help us achieve our mission, but to require that each client has a personal relationship with their attorney and their paralegal. That’s an expensive way to build a bankruptcy practice. Good paralegals are not cheap and they tend to be sassy. Great attorneys take years to train and they leave unless they are provided with proper compensation and a sense of self-control.
It’s a lot more profitable to build a bankruptcy mill on cheap labor and technology, but invariably those firms at some point blow up at some point. They thrive for a while but eventually collapse.
Communicating with clients exclusively over the telephone, Skype, Facetime, or video conferencing is all fine. The medium does not matter. It’s the attorney’s commitment to professionalism, caring and the client that matter in the end. Clients know when they matter. They know when calls are returned, emails are answered, and when the attorney fusses over details.
I think Nancy’s point is that attorney contact with the client must be continuous throughout the case and that some firms are limiting that contact a a quick 10-minute sales consultation. I could not agree more.
Overview This is the bankruptcy case study for Mr. M., who resides in Chicago, Illinois. He is seeking advice on whether or not chapter 7 bankruptcy will provide relief. Let’s go through and look at the particulars of his case. For starters, he has no significant assets whatsoever. He is not a homeowner; He does+ Read More
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Contrary to the pervasive myth that bankruptcy will destroy your credit, bankruptcy can actually provide the much-needed financial relief that, in the long term, allows the filer to begin building good credit once again. However, while a Chapter 7 or “liquidation” bankruptcy can empower you to strengthen your credit in the future, it will have some immediate effects upon your credit score for which you need to be prepared. Our Folsom Chapter 7 bankruptcy lawyers will explain how long a Chapter 7 bankruptcy stays on your credit report, and discuss the possible effects on your ability to obtain loans. You may be pleasantly surprised by some of the information.
How Many Years Does a Chapter 7 Bankruptcy Stay on Your Credit Report?
First, it’s important to distinguish between a bankruptcy case that is discharged and a bankruptcy case that is dismissed. A discharge, which frees the debtor from his or her liability for dischargeable debts, is the goal in any bankruptcy case. But, a case can also be dismissed, which means there was a problem with the case and the filer will not be relieved of his or her debt obligations. A bankruptcy case can be dismissed for numerous reasons, including but not limited to fraud, noncompliance with requirements of the legal process, or failure to meet certain financial criteria.
It’s important to understand that a bankruptcy case will appear on your credit report even if your case is ultimately dismissed. If this is the case, the dismissal should be noted on the report, regardless of whether or not it was dismissed “with prejudice,” meaning the case cannot be refiled.
The length of time a bankruptcy stays on your credit report is not determined by whether the case was dismissed or discharged; rather, it is determined by the type or “chapter” of bankruptcy under which you file. Chapter 7 bankruptcies, though not appropriate for every situation, are favored by many people due to their speed and simplicity, concluding in as little as four to six months. This chapter of bankruptcy will be reported to each of the three major credit bureaus – Equifax, Experian, and TransUnion – for a period of 10 years or more.
Many people panic when they hear this figure because they assume it means they will be unable to obtain any loans for a decade. This is yet another harmful myth about bankruptcy that fails to take into account the true nuance of the matter. In order to understand why, we have to rewind.
If you are considering filing for Chapter 7 bankruptcy, your credit is likely already in less-than-optimal condition. When you file for Chapter 7 bankruptcy and your case is successfully discharged, it means that your debts will be discharged, or eliminated. Once you are released from these burdensome financial liabilities, you will be much better able – perhaps more than you have been in many years – to effectively manage new debt if a lender issues you a loan.
At this point, you may be worrying to yourself, “But I’ll never be able to get a loan when the lender sees my bankruptcy.” Once again, this is not necessarily true. Though it seems counter-intuitive and may come as a surprise, many lenders are fairly willing to work with a person who has recently come out of a Chapter 7 bankruptcy for two significant reasons:
- They know you have been released from most of your debts (though there are certain debts which are not typically dischargeable in Chapter 7 cases, including student loans, criminal restitution, and loans pertaining to alimony and child support).
- They know that you will not be able to obtain another Chapter 7 bankruptcy discharge for a period of at least eight years.
In short, bankruptcy will remain on your record for up to a decade; but, that doesn’t mean it has to negatively affect your life for all or even much of that time. On the contrary, filing for bankruptcy can be an ideal strategy for tackling bad credit head-on. You could think of it a bit like the extraction of a rotten tooth: though it may cause some discomfort at first, it will help you to become much healthier in the long run.
California Chapter 7 Bankruptcy Lawyers Serving Sacramento, Folsom, and Roseville
If you need help filing for Chapter 7 bankruptcy in Folsom, Sacramento, or Roseville, or even if you are simply wondering about whether bankruptcy might be right for you, we encourage you to contact the California Chapter 7 bankruptcy attorneys of The Bankruptcy Group for a free, friendly, and completely confidential legal consultation. We can help to assess your financial situation, including your long-term goals for the future, in order to determine whether bankruptcy is a possible option for getting your debt under control. Please do not hesitate to call our law offices at (800) 920-5351 to talk about Chapter 7 bankruptcy today.
The post How Long Does Chapter 7 Bankruptcy Stay on Your Record? appeared first on BK Law.
A generation ago, many post-secondary students spent more money on books and other ancillary costs than on school tuition, but those days are long gone now. Today, thanks to skyrocketing tuition costs and financial institutions that are all too willing to extend credit, former post-secondary students owe more than $1 trillion in education loans. Any way you slice it, that is a lot of money, especially since these borrowers are just starting their careers and consequently usually have a limited earning capacity. Former students are not the only ones feeling the pinch. Because of high debt servicing payments, many borrowers must put off buying houses and making other large purchases. As a result, if you are buried by student loans, you need a Portland student loan debt lawyer more than ever. That’s because an attorney can both negotiate with the lender to reduce the amount due or obtain a more favorable repayment arrangement, and be an effective advocate in court.
In most cases like these, Chapter 7 or Chapter 13 bankruptcy is about the only way to get rid of excess debt. But student loan cases work a little differently, and it takes an experienced Portland student loan debt lawyer to both evaluate your case and chart a way out of crippling debt.
How Student Loan Debt Settlement Works
Although education loans are unsecured debts, these loans are not automatically discharged like credit cards or medical bills. Instead, a Portland student loan debt lawyer must usually file a motion for discharge. Then, like almost any other adversarial action, the Portland student loan debt lawyer usually negotiates with the lender to reduce or eliminate the student debt. Some judges in Washington and Oregon refer these disputes to mediation, to expedite settlement.
If the parties cannot settle the dispute and it proceeds to a hearing, the court must determine if the debtor has met the “undue hardship” test in the Bankruptcy Code. When lawmakers changed the Bankruptcy Code in 1978, they deliberately left this phrase undefined. Much to the chagrin of many a Portland student loan debt lawyer, the courts stepped in where lawmakers failed to act. One of the first student loan cases under the new Bankruptcy Code was Brunner v. New York State Higher Education Services Corporation, an opinion from the Second Circuit in New York in 1987. Five years earlier, Marie Brunner received an MS in Social Work. She graduated with $9,000 in student loans, or about $20,000 in today’s dollars, which is far less than the average amount of student debt today. The court took note of the following facts: Ms. Brunner had apparently made no payments on her debt, was working in her field, and had not asked for a deferral or any other lesser relief prior to her discharge request.
Your Portland student loan debt lawyer will probably be familiar with the saying “bad facts make bad law,” and that may have been the case here. Probably to prevent future Marie Brunners from obtaining a bankruptcy discharge, the court interpreted the “undue hardship” provision in the Bankruptcy Code as a three-part test.
- Financial Hardship: Debtors must be unable to maintain a minimal standard of living (e. stay above the poverty line) if they must repay their student loans.
- Good-Faith Effort: Debtors must prove that they made good-faith efforts to repay their loans, and that usually means they must have a relatively solid, although not necessarily perfect, payment history.
- Extent of Disability: The hardship must either be permanent or at least be expected to last throughout the entire repayment period.
Portland student loan debt lawyers immediately criticized the so-called Brunner Rule for several reasons. First, the prongs are inconsistent, because it is difficult or impossible to show both a good-faith effort to repay the loans and a crippling financial hardship. Second, the rule gives no consideration to any other circumstances, such as the amount of the loans. Essentially, under a strict interpretation, bankruptcy debtors are only entitled to discharge if they are physically or mentally disabled, the disability prevents them from working in almost any capacity, and that disability occurred after they received their post-secondary degrees.
How Does Portland Student Loan Debt Law Work Now?
Over time, these objections and the mounting student loan crisis caused some federal appeals courts to toss out the harsh Brunner Rule in favor of a totality-of-the-circumstances approach. Walker v. Sallie Mae, a recent case from the neighboring Eighth Circuit, involved a former medical school student who had $300,000 in student loans and was a stay-at-home mom to disabled children.
However, in the Ninth Circuit, your Portland student loan debt lawyer must still contend with the Brunner Rule. However, at least the local federal appeals court has embraced a kinder, gentler Brunner Rule that makes it a little easier to discharge student loans in bankruptcy, thanks to Hedlund v. Educational Resources Institute, Inc.
After earning a bachelor’s degree from the University of Oregon, Michael Hedlund graduated from law school in 1997 with about $85,000 in loans. He failed the bar exam twice and missed a third sitting because he locked his keys in his car. When his loans entered repayment in 1999, Mr. Hedlund was earning $10 an hour as a Klamath County juvenile counsellor. He was unable to consolidate his loans because of a clerical error, and after struggling to make payments here and there, he partnered with a Portland student loan debt lawyer to file bankruptcy in 2003. The bankruptcy judge granted a partial discharge, but the moneylender appealed, arguing that Mr. Hedlund didn’t make a good-faith effort to repay the loans.
On appeal, largely thanks to the work of Mr. Hedlund’s lawyer, the Ninth Circuit took a rather generous view of the Brunner Rule. For example, instead of requiring that the student loan payments drive him below the poverty line, the judges were satisfied that the Hedlunds (he was married with a small child) had lived “frugally.” Furthermore, although some courts require student loan debtors to obtain different jobs in different cities to maximize their income, the court imposed no such requirement on Mr. Hedlund. Finally, although he suffered from no disability, the court concluded that Mr. Hedlund’s hardship was not “self-inflicted.”
The bottom line is that student loan bankruptcy discharge is not as certain in Oregon as it is in other parts of the country, but an experienced Portland student loan debt lawyer can often convince the bankruptcy judge to at least grant a partial discharge and give some relief to the debtor. Furthermore, your lawyer can negotiate with the moneylender to obtain more favorable repayment terms.
Contact a Portland Student Loan Debt Lawyer Today
At the Northwest Debt Relief Law Firm, we help people like you manage or eliminate their student debt. Call us today for a free consultation.
The original post is titled A Portland Student Loan Debt Lawyer Explains Student Loan Law , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .