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2 months 2 days ago

The Fair Credit Reporting Act “FCRA” and the Bankruptcy Code
The Automatic Stay v. the Bankruptcy Discharge
credit reportingThe Fair Credit Reporting Act “FCRA” and the Bankruptcy Code deal with debt differently and this difference can become confusing for everyone, including experienced bankruptcy attorneys.  For instance, the legal status of a debt changes as a bankruptcy moves to conclusion.  At the beginning of a bankruptcy the automatic stay stops most creditors seizing assets from the bankruptcy estate’s assets without an order from the Bankruptcy Court.   But the debt is still the same as before the bankruptcy was filed.  If the case is dismissed the creditor has all the same rights as before the bankruptcy was filed.  Reporting the debt to the credit bureaus has raised lots of issues in bankruptcy.  Many courts have found there is no liability under the FCRA to report a debt as being in default, at least until the case is discharged.
An order discharging the debt alters the legal nature of the debt and prohibits collection efforts.
credit reportingOnce the order of discharge is entered it “operates as an injunction against the commencement or continuation of an action … to collect, recover or offset any such debt as a personal liability of the debtor.”  Therefore, a discharge order (unlike the automatic stay) alters the legal nature of the debt. Many courts have interpreted the FCRA to require credit reporting agencies “CRA” and furnishers to adjust credit reports after an order of discharge, otherwise be liable under the FCRA (not all courts follow this line of thought).
Reorganizations
Plans of reorganization are a key component of Chapter 11 and 13 cases.  In order for a reorganization to be successful a plan must be confirmed and completed.  The challenge for the courts is to determine how the debts should be reported on a credit report before completion of the plan.  The order confirming the plan binds the debtor and creditors to the plan’s provisions, and controls any contracts that existed before the bankruptcy was filed, including the amount to be paid and lien priority. Once the plan is confirmed the United States Supreme Court determined that creditors may not relitigate their treatment under the plan (basically they already had their shot at the apple).  Although confirmation binds the parties to the plan’s terms, it does so only as long as the case is active and is subsequently discharged.
If a case is dismissed the debts return to the same position as before the bankruptcy was filed, offset by any monies the creditors received during the case.
credit reportingGiven that the bankruptcy is not completed until discharge this raises the issue of whether a credit report can be determined to be inaccurate or misleading if it discloses the pre-petition debt after the bankruptcy court confirms a plan reducing the amount to be paid on the claim, or if it must report the amount established by the confirmed plan (not yet discharged).  You can see the quandary.

The post Discharge vs Automatic Stay and Credit Reporting appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 months 3 days ago

Most Tenants Facing Foreclosure Now Have Some Protection, at Least for 90 Days
tenants and foreclosure
On May 24, 2018 a permanent extension of the “Protecting Tenants at Foreclosure Act” (PTFA) was signed into federal law.  The PTFA enables renters whose homes were in foreclosure to remain in their homes for at least 90 days or for the term of their lease, whichever is greater.

The PTFA, enacted in 2009 and originally expired at the end of 2014, was the only federal protection for renters living in foreclosed properties. During the financial crisis, bad faith and fraudulent lending, coupled with falling home prices and high unemployment, resulted in an astronomical high number of foreclosures in the U.S.
Renters lose their homes when the owner of the home they are renting goes into foreclosure.
The impact of these foreclosures was not limited to homeowners, however; renters lose their homes every day when the owner of the home they are renting goes into foreclosure.  Unlike homeowners who know that a foreclosure is coming, renters are completely unaware.  Yet, they continued to pay rent while the homeowner was not paying their lenders.  Many renters can be evicted within a few days of the completion of the foreclosure.
The PTFA gives most renters at least to 90 days’ notice before being required to move after a foreclosure.
tenants and foreclosure
Under PTFA, tenants with Section 8 housing choice voucher assistance have additional protections allowing them to retain their Section 8 lease and requiring the successor-in-interest to assume the housing assistance payment contract associated with that lease.
The law applies in cases of both judicial and nonjudicial foreclosures.
The PTFA applies to all foreclosures on all residential properties; traditional one-unit single family homes are covered, as are multi-unit properties. Tenants with lease rights of any kind, including month-to-month leases or leases terminable at will, are protected as long as the tenancy is in effect as of the date of the completion of the foreclosure.
The PTFA applies in all states but does not override more protective state laws.  Read more…
For more information about the PTFA, see: https://bit.ly/2L55LbE

Some other articles: Protecting Tenants, Arizona law

The post Tenants Facing Foreclosure Protected by New Federal Law appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 months 4 days ago

Consumers file significantly more Chapter 7 bankruptcy cases than Chapter 13 ones. In 2016, out of almost 800,000 bankruptcies, about 490,000 were Chapter 7s and almost 300,000 were Chapter 13s. (The rest were almost all Chapter 11s and 12s, plus a few Chapter 9s and 15s.)
A Simple Chapter 7
In a simple Chapter 7 case, you would:

  • protect yourself right away from (almost) all of your creditors;
  • discharge (legally write off) all or most of your debts, excluding some you may choose not to;
  • keep or surrender collateral mostly based on your own choice; and
  • keep (usually) all of your assets.

1) Immediate Protection
The “automatic stay” stops virtually all collection efforts at the filing of your Chapter 7 case. See Section 362 of the U.S. Bankruptcy Code. Just about any method of collecting a debt are included. For example, garnishments, lawsuits and judgments, collection phone calls, bills and collection notices in the mail or email, foreclosures, repossessions, and tax lien recordings are all “stayed,” or stopped immediately when you file. If a creditor continues its collection efforts, or starts any new collection action, it can be punished. So they generally respect the automatic stay and stop.
There are some very limited exceptions:

  • specific kinds of debts that a Chapter 7 filing does not affect, such as back child support and criminal fines; and
  • cases in which the automatic stay

either does not come into effect at all or potentially expires after 30 days because of the filing and dismissal of one or more bankruptcy cases within the prior year.
2) The Discharge of Your Debts
Most debts are legally written off—discharged—in a Chapter 7 case. There are exceptions, of different types. See Section 523 of the Bankrutpcy Code. Very rarely a debtor could lose the right to a discharge of ANY debts. This happens if he or she hides assets or commits some other kind of fraud against the bankruptcy system itself. Also, filing bankruptcy too soon after a previous case results in not discharging any debts in the new case.
Certain kinds of debts are simply never discharged—such as child and spousal support. Some are only discharged under very specific or limited conditions—such as income taxes and student loans. And some are discharged unless a creditor proves specific circumstances—such as a loan entered into through a debtor’s misrepresentations.
3) The Option to Keep or Surrender Collateral
Chapter 7 gives you the opportunity to either surrender the collateral on a secured debt or to keep it by paying for it.
When collateral is surrendered outside of bankruptcy, you are often left owing money—the “deficiency balance.” That’s the amount you still owe after your creditor sells the surrendered collateral and credits the proceeds to your account. Chapter 7 almost always discharges the “deficiency balance.”
If instead you want to keep the collateral, usually you can if you are current on the debt. Even if you are not, you can often keep the collateral if you can quickly get current.
SO, in a simple Chapter 7 case, you either surrender the collateral, or can keep it if you are current or can quickly get current.
4) Keep All Your Assets in Tacoma
In most Chapter 7 cases, everything the debtors own fits within “exemptions.” These are categories of assets, usually up to a certain amount in value, which are protected from creditors. These are also protected from the Chapter 7 trustee acting on behalf of the creditors.
Both federal bankruptcy law and each state’s laws provide sets of such exemptions. Some states require their residents to use their state exemptions. Other states allow them to choose between with the state or federal exemptions. See Section 522 of the Bankruptcy Code.
There can be certain complications about exemptions. For example, you have to live in a state for a certain length of time before being able to use its exemptions. And you must own a homestead in a state for a certain length of time before being able to exempt it.
Schedule a Free Consultation with Your Tacoma Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Washington State.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
Give us a call at (253) 780-8008 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
 
The post Chapter 7 Is the Most Common Kind of Bankruptcy in Tacoma appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


2 months 5 days ago

By Courtney Nagle

Student loans are a hefty burden for many Americans.
There are around 44 million borrowers with student debt, according to a 2017 report from the Consumer Financial Protection Bureau. Outstanding student debt sits at about $1.4 trillion, with nearly 11 percent of debt that was 90 days or more delinquent or in default at the end of March 2018, according to the most recent report by the Federal Reserve Bank of New York. So the burden is common ground for many people, to say the least.
In recent years, it's been almost impossible to get a court to discharge student loans in bankruptcy.  However, while difficult, student loans have been discharged in bankruptcy before. When loans are discharged, it means the borrower is no longer legally required to repay them.
The HIGHER ED Act, H.R. 5549, introduced by Democratic Congressman Peter DeFazio from Oregon in April, would make significant changes to bankruptcy rules regarding student loans and may provide relief for some borrowers. The proposed legislation would broaden the definition of "undue hardship," the standard used to determine if a debt is eligible for discharge.
To date, Congress hasn't defined undue hardship and has left it to courts to decide on a case-by-case basis. But momentum is building with the Trump administration and in Congress to define undue hardship for student loan borrowers.
Earlier this year, the Department of Education issued a request for public comment to collect data and feedback on whether there's a need to modify how undue-hardship claims by student loan borrowers in bankruptcy are evaluated. The Education Department has expressed concerns that the undue hardship standard in its present form is discouraging borrowers from filing for bankruptcy.Evidence that supports the concern can be found in a study by Jason Iuliano at the University of Pennsylvania Law School.
Iuliano found that nearly 40 percent of borrowers who include their student loans in their bankruptcy filing ended up with some or all their student debt discharged, but only 0.1 percent of people who filed for bankruptcy attempted to discharge their student loans. The study suggests that many student loan borrowers who are filing for bankruptcy often don't attempt a student loan discharge since it's challenging to meet the requirements used by most circuit courts.
According to the National Consumer Law Center, all federal courts of appeal except the Boston-based 1st U.S. Circuit Court of Appeals and the St. Louis-based 8th U.S. Circuit Court of Appeals have adopted what's known as the Brunner test to define undue hardship. It's based on three factors students must prove:

  1. Would you be able to maintain a minimal standard of living if you had to repay the loan?
  2. Are the financial difficulties you face temporary, or are they expected to continue for several years?
  3. Have you made efforts to keep up with your student loan payments before filing for bankruptcy?

Borrowers must be able to prove the student debt is making it impossible to support themselves and their family and their financial situation is not expected to improve for several years.
The Department of Education is currently re-evaluating these criteria and developing guidance on determining when a student is experiencing undue hardship. It's also looking at whether to change the weights of each factor and make student loan discharges more accessible for borrowers who need relief.
There are arguments for both sides of this issue. Opponents fear that making discharge easier could put student loan programs in jeopardy and that people will game the system and run up debts with no intention to repay. But consumer advocates support the change, saying there are a lack of options for struggling student loan borrowers.
These advocates hope that by changing the definition of undue hardship, more qualified student loan borrowers will be able to get debt relief when filing bankruptcy by being able to include their student loans. Whether this change will take place or not is still unclear.
For borrowers who are struggling to make their payments and headed into default, here are a few tips to consider with the current rules.
Review the Education Department's guidance on bankruptcy. The Department of Education developed guidance for borrowers in 2015 on whether they would be likely to qualify for a student loan discharge through bankruptcy. The guidance provides hypothetical examples of several scenarios where it would be likely. It's important to do your research and use all of your resources.
Talk to your lender. Federal student loans come with income-driven repayment plans, deferment or forbearance, and sometimes loan forgiveness. If you are struggling to figure out if there's a good option for you other than bankruptcy, the Student Loan Ranger recommends reaching out to your servicer, lender or a nonprofit credit counselor.  They can evaluate your specific situation and explain what options you have. There may even be a hardship program you don't know about.
Copyright 2018 © U.S. News & World Report L.P.  All rights reserved.


1 week 3 days ago

California Attorney General files a lawsuit against Navient and subsidiaries, Pioneer and General Revenue Corp., alleging violation of California’s unfair competition and false advertising laws
Misrepresenting the order in which the company would apply extra loan payments and failing to properly discharge federal student debt for borrowers with a total and permanent disability.

Navient scamAccording to articles in the Washington Post and the Los Angeles Times – at issue is a practice to mislead student loan borrowers about the important difference between forbearance and income based repayment programs.  Navient encouraged borrowers to postpone payments through forbearance, knowing that interest continued to add up, which would result in a dramatic increase in the overall debt.  When there was a most cost effective option – enrolling the borrower in an income-driven repayment plan that would avoid unnecessary fees and costs.
Navient “games” the system – steering borrowers to forbearance in order to charge higher rates
According to The Washington Post’s Danielle Douglas-Gabriel, “consumer advocates say loan servicers steer borrowers toward forbearance because it requires substantially less paperwork than enrolling them in low-cost plans that peg monthly payments to a percentage of income.  Navient has long countered that it has one of the highest rates of enrollment in income-driven plans, denying there is a nefarious plan afoot to deny borrowers the option.”
Claims against Navient and subsidiaries for providing false information.
Navient scamThe lawsuit also includes claims from Becerra that Navient’s subsidiaries violated California law by, among other things, providing false information about collection fees on loans people were trying to get out of default
Navient lied to those with disabilities.
The lawsuit also claims that Navient and its subsidiaries inaccurately tell borrowers that disability loan forgiveness requires a permanent inability to work, although no such requirement exists.

Our students can’t afford to be cheated out of any more money than they legally owe simply because Navient knew how to game the system, Becerra said in a release about the lawsuit.

Navient Overcharged military service members.
Navient scamNavient claims lies were merely “processing errors”.

REALLY!!!  Just how many “errors” do you have to make before it becomes obvious this is a standard business practice?  Just ask Wells Fargo.

More posts about Wells Fargo’s scams on their customers:

More from the Washington Post:
They would like to hear if you have experienced issues with paying your student loan? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Student Loans.”
Additional articles from the Washington Post: 

The post Navient’s Latest Student Loan Scam appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 months 1 week ago

California Attorney General files a lawsuit against Navient and subsidiaries, Pioneer and General Revenue Corp., alleging violation of California’s unfair competition and false advertising laws
Misrepresenting the order in which the company would apply extra loan payments and failing to properly discharge federal student debt for borrowers with a total and permanent disability.

Navient scamAccording to articles in the Washington Post and the Los Angeles Times – at issue is a practice to mislead student loan borrowers about the important difference between forbearance and income based repayment programs.  Navient encouraged borrowers to postpone payments through forbearance, knowing that interest continued to add up, which would result in a dramatic increase in the overall debt.  When there was a most cost effective option – enrolling the borrower in an income-driven repayment plan that would avoid unnecessary fees and costs.
Navient “games” the system – steering borrowers to forbearance in order to charge higher rates
According to The Washington Post’s Danielle Douglas-Gabriel, “consumer advocates say loan servicers steer borrowers toward forbearance because it requires substantially less paperwork than enrolling them in low-cost plans that peg monthly payments to a percentage of income.  Navient has long countered that it has one of the highest rates of enrollment in income-driven plans, denying there is a nefarious plan afoot to deny borrowers the option.”
Claims against Navient and subsidiaries for providing false information.
Navient scamThe lawsuit also includes claims from Becerra that Navient’s subsidiaries violated California law by, among other things, providing false information about collection fees on loans people were trying to get out of default
Navient lied to those with disabilities.
The lawsuit also claims that Navient and its subsidiaries inaccurately tell borrowers that disability loan forgiveness requires a permanent inability to work, although no such requirement exists.

Our students can’t afford to be cheated out of any more money than they legally owe simply because Navient knew how to game the system, Becerra said in a release about the lawsuit.

Navient Overcharged military service members.
Navient scamNavient claims lies were merely “processing errors”.

REALLY!!!  Just how many “errors” do you have to make before it becomes obvious this is a standard business practice?  Just ask Wells Fargo.

More posts about Wells Fargo’s scams on their customers:

More from the Washington Post:
They would like to hear if you have experienced issues with paying your student loan? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Student Loans.”
Additional articles from the Washington Post: 

The post Navient’s Latest Student Loan Scam appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


1 week 3 days ago

National Credit Adjusters, LLC and Bradley Hochstein admit to illegal consumer debt collection practices.
Company and Its Former CEO Engaged In Illegal Debt Collection Practices
(Reprint from CFPB announcement 7/13/18) The Bureau of Consumer Financial Protection (Bureau) announced a settlement with National Credit Adjusters, LLC (NCA), a privately-held company headquartered in Hutchinson, Kansas, and its former CEO and part-owner, Bradley Hochstein.
NCAAs described in the consent order (below), the Bureau found that NCA and Hochstein used a network of debt collection companies to collect consumer debt on NCA’s behalf. Some of those companies engaged in frequent unlawful debt collection acts and practices that harmed consumers, including by representing that consumers owed more than they were legally required to pay, or threatening consumers and their family members with lawsuits, visits from process servers, and arrest, when neither NCA nor the collection companies intended or had the legal authority to take those actions. NCA and Hochstein continued placing debt with those companies for collection with knowledge or reckless disregard of the companies’ illegal consumer debt collection practices. NCA and Hochstein also sold millions in consumer debt to one of those companies with knowledge or reckless disregard of the company’s illegal consumer debt collection practices.
The Bureau found that NCA and Hochstein violated the Consumer Financial Protection Act of 2010 and that NCA violated the Fair Debt Collection Practices Act.
fraudIllegal actions by National Credit Adjusters and Bradley Hochstein.
Under the terms of the consent order, NCA and Hochstein are barred from certain collection practices and Hochstein is permanently barred from working in any business that collects, buys, or sells consumer debt. The order imposes a judgment for civil money penalties of $3 million against NCA and $3 million against Hochstein. As explained in the order, full payment of those amounts is suspended subject to NCA paying a $500,000 civil money penalty and Hochstein paying a $300,000 civil money penalty.
The consent order is available at: https://files.consumerfinance.gov/f/documents/bcfp_national-credit-adjusters_consent-order_2018-07.pdf

The post National Credit Adjusters, LLC (NCA) & Hochstein Guilty of Consumer Fraud appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 months 1 week ago

National Credit Adjusters, LLC and Bradley Hochstein admit to illegal consumer debt collection practices.
Company and Its Former CEO Engaged In Illegal Debt Collection Practices
(Reprint from CFPB announcement 7/13/18) The Bureau of Consumer Financial Protection (Bureau) announced a settlement with National Credit Adjusters, LLC (NCA), a privately-held company headquartered in Hutchinson, Kansas, and its former CEO and part-owner, Bradley Hochstein.
NCAAs described in the consent order (below), the Bureau found that NCA and Hochstein used a network of debt collection companies to collect consumer debt on NCA’s behalf. Some of those companies engaged in frequent unlawful debt collection acts and practices that harmed consumers, including by representing that consumers owed more than they were legally required to pay, or threatening consumers and their family members with lawsuits, visits from process servers, and arrest, when neither NCA nor the collection companies intended or had the legal authority to take those actions. NCA and Hochstein continued placing debt with those companies for collection with knowledge or reckless disregard of the companies’ illegal consumer debt collection practices. NCA and Hochstein also sold millions in consumer debt to one of those companies with knowledge or reckless disregard of the company’s illegal consumer debt collection practices.
The Bureau found that NCA and Hochstein violated the Consumer Financial Protection Act of 2010 and that NCA violated the Fair Debt Collection Practices Act.
fraudIllegal actions by National Credit Adjusters and Bradley Hochstein.
Under the terms of the consent order, NCA and Hochstein are barred from certain collection practices and Hochstein is permanently barred from working in any business that collects, buys, or sells consumer debt. The order imposes a judgment for civil money penalties of $3 million against NCA and $3 million against Hochstein. As explained in the order, full payment of those amounts is suspended subject to NCA paying a $500,000 civil money penalty and Hochstein paying a $300,000 civil money penalty.
The consent order is available at: https://files.consumerfinance.gov/f/documents/bcfp_national-credit-adjusters_consent-order_2018-07.pdf

The post National Credit Adjusters, LLC (NCA) & Hochstein Guilty of Consumer Fraud appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 months 1 week ago

Another Fairfax County Family Wastes Thousands with Freedom Debt Relief. I filed a bankruptcy case this week for Alexander and Alina yesterday.   They had been enrolled with Freedom Debt Relief for over five years–the longest enrollment I ever heard of. And according to Freedom Debt Relief, they had only four monthly payments to go […]
The post Another Family Wastes Thousands with Freedom Debt Relief by Robert Weed appeared first on Robert Weed.


2 months 1 week ago

Depending on your situation, bankruptcy may be the best way to avoid foreclosure and keep your home. Before filing bankruptcy, you should step back and assess your individual situation. Just because something works for someone else does not mean it is the best option for you. Each person’s situation is unique to their specific circumstances. Some things you should consider before filing bankruptcy:
The post Is Bankruptcy the Best Way to Avoid Foreclosure and Keep Your Home? appeared first on Tucson Bankruptcy Attorney.


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