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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.
Here is the advertisement spam in today’s inbox:
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.
Sam Turco Law
Proudly Made in America
Image courtesy of Flickr and Juan Antonio F. Segal
Here is the advertisement spam in today’s inbox:
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.
Sam Turco Law
Proudly Made in America
Image courtesy of Flickr and Juan Antonio F. Segal
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.
UNLV law professor Nancy Rapoport asks a series of questions in her latest article published in www.ConsiderChapter 13.org.
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.
UNLV law professor Nancy Rapoport asks a series of questions in her latest article published in www.ConsiderChapter 13.org.
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
The post Bankruptcy Case Study 1/5/17 appeared first on David M. Siegel.
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