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The Small Print Says Your Credit Union Can Repossess Your Car If You Are Late on Your Credit Cards. When you get a car loan from a credit union, you sign in small print that they can repossess your car if you don’t pay your credit cards.  (I have never seen a bank do this; […]
The post Filing Bankruptcy and Keeping Your Car with Your Credit Union by Robert Weed appeared first on Robert Weed.

The U.S. Bankruptcy Court for the Eastern District of Michigan recently considered the issue of whether a Chapter 7 trustee may bring a cause of action against a debtor for damages caused to the bankruptcy estate by the debtor’s alleged failure to comply with the debtor’s duties under section 521 of the Bankruptcy Code. Under the circumstances, the court held that no private cause of action existed and thus ruled in favor of the debtor on the issue.[1] Read More ›
Tags: Chapter 7, Eastern District of Michigan

Here at Shenwick & Associates, our goal for our consumer bankruptcy clients is to get as many of their debts as possible discharged, while enabling them to maximize the property they can keep in bankruptcy, which is exempted from the debtor’s bankruptcy estate that comes into being when a bankruptcy case is filed.

Bankruptcy law is a federal system, but there’s a complex interplay between state and federal law in practice.  And this relationship between state and federal law also holds true for exemptions from bankruptcy.

Section 522 of the Bankruptcy Code governs exemptions.  Section 522(b)(1) of the Code provides that “an individual debtor may exempt from property of the estate the property listed in either paragraph (2) or, in the alternative, paragraph (3) of this subsection.”  Section 522(b)(2) provides that “property listed in this paragraph is property that is specified under subsection (d) . . .” (which includes the federal exemption scheme, addressed below).  Section 522(b)(3) provides that “ . . . any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition to the place [where the Debtor was domiciled for the greater part of the 180-day period prior to filing than in any other place].”  Up until 2011, New York State debtors were required to use New York State’s exemptions.  However, now debtors are free to choose either the state or the federal exemptions (but only one or the other-you can’t mix and match exemptions from both systems).
The New York State exemptions are contained in Civil Practice Law and Rules (CPLR) §§ 5205 (personal property exempt from application to the satisfaction of money judgments  and 5206 (real property exempt from application to the satisfaction of money judgments), as well as in Article 10-A (§§ 282-285) of the Debtor and Creditor Law.  Some commonly used New York State exemptions are for a homestead ($165,550 per debtor in the NYC metropolitan area-amounts differ upstate); a car ($4,425); and the cash surrender value of life insurance (fully exempted).  New York exemption amounts were last adjusted on April 1, 2015 and will be readjusted on April 1, 2018.

The federal exemptions in § 522(d) of the Code include exemptions for a homestead ($23,675 per debtor); a car ($3,775); the cash surrender value of life insurance ($12,625) and a “catch all” exemption (interest in any property (including cash) up to $1,250 plus up to $11,850 of any unused homestead exemption).  Federal exemption amounts were last adjusted on April 1, 2016 and will be readjusted on April 1, 2019.

In practice, we usually use New York exemptions, but in cases where the debtor doesn’t own a house or has no equity in their house but has other valuable personal property, we may use the federal exemptions. 

Deciding which exemption system to use is a fact intensive process that requires a carefully analysis of the debtor’s property and its valuation.  For more information about exempting your valuable property from the reach of your creditors, please contact Jim Shenwick.  

State Prosecutors Accuse Student Loan Giant Of Wrongdoing
According to the Huffpost Business Navient Corp., the nation’s largest student loan company, violated state laws that ban unfair or abusive practices by paying call center workers based on how quickly they could get struggling borrowers off the phone, a group of more than two dozen state attorneys general alleged.  For more

This practice smacks of the same problems that permeated the mortgage lending practices.  Lenders are rewarded for doing nothing that will really help the borrowers.  I am not asking you to ignore the horrible abuses that a few borrowers suffered on the student loan system.  Borrowing hundreds of thousands of dollars to obtain a degree that will never provide for the necessary funds to pay their student loans.  Money is not free.  Loans should not be entered into without understanding the long range consequences on the family budget.
Having said that lenders (schools) need to be responsible for their actions.  They give loans to individuals that they know will not be able to repay the debt, unless they hit the lottery.  The schools raise tuition so as to make more loans, which makes it impossible for those students who do not have to take out student loans to get an education.
Contact your Congressman/woman and urge them to pay attention to proposals to change the bankruptcy laws dealing with student loans back to where the laws were twenty, plus years ago.  Everyone with any insight into the lending market knows the next huge financial balloon to burst will be student loans.  Most likely this tsunami will look very similar to the mortgage loan debacle.
The post Naviet Sued for Abusive Student Loan Practices appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.