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The financial and housing crisis that began in 2008 led to a huge wave of foreclosures and foreclosure-related litigation. While foreclosure is rooted in state law, the initiation of a foreclosure proceeding by a lender often leads to federal bankruptcy proceedings initiated by a borrower, giving rise to interesting legal issues involving the interplay of state foreclosure law and federal bankruptcy law. Recently, the U.S. Court of Appeals for the Sixth Circuit (the "Sixth Circuit") considered the implications of a foreclosure on a residence following the borrowers' Chapter 7 bankruptcy proceeding.[1] Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 7, Eastern District of Michigan
When you graduate from college you expect to find a job that will pay enough to allow you to take care of those student loan debts. For many, however, that dream fails to turn into reality.
Millions of people graduate each year, diploma in hand and stars in their eyes, only to find that their best employment option is in a field that doesn’t require a degree at all. Faced with a paycheck that barely covers gas for the car, the student loan bills quickly fall behind.
It’s no wonder – after all, most student loans companies don’t broadcast their payment options. That leaves borrowers and their families in the dark, feeling as if there are no options.
Here, then, are the first steps to take when you realize your salary won’t cover the student loan payments.
Get into an income-dependent repayment plan. Federal student loans give you the option of tailoring your payments to a portion of your disposable income. Income-based repayment and Pay As You Earn are very popular, and can even result in payments as low as $0 per month.
Look to the public sector. Jobs with the government or 501(c)(3) not-for-profit companies may not pay well, but if you snag one of these jobs you may be able to wipe out your federal student loans after making 120 timely payments through Public Service Loan Forgiveness. Combine this with one of those income-dependent repayment plans and you have a powerful student loan weapon.
Look at your benefits package. Some employers will actually pay all or part of your student loan debt after a period of time. This is more likely to be the case if you go to graduate school while working for a large employer, but companies like Starbucks have been rolling out programs like this for a greater number of their work force.
Recognize the risks of nonpayment. With the payment options available for federal student loans there’s a good chance you can afford to make the payments, but private student loans don’t come with such protections. For federal student loans, nonpayment can result in administrative wage garnishment and tax return offsets, among other things. Private student loans, if not paid, will likely result in a lawsuit against you.
Free up some cash. Look around you and see if there’s anything you can live without – if so, hit Craig’s List or hold a yard sale to collect some money to throw at the private student loan balance. If you’ve also got significant credit card debt, consider bankruptcy as a way to wipe the slate clean and free up more money to pay down the student loans. Desperate times call for desperate measures.
Act strategically. If you’re not able to pay the private student loans, you need to have a plan to put away a small amount of money each month to fund a settlement or legal defense. Your chances of settling the debt improve as the delinquency gets longer, but unless you’ve got money to hand over the lender isn’t going to approve a settlement at all. It helps to talk with a lawyer who focuses his or her practice on student loan resolution because this way you’ll get the facts about your situation.
Remain calm. Student loans can be impossible to manage, and your options aren’t always as good as you might hope. But a little knowledge goes a long way, and you can get on top of things if you approach the problem head-on.
On September 4, 2014, the United States Court of Appeals for the 11th Circuit Court of Appeals addressed the "party aggrieved" doctrine in the case of Benjamin Atkinson v. Ernie Haire Ford, Inc. (In Re: Ernie Ford, Inc.), 2014 WL 4358417.
Party Aggrieved Requirement
The Court explained that, as bankruptcy cases often involve numerous creditors who are dissatisfied with any compromise that jeopardizes the full payment of their outstanding claims against the bankrupt, that "special rules have been developed to govern which parties my appeal a bankruptcy court order. The Court reviewed that courts continue to apply this rule, which was codified in the 1898 Bankruptcy Act, that only a "person aggrieved" can appeal a bankruptcy court order.
Definition of a Party Aggrieved
The Court cited its previous holding in the case of In re Westwood Cmty. Two Ass'n v. Barbee (In re Westwood Cmty. Two Ass'n) 293 F.3d 1332 (11th Cir. 2002) which defined a party aggrieved as those individuals that are "directly, adversely, and pecuniarily, affect[ed]" by a bankruptcy court's order." This case further explained that "[a]n order will directly, adversely, and pecuniarily affect a person if that order diminishes their property, increases their burdens, or impairs their rights."
Bankruptcy Code Interests
The Court further held that it agreed with other circuit courts which have held that a person is not "aggrieved" when the interests harmed by the court order are "not the interests that the Bankruptcy Code seeks to protect or regulate." The Court cited another case which states that this doctrine was developed to limit appeals of bankruptcy court to avoid "endless appeals brought by the myriad of parties who are indirectly affected by every bankruptcy court order." It explained that the purpose of this doctrine was to ensure that the goals of bankruptcy are not derailed by a flood of appeals" by those parties "who do not suffer a direct harm to interests the Bankruptcy Code seeks to protect or regulate." It further stated that the allowance of appeals from parties who have suffered "only an indirect harm or who hold interests outside of the scope of the Bankruptcy Code would defeat the very purpose underlying our person aggrieved standard."
Further References
The Court in In re Randy L. Jones, Case 09-11551-MGW (Bankr. M.D. Florida 2013) (Williamson, J), applied the party aggrieved doctrine in a chapter 13 case to avoid the Chapter 13 trustee's objections to an attorney fee settlement as the unsecured creditors were being paid 100%.
A lengthy law review article published in 2010 on the party aggrieved doctrine is available entitled "Non-Pecuniary Interests and the Injudicious Limits of Appellate Standing in Bankruptcy" by S. Todd Brown.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
Ocwen Back-Dates Loan Mod letters–according to NY Attorney General. One of the scary thing about applying for loan mods is the short deadlines you have to get them stuff–often things you’ve sent them twice before. As a bankrutpcy lawyer, I’m often sent copies of those requests to send on to my clients–and sometimes the dates […]The post Ocwen Back-Dates Loan Mod Letters by Robert Weed appeared first on Robert Weed.
Avvo names Robert Weed a Top Contributor One of the ethical aspirations of lawyers is to help the public understand their rights. To help with that, Avvo provides a forum for lawyers to answer questions–not give legal advice–to members of the public. On November 1, Avvo named me one of the Top Contributors in Bankruptcy […]The post Avvo names Robert Weed a Top Contributor in Bankruptcy Law by Robert Weed appeared first on Robert Weed.
It is true that filing bankruptcy in some instances will allow you to regain your driver’s license. There are a few scenarios where this is definitely the case. The first of which is driving with no insurance. If you are caught driving with no insurance and your license is subsequently suspended, you can have that+ Read More
The post Reclaiming Your Driver’s License Through Bankruptcy Filing appeared first on David M. Siegel.
After filing bankruptcy, there are two main scenarios when you will need to go to court after you file bankruptcy. While there are others, those are less common and not mentioned in this article.
1. Meeting of Creditors
When filing a personal bankruptcy under a chapter 7 or chapter 13, you will be obligated to attend the "meeting of creditors." A "meeting of creditors" is not in front of a judge. --That's good news!-- Instead, the meeting is in front of a "trustee". For meetings held at the Fresno Federal Courthouse, there are 5 different trustees that run the meetings. These trustees are presenting private practicing lawyers and accountants. The meeting usually occurs between 20 and forty 40 days from the date the debtor filed the bankruptcy petition.
The main goal of the meeting of creditors is for the trustee to ask questions of the debtor related to their financial condition. They want to see whether the debtor has any non-exempt assets that can be sold and paid to creditors. They also want to ensure the debtor is being honest about their financial situation. The meeting is set with other debtors. On average, the meeting lasts about 5 minutes. Some meetings, however, can last longer if there are complicated issues involved. Meetings can last longer because the debtor is represented by an unprepared attorney, or if the debtor is not represented by an attorney at all.
The meeting permits the trustee to review the debtor's petition and schedules with the debtor face-to-face. The debtor is required to answer questions under penalty of perjury.
2. Reaffirmation Hearing
Do you own a car with a loan? If so, your car loan is secured to the car, which means the creditor can repossess the car if you breach your contract. Most car creditors have the right to repossess the car, even though the debt owed to the car is discharged.
If you wish to keep your car, you will need to decide whether to "reaffirm" the debt. A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. The agreement must generally be filed within sixty (60) days after the first date set for the meeting of creditors, but before the discharge is entered. You do not have to reaffirm a debt. This is a voluntary agreement.
If you decide to reaffirm your secured property, like your car, the protections of the automatic stay are terminated. Since a reaffirmation agreement takes away some of the effectiveness of your discharge, legal counsel is advisable before agreeing to a reaffirmation.
If you are not represented by an attorney, you and the creditor will file an application for approval of the agreement, along with a request for hearing. An order approving the agreement should be brought to the hearing. You must appear in person at the hearing. The judge will ask you questions to determine whether the reaffirmation agreement imposes an undue burden on you or your family and whether it is in your best interests. The judge will only reaffirm those secured debts that you can afford and is important to you to make a living. The judges in Fresno do not reaffirm home loans.
Photo: Phil Roeder at Flickr
After filing bankruptcy, you will be required to go to bankruptcy court after filing a chapter 7 or chapter bankruptcy. All debtors must appear at the meeting of creditors. Some will need to appear to reaffirm car debt.
1. Bankruptcy Court's Meeting of Creditors
When filing a personal bankruptcy under a chapter 7 or chapter 13, you will be obligated to attend the "meeting of creditors." A "meeting of creditors" is not in front of a judge. --That's good news!-- Instead, you are examined by a trustee. For meetings held at the Fresno Federal Courthouse, there are 5 different trustees that run the meetings. These trustees have legal or accounting backgrounds.
Do you want to know where Fresno's bankruptcy court is located and details of what happens at a meeting of creditors? Here is a link to one of my more popular articles:
What to Expect At Meeting of Creditors at Fresno's Bankruptcy Court
Usually the creditors meeting takes place between 20 and 40 days after filing chapter 7. Chapter 13 meeting of creditors occurs a few weeks later.
The main goal of the meeting of creditors is for the trustee to ask questions of the debtor related to their financial condition. They want to see whether the debtor has any non-exempt assets that can be sold and paid to creditors. They also want to ensure the debtor is being honest about their financial situation. The meeting is set with other debtors. On average, the meeting lasts about 5 minutes. Some meetings, however, can last longer if there are complicated issues involved. Meetings can last longer because the debtor is represented by an unprepared attorney, or if the debtor is not represented by an attorney at all.
The meeting permits the trustee to review the debtor's petition and schedules with the debtor face-to-face. The debtor is required to answer questions under penalty of perjury.
2. Reaffirmation Hearing
Do you own a car with a loan? If so, your car loan is secured to the car, which means the creditor can repossess the car if you breach your contract. Most car creditors have the right to repossess the car, even though the debt owed to the car is discharged.
If you wish to keep your car, you will need to decide whether to "reaffirm" the debt. A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. The agreement must generally be filed within sixty (60) days after the first date set for the meeting of creditors, but before the discharge is entered. You do not have to reaffirm a debt. This is a voluntary agreement.
If you decide to reaffirm your secured property, like your car, the protections of the automatic stay are terminated. Since a reaffirmation agreement takes away some of the effectiveness of your discharge, legal counsel is advisable before agreeing to a reaffirmation.
If you are not represented by an attorney, you and the creditor will file an application for approval of the agreement, along with a request for hearing. An order approving the agreement should be brought to the hearing. You must appear in person at the hearing. The judge will ask you questions to determine whether the reaffirmation agreement imposes an undue burden on you or your family and whether it is in your best interests. The judge will only reaffirm those secured debts that you can afford and is important to you to make a living. The judges in Fresno do not reaffirm home loans.
Photo: Phil Roeder at Flickr
Searching for a bankruptcy lawyer can be a lot tougher than one might think. One of the main reasons for this is that people do not readily refer bankruptcy attorneys to other people because they don’t want to advertise to their friends, family, and co-workers that they had to file for bankruptcy. Thus, people are+ Read More
The post The Top Five Obstacles To Avoid When Searching For A Bankruptcy Lawyer appeared first on David M. Siegel.
The historic Detroit bankruptcy trial came to a close on Monday when city attorneys gave closing arguments as to why U.S. Bankruptcy Judge Steven Rhodes should approve the city’s bankruptcy plan.
Judge Rhodes is expected to announce his ruling on November 7.
Closing arguments highlighted the necessity to pass the debt-cutting plan, which would free Detroit from $7 billion in debt and open up money to improve city services.
The City of Detroit filed for bankruptcy in June 2003, claiming to owe over $18 billion in debt. The bankruptcy plan was revealed earlier this year: it aims to restructure and settle debts through several different severe measures, including reducing city employee pensions.
Funding of roughly $200 million will come from Michigan taxpayers and due to an agreement to not sell off art pieces from the Detroit Institute of Arts, the city will received nearly $500 million from private and corporate donors.
City lawyer Bruce Bennett identified the greatest risks that would stop Detroit from executing the debt-cutting strategy. He stated the plan could collapse if city leaders strayed from the plan to invest $1.7 billion.
"The worst thing that could happen is if the $1.7 billion is misused or perceived to be misused," Bennett said. "Either would be an enormous problem."
Detroit filed a Chapter 9 bankruptcy case, which is similar to the proceedings of a Chapter 11 business bankruptcy case. However, a main difference is the inability to liquidate assets if Judge Rhodes does not approve the plan.
"In Chapter 9 you have to have consensus because there's really no viable alternative," said John Pottow, professor of law at the University of Michigan. "If this plan gets shot down, you can't liquidate Detroit -- so it's literally just back to the drawing board.”
If Judge Rhodes approves Detroit’s bankruptcy, Bennett believes the city can start executing the plan before Thanksgiving.
The post Closing Arguments in Detroit Bankruptcy Trial appeared first on The Bankruptcy Blog.
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