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In interviews with the Wall Street Journal, more than 50 current and former bankruptcy judges, frustrated at seeing borrowers leave federal courtrooms with six-figure debts, say they or their colleagues are more open to chipping away at the decades-old guidelines that determine how such debt is treated.
“If the law’s not going to be improved by Congress, we have to help these young people who are drowning in student loan debt,” said U.S. Bankruptcy Court Judge John Waites in South Carolina.
Outright cancellations remain rare, but judges said they have other tools at their disposal, including encouraging lawyers to represent borrowers for nothing. The lawsuits can cost $3,000 to $10,000 and take years.
Other judges are embracing debt-relief techniques that don’t fully erase student loans but make repayment more affordable by, for instance, canceling future related tax bills. The popularity of these relief strategies could get a boost from a panel of professors, judges and advocates who are studying failures in consumer bankruptcy law and plan to release a report next year.
Nearly 45 million people carry student debt in the U.S.—the total amount has more than doubled over the past decade to $1.4 trillion—most backed by the federal government. It has eclipsed credit cards as the largest source of consumer debt after mortgages. Almost every other type can be extinguished in bankruptcy, but legal standards made college debt largely untouchable. Borrowers typically must repay student loans over their lifetime, even those facing extreme financial hardship.In March, Federal Reserve chairman Jerome Powell said he would be “at a loss to explain” why student loans can’t be cancelled like other debt. The Trump administration is considering whether to fight cancellation requests less aggressively.
Consumer bankruptcy lawyers are starting to notice that judges are being more flexible. One Las Vegas law firm recently filed the first cancellation request in its 14-year history after hearing a judge at a conference voice concern over student loans. Other lawyers said growing sympathy among judges is making lenders more willing to reach resolutions out of court.
“I’m getting really good results with settlements these days,” said Chicago lawyer David Leibowitz. “I’m not the only one.”
Rules governing how student debt is handled in bankruptcy are made by Congress and by judges who issue influential rulings. Several bills in Congress that would erase student-loan debt in bankruptcy have stalled in recent years.
Last year in Philadelphia, U.S. Bankruptcy Court Judge Eric Frank cancelled a single mother’s $30,000 in student loans. Opposing lawyers from the U.S. Department of Education said the borrower needed to prove her hardship would persist 25 years, the length of some repayment plans. Judge Frank ruled that the relevant window was five years.
An appeals court overturned his ruling, but his decision inspired Judge Mary Jo Heston in Tacoma, Wash., in December to cancel a portion of another borrower’s loans.
Such rulings are rare because few troubled borrowers attempt to cancel their student loans, because of the historically slim chances of victory. Last year, only 473 people of the millions repaying student loans sought relief using bankruptcy, according to a Wall Street Journal analysis.
No one tracks outcomes of student-loan cancellation cases, and only a handful advance to the point where a judge rules. In one examination of cases in 2017, judges ruled on student-loan debt 16 times, according to lawyer Austin Smith who analyzed WestLaw’s database of key decisions.
In those decisions, judges preserved student-loan debt in 12 cases, and canceled it in three. One borrower got partial relief.
Some bankruptcy judges criticize their colleagues for re-interpreting well-settled law on student loans. “My view is, if the law is clear, follow it,” said retired California judge Peter Bowie.
The push to rethink the legal standard on student-loan debt is bipartisan. Judges interviewed by the Wall Street Journal were appointed during both Republican and Democratic administrations, though bankruptcy judges are appointed by appeals court judges, not the president.
Disagreements among judges on student-loan debt expose philosophical differences, said Cornell Law School professor Jeffrey Rachlinski. Some judges want to maintain predictability by sticking to past law. Others see their roles as fixing flaws in the legal system, he said. “There are people who like to change the institution in which they work.”
Before 1976, laws allowed borrowers to do away with student-loan debt in bankruptcy. Congress, out of concern that new graduates would take too much advantage of that option, made a new rule: Borrowers could cancel student loan debt after only five years of payments. Judges could grant exceptions if borrowers showed that repaying would cause “undue hardship.”
Congress didn’t define “undue hardship” so the task of doing so fell to federal judges. When Marie Brunner, a 1982 graduate of a master’s program in social work, tried to cancel her loans in bankruptcy, a New York judge in 1985 said she had to show three things: she struggled financially, her struggles would continue and that she had made a good faith effort to repay. She lost.
That list still serves as a baseline for hardship in circuit courts that control the rules in most states.
Some appeals courts set even higher benchmarks, with one, for instance, saying borrowers must face a “certainty of hopelessness.”
In 1998 Congress said any borrower trying to cancel any federal student loans must prove “undue hardship,” like Ms. Brunner. Congress gave private student loans the same protection in 2005.
Some of the country’s bankruptcy judges are starting to argue that the prevailing legal standard is unintentionally harsh and wasn’t meant for adults still on the hook for student-loan debt years after college.
Judge Frank Bailey in Boston made that argument in an April ruling wiping out $50,000 in student loans for a 39-year-old man whose health ailments prevent him from working.
Frustrated judges are more likely to “look for wiggle room and try to find solutions that will allow them to sleep at night, ”said Terry Maroney, a Vanderbilt Law School professor who studies judicial decision-making.
Some judges, including U.S. Bankruptcy Court Judge Michael Kaplan in Trenton, N.J., said they are looking for ways to be more forgiving after seeing their own adult children borrow heavily for their education. Other judges grew concerned after talking to their law clerks. The typical law-school student takes out $119,000 in loans, according to the legal-education watchdog group Law School Transparency.
Two judges said they regret their rulings against borrowers more than a decade ago. One Florida judge said that if the case was filed today, the borrower would win.
Kansas judge Dale Somers said he worked particularly hard to justify the reasoning in a December 2016 ruling that cancelled more than $230,000 in interest that built up on a couple’s student loans from the 1980s. They left bankruptcy owing the original amount: $78,000.
Alabama judge William Sawyer declared that student loans had become “a life sentence” in a 2015 decision cancelling a $112,000 student loan debt for high school science teacher Alexandra Conniff, a single mother of two teen boys whose yearly income is $59,400.
She took out loans for several degrees, including a Ph.D. in special education, a discipline she also taught. Repaying them over 15 years would cost $843 a month.
Ms. Conniff testified she has been unable to land higher-paying jobs and keeps costs down. Federally contracted lawyers argued she could cut retirement savings, life insurance payments and $100 in monthly landline-phone costs. The case is under appeal and was sent back to Judge Sawyer to re-rule.
Copyright ©2018 Dow Jones & Company, Inc. All Rights Reserved.
By Will Bredderman
Who speaks for Uber drivers?
As market saturation and driver suicides wrack the taxi and black-car industry, and the city gears up for another street fight with ride-hail apps, three powerhouse unions are in an equally heated drag race to represent car operators working under Uber, Lyft and their competitors. All call themselves the definitive voice of tens of thousands of drivers and claim the others are frauds.
One twist in this union fight is that Uber and Lyft drivers are independent contractors, not employees, and thus cannot bargain collectively. That has become one of the biggest disputes among the combatants: the Independent Drivers Guild (an offshoot of the International Association of Machinists), the New York Taxi Workers Alliance (aligned with and partly staffed by building workers union 32BJ SEIU) and the Amalgamated Transit Union.
As proof of its legitimacy, the Taxi Workers Alliance, a volunteer organization founded in 1998 to organize drivers of yellow cabs, cites its lawsuits to get app-dispatch drivers recognized as employees of the tech giants. One of those suits won unemployment benefits for some Uber drivers; another, accusing the company of misclassifying its entire workforce, found the company skimming its hacks' fares.Battling Uber, 'opportunists'The alliance contrasts itself from the IDG, which came into existence in 2016 after the Machinists reached an accord with Uber. In exchange for the company's recognizing the Guild as the representative of Uber drivers and helping fund the organization's internal operations, the Machinists agreed not to push for employee status.
"It's not defending workers' rights when you decide that workers who don't have the ability to set the price of their labor are contractors," said Eugenio Villasantes, a spokesman for Taxi Workers Alliance benefactor 32BJ.
"We not only had to fight the company that had become the highest valuated company on earth," said the alliance's executive director, Bharivai Desai, "we also had to fight opportunists in the labor movement that were trying to be the first to make a deal with Uber."
The IDG denied Desai's accusation that it is a "company union." Noting that Desai's husband is a taxi medallion owner, the Guild insinuates that her group's push for regulations on apps—notably Mayor Bill de Blasio's failed 2015 plan to cap their growth—are really attempts to drive the new tech companies out of the market.
IDG steward Sohail Rana defended his organization's acceptance of Uber funding, saying it has paid for legal assistance, classes and organizing space for drivers. He said IDG petitions had compelled Uber and Lyft to introduce in-app tipping, and the IDG is now lobbying the Taxi and Limousine Commission to mandate minimum pay for drivers.
"These other organizations, they were not there," said Rana. "IDG is the only union that really helps drivers in real time."
The ATU, which has long represented bus drivers, argues that it is the most natural fit for the industry and claims it has gotten 16,000 drivers to sign union cards since 2016. The ATU's competition dismissed this as a stunt because the drivers are classified as contractors and cannot join the union.
But the ATU deemed it "an experiment" that could lead to something dramatic.
"All organizing is to prepare for a strike," Chris Townsend, director of field mobilization for ATU Local 1181, told Crain's. Townsend demurred on whether such an action was imminent and said his union focuses on getting legal assistance for aggrieved drivers.
De Blasio and the City Council recently reopened discussion of passing legislation to contain the sector's astronomical growth, though a consensus has yet to emerge on how. The Taxi Workers Alliance has revived its calls to limit the number of new vehicles the Taxi and Limousine Commission can approve; the IDG has demanded a cap on the number of new drivers. Uber and Lyft, meanwhile, appear to be revving their engines for another fight.
Meera Joshi, chairwoman of the TLC, told Crain's its 180,000 licensed drivers would continue to be a target for union organizing. But she warned that the labor groups' disunity and self-interest could hobble efforts to curb the tech giants. "Because there is this hostility of 'who's going to own this space?,' it could end up being counterproductive," she said. "There's a question of, will any regulation come out at all? Why don't you focus on that, instead of fighting each other?"
© 2018 Crain Communications Inc. All rights reserved.
All of my clients want to know how quickly they can recover their credit score and so here is the answer. If you are proactive you can have a six eighty or six 90 credit score. Two years after we file the bankruptcy petition the way that you do that is you obtain a credit card immediately after we file. You start using the card responsibly and you only charge 50 percent of the limit on the card and you pay that off every single month. If you do that for two years you're going to have a 680 credit score in two years.
The post Am I Eligible to File Bankruptcy? appeared first on Tucson Bankruptcy Attorney.
On June 4, 2018, the U.S. Supreme Court decided the case of Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, which dealt with the dischargeability of debt in bankruptcy proceedings. The Court held that a statement about a single asset can be a “statement respecting the debtor’s financial condition” under section 523(a)(2) of the Bankruptcy Code. Read More ›
Tags: Chapter 7, U.S. Supreme Court
To rebuild credit after bankruptcy, you need to have a plan. That plan has to be better than the one that landed you into bankruptcy in the first place. Sure, it’s a huge relief to have all that debt off your shoulders, but the bankruptcy will be on your record for the next 10 years for those who filed for Chapter 7.
On the other hand, the older the bankruptcy is, the lower the impact it will have on credit offers. In other words, potential creditors will consider the most recent activity the most important information. To rebuild credit after bankruptcy, you must regain the trust of creditors.
If your debt has spiraled out of control, a fresh start may be exactly what you need. Call the bankruptcy attorneys at Allmand Law Firm, PLLC at (214) 740-3682 and we can start discussing your situation.
You Can Begin Restoring Your Credit Right Away
Contrary to popular belief, your credit isn’t “ruined” because you filed for bankruptcy. On the other hand, it isn’t in a very good place either. It has to be rebuilt from scratch.
Before we get into that, however, let’s take a look at why you might be an attractive prospect to potential lenders.
Firstly, if you’ve filed for Chapter 7, it will be another 8 years before you’re allowed to file again. Secondly, a lender likes to see that you can pay for your basic needs, handle the potential debt you will be incurring, and still have money left over. After your Chapter 7 was granted, you had all or most of your debt cleared. So basically, you’re not as much of a risk to a creditor as you probably think.
It’s not as hard as you probably think to rebuild credit after bankruptcy.
Developing a Sound Credit Strategy
Rebuilding credit isn’t hard, but it isn’t like building credit either. You’re not a risk to creditors because they don’t know anything about you. You’re a risk to creditors because you didn’t pay back the money you owed. Now, you just need a workable strategy on which to operate.
The first thing you want to do is check out your credit score. If there are claims against you that you think are false, then you can dispute those. More likely than not, those claims will still be valid. Just because Chapter 7 wipes out your debt doesn’t mean that it will cleanse your credit report as well. It’s just the opposite.
Secured Loans and Secured Credit Cards
Now starts the process of rebuilding your credit. You will find to find a bank or a creditor that is willing to deal with you despite the fact that you’re coming out of bankruptcy. To rebuild credit after bankruptcy you must establish a history of repaying loans.
One way to do this is by applying for a secured loan.
What is a secured loan? There are two different kinds. The first type allows you to borrow money against money you already have deposited. Usually, this type of loan is offered by banks or credit unions. That money will be inaccessible until you’ve paid off the loan.
The second type involves the release of a loan into a savings account that you cannot access until you’ve made a set amount of payments.
In other words, you’re “borrowing” money that you already have. In exchange, the bank agrees to send this information to credit bureaus. This new information will appear on your credit report.
Secured cards work much the same way where you borrow against money you have on deposit.
Co-Signed Credit Card or Loan
If you know someone who is willing to incur the risk, then having them cosign on a card or a loan is a viable way to rebuild credit after bankruptcy. Understand, however, this is a huge favor to ask. They are incurring the risk if you default.
Rebuild Credit After Bankruptcy: Final Steps
Eventually, an offer of credit will be extended to you. A credit card, for instance, with a $500 limit. Use this card, but pay it back on a monthly basis! Make sure your balance does not go over 30% of your limit and you will be well on your way to rebuilding your credit after bankruptcy.
Contact a Bankruptcy Attorney Today
To learn more about how you can rebuild credit after bankruptcy, contact Allmand Law Firm, PLLC at (214) 740-3682 today.
The post How to Rebuild Credit After Bankruptcy appeared first on Allmand Law.
New York City’s struggling yellow cabbies are facing the auction block.
A record 139 taxi medallions will be offered for sale in bankruptcy auction this month — the latest sign that a deluge of ride-sharing apps like Uber are squeezing cabbies out of business and deeper into debt, as well as pinching the incomes of for-hire drivers, according to analysts.
The medallions will be auctioned for a fraction of their original value — some likely having cost their owners as much as $1 million or more apiece.
A minimum of 20 will be sold, the auctioneers say. The collection is part of the 13,587 licensed medallions required to operate New York City’s fleet of iconic yellow cabs. Back in 2013, a medallion fetched a whopping $1.3 million.
Today, prices have plunged to between $160,000 to $250,000 each, as a wave of ride-sharing vehicles floods the market.
Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, snatched up by Connecticut-based MGPE, a hedge fund presumably seeking yield on a distressed asset.
For-hire vehicles on New York’s congested streets have surged from 50,000 in 2011, when Uber entered the New York market, to about 130,000 today.
Not surprisingly, earnings for yellow cabbies have fallen off the cliff — full-time average annual earnings, before taxes, are down from $45,000 as recently as 2013, to as low as $29,000 today, according to some estimates.
Uber drivers, who number about 60,000 on New York’s streets at any given time, are also taking a hit from increasing competition.
Their estimated average annual earnings, pre-tax, today hover between $30,000 and $34,000. Many individual for-hire drivers earn less than an hourly worker at McDonald’s.
“Uber has worked hard to grow the transportation pie, ensuring that all New Yorkers can get a ride in minutes, particularly in neighborhoods outside of Manhattan that have been long ignored by yellow taxis and underserved by public transit,” said Uber in a statement. “The majority of our trips are happening in the Bronx, Staten Island, Queens and Brooklyn.”
© 2018 NYP Holdings, Inc. All Rights Reserved.
Call it the Uber effect: A record 139 New York City taxi medallions will be up for sale in bankruptcy auction this month as cab drivers continue to struggle to compete with ridesharing apps.
According to The New York Post, bidders will be able to snag some of the medallions for a fraction of their original value — some might have cost their owners as much as $1 million or more apiece. Back in 2013, a medallion went for $1.3 million.
Today, however, prices have dropped to between $160,000 to $250,000 each due to increasing competition from ridesharing apps such as Uber and Lyft.
Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, bought by Connecticut-based hedge fund MGPE. This month, a minimum of 20 will be sold.
Rideshare vehicles in New York have risen from 50,000 in 2011, when Uber first entered the New York market, to currently about 130,000.
As a result, earnings for yellow cabbies have dropped, with full-time average annual earnings, before taxes, down from $45,000 as recently as 2013, to as low as $29,000 today.
Earlier this year, a report revealed that Uber and Lyft have become more popular than yellow and green cabs in NYC.
Analysis of data from the Taxi and Limousine Commission from blogger Todd Schneider found that in February 2017, ride-hailing services made 65 percent more pickups than taxis did. And the two companies combined now make more pickups per month than taxis did in any month since the data began being analyzed in 2009.
“Over the past 4 years, ride-hailing apps have grown from 0 to 15 million trips per month, while taxi usage has only declined by around 5 million trips per month,” wrote Schneider.
The data also shows that ridesharing services have been utilized more than taxis in the outer boroughs since the beginning of 2016 — and that gap has dramatically widened in recent months. In fact, Uber and Lyft are ten times more popular than yellow and green taxis combined in the outer boroughs.
© 2018 What’s Next Media and Analytics. All rights reserved.
The 8th Circuit Court of Appeals has turned away an appeal of a $28.1 million dollar judgment awarded to 6 plaintiffs (commonly referred to as the Beatrice Six) for damages imposed by a federal jury for a reckless investigation and manufacturing false evidence orchestrated by the Gage County Sheriff’s department. The plaintiffs spent two decades in prison for the rape and murder of Helen Wilson, but DNA testing revealed that the murder was actually committed by another individual.
Gage County previously hired a law firm to help plan a potential Chapter 9 bankruptcy case to avoid payment of the judgment (see Can Gage County Discharge Intentional Wrongdoing in Bankruptcy?), and now that the appeal has been lost it appears that the county must make a final decision on whether to file a case.
This case is familiar to us, as it is to Nebraskans and much of the nation. It returns after three prior opinions by this Court, two trials, and, now, one jury verdict that is contested on this appeal. We are asked here, in large part, to sweep the pieces off the board—to overturn our prior rulings—in order to vacate the jury’s verdict. We decline to do so. And, after careful examination of the remaining claims on appeal, we find no other reason to disturb the verdict or rulings by the district court. Thus, we affirm.
There is little doubt that a county whose annual budget is roughly the same amount as the judgment in question cannot afford to pay the judgment in one financial year, but there is also little doubt that the county would have no problem paying the judgment over a term of years with modest real estate tax hike.
Ultimately, the Nebraska bankruptcy court will have to decide whether a Chapter 9 case filed with the sole purpose of denying just compensation to 6 plaintiffs wrongfully incarcerated for 20 years of their lives can be approved when the county has ample revenue sources to pay the debt in full over a reasonable period of time. Should the bankruptcy court even entertain the notion of allowing a Chapter 9 plan to be confirmed until the county shows a good faith effort to pay a significant portion of the judgment? Can the county actually propose any plan in good faith if it fails to increase taxes by even 1% to pay some of this judgment?
Arizona Money Judgment Validity and Renewal Deadline Extended from Five Years to Ten
Guest Post: Larry Folks, Folks Hess Kass, PLC
On March 20, 2018, Arizona Governor Doug Ducey signed into law House Bill 2240, which extends, from five years to 10 years, the validity of and renewal deadline for a money judgment. The effective date of the new law is August 3, 2018.
Our understanding is that the deadline for expiration and renewal of money judgments included in A.R.S. § 12-15511 is a statute of limitation, per Jensen v. Beirne. If that is correct, then A.R.S. §12-505(B) provides that, when a statute of limitation (such as this one) is amended and an action was not otherwise barred by pre-existing law, “the time fixed in an amendment of such law shall govern the limitation of the action.”
Based on the foregoing, we conclude that, after August 3, 2018, any money judgment that has not yet expired (pursuant to the current five-year limitations deadline imposed by A.R.S. § 12-1551) will be valid and can be renewed until 10 years after entry of said judgment on the Superior Court docket. In addition, the rule authorizing successive renewals of judgments has not changed.
Folks Hess Kass’s legal services to financial institutions and other creditors include enforcing and renewing money judgments in Arizona.
The post Arizona Judgment Renewal Law Changed to 10 Years appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Multiple Bankruptcies Can Result in a Conviction for Bankruptcy Fraud
Many people do not understand the consequences of filing multiple bankruptcies. It is very important to know that every bankruptcy filed (even if the process is not completed) will stay on the credit for ten years.
Filing bankruptcy will stay on your public record forever.
Also, once the bankruptcy is filed you cannot remove it from the public record if you decide not to go forward.
Bankruptcy will stop a foreclosure and perhaps an eviction (for a short time), but can land you in prison if you abuse the process.
Filing bankruptcy to stop a foreclosure is not a good reason unless you intend on completing the bankruptcy process. CHARLISE WILLIAMS found out the hard way that filing several bankruptcy petitions (serial filings) to stop a foreclosure or avoid an eviction can result in a conviction for bankruptcy fraud. Ms. Williams is now spending the next four years in a federal prison for this bankruptcy fraud.
What is the story about this bad faith bankruptcy?
Ms. Williams owned a condominium, did not pay the secured debts so the condominium association moved to evict her. According to Circuit Judge Joel M. Flaum, the filings followed the same pattern:
Her scheme was generally as follows. After filing for bankruptcy, Williams would fail to make all required payments as required by her Chapter 13 payment plan. As a result, the bankruptcy court would dismiss the case. After the dismissal, SCCA would often file eviction and collection suits. Williams would then file a new Chapter 13 bankruptcy petition in order to stay the action. Again, Williams would fail to make most of the required plan payments, and the cycle would continue.
Ms. Williams filed five bankruptcies over a decade – all to try to stop the foreclosure/eviction process on her condo. She even involved a friend in this fraud by transferring title to the friend, after which the friend filed for bankruptcy. This did not work out well for the friend because he was also sued for bankruptcy fraud. Eventually the friend admitted he committed perjury as part of filing his own bankruptcy, and, in exchange for avoiding a felony conviction, the friend testified against Ms. Williams about the scam.
NOTE: bankruptcy is not a game.
Never go down this path without understanding the implications on your life (present and future). Never lie on any legal document. Never lie on the stand.
The post Prison Sentence For Filing Several Bankruptcies (to Stop a Foreclosure) appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.