STUDENT LOAN BANKRUPTCY DISCHARGE STAYING DIFFICULT

STUDENT LOAN DISCHARGEABILITY CHANGES NOT COMING SOON

            There has been some hope that change from the Federal Government was coming soon to the growing issue of student loan debt. Both Public and Private student loans are currently nearly impossible to discharge in bankruptcy, due to a bankruptcy reform package pushed through by Republicans in 2005. Essentially, a consumer must be disabled to the point of never being able to rise above the poverty line standard of living in order to attempt to discharge any portion of a student loan debt, whether publicly or privately backed.

            Now the Obama administration has weighed in on the issue. And the results are not what many borrowers were hoping for from this administration. In this article:

http://www.bloomberg.com/news/articles/2015-10-14/obama-administration-hits-back-at-student-debtors-seeking-relief

 the administration argues in Court filings that the current standards for discharging student loans should not be relaxed. This case involved a parent taking out loans on behalf of his three children, but the standard for any student loan discharge would be covered by the filing. Essentially, the government argues that to allow a discharge in bankruptcy would endanger the entire federal student loan program due to the expected loss of repayments.

            Student loan debt has been growing tremendously over the past few years. The total outstanding student loan balance is $1.08 trillion, and a whopping 11.5% of it is 90+ days delinquent or in default. That’s the highest delinquency rate among all forms of debt and the only one that’s been on the rise consistently since 2003. (see http://www.forbes.com/sites/halahtouryalai/2014/02/21/1-trillion-student-loan-problem-keeps-getting-worse/ for chart and other statistics). The delinquency rate on student loans is higher than credit cards, mortgages and auto loans which have all seen a decline in late payments.

            Putting in some form of ability to discharge private student loans would be a good start to addressing the growing student loan problem that continues to plague today’s struggling consumers. Often, private student loans have been incurred at predatory type of institutions which provide minimal benefit to consumers or which have very low graduation rates compared to the level of lending. More than 70 percent of Americans matriculate at a four-year college — the seventh-highest rate among 23 developed nations. But less than two-thirds end up graduating. Including community colleges, the graduation rate drops to 53 percent. (http://www.nytimes.com/2013/06/26/business/economy/dropping-out-of-college-and-paying-the-price.html?pagewanted=all&_r=0). Allowing truly needy consumers the ability to discharge some private loans would allow those consumers the ability to enter the credit markets again in order to purchase homes, cars and other necessary items in order to contribute to the economy, without the burden of crushing student loan debt. The rate of home ownership is 36% less among those currently repaying student debt, according to research from ProgressNow.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

MORTGAGES AFTER BANKRUPTCY – IS IT ABOUT TO GET BETTER?

MORTGAGES AFTER BANKRUPTCY – IS IT ABOUT TO GET BETTER?

One of the leading questions that I receive while consulting with people is about the effect of bankruptcy on the ability to purchase a home in the future. Despite financial troubles, people tend to look ahead in their lives and see a brighter financial future. This can be especially true when they consider that they could be essentially debt free after many bankruptcies.

A recent article highlights the potential to quickly recover from a negative credit event in order to purchase a home:

http://www.wsj.com/articles/call-it-a-comeback-for-risky-home-buyers-1435185671

The Wall Street Journal article discussed the new lenders pouring into the mortgage market in order to fund home mortgages shortly after foreclosure, bankruptcy or other types of credit events. Typical waiting times for mortgages after such events are normally 2-4 years. According to the article, hedge funds and other private lenders have stepped into the void left behind by traditional lenders. These non-traditional lenders can approve a mortgage loan in just weeks after a foreclosure according the article. Often these lenders charge rates between 5-10% and require down payments of 25% for mortgage loans, well above traditional levels.

The service provided by these lenders is a valuable one. But like the subprime mortgage crisis that caused the financial turmoil of the last few years, it will be interesting to see if the loosening of lending standards causes a return of the high default rates of the past.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

 

Bryan K. Mickler

The End of Stripping Second Mortgages in Jacksonville Bankruptcy

13802 Windsor Crown Ct E, Jacksonville, FL 32225

 

The End of Stripping Second Mortgages in Jacksonville Bankruptcy

 

It was fun while it lasted. For the past two years, the 11th Circuit decision of McNeal v. GMAC Mortgage LLC (In re McNeal), 2012 WL 1649853 (11th Cir. May 11, 2012), allowed lien-stripping of a wholly unsecured lien or second mortgage in chapter 7. However, the as the saying goes, “The party is over . . . “

 

This week, however, the Supreme Court voided the ability to strip second mortgages in Chapter 7 cases. Now, Chapter 13 may be the only avenue to obtain relief from the second mortgage. This option is still attractive if the first mortgage is subject to modification. I have previously written about modification of Mortgages through Chapter 13 in Jacksonville, FL bankruptcy:

 

http://www.planlaw.com/modification-of-mortgages-in-chapter-13-in-jacksonville-fl/

 

If you feel that you may benefit from a loan modification or any type of mortgage relief, contact our office at 904.725.0822 or bkmickler@planlaw.com for a free consultation.

 

Bryan Mickler

 

CREDIT REPORTING AFTER BANKRUPTCY – IS IT ABOUT TO GET BETTER?

 

 

 

CREDIT REPORTING AFTER BANKRUPTCY – IS IT ABOUT TO GET BETTER?

            One of the leading questions that I receive while consulting with people is about the effect of bankruptcy on a credit report. I try to tell people that federal law requires that all discharged debts be reflected as discharged, and not some type of “charge off” or “90 day delinquent” account after a bankruptcy discharge has been entered. However, too often, that is not the case. Banks and mortgage companies routinely fail to update the credit reports of millions of American each year to reflect the current status of discharged debt. Now a landmark settlement may finally produce some results for those affected by such a situation. In this article:

http://www.nytimes.com/2015/05/08/business/dealbook/bank-of-america-and-jpmorgan-chase-agree-to-erase-debts-from-credit-reports-after-bankruptcies.html?_r=0

            The New York Times discussed the causes of the credit reporting issues (Hint – it involves banks making money off of holding consumers’ credit reports hostage) and the potential fix to this problem.

            I see this type of behavior by lenders repeatedly after discharge in all types of bankruptcies. Our office provides a full service bankruptcy to our clients. If they have credit reporting issues which can’t be cleared up in the Bankruptcy Court, we put them in touch with knowledgeable credit reporting attorneys who can repair the problems through federal court litigation. Don’t let your credit report be held hostage or feel that you must pay discharged debt in order to clear your credit report.

            At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

 

Bryan K. Mickler

TAX REFUNDS AND DEBT COLLECTORS – IS IT ABOUT TO GET EASIER TO TAKE YOUR MONEY?

 

 

TAX REFUNDS AND DEBT COLLECTORS – IS IT ABOUT TO GET EASIER TO TAKE YOUR MONEY?

One of the leading causes of filing bankruptcy is having a judgment entered against an individual. In Florida, the entry of a judgment allows a judgment creditor up to 20 years to collect the debt, allows the judgment creditor to place liens on property and even garnish wages in certain instances.

Now it appears that some debt collectors feel that is not enough power. Recently, an article out of Indiana House of Representatives highlighted the aggressive nature of debt collection these days. The article can be found here: https://iga.in.gov/legislative/2015/bills/house/1358

This bill provides that if a debt has been reduced to a judgment in Indiana and the judgment has not been satisfied, set aside, or discharged in bankruptcy, the judgment creditor may garnish a state tax refund otherwise due to the debtor. The bill also allows a writ of garnishment to be electronically filed with the department of state revenue. The easy garnishment of the tax refund will deprive many needy families of a source of income that many rely upon for providing extra income for necessary expenses.

At this point the legislation is only related to Indiana State tax returns. However, the debt collection industry is very powerful at lobbying. It would not be at all surprising if similar legislation is introduced in other States and/or targets the federal refunds of State citizens. If you have a judgment against you, don’t wait until your wages or property are seized. Call our office today to see if the debt may be discharged in a bankruptcy procedure.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

 

Bryan K. Mickler

 

 

Gay Marriage and Bankruptcy Filing in 2015

 

GAY MARRIAGE AND FILING BANKRUPTCY IN 2015

It was recently a banner day at the Law Offices of Mickler & Mickler. We just received our first discharge in a case filed by a married gay couple.

When the case was filed as a Chapter 7 in September of 2014, gay marriage was not legal in Florida. However, the couple were Florida residents who had recently been married in New York. Our office took the position that a married couple should be allowed to file a joint case no matter the status of the marriage in Florida. It was clear that the Supreme Court ruling striking down discriminatory federal marriage laws meant that the Federal Courts were going to have to allow joint cases for gay married couples – even if Florida law was still unsettled.

When the discharge was entered without objection, it was another small step in what has been a long march to equality in marriage. If you have questions regarding your eligibility to file bankruptcy, call our office today to schedule a free appointment to review your options.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

 

Bryan K. Mickler

2015 Bankruptcy Filings Predictions

BANKRUPTCY PREDICTIONS FOR 2015

            In my 2014 Blog on the state of bankruptcy filings, I discussed the causes of bankruptcy filings and how it was related to the availability and amount of consumer credit. That article is here: http://www.planlaw.com/bankruptcy-predictions-2014-beyond/

            Now with 2015 upon us, how is the model of cause and effect playing out? In 2014 it appeared that short term credit was rising which was expected to push down filing rates. As expected, the 2014 numbers show a 12% decline in bankruptcy filings compared to 2013. http://www.acainternational.org/creditors-bankruptcy-filings-decrease-by-12-percent-in-2014-34672.aspx

            So how is 2015 going to compare to 2014? It appears that consumer debt is still rising. This article shows that consumer debt increased by over 3% in the third quarter of 2014, or almost $15 Billion. http://www.ttnews.com/articles/basetemplate.aspx?storyid=36997

      As expected, after the short term credit bulge, delinquencies are starting to rise. The subprime auto market is especially vulnerable to a dramatic rise in delinquency rates. http://www.wsj.com/articles/car-loans-see-rise-in-missed-payments-1420768083

            So based on the availability of credit, what can we expect for 2015? Based on the below chart, it appears that consumer credit has been steadily increasing since 2011 at approximately 4-8% a year. At that rate, the bankruptcy filings should start to pick up during 2015 and accelerate in 2016. This would coincide with a greater amount of consumer debt levels and the gradual tightening of the credit markets as delinquencies start to increase. Of course, real wages remain flat for most workers, making any increased expense difficult to handle. It will be interesting to see if the historical trends continue with the current tepid recovery that has been ongoing in the job market.

Consumer Credit Outstanding 1

Seasonally adjusted. Billions of dollars except as noted.

  Year Quarter Month
  2013 2014
  2009 2010 2011 2012 2013 Q3 Q4r Q1r Q2 Q3r Sepr Octr Novp
Total percent change (annual rate)2 -3.9 -1.0 4.1 6.2 6.0 6.3 5.4 6.6 8.2 6.7 6.2 5.9 5.1
Revolving -8.8 -7.6 0.2 0.6 1.3 0.9 2.0 1.8 6.3 2.9 2.1 2.0 -1.3
Nonrevolving 3 -1.0 2.7 5.9 8.6 7.9 8.5 6.7 8.5 9.0 8.1 7.7 7.3 7.5
Total flow (annual rate)2,4 -103.6 -25.3 108.5 169.7 174.3 190.6 164.7 205.7 259.6 214.6 200.8 191.6 169.0
Revolving -88.0 -69.7 1.8 4.9 10.9 7.5 17.1 15.7 54.4 25.8 18.8 17.7 -11.4
Nonrevolving 3 -15.7 44.4 106.8 164.7 163.4 183.1 147.6 190.0 205.2 188.8 181.9 173.9 180.3
Total outstanding 2,552.8 2,647.4 2,755.9 2,923.6 3,097.9 3,056.7 3,097.9 3,149.3 3,214.2 3,267.9 3,267.9 3,283.9 3,297.9
Revolving 916.8 840.0 841.7 846.7 857.6 853.3 857.6 861.5 875.1 881.6 881.6 883.1 882.1
Nonrevolving 3 1,636.1 1,807.4 1,914.2 2,076.9 2,240.3 2,203.4 2,240.3 2,287.8 2,339.1 2,386.3 2,386.3 2,400.8 2,415.8

 

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

 

Bryan K. Mickler

 

Medical Bills and Bankruptcy: How to save your wages from garnishment

MEDICAL BILLS AND BANKRUPTCY: HOW TO SAVE YOUR WAGES FROM GARNISHMENT

            A recent broadcast and article regarding medical bills from non-profit hospitals caught my attention. http://www.propublica.org/article/how-nonprofit-hospitals-are-seizing-patients-wages

            The above link will take you to the story regarding non-profit hospitals suing low-wage workers for past due medical bills. The suits resulted in judgments against the low wage workers and garnishment of wages. In the article, some people had been garnished for years as a result of large past due medical bills. The hospitals in question were all non-profit hospitals that were receiving significant tax breaks and were supposed to be offering low wage workers financial programs to reduce or eliminate medical bills based on income guidelines. Of course, the hospitals weren’t following the guidelines and continued to garnish wages from low wage workers.

            In our practice, we see this type of behavior by medical providers nearly every day. Almost every potential client who comes in to our office has some type of medical debt. Frequently, the medical bills are a primary cause of the need to file Chapter 7. Co-pays and uninsured costs can quickly overwhelm low income and middle class people if any type of serious medical incident occurs. The result is often collection calls, notices and lawsuits.

           My thought during the entire broadcast regarding the above link was “Why don’t these people just file Chapter 7?”. I listened to several people on the story recount how they had been garnished 10% to 25% of their wages for years. These were people who could not afford to have even $1 taken from their family. Yet, there they were still struggling with the garnishments.

            If you find yourself or a family member in such a situation, contact our office for a personal and private conversation to discuss options. Chapter 7 or Chapter 13 bankruptcies offer the opportunity to stop wage garnishments and eliminate or reduce medical bills, credit cards and other unsecured type of loans. Don’t struggle with wage garnishment needlessly. Know your options.

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

Credit Unions and Bankruptcy

BANKRUPTCY AND CREDIT UNIONS

            Over the many years of filing every Chapter of bankruptcy for people, one thing has remained constant – people really like their credit union accounts. I have clients come in who have been with Vystar or Navy Federal for years and don’t want to include such debts in any bankruptcy filing. We always end up talking about the same thing in every meeting: “Will I lose my credit union account?”.

            The short answer is “Yes, if the credit union will lose money when you file.” Typically, a person will come in with a credit card, a car loan and maybe a signature loan through a credit union. They would like to keep the car, but discharge the credit card and signature loan. That is easily accomplished through a Chapter 7 or Chapter 13 filing, but the credit union will close any checking or savings accounts held by the individual. Why does this happen? Credit unions are member owned, as you often hear in advertisements. That means if the credit union takes a loss on a member, that member hurts all other members. Until the loss is cured or made up by the member, the credit union will normally deny membership privileges.

            What can be done to make things a little easier for the client looking to file a bankruptcy and discharge credit union debt? First, consult with experienced bankruptcy counsel to make sure that you receive appropriate advice regarding the problems with a credit union account after bankruptcy. There is nothing worse than having no access to a direct deposited paycheck and trying to pay bills. Not to mention trying to open a bank account with an open bankruptcy filing. Second, make sure that you open any new bank or credit union accounts prior to filing a bankruptcy and move any direct deposits or debits to the new account. A lot of frustration and aggravation can be avoided with just a little planning. Contact our office if you have other questions regarding a credit union account during a bankruptcy filing.

          At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or bkmickler@planlaw.com.

 

Bryan K. Mickler

Bankruptcy Saving Lives!!!

 

BANKRUPTCY SAVING LIVES!!

A new study finds that bankruptcy filers make more money and live longer than those who were denied such protection, Fortune Magazine reported today. In a working paper released Monday by the National Bureau of Economic Research, economists Will Dobbie and Jae Song examine 500,000 bankruptcy filings in the U.S. to measure the effect of bankruptcy laws on consumers. They found that the Bankruptcy Code is an effective social insurance policy. According to their findings, getting approved for chapter 13 bankruptcy protection “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.”

 See the entire article here: http://fortune.com/2014/09/30/bankruptcy-law-inequality-income/

At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 orbkmickler@planlaw.com.

Bryan K. Mickler