Archive for: ‘October 2015’

Bankruptcy Case Could Unchain Americans from Student Loan Debt

October 23, 2015 Posted by kingcade

An unemployed 65-year-old man, acting as his own attorney, has spent three years appealing his way to the Boston federal court that is now hearing his case.  Not only will a win relieve him of hundreds of thousands of dollars in student loan debt, the verdict could fundamentally change the way U.S. bankruptcy courts handle borrowers who cannot repay their student loans.

While most consumer debt is discharged in bankruptcy, federal rules make it nearly impossible for borrowers to eliminate their student loan debt.  In the 1970’s, Congress added new rules to the law that excluded most student debt from that relief.  Anyone trying to discharge student loan debt in bankruptcy must prove that repaying it would constitute an “undue hardship.”  However, lawmakers never defined an undue hardship, so it is left to the courts to determine just how destitute a borrower needs to be to qualify for relief.

The appeal seems to have prompted the First Circuit Court of Appeals to reconsider the definition of hardship.  A judgment in favor of the debtor could have a significant impact on other courts, which have not looked at this issue in some time.  This case could mark the first time a federal court weighs in on modifying the standards in a decade.

Federal student loan debt stands at $1.2 trillion, making it the largest source of consumer debt outside of mortgages.  This figure is expected to double in the next 10 years, with the rising costs of higher education. Some 7.5 million student debtors are severely behind in paying the government back.

From 2001 through 2007, the debtor in this case took out several Parent PLUS student loans (federal debt parents can use to finance their kids’ education) to send his three children to college. After accruing interest, the total debt ballooned to $246,500. In 2002, he lost his job as president of a manufacturing company when it closed its doors to move overseas.

He has been unable to find work in the last 13 years, he said, because he is viewed as too old for executive positions and overqualified for lower-level jobs. He lives on the salary his wife makes as a teacher’s aide, less than $15,000 in annual income.  Their retirement savings has been drained and their house just went into foreclosure.  Even if he were able to find a job paying $50,000 per year until he turned 77, he calculated, the balance of his loans would still grow to $500,000.

Consumer advocates agree, most of debt that could be discharged in bankruptcy is not collectible because the bankrupt borrower cannot pay it back.  The idea of bankruptcy is to give consumers relief from overwhelming debt and a fresh financial start.  If a debtor is never going to be able to repay their debts, why are we not giving them relief?

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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Obama Administration asks Congress to grant bankruptcy protection to Puerto Rico

October 22, 2015 Posted by kingcade

The Obama administration has asked Congress to grant bankruptcy protection to Puerto Rico in an attempt to restructure its $72 billion debt.  The proposal would allow Puerto Rico and other territories to seek financial restructuring under the supervision of a federal bankruptcy court.

The administration went a step further by asking for new oversight of Puerto Rico’s finances, restructuring the territories Medicaid funding system and extending the earned income tax credit to Puerto Rican taxpayers.

“The administration has no plans to provide a bailout to Puerto Rico,” White House press secretary Josh Earnest said.

“What we have said is that the administration has an interest in working with officials inside Puerto Rico to help them deal with the significant financial challenges that are facing the government there,” he continued.

Governor Alejandro Garcia Padilla has been trying to slash expenditures and restructure Puerto Rico’s debt since taking office three years ago.  However, in July he was forced to announce that it was not enough and the government would begin defaulting on its massive debt.

The inability to repay that debt is a big threat to American investors, who may not realize how much money they have tied up in the island’s economy.

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Reform Ten Years Later

October 21, 2015 Posted by kingcade

The Bankruptcy Abuse and Consumer Protection Act became law on October 17, 2005. This legislation was prompted in part by a spike in personal bankruptcy filings and was an effort by Congress to reduce the misuse of the bankruptcy system.  Congressional supporters of the law worried that abuse of the bankruptcy laws would unfairly increase costs for non-bankrupt consumers.

Ten years later, it is questionable as to whether the reform law actually achieved its goals.  The number of bankruptcy filings has dramatically declined since 2005, from almost 1.7 million to 920,000 in 2014, despite the Great Recession of 2008.

The “means test,” which measures a prospective bankruptcy filer’s ability to repay their debts along with other substantial changes to the bankruptcy code has decreased the number of “opportunistic” bankruptcy filings, but has also made filing for bankruptcy more difficult for consumers.

The requirement that prospective debtors must undergo credit counseling prior to filing for bankruptcy has had a positive impact.  According to the Department of Justice, there are at least 140 nonprofit agencies approved by the government to provide pre-bankruptcy counseling.  There are an additional 220 nonprofit entities approved to provide education for consumers while in the process of filing for bankruptcy.

These agencies are screened to make sure debtors are receiving valuable advice, free from scammers who prey on consumers in financial distress.  These resources also provide consumers with valuable financial tools to help them avoid having to file for bankruptcy, again.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Homeowners get Foreclosure Dismissed; Could Own Home Free and Clear

October 20, 2015 Posted by kingcade

A New York judge recently dismissed a foreclosure case against a mother and daughter, ruling that the bank missed New York’s six-year deadline to file its lawsuit.  The decision could mean mortgage payments disappear and the two own their home free and clear, more than eight years after their lender foreclosed on them.

State Supreme Court Justice William Rebolini decided in favor of the family, writing that U.S. Bank National Association was “untimely” in suing last year to take back the home.  In May 2006, the family took out a $250,000 mortgage to fund home repairs, but shortly after one of the relatives left the home and the owner underwent two difficult surgeries.  As a result, payments were missed.

The owner and her daughter applied for loan modifications four times, but lenders who bought and sold the loan denied their requests.  A lender that previously held the mortgage sued to foreclose in March 2007, demanding the entire mortgage balance due.  By calling in the loan, the clock started ticking on New York’s six-year statute of limitations for such lawsuits.

The lender could have used a legal tactic to stop the six-year clock, but failed to do so.  In this case and others like it, the statue of limitations exists for a reason and there is an obligation on the part of the lender to bring the action on a timely basis.  This seems to be a growing trend, as a number of homeowners in New York are asking judges to dismiss foreclosure cases because the statute of limitations has expired.  Banks can avoid getting themselves in this situation by giving homeowners a loan modification, helping them cure their default.

In Florida, some courts have ruled lenders cannot bring foreclosures if certain criteria are met: the lender already filed for foreclosure, demanded payment of all the money borrowed, and lost its foreclosure case.  If it fails to file another action within five years of the first lawsuit, the lender can no longer foreclosure and evict the residents, some courts have ruled.

Click here to read more on this story.

Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:
http://www.nbcmiami.com/news/local/Five-Years-After-Foreclosure-Some-Keep-Homes-303817841.html

Precedent Overturned to Award Debtor Fees

October 19, 2015 Posted by kingcade

The Ninth Circuit recently overturned precedent allowing for attorney’s fees in a debtor’s prosecution of a creditor, after the creditor violated an automatic stay.   The case transpired after a woman filed a lawsuit against Wells Fargo subsidiary America’s Servicing Company in 2009 after it sold her home at a trustee’s sale, despite the fact that a stay had been entered in a Nevada bankruptcy court.

After the bankruptcy court found the company willful in its intent, it granted the woman $80,000 in sanctions and damages – including $20,000 in attorney’s fees.  America’s Servicing argued on appeal that the bankruptcy court had improperly included the attorney’s fees with the “actual damages” awarded, and a federal judge reversed that portion of the award.

The woman then sought an additional $10,000 in attorney’s fees for her defense of the company’s appeal. The bankruptcy court denied this, finding that the fees did not constitute “actual damages” because the stay violation had ended before she had to challenge the appeal. But the Bankruptcy Appellate Panel reversed the decision and granted the fees, and the Ninth Circuit upheld the panel’s judgment.

In a 20-page opinion, Circuit Judge Paul Watford wrote that a crucial precedent case is Sternberg v. Johnston, in which the circuit held that the statute at issue allows a debtor to recover only those fees incurred to end the stay violation itself, not the fees incurred to prosecute a damages action.

But Watford pointed out that Sternberg “misconstrued the plain meaning” of the statute, and the circuit overruled the case to the extent that it was inconsistent with its opinion.”Rather than decide whether Sternberg‘s holding extends to the facts of this case, we think the better course is to jettison Sternberg‘s erroneous interpretation of [the statute] altogether,” he said.

Watford said that Congress’s inclusion of the automatic stay provision “strengthened the remedies previously available to debtors injured by willful stay violations,” and it “makes an award of actual damages and attorney’s fees mandatory, and grants bankruptcy courts the discretion to impose punitive damages in appropriate cases.”

Click here to read more on this story.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.