As we’ve previously covered in our chapter 7 bankruptcy blog series, determining chapter 7 eligibility can be complicated in itself, as can properly balancing the benefits and drawbacks unique to your circumstances. Advice from trusted, experienced legal counsel can help you smoothly navigate these obstacles and ensure you get the relief you deserve as quickly as possible.

Once you have made these crucial pre-filing decisions, Savage Villoch Law can also assist you through the process of filing your Chapter 7 Bankruptcy petition. This petition will be filed in your local bankruptcy court and consists of several Official Bankruptcy Forms which detail information such as your current assets and liabilities, a record of your current income and expenditures, a statement of your financial affairs, and any open contracts or unexpired leases.

As a consumer debtor, you’ll also need to provide the court with a record of recent credit counseling, along with the debt repayment plan develop therein. In addition, the court will need a detailed list of all of your current creditors, and a list of all of the property you own.

The filing fees for a chapter 7 bankruptcy petition include $245 to file the case, a $75 administrative fee, and a $15 surcharge for your assigned case trustee. That brings the total cost of filing to $335, which is generally due to the clerk at the time of filing.

Once your petition is officially filed with the bankruptcy court, a trustee will be assigned to your case. This case trustee will be an impartial third party who administers your case through the process and facilitates the liquidation of any of your nonexempt property and assets. In the event that all of your property is exempt, as is typical of chapter 7 cases, the case trustee will simply file a “no asset” report, and none of your assets will be taken from you and sold to pay your debts.

Within 21 and 40 days of filing, your case trustee will hold a creditor meeting, during which you’ll be put under oath and asked questions regarding your financial standing and property interests. This meeting helps the court determine whether your petition can properly be filed under chapter 7, similar to the chapter 7 means test.

So long as the court finds no “abuse,” and no interested party files an objection to your discharge, a chapter 7 discharge should be granted within 60 to 90 days of your first creditor meeting. Of course, there are many exceptions to receiving relief under Chapter 7, which illustrates why working with trusted legal counsel is so critical from the outset.

Once a chapter 7 discharge is granted, you will be released from any liability for your unsecured debts, and your creditors will no longer be able to attempt to collect those debts, nor bring legal action against you.

Although chapter 7 will only grant relief from unsecured debts, it can be a powerful way to responsibly get your finances back on track. If chapter 7 bankruptcy sounds like a solution for your current situation, please contact us. The attorneys at Savage Villoch Law, PLLC have the experience and expertise to guide you through this process and help you regain your financial footing.

Sources: https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

This month The Trump administration, through acting CFPB Director Mick Mulvaney, announced sizeable restrictions to CFPB’s enforcement and day-to-day oversight of the financial industry’s fair lending practices. The move comes shortly after Mulvaney was installed as Acting Director following the departure of Richard Cordray. Speculation of the CFPB’s impending dismantlement under the Trump Administration has been swirling since the election and this is just one of the latest in a series of moves pertaining to the CFPB that lends some credence to that speculation. The decision will restrict the role of the Office of Fair Lending and Equal Opportunity – the fair lending enforcement arm of the CFPB – to one strictly focused on education and advocacy. The Office was also moved under the direct oversight of the Director’s Office, placing even more first-hand control with the Director. Additionally under Mulvaney’s direction, the bureau has dropped several payday loan cases and has announced plans to review current restrictions on payday lenders recently put in place by the CFPB under the Obama Administration. You may be more familiar with payday loans as a cash advance or paycheck loan. They are short term loans given at significantly higher interest rates. They are typically requested for immediate funds available in advance of a payroll check, with the principle and interest being paid shortly (typically after a paycheck is received).

What’s the CFPB’s role in fair lending enforcement?

Critics of the CFPB have long claimed that the bureau over-extends itself in terms of regulation and oversight. A prominent component of its oversight responsibilities focus on fair lending enforcement; ensuring that consumers are not discriminated against by lenders. This means, that you cannot be denied credit based on superficial terms such as race, sex, or religion. Have you ever heard the term “redlining”? It is a term used by the financial industry to describe lenders refusing credit based on residential demographics. Essentially, if you live in an area that the lender deems high-risk, they may reject your loan application. Of course this is completely illegal, but it hasn’t stopped lenders from trying. And this, along with other forms of discrimination, are exactly what the CFPB has been tasked with monitoring.

Looking for redlining and other lending discrimination

There are the few things that the CFPB looks at when a bank or lender is suspected of engaging in discriminating practices:

• Comparisons with other loan applications and originations in a minority area
• Where physical branches and offices are located
• Marketing scope and practices
• Current lending policies

Curbing predatory payday loans

In addition to ensuring that consumers have fair, equitable access to credit options, the CFPB has also played a considerable role in protecting consumers from being victimized by predatory loan practices. Most specifically, as they relate to payday loan or cash advance loan programs. The CFPB has aggressively gone after payday lenders in the past, including bringing lawsuits against those that the bureau alleged engaged in deceitful and predatory practices.

Why the changes to fair lending enforcement?

Since the bureau’s inception as part of Dodd-Frank, the Office of Fair Lending and Equal Opportunity has pursued lending discrimination, bringing several high-profile cases against lenders. Not only did it aggressively pursue discriminatory mortgage lenders, but other institutions as well, including automotive lenders. Herein lies the issue with most opponents of the bureau: Why, as measure created out of housing lending crisis and created to address oversight and enforcement for mortgage lending, intervening in auto lending enforcement? Well Dodd-Frank grants broad access for the CFPB, through the Office of Fair Lending and Equal Opportunity, to oversee and enforce fair lending practices. Under the Act, the Office of Fair Lending is tasked with:

• Providing fair lending enforcement under federal guidelines, including oversight for:
  • Equal Credit Opportunity Act (ECOA)
  • Home Mortgage Disclosure Act (HMDA)
• Coordinating fair lending enforcement efforts with federal and state regulators
• Working with private sector fair lending advocates

Essentially, this means that the CFPB has had a say (one with the authority to force compliance) in any form of consumer credit offering… but moves under the current administration are setting the stage for a drastically different CFPB.

What roll-backs at the CFPB mean for consumers

So how does the changing role of the CFPB affect you and other credit consumers? First, this does not mean the end of fair lending enforcement and consumer credit protection. The CFPB’s fair lending oversight responsibilities were concurrent with the regulation and oversight duties of other organizations. However, the relative autonomy in exercising its enforcement policies made the CFPB an aggressive and effective regulator in the financial lending industry. Critics of the announcement worry that the move will greatly reduce the CFPB’s efficiency in addressing lending discrimination.

There are also concerns raised over the pull-back by Mulvaney on the CFPB’s efforts to try payday lending discrimination cases. Under the Acting Director, the bureau has dropped several payday lending lawsuits, including one lawsuit file just a year ago, involving four different lending firms. Additionally, Mulvaney has announced plans for a review (and potential roll-back) on legislation the CFPB put in place this past October regarding payday lending regulation. The new regulations, which were set to take effect in January, would address lenders properly vetting loan applicants as well as set restrictions on certain lending practices. Unfortunately, this puts even more oneness on you as a credit consumer to be diligent when consider loans or other financing options. It’s now even more important to make sure that you completely understand all details of a potential loan, including repayment structure and fees and penalties. While there are other agencies tasked with reviewing and regulating fair lending enforcement, the recent announcement most likely means a decrease in efficiency and effectiveness in addressing discrimination cases as they will now be encompassing roles and responsibilities previously occupied by the CFPB.

Resources

Do you have questions about current loan programs in which you are enrolled or would like further information on how the CFPB’s decision will affect future credit applications, contact our team to discuss. You can also get more info on lending and investment information from our blog page.

What exactly is the CFPB?

You’ve probably heard of the Consumer Financial Protection Bureau, but you may not be entirely sure what it actually does. For those of you who aren’t aware, the CFPB is governmental oversight and regulating body that monitors the financial industry and protects consumers from predatory or unethical behavior. The bureau was formed as a measure under the Dodd-Frank Act, the legislation that provided much of the framework for our financial regulation post-recession. Its strict oversight and regulation has definitely come as a benefit to consumers, but businesses and banks have railed against it for its perceived overreach and autonomy. Along with regulatory oversight, the CFPB also provides a platform to empower consumers. In addition to providing educational resources to consumers, the bureau has made complaint filing much more accessible improving transparency between consumers and the banking industry.

Uncertain future the bureau

Many Republican lawmakers have expressed criticism over the CFPB. Additionally, it has long been the subject of attack from the Trump Administration. Many experts believe that, with Cordray’s departure the bureau will almost certainly be placed in the cross-hairs as the administration considers a major financial regulation review.

Is 2008 far enough in our rear-view that we’ve already forgotten the same mistakes that brought the financial industry-and U.S. economy-to the brink of collapse? Evidently, it is for banks and policymakers. You have probably been hearing a lot of talk about impending “reviews” of current financial regulation measures; the very regulations put in place immediately following the aftermath of the 2008 collapse; the very measures that are meant to ensure that kind of thing doesn’t happen anymore. However, these calls for review signal a clear intention for some of a desire for wide-scale financial deregulation.

The Push for Financial Deregulation

Financial institutions have claimed that regulation measures have been retaliatory and have largely resulted in stifling growth and ability to offer competitive services and prices. With the introduction of the Trump Administration, financial stocks soared on optimism of a businessman in the White House. The president and other policymakers have repeatedly voice dissatisfaction with current regulatory measures. Notably, the Dodd-Frank law, which provides much of the overarching regulation for banking and finance, has been seen as headed for the chopping block. Reuters reports that in June, House Republicans voted to replace Dodd-Frank.

In a World Without Financial Regulation

The risks of widespread financial deregulation are great. The fallout of 2007-2009 were universal, and effectively ended the popular “too big to fail” concept. Entire companies were brought down, not to mention the homes and savings of thousands of people and families. You probably know someone who experienced financial devastation. Dodd-Frank and other regulatory measures were put in place to ensure that devastation of the magnitude never occur again. While a review of some measures may be warranted, massive financial deregulation is not. In fact, banking experts are warning that a move like that could have dire consequences. Vice Federal Reserve Chair, Stanley Fischer, recently stated that the decision to roll back key elements of Dodd-Frank were extremely short-sighted. He warned that a reversal could be taking us in a very dangerous direction. Regardless of political preference, nobody wants a return to the dark days of 2008. Any “reviews” of existing regulations should be met with apprehension and should be given full deliberation.

Resources

You can read more about the Fed’s concern over deregulation here. Curious about what potential rollbacks could mean for your retirement savings or investments? Give us a call.

On November 17, 2014, the United States Supreme Court granted a petition for writ of certiorari in two cases: Bank of America, N.A. v. Caulkett (In re Caulkett), 566 Fed. Appx. 879, 2014 U.S. App. LEXIS 9407 (11th Cir. Fla., 2014) and Bank of Am., NA v. Toledo-Cardona (In re Toledo-Cardona), 556 Fed. Appx. 911, 2014 U.S. App. LEXIS 9035 (11th Cir. Fla., 2014). In both cases, the United States Court of Appeals for the Eleventh Circuit ruled that a Chapter 7 debtor could strip off a second mortgage when the home’s value fell below the amount owed on the first mortgage. What that ruling means is, if you file bankruptcy and the second mortgage on your home is completely “underwater,” like many second mortgages after the recent housing bust, then you could keep your house subject to the first mortgage and strip off the second mortgage completely leaving the debt secured by that second mortgage to be discharged in the bankruptcy. In the Toledo-Cardona case, the debtor kept his home and stripped off the second mortgage that had a value of over $100,000.00. That is why Bank of America and other lenders are not pleased with the decision. The Eleventh Circuit is the appeals court for all bankruptcy cases filed in Florida, Georgia, and Alabama. This ruling is not the first Eleventh Circuit Court decision on this topic. The Eleventh Circuit previously ruled this way about mortgage stripping in Folendore v. U.S. Small Bus. Admin., 862 F.2d 1537, 1538-39 (11th Cir. 1989); and McNeal v. GMAC Mortg., LLC, 735 F.3d 1263, 1265-66 (11th Cir. 2012). Bank of America seeks to convince the United States Supreme Court that the Eleventh Circuit ruling should be overturned in light of Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), where the U.S. Supreme Court previously held that a chapter 7 debtor could not “strip down” a creditor’s lien on real property where the value of the property is less than what is due to be paid to the creditor. Id. at 417, 112 S. Ct. at 778. The U.S. Supreme Court will likely hear the lien-stripping cases and make its decision in Spring 2015. The ruling will likely unify a split among the Circuit Courts of Appeal. The Fourth, Sixth, and Ninth Circuit Courts of Appeal have previously ruled opposite of the Eleventh Circuit and denied the debtor’s ability to strip off a second mortgage when the second mortgage is completely underwater. The Supreme Court’s decision is one of great importance because it will affect debtor’s rights throughout the country, especially given that many second mortgages are still completely underwater after the housing bust beginning in 2007. If you know someone facing financial difficulties and/or foreclosure, please contact Savage, Combs & Villoch, PLLC, and speak to a qualified attorney who could provide you practical advice on important issues such as stripping junior liens in bankruptcy. Please call for a free bankruptcy consultations today. 813-200-0013 or visit www.savagelaw.us!