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

Chapter 7 bankruptcy is often referred to as “liquidation bankruptcy” because it allows individuals to completely discharge some portions of their debt, but only after certain assets have been liquidated. It is both the fastest and most common type of bankruptcy, and often allows debt to be discharged within three to five months of filing. However, before filing, there are some important factors to consider.

First, you should consider your current financial situation to determine eligibility. When filing for Chapter 7 bankruptcy, a variety of financial documents will be disclosed, including schedules of assets, liabilities, income, and expenditures, transcripts of tax returns, and a list of all owned property, among other information. As with any form of bankruptcy, individuals must also undergo credit counseling and provide a record of completion before filing.[1]

In addition, your income must either be below the median income of your state, or you must pass the Chapter 7 means test to be eligible for Chapter 7. The means test calculates whether an individual has enough disposable income, or income left over each month after expenses have been paid, to feasibly repay their debt. If the test determines there is not enough disposable income, you may qualify for Chapter 7 even with an income above your state’s median level.

Once eligibility has been determined, it’s important to consider the nature of the assets you currently own. Because Chapter 7 requires liquidation of certain assets, it is often best suited for those who either do not own lots of assets or otherwise high-value property that they do not wish to sell. Each state is permitted to set its own property exemption laws which determine how much property is exempt and thus protected from being sold to cover an individual’s debt. While exemptions vary by state, each state sets out a dollar limit, above which any property, or assets, may be sold to cover an individual’s debts. In Florida, you can exempt your owned home 100%. Additionally, you can generally keep things like your clothing, furniture, electronics, and your car (by either exempting it or reaffirming the car loan).

Once eligibility and property exemptions are considered, the filing process can begin. As soon as a petition for Chapter 7 is filed, the individual who filed is protected from most collections against them or their property. Each case is then assigned a trustee, who primarily handles the selling of any nonexempt assets or processing a no-asset bankruptcy.

In a typical Chapter 7 case, an individual’s debt will be discharged within 3 to 5 months. However, the debts discharged under Chapter 7 will be only “unsecured” debts, including credit card debt, personal loans, medical bills, and any other debt that is not secured by collateral. Secured debt, like mortgages, student loans, and car loans, will not be discharged under Chapter 7. It is also important to remember that Chapter 7 can negatively impact your credit score for up to 10 years if you don’t work to rehabilitate your credit score.

While a vast majority of Chapter 7 petitions result in a discharge of the individual’s debt, there are quite a few eligibility exceptions and other pre-filing considerations. Guidance from trusted legal counsel can be indispensable in determining your eligibility and whether Chapter 7 is the best step forward for you.

If you are interested in learning more about the Chapter 7 bankruptcy feel free to contact Savage Villoch Law, PLLC.

Sources:

[1] https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

[2] https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy-means-test-eligibility-29907.html

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.

For many retirees, the idea of spending their leisure years in Florida is a goal for which they have striven for many years. According to U.S. News & World Report’s analysis of 2010 U.S. Census Bureau data, the “Sunshine State” has the greatest proportion of people who are at least 65 (17.3%). And that doesn’t necessarily include “snowbirds” who might spend a considerable amount of the winter months in Florida away from their normal array of trusted advisers such as lawyers, investment advisers and other financial professionals who remain behind in the snow. Whether they are new residents or snowbirds, and like many other Americans, some of Florida’s newest senior citizens probably are hoping to make some new investments to help them recover ground lost during the difficult economic times of the last five years, and that makes them extra-vulnerable to securities fraud schemes targeting the elderly. One such scheme involving the stock of two companies, Miami Beach-based Thought Development Inc. and Virgin Gaming, just resulted in two Boca Raton men being among eight defendants being charged in federal court with conspiracy to commit federal mail and wire fraud. PalmBeachCoast.com recently reported that Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and George L. Piro, Special Agent in charge of the FBI’s Miami field office are prosecuting the Boca Raton pair on charges based on what Ferrer described as “exorbitant, undisclosed commissions” and misrepresentation of the technology involved, which allegedly projected a green laser line on a football field visible in the stadium to players and fans as well as to television viewers. Ferrer and Piro also took the position that the promoters also failed to mention a pretty significant defect, which was that use of the technology posed a risk of blindness to the players. U.S. Attorney Ferrer stressed that his office strives to prevent the “victimization” of Florida’s elderly residents. As effective as that assistance is, of course, it’s still only half of the answer. Florida’s seniors also need the tremendous resources that can be accessed through a relationship with a Florida stock fraud lawyer, who not only can fully explore options for recovery of investment-related losses but can advocate, with federal and state law enforcement officers, on behalf of Floridians who have suffered losses due to investment-related fraud where the promoters of the fraudulent scheme, like the defendants charged in the Thought Development Inc./Virgin Gaming scheme, are the target of state or federal civil or criminal prosecution. Contact us to learn more about the possibilities for pursuing recovery of losses that result from investment activities with unscrupulous promoters, brokers and other securities industry operators.

Recently, President Obama proposed the idea of making student loan discharge through bankruptcy easier for millions of people who can’t make their payments. Soon after, thirteen U.S. Senators introduced the Fairness for Struggling Students Act of 2015 which places private student loans on the same level as other forms of consumer debt. Although less than 10 percent of loans are with private lenders, talking about making student loans more eligible to discharge in bankruptcy is a step-forward for many drowning in debt. This discussion is especially pressing because student loans are only behind home mortgages as the largest source of consumer debt in the U.S. There is even more student loan debt than that with credit cards. Unfortunately, right now individuals have few options for forgiving their debts; in many cases bankruptcy is out of reach. Why? The court can decide whether or not to discharge the debt based on “undue hardship” — a standard that is not well-defined and hard to prove. One threshold for undue hardship often considered is whether or not the loan payments prevent you from having a minimal standard of living and if this is unlikely to change in the future. Because getting your loans discharged through bankruptcy is so difficult and the law is complicated, having a lawyer represent you is particularly important. Even if you are just considering bankruptcy with student debt, a lawyer can help you determine if it is even an option. There may be hope in the future for more student loan debt relief in the future. But if the burden is too overwhelming right now, contact us and we will discuss what course of action you should take.

(1) whether the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for himself and his dependents if forced to repay the loan;
(2) whether additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loan(s); and
(3) whether the debtor has made a good faith effort to repay the loan(s).

See Michaud v. Sallie Mae, Inc. (In re Michaud), 2014 Bankr. LEXIS 2977, 2014 WL 3362157 (Bankr. M.D. Fla. July 9, 2014). If a debtor cannot prove one of the elements of the Brunner test, the court’s inquiry ends, and the student loan cannot be discharged. Johnson v. Nat’l Collegiate Student Loan Trust (In re Johnson), 2014 Bankr. LEXIS 1401, 7 (Bankr. M.D. Fla. Apr. 2, 2014). Under the first prong of the Brunner test, you would need to show that your student loan will prevent you from maintaining a minimal standard of living. In re Wolfe, 501 B.R. 426, 435 (Bankr. M.D. Fla. 2013). You are not required to live in poverty, but may not necessarily maintain your previous standard of living. Credit Mgmt. Corp. v. Stanley, 300 B.R. 813, 818 (N.D. Fla. 2003). Under the second prong of the Brunner test, you would need to show “an inability to pay that is likely to continue for a significant time.” In re Cox, 338 F.3d at 1242. Your inability to pay is not simply a “temporary dire financial situation,” but a “certainty of hopelessness.” In re Matthews-Hamad, 377 B.R. 415, 422 (Bankr. M.D. Fla. 2007). Under the final prong of the Brunner test, you must show a good faith effort to repay your student loans. “Good faith” does not require that your enroll in an income-contingent repayment program. In re Sturtevant, 2011 Bankr. LEXIS 1612, 2001 WL 1741911 at *8 (Bankr. M.D. Fla. 2011). For instance, if you pay towards the student loan using funds from your retirement savings, the court might decide that you made a good faith effort to repay the student loan. Bumps v. Wells Fargo Educ. Fin. Servs. (In re Bumps), 2014 Bankr. LEXIS 207, 9, 2014 WL 185336 (Bankr. M.D. Fla. Jan. 15, 2014). In short, it is difficult, but not impossible to get rid of your student loans in bankruptcy. If you’re having trouble paying your bills, bankruptcy might be an answer. Please call Savage, Combs & Villoch, PLLC, at www.savagelaw.us for more details and advice.