White House Unveils New Student Loan Initiative

White House Unveils New Student Loan InitiativePresident Barak Obama announced the signing of the “Student Aid Bill of Rights” before an enthusiastic crowd of over 9,000 supporters at Georgia Tech University. In a similar move, President Obama directed the Treasury Department, Education Department and Consumer Financial Protection Bureau to opine whether or not bankruptcy laws should be changed, or at least relaxed, in this area. President Obama gave the agencies an October 1 deadline for their report.

This Bill of Rights is designed to streamline the loan repayment process and keep delinquent borrowers out of default. The new law also requires lenders to provide clear disclosures to borrowers about repayment terms.

In terms of bankruptcy reform, the administration’s review will most likely focus on private student loans which do not have the same obligations and conditions as federally-guaranteed loans. The President promised that “we’re going to take a hard look at whether we need new laws to strengthen protections for all borrowers, wherever you get your loans from.”

According to the White House, about 40 million people owe an average of $28,400 apiece in student loan debt.

Bankruptcy Laws and Student Debt

The President’s initiative comes about six weeks after Maryland Democrat John Delaney introduced House Resolution 449, which would change Section 523 of the Bankruptcy Code to make all student loans dischargeable in bankruptcy.

Democratic lawmakers are not the only people who have recently questioned the Brunner Rule. Both the Eighth Circuit Court of Appeals in Minnesota and the Tenth Circuit Court of Appeals in Colorado expressed some preference for a totality of the circumstances analysis, which basically states that “if the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt – while still allowing for a minimal standard of living – then the debt should not be discharged.” The First Circuit in Maine joined this chorus when it described the Brunner rule as “overkill” that was contrary to standard of a fresh start for bankruptcy debtors.

Republicans have yet to speak out on any of these measures, but by and large, this same group of GOP lawmakers pushed the cleverly-titled Bankruptcy Abuse Prevention and Consumer Protection Act through Congress in 2005. Predictably, lenders also oppose any move to make student debt dischargeable.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

When Do I Start Receiving Bankruptcy Benefits?

When Do I Start Receiving Bankruptcy Benefits?In some ways, your financial fresh start occurs the moment you file for bankruptcy, as your creditors are immediately prevented from taking actions against you or your property to collect their debts. The debts are then officially wiped out when you receive a discharge order in a Chapter 7 or Chapter 13 Bankruptcy.

When Can I Get A Home Loan?

Many of our clients ask how long they must wait before they can apply for a residential mortgage after filing for bankruptcy. Specific requirements may vary between lenders, so it is best to shop around. But, there are some general industry standards:

  • Fannie Mae: Lenders are eligible for a loan as little as two years after a Chapter 7 or Chapter 13 discharge, although some borrowers may have to wait four years after a Chapter 7. Either way, that is considerably less time than the seven year wait after a foreclosure.
  • Freddie Mac: The same general waiting periods apply, but Freddie may be a bit more rigid.
  • FHA: These loans are generally the most forgiving when it comes to past credit problems. Borrowers with a Chapter 7 must wait a maximum of two years, while Chapter 13 debtors can be eligible in only one year.
  • VA: Borrowers are eligible for a loan under $417,000 within two years after a Chapter 7 or Chapter 13 Bankruptcy.
  • USDA: The waiting period after a Chapter 7 is three years, and a borrower who is still in Chapter 13 can qualify after a year of on-time trustee payments.

These values may be changing, as Congress and the White House may consider unwinding the government’s control of Fannie Mae and Freddie Mac in the coming year.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Dealing with an Aggressive Creditor

Protecting Yourself from Creditor Harassment

Protecting Yourself from Creditor HarassmentMost of us want to pay our bills in a timely manner, and we often try hard to work with creditors when we get behind. But some creditors are relentless, calling and writing incessantly in an attempt to collect a debt. Some will call at all hours of the day or night. Some will call your friends and neighbors. Some will badger and berate you over the phone. There are ways you can deal with overly aggressive creditors.

The Fair Debt Collection Practices Act

In recognition of the abuses of debt collectors, Congress enacted the Fair Debt Collection Practices Act, empowering the Federal Trade Commission to monitor and regulate for abusive, unfair or deceptive practices. The FDCPA prohibits a wide range of actions perceived as harassment or misrepresentation, including:

  • Calling outside of specific hours
  • Communicating information about a debt to a third party
  • Threatening actions that the creditor or collection agency cannot take
  • False statements about a debt owed

Taking Legal Action

If a creditor or collection agency violates the law, and refuses to stop doing so after a written request, you can take legal action in court. In many instances, if you can successfully show violation of the law, you can get attorney fees and court costs, in addition to statutory and other damages. However, the legal action will not necessarily make the debt go away. Even if you can demonstrate that a creditor or collector violated federal law, you will still owe the debt until you pay it or the creditor/collector discharges it.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

‘No One Gets A Free House’

No One Gets A Free HouseCourts in New Jersey, Pennsylvania and elsewhere have repeated this phrase quite a bit since the mortgage crisis began in 2009. Distressed homeowners burdened by mortgages that had become unaffordable complained of unfair lending practices, both inside and outside of bankruptcy court. While not unsympathetic to their plight, most judges were very reluctant to grant legal relief, absent extraordinary circumstances. However, all the stars aligned for two Madison homeowners in Washington v. Specialized Loan Services and The Bank of New York – Mellon (In Re Washington). What happened in this case, and what does it mean for your family?

Facts

In 2007, the Washingtons purchased a three-family home on Walnut Street. They failed to make the installment payment due on July 1, 2007, and their 30-year adjustable rate mortgage loan has been in default ever since then. The bank accelerated the note in May and filed a foreclosure complaint in December 2007. These dates become very important later.

Decision

A provision in the Fair Foreclosure Act of 2009 places a six-year statute of limitations on a mortgage foreclosure proceeding. In other words, the bank has six years from the date of filing to either take the property or formally reinstate the loan.

Probably because the case slipped through the cracks, the court dismissed the foreclosure action because the bank did not pursue the action, and its six years expired in December 2013. The bank tried to argue that a thirty year statute of limitations applied, but the court was unconvinced.

After “gargl[ing] to remove the lingering bad taste,” Bankruptcy Judge Michael Kaplan ruled that the statute of limitations had expired and that the mortgage was void. The Washingtons are also immune from a deficiency judgment or any other action on the note. Hello, free house.

Application

The ruling only applies when the statute of limitations has expired prior to the commencement of a foreclosure case. Such instances are quite rare, but not unheard of. The same thing happened in Texas in 2001!

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Is Your Past Haunting You?

The Zombie Apocalypse probably won’t occur, but these creatures can still haunt your credit report, even if you filed bankruptcy.

Also known as debt scavengers, zombie debt-buyers purchase delinquent credit card accounts, overdue payday loans and other unsecured debt that the original lender wrote off as uncollectible. Since the debt may be eight or nine years old, or even older, the purchaser only pays a few cents on the dollar for the right to collect the account. Typically, after running a skip trace to find the debtor’s current contact information, the letters and phone calls begin.

Legally, a debt-buyer is supposed to provide written verification of the debt upon request. Since these accounts are so old, the original records may have been lost or destroyed. Many time, a zombie debt-buyer may only have a name, account number and outstanding balance.

Dealing with Zombie Debt During a Chapter 7

If you get a call from a debt collector before your bankruptcy is discharged, tell the caller that you have hired a bankruptcy lawyer and provide them with your attorney’s name and phone number. That’s all you need to do. Do not volunteer any other information and politely refuse to answer any questions. If you receive a letter, give it to your attorney.

If you get another call or letter, repeat the same process. Do not argue with the person about the debt. Let your lawyer handle that for you.

Dealing with Zombie Debt After a Chapter 7

Once you receive your discharge order, keep a copy of both the petition and order close at hand, because you’ll probably need them again.

Monitor your credit report closely. If another debt-buyer appears, be proactive and send them a copy of the discharge order. If they call, politely give them the case number and discharge date and then hang up. If they keep calling, you may need to speak to an attorney to get the harassment to stop.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

The Two Most Common Personal Bankruptcy Options

Your Personal Bankruptcy Options

If you are considering filing for personal bankruptcy protection, you can easily be confused about the different options available to you. Here are the basic options for obtaining personal bankruptcy protection.

Chapter 7 Case

In a Chapter 7 bankruptcy proceeding, you are allowed to replace with most debts certain debts in exchange for the sale of some of your assets. There are some limitations on the debts you may discharge. Customarily, you cannot discharge the debt on secured assets—homes or cars—and still keep the property. Additionally, child support and alimony arrearages cannot be wiped out in bankruptcy, and student loan and tax debts are very difficult to discharge.

With respect to things you are financing like your car or home if you want to keep it you have to continue to make the payments. If the thing you are financing is work less than what you owe, you have the option to give it back to the lender and owe them nothing or keep it but continue with the payments.

Under the revisions to the federal bankruptcy laws in 2005, you must now qualify for Chapter 7 by submitting to a means test, where the bankruptcy court determines if you make too much money to be in Chapter 7, in which case your options are to file Chapter 13 or no bankruptcy.

Chapter 13 Reorganization

In a Chapter 13 petition, you work out new payment arrangements with your creditors, agreeing to settle your debts over a three-to-five year period. Often, you will be able to get late fees and penalties waived. As long as you honor your new commitments, your creditors cannot make any additional efforts to collect on a debt.

The Automatic Stay

Whether you file for protection under Chapter 7 or Chapter 13, you are immediately entitled to the protection of the automatic stay, which prevents your creditors from calling, writing or taking any legal action outside of the bankruptcy proceeding to collect a debt from you.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Can An Attorney Help Me Modify the Terms of a Loan?

Can a Lawyer Help You Obtain a Loan Modification?

You may be experiencing financial difficulties and considering a bankruptcy filing to get a fresh start. However, your problem may be limited to one or a couple of loans that you simply can’t afford to pay. Can an attorney help you renegotiate the terms of those obligations such that they become affordable and you don’t have to seek protection in bankruptcy?

The answer is yes. Furthermore, most lenders would prefer to restructure your loan than have you file for protection in bankruptcy. Once you file for bankruptcy protection, your lender is prohibited from calling, writing or taking any legal action outside of the bankruptcy proceeding to attempt to collect on the loan. During the period of the bankruptcy, you generally don’t have to make payments and cannot be subject to legal action. In addition, if you file a bankruptcy petition, your creditors (including your lender) will likely incur legal fees to protect their interests.

An experienced bankruptcy lawyer will know how to work directly with your lender to work out new payment arrangements that lower the interest rate or extend the repayment period, or both. In many instances, your attorney can get late fees and penalties waived, and may be able to get any past due amounts folded into the new principal balance.

You can, of course, try to work directly with your lender. Your lender, however, doesn’t have your best interests at heart, but is only trying to protect his or her organization’s best interests. An attorney is duty bound to zealously represent you, and will make certain that you understand all your legal rights. Your lender may limit discussions to a single option, one that is best for the lender. A lawyer will make certain you understand all your options, and will fight to get the best outcome for you.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).

Should You File For Bankruptcy?

One of the crucial reasons that individuals file for bankruptcy is to receive relief from their creditors. The initial relief arrives in the form of an automatic stay. The automatic stay goes into effect immediately upon filing for bankruptcy. In general, the stay prohibits collectors from continuing collection activities unless and until the Court gives them permission to continue.

Bankruptcy advertisements often claim to:

The automatic stay, applied when applicable, ceases all of these actions.

Chapter 7 Bankruptcy

Chapter 7 is a “liquidation” bankruptcy. If an individual receives a discharge in their bankruptcy, the Debtor’s personal liability to pay for most of their debt is removed. Therefore, a chapter 7 can bring relief from creditors and resolve the debt issues. However, there are many exceptions, so it is vital to seek an experienced attorney.

Valid reasons to file under chapter 7 include:

  • Relief from the collection process when left with no other alternatives
  • In order to deal with the debt that has become unmanageable (outside the assistance of bankruptcy)

Whether you have reached the threshold in the above areas is the determining factor for whether or not to file.

Is Bankruptcy Right for You?

Learn whether bankruptcy is the right choice for you. Talk your debt-relief options over with an experienced attorney at the southern New Jersey law firm of John Hargrave and Associates. We offer free confidential consultations. Call 856-547-6500, or contact us online.

“Meaningful Review” by Collections Attorneys

U.S. District Judge Kevin McNulty, in the District of New Jersey, ruled last week in Bock v. Pressler & Pressler that a debt collection law firm violated the FDCPA (Fair Debt Collection Practices Act). The law firm apparently did not conduct a “meaningful review” of a collection claim filed against a consumer.

Bock had filed a federal court action against Pressler, alleging that Pressler had filed their State complaint against Bock without meaningful review by an attorney. His case work (Pressler employees working on behalf of the debt holder – Midland Funding LLC) was carried out by non-attorneys (a non-issue), but when it came time for the attorney review prior to filing the case with the State, the firm’s computer system shows a file accessed for review for only four seconds.

The standards set forth in the case Lesher v. The Law Offices Of Mitchell N. Kay in 2011 played a role in Judge McNulty’s decision. McNulty wrote that Lesher “establishes that it is false and misleading, within the meaning of FDCPA, for an attorney to send a debt collection letter without having meaningfully reviewed the case.”

Credit Card Debt HELP When You Need it Most

Regular, hard-working people get in over their heads with credit card debt and collections for many reasons. No matter how you got into deep credit card debt, there is a way out. In this country we do not put people in debtor’s prisons. Rather, our Constitution, as originally written in 1797, provides people the opportunity for a fresh financial start. Eliminating credit card debt can seem next to impossible when you don’t know your options. Our debt-relief attorneys can help you understand your options so you can make an informed decision about filing for bankruptcy and eliminating credit card debt.

Contact John Hargrave and Associates

The law firm of John Hargrave and Associates in Barrington, New Jersey, can help you regain your financial footing. Contact us online or call 856-547-6500 to schedule a free consultation with an attorney who has been helping people resolve difficult financial issues since 1977.

Do I Really Need a Lawyer to File for Bankruptcy?

Filing Bankruptcy on Your Own — Can You??? Should You???

When you are struggling to make ends meet and have concluded that your best option is probably to file for protection under the federal bankruptcy laws, the last thing you may want to think about is paying money (that you don’t have) for an attorney to help you file. Can you do without the services of a lawyer in the bankruptcy process? Better yet, even if you can, should you?

The Bankruptcy laws do not require that people filing for bankruptcy have an attorney, but there are a number of good reasons why you should hire an attorney to help you file for bankruptcy.

A skilled bankruptcy attorney will help you to determine if you should file a Chapter 7 or Chapter 13 bankruptcy case. The success rate of Chapter 13 bankruptcy cases filed without an attorney is less than 5%.

With the changes imposed by the revisions to the bankruptcy law in 2005, you must now demonstrate to the bankruptcy court that you qualify for Chapter 7 protection, by completing a “means test.” The means test essentially determines whether you have the resources to repay your creditors over a three-to-five year period. The means test is fairly complex, but an experienced bankruptcy attorney will know how it works.

Bankruptcy has its own lingo. If you don’t know what a “domestic support obligations” or “priority unsecured debt” or “secured debt” is, then you will not be able to properly complete the bankruptcy forms. A bankruptcy lawyer knows bankruptcy lingo and can ensure that you provide all of the information necessary to the Bankruptcy Court.

To file a bankruptcy case the Court charges a $300 or $335 filing fee (depending on the chapter). Many cases where the person filing has no lawyer are dismissed because the person filing did not file all of the necessary paperwork. In these cases the filing fee is often forfeited and another filing fee must be paid in order to get bankruptcy relief. Cases filed by lawyers have a very low rate of dismissal.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).