The debtor has the burden of establishing "undue hardship" by a preponderance of the evidence. The term "undue hardship" does not include the "garden-variety" hardship or unpleasantness but must be long-term in nature.
To determine if the debtor has met its burden to demonstrate an undue hardship the court will apply a totality-of-circumstances test, under which it considers whether the debtor has shown : (1) that 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 loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395 (2d Cir. 1987).
]]>A sale conducted in accordance with section 363 of the Bankruptcy Code is unique in that it allows the owner to sell property for less than the amount owed. There are a lot of opportunities for those investors with some knowledge of how the process works to find value in what others have surrendered.
]]>The means test does no consider what the debtor actually pays for expenses and instead uses standardized expenses which has been calculated by other government agencies. Periodically, the median income and standardized expenses change. And it is expected that they will next change in May.
Our office is reviewing cases that may be affected by change and will likely counsel clients to wait a few days before filing if it is in their beneifit to wait. The change may be slight, but in some cases a slight change makes a world of a difference.
]]>New Jersey bankruptcy lawyers remain concerned about the impact of large medical bills on ordinary families. Problems in paying these bills do not only happen to people without health insurance. Even those with insurance can find themselves facing major challenges.
One reason for is what is known as the "out-of-network trap." This can happen when the fine print of a patient's insurance allows healthcare providers from outside of his or her insurance network to deliver services.
The bills that accompany such services can be shockingly high, even if the care was delivered at an in-network hospital.
Mark Rukavina, a health policy expert at an advocacy organization called The Access Project, says this type of occurrence is all too common.
]]> In one particularly egregious case in New York State, a man went to the ER to have his finger reattached after an accident with a table saw. The emergency room was associated with a hospital in the man's insurance provider network. But he nonetheless received a bill for $83,000 from a plastic surgeon who was not part of the network.Unexpectedly high medical bills continue to surprise health care consumers, whether they have insurance or not. Clearly consumers need to become more wary of medical billing procedures, which are often overly opaque.
Meanwhile, bankruptcy remains a viable option for medical debt relief.
Source: "The $83,000 Finger: Insurance May Not Protect Your From Large Medical Bills," Gerri Detweiler, Huffington Post, 4-3-12
]]>At least here in New Jersey, it could take more than a year to foreclose on a home. During that time the homeowner may not be making any housing payment. There may be cases where a homeowner is able to negotiate away the right of the bank to seek a deficiency judgment, but I doubt the bank is going to expain all the alternatives available before the homeowner turns over the keys.
]]>There is a big difference in the time to foreclose in states that require a judge in the foreclosure process and states that do not. Foreclosures proceed much faster in States that do not require a judge in the foreclosure process. For instance, in New Jersey, which requires judges in the process, it takes more than 900 days on average to foreclose on a home. In New Jersey, many of the foreclosures were put on hold last year pending the Supreme Court's recent ruling in US Bank v. Guillaume. Now that the court has ruled in that decision, which is more favorable to the banks, the foreclosures are expected to explode this year in volume in NJ. This will lead to many more chapter 13 bankruptcies, which were down significantly last year.
]]>I spoke to an attorney working for a major bank earlier this week to get the lenders point of view. It seems the lenders are trying to clean out the cases already filed before filing new ones. Guillaume was a win for lenders in that it allowed a deficient Notice of Intent to Foreclose ("NOI") to be corrected, rather than require the case to be dismissed. However, the Court still left that discretion to the trial judge. Thus, lenders have to file a motion to have each case reviewed and obtain an order that a corrective NOI is sufficient. It will be several weeks, if not months before we see the full impact of the Guillaume case on new foreclosure cases in New Jersey.
]]>Debt collectors are supposed to be regulated by the Fair Debt Collection Act and other state and federal laws. But New Jersey bankruptcy lawyers must often assist clients who have suffered fraud at the hands of dubious collectors.
These phony collectors sometimes pose as attorneys or law enforcement agents. They make calls all over the US, sometimes using call centers in India. The tactics they use include threats of lawsuits or even arrest if payments are not made.
The Federal Trade Commission recently announced that two companies engaging in such tactics have been closed by court order. The companies are American Credit Crunchers LLC and Ebeeze LLC, both based in Orange County, California.
The FTC says it is committed to shutting the two companies down completely. The companies had collected over $5 million in payments from consumers who didn't even owe the money.
]]> Many of the bogus debts involved so-called payday loans, which involve short terms and high interest. The two companies targeted by the FTC used coercive collection tactics against many people who had filled out online applications for such loans.The financial stress experienced by people who are considering pay day loans is similar in some ways to the stress of people who are weighing whether to file for bankruptcy.
Keep in mind that even if a debt is legitimate, collectors must abide by the Fair Debt Collection Act. They are not allowed to harass or intimate you, or to show up unsolicited at your workplace.
Source: "Personal Finance: Beware of phony debt collectors," Sacramento Bee, 2-26-12
]]>The Court explicitedly stated that because it was applying the plain language of a 17-year-old statute in its holding, today's decision applied retroactively. Presently pending foreclosure cases will not have to start over. And now that the lenders know what the ruling is, the back-log of foreclosure cases waiting to be filed in New Jersey will flood the already overwhelmed courts.
]]>But the real issue in this case -the reason why most foreclosures cases have been sitting idle in New Jersey - is whether the Notice of Intent to Foreclose ("NOI") met the statutory requirements. Is listing the address of the servicer of the loan, rather than the address of the holder of the Note good enough? A strict reading of the statute requires both. [N.J.S.A. 2A:50-56c(11).] But the lower courts held that the listing the servicer address alone satisfied the purpose of the Fair Foreclosure Act.
In the big scheme of things it doesn't matter what the ruling is, there just has to be a decision one way or another for the foreclosure mill to start turning out complaints again. For all those homeowners who are in default on the mortgage loans but haven't been served with a foreclosure complaint, the respite is over. As a result, my firm expects to be getting a flood of calls from delinquent homeowners with questions about how bankruptcy can help.
]]>Section 362(k)-formerly section 362(h)-of the Bankruptcy Code provides for recovery of actual damages for willful violations of the automatic stay. 11 U.S.C. ยง 362(k). On remand from the District Court, Judge Kaplan found that Countrywide's collection on the pre-petition escrow shortages was a violation of the stay, that its violation was willful, and that the debtors suffered damages as a result of having to pay their attorneys to protect their rights.
Countrywide tried an end-run to prevent this case from being heard by the Bankruptcy Court. It argued that the Bankruptcy Court did not have jurisdiction over the case any longer since the debtors' bankruptcy case was dismissed. Judge Kaplan disagreed. It is likely that Countrywide will now appeal this decision on the grounds that awarding attorney's fees, in the absence of any other compensable harm, is not appropriate. In the meantime, I am going to be reviewing my cases for the same type of violations found here.
]]>Today, a lot of companies of sprung up that purport to assist people struggling to pay their bills. Whether they label their "services" debt reduction, loan modification, debt relief, etc., unless qualified for an exemption as set forth in N.J.S.A. 17:16G-1(c), they are operating illegally in New Jersey. Only those entities that are licensed to act as a debt adjuster by the Department of Banking and Insurance may perform debt adjustment services as defined therein for New Jersey residents.
If you are working with a debt adjuster within the State of New Jersey, visit the New Jersey Department of Banking and Insurance and verify that they are licensed. I have met with numerous people that have complained of services rendered by these types of companies; and I have yet to find a company that was licensed. Fortunately, I have been successful in having fees charged by these companies returned to my clients in most cases.
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