A bankruptcy court in Illinois detailed the failure of a chapter 12 farming debtor to meet the requirements for confirmation in IN RE: KARL A. BLAKE JENNA K. BLAKE Debtor(s)., No. 16-60425, 2018 WL 1179466,  (Bankr. S.D. Ill. Mar. 6, 2018).  The debtors had reduced their farming acreage from 2200 acres to less than half that pre-petition due to a loss of the leased ground.  The chapter 12 was filed in November 2016.  First Financial held a lien on the debtors' crops, machinery, inventory, accounts, and general intangibles.  On 31 March debtors filed a motion to use First Financial's cash collateral, specifically the 2015 and 2016 crop proceeds, to finance the 2017 crop.  After a hearing the motion was granted granting First Financial a first replacement lien on the 2017 crop proceeds, crop insurance proceeds, and government insurance payments, as well as a §507(b) administrative priority claim to the extent the other collateral was insufficient to repay the cash collateral plus 5.25% interest.   After confirmation of the initial chapter 12 plan was denied, and amended plan was filed in June 2017 adjusting the cash flow projections to account for a change in crops and reduced acreage planted.  The amended plan proposed to value the collateral of First Financial at $4,455.03 with annual payments, and set the liquidation amount to be paid unsecured creditors at $0.  Both First Financial, and an unsecured creditor, Bunker Hill Supply, objected to this plan.    The requirements for confirmation under §1225 include: (1) that objecting secured creditors retain their liens and receive the present value of their claims (11 U.S.C. § 1225(a)(5)(B)); (2) that unsecured creditors receive what they would have otherwise received if the estate had been liquidated in a Chapter 7 case (11 U.S.C. § 1225(a)(4)); and (3) that the debtor be capable of making all payments under the plan (11 U.S.C. § 1225(a)(6)).  The debtor bears the burden of proving by a preponderance of the evidence that the proposed plan satisfies all of the statutory requirements of §1225.  In addition, the Court has an independent obligation to ensure that the plan complies with §1225.    At the trial the Mr. Blake, the Debtor, testified as to his opinion as the 53 pieces of equipment, machinery, and other personal property on which they believed First Financial had a lien.  The testimony discussed each item of collateral in detail, and virtually each items was described as either being old or having a mechanical defect.  The gross value of the items per Mr. Blake was $101,110.  The Debtors did not have an appraiser testify.   First Financial had an appraiser testify who had been an appraiser and auctioneer for 20 years, and had previously been a farmer himself.  The appraiser had inspected the collateral approximately 6 weeks prior to the date the chapter 12 petition was filed.   The appraiser inspected the available collateral with the Debtor, and took the Debtor's comments and the condition of the property into account in determining value, especially as to those items that were not available for inspection.  The values were determined as is for the collateral.  His appraiser came to $480,400.  The debtors subsequently decided to surrender some of the items of collateral, leaving $196,745 of collateral being retained per the creditor's appraiser.   The court determined the appraiser's values to be more credible, given the consistently lower values by Debtor, and the fact that the values were inconsistent with values given in financial statements to First Financial.  The court found that Mr. Blake's testimony on cross examination was evasive and lacked credibility.  The court generally accepted the appraiser's values, with an adjustment on one item where the frame of the equipment had cracked and a hasty weld was placed to put it back together, which was not accounted for in the appraiser.   Based on the higher value of the equipment, the Court found that the plan failed to pay First Financial the value of it's secured claim, and thus failed to satisfy §1225(a)(5).  Similarly, the Court found that the plan failed meet the best interest of creditors test of §1225(a)(4) by not paying the liquidation value of unliened assets to general unsecured creditors.   Debtors estimated a liquidation value of $12,000, and estimated the 2016 tax liability would use up such equity.  The unencumbered assets available toward liquidation included a 2016 tempte trailer appraised at $30,000 as well as several other vehicles owned free of liens.  The objecting unsecured creditor also pointed out that the values of the real estate owned by the debtors was shown as substantially higher in pre-petition financial statements.  The Court rejected this argument as there was no actual appraisals of the real estate to support such determination.  However, given the values of the vehicles the court determined at least $45,000 would have to be paid to unsecured creditors. Finally, the Court found that the plan failed to meet the feasibility requirement of §1226(a)(6).  This requires a showing that the debtor will be able to make all of the payments under the plan and comply with the plan.  This test requires the Court to “carefully scrutinize the proposed payments in light of projected income and expenses and consider whether they are based upon realistic and objective facts and whether they are capable of being met.  The Debtors presented spreadsheet with projected income and expenses, showing a $95,404 profit for the 2017 operating year.  These figures were based on the number of acres of soybeans to be harvested, an estimated yield per acre, and price per bushel, and included estimates with a range of possible prices for soybeans still showing feasibility.  While the operating income was supported through such figures, the debtors did not properly support their non-operating income, including annual wages of $7,200 for the co-debtor, miscellaneous income of $15,500 for Mr. Blake, annual cattle sales of $7,928, and government commodity support payments of $8,778.  These income figures were not supported by the monthly operating reports.    Further, the yield shown in the estimates for operating income was significantly higher than historical yields, 54 bushels/acre vs 42-45 bushels/acre yield in 2016.  Further, the price per bushel as of the hearing was not as high as estimated by the Debtors.  Also, since the Debtors understated the amount of the secured claim of First Financial, even if their income figures were accepted it would be insufficient to service the higher secured claim as determined by the Court.  The court denied confirmation with leave to file another amended plan to address the issues raised by the objecting creditors.  The court denied the motion of First Financial to reconsider the cash collateral order, but noted that any proceeds of the 2017 crop that has been harvested must be limited to expenses to sell sch crop ie transportation of the crop.Michael Barnett www.hillsboroughbankruptcy.com       

By Artie WeinbergerThe NY City Council has proposed a new bill targeting Uber, Lyft and other app.-based car services, Crain’s reported. The bill was written by the new “For-Hire Vehicle Committee” of the City Council and will include tighter regulations and higher fees, including a new $2000 yearly fee for each car. App.- based drivers work independently using their own vehicles and obtain passengers via a smart phone app.These services are also referred to as “e-hail” since the one requesting the car simply goes online to do so instead of hailing a cab in the street.The fee is designed to slow the growth of these services, essentially pricing out some drivers. The app-based companies have come under scrutiny as their rapid growth has contributed to record levels of congestion in Manhattan while undermining the traditional hired-car industries, Crain’s reported.Taxi medallion values have also plummeted. In the past selling taxi medallions was a giant industry in NYC, where dealers would sell medallions for as much as a million dollars. The number of medallions is capped at 135,000 in NYC, however with Uber there is no limit as basically any driver with a good automobile and driving record can sign up and jump on the app for passengers.Many long time New Yorkers look at this effort as a “protection scheme” designed to protect the profits the City makes from the limited amount of Taxi medallions. Others point out the black car or TLC industry floods the street with cars, just as the app.-based drivers do, yet no new regulations are being proposed on the TLC industry.The price of taxi medallions has dropped drastically in NYC; currently the price is around $186,000.Mayor de Blasio in his recent budget included $1.2 billion in expected money to be obtained by auctioning 1,650 taxi medallions from fiscal years 2019 to 2023. That’s an average price of $728,000. Most analysts believe those numbers are unrealistic as recent auctions only managed to pull $186,000 or so for each medallion.One can speculate the regulations proposed have alternative reasoning beyond “traffic congestion”.The bill proposes also that any new license for an app-based service base would also have to meet city environmental requirements, which essentially mimics the standards of taxi-cabs. It must be noted that every car in NYC driven by anyone already has pass emissions inspections to receive a registration sticker.One final proposal, would force app.-based drivers to be attached to a single base. Currently, an e-hail driver working for Uber can respond to a dispatch from any Uber base. This basically would change the entire business model.“I have seen how Uber is not regulated—that what is being demanded of other members of the industry is not demanded of Uber. The point is to make it equal and fair”, Crain’s reported Councilman Ruben Diaz Sr., chairman of the new committee saying.Copyright 2018 The Jewish Voice.  All rights reserved.

By Liz DominguezStudent loan debt is one of the major home-buying challenges for the millennial generation.According to a survey by the National Association of REALTORS® (NAR), 83 percent of surveyed millennials said they are delaying their home-buying plans by a median of seven years in direct correlation to their student loan debt. In today’s financial landscape—even with options such as loan consolidation, repayment restructuring and earnings-based, graduated payments—millennials are having difficulty paying bills, let alone freeing up their debt-to-income ratio and saving for a down payment. For those struggling with overbearing debt, bankruptcy can be an intimidating option that is saved as a last resort; however, since 1998, student loan borrowers were not eligible for discharged student loans through bankruptcy until 2005, when Congress added an “undue hardship” condition, according to the Wall Street Journal. Even so, the law does not clearly define what it considers “undue hardship,” giving banks—which rarely grant loan forgiveness—the deciding power. On Wednesday, the Education Department announced it is looking to clarify what constitutes “undue hardship” to give student loan debtors a better chance at having their loans expunged, and opportunities for more borrowers to apply for bankruptcy if needed. “The U.S. Department of Education seeks to ensure that the congressional mandate to except student loans from bankruptcy discharge except in cases of undue hardship is appropriately implemented while also ensuring that borrowers for whom repayment of their student loans would be an undue hardship are not inadvertently discouraged from filing an adversary proceeding in their bankruptcy case,” according to an Office of Postsecondary Education, U.S. Department of Education statement. While bankruptcy does not eliminate the option of home-buying, it does delay the process, as most lenders will not grant mortgages unless a period of time has passed. In order to understand what the overall impact may be, the most common types of bankruptcy must be considered: Chapter 7 – Liquidates assets to pay as much of the debt as possible—a blank slate in the financial world.Chapters 11 and 13 – Restructures the debt and sets up a repayment plan approved by the court. Chapter 11 has no limit on the amount of money owed, while Chapter 13 filers must have a steady income less than $394,725 in unsecured debt and less than $1,184,200 in secured debt, according to Debt.org.According to realtor.com®, most individuals who file for bankruptcy will have to wait at least two years before they are considered for a home loan; and lenders are more lenient with Chapter 11 and 13 bankruptcy filers. It is also highly dependent upon each individual’s personal experience and the type of loan being applied for—some may have to wait up to four years. Credit also needs to be taken into consideration, as it can depend on how quickly an individual repairs their credit score; however, certain loan programs that can help millennial buyers purchase with low down payments and low credit scores, such as FHA and VA loans, may be less stringent with their bankruptcy restrictions. As student loan debt is a widespread home-buying obstacle for the millennial generation (and may be passed along to future generations, as well), it is crucial that the problem be addressed within the real estate community. Is the solution in more lending programs with lessened restrictions or increased eligibility for bankruptcy? Some sources say that increasing bankruptcy eligibility to expunge more student loan debt will only spur heightened interest rates by lenders and increased tuitions by educational institutions. If that is the case, future generations will have even more difficulty managing their student loan debt repayment and saving for a down payment. A rise in bankruptcy applicants may, however, incentivize the creation of more government-sponsored mortgage programs targeted toward those suffering from high student loan debt. The Education Department is seeking public comments on which factors should be considered “undue hardship” in bankruptcy cases dealing with student loan debt. Interested individuals must submit their responses by May 22, 2018 through the Federal eRulemaking Portal or via U.S. mail, commercial delivery or hand delivery to Jean-Didier Gaina, U.S. Department of Education, Office of Postsecondary Education, 400 Maryland Avenue SW, Washington, DC 20202-6110.© 2018 RIS Media. All Rights Reserved.

By James DoubekThe vast majority of Uber and Lyft drivers are earning less than minimum wage and almost a third of them are actually losing money by driving, according to researchers at the Massachusetts Institute of Technology. A working paper by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT's Center for Energy and Environmental Policy Research says the median pretax profit earned from driving is $3.37 per hour after taking expenses into account. Seventy-four percent of drivers earn less than their state's minimum wage, the researchers say. Thirty percent of drivers "are actually losing money once vehicle expenses are included," the authors found. The conclusions are based on surveys of more than 1,100 drivers who told researchers about their revenue, how many miles they drove and what type of car they used. The study's authors then combined that with typical costs associated with a certain car's insurance, maintenance, gas and depreciation, which was gathered in data from Edmunds, Kelley Blue Book and the Environmental Protection Agency. Drivers earning the median amount of revenue are getting $0.59 per mile driven, researchers say, but expenses work out to $0.30 per mile, meaning a driver makes a median profit of $0.29 for each mile. An Uber spokesperson responded to the finding in a statement to The Guardian: "While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We've reached out to the paper's authors to share our concerns and suggest ways we might work together to refine their approach." The newspaper also noted, "Other studies and surveys have found higher hourly earnings for Uber drivers, in part because there are numerous ways to report income and to calculate costs and time and miles spent on the job." MIT authors also calculated that it's possible for billions of dollars in driver profits to be untaxed because "nearly half of drivers can declare a loss on their taxes." Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower," researchers write. "If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed," they add. According to MIT researchers, 80 percent of drivers said they work less than 40 hours per week. An NPR/Marist poll in January found that 1 in 5 jobs in the U.S. is held by a contract worker; contractors often juggle multiple part-time jobs. Uber and Lyft both have "notoriously high" turnover rates among drivers. A report last year said just 4 percent of Uber drivers work for the company for at least a year. NPR's Aarti Shahani reported in December that Lyft began a program to give drivers "access to discounted GED and college courses online" in a recruiting effort. It was only last year that Uber introduced the option to tip drivers into its app for customers. Recode listed the initiatives Uber rolled out in 2017 in order to appeal to drivers, including 24-hour phone support, paid wait time and paying drivers if customers cancel after a certain amount of time. Both Uber and Lyft have been fighting legal battles for years against initiatives to classify their drivers as "employees" instead of "independent contractors" — meaning drivers don't receive benefits like health care or sick leave.© 2018 npr.  All rights reserved.

By Aaron Elstein First Jersey Credit Union of Wayne, N.J., was closed Wednesday by the National Credit Union Administration. Its accounts were transferred to the US Alliance Federal Credit Union of Rye, N.Y. First Jersey had more than 9,000 members and $86 million in assets.Like Melrose Credit Union, Montauk Credit Union and Lomto Federal Credit Union, First Jersey was seized after too many of its taxi-medallion loans went bad. Keith Leggett, an economist who tracks credit unions, estimates that taxi medallions accounted for nearly 20% of First Jersey’s loan book at one point. Medallions in New York have lost about 80% of their value in the past five years amid the rise of Uber and other e-hailing apps.First Jersey, chartered in 1929, hasn’t had a profitable year since 2013. It piled up about $15 million in losses during the past four years.The credit union had been trying to avoid the fate it suffered Wednesday by auctioning medallions. On Jan. 11 in the rotunda of the state Supreme Court building, it sold six to a bulk buyer for $1.11 million, or $185,000 apiece. In early 2014 individual medallions were selling for about $800,000. Prices are much lower now because medallions generate less revenue than they once did and because once-prolific medallion lenders are no longer financing such purchases.© 2018 Crain Communications Inc.  All rights reserved.

When filing a Bankruptcy is Beneficial Unfortunately, it seems that as a last resort, more and more people are filing for personal bankruptcy. The figures have risen to over 1.5 million bankruptcy filings each year. It is no longer an unheard of option and the repercussions can be effectively managed. The two types of personal bankruptcy filings are Chapter 13 and Chapter 7. Each type is significantly different in rules and outcomes. You should not enter into bankruptcy lightly. It is best to seek professional counsel from qualified Troy, Ohio Bankruptcy Attorney before making the decision to file for bankruptcy. Bankruptcy, although not a desirable option, may be the best solution for you if you are hopelessly behind on bills such as car payments, loans, medical expenses, mortgages, or other bills. Of course, if at all possible, you want to work out a solution with your creditors. However, sometimes creditors can be less than understanding to people who are unemployed, laid off from work, disabled, or without income through circumstances beyond their control. If this sounds like you, contact a qualified attorney before your creditors take you to court. Once your creditors have sued you in court, they may be able to obtain a judgment against you and may be able to garnish your wages until you have paid your balance in full. Chapter 13 personal bankruptcy involves the court setting up a repayment plan for you to pay off your existing creditors and the debts you owe them. In most cases, before a person is allowed to file for Chapter 13 bankruptcy, he must first undergo an approved debt counseling program. Once you have completed your debt counseling program, you will need to consult with your attorney to begin proceedings. He can give you more information about the paperwork that will be required in the process including documentation you will need such as bank statements, recent tax returns, schedules of liabilities and assets, case filing fees, and other important information. Once you file Chapter 13 bankruptcy, this should stop any garnishments or foreclosure proceedings. It can be a way for you to gain a fresh start financially. Chapter 7 bankruptcy differs from Chapter 13 bankruptcy in that your assets will be liquidated and the money turned over to the court to pay towards your debts. Again, you must undergo approved credit counseling before filing. There are filing fees you will have to pay to file Chapter 7 bankruptcy in court. For certain low-income cases, the judge can approve that these fees be waived. Under Chapter 7 bankruptcy, some debts may be completely discharged. The presiding judge will make the determination as to which debts you will not be responsible for repaying. Initial consultations with a bankruptcy attorney are free. You can discuss your case and get the best legal advice available. Bankruptcy may not be desirable, but it is survivable and may be the best solution to helping you get your finances back in order. If you think you may need to file bankruptcy or want to discuss your legal options with a qualified legal representative, contact us to schedule a consultation. The post Springfiled, Ohio Bankrutpcy Attorney when to file Bankruptcy appeared first on Chris Wesner Law Office.

Crushed by debt A Springfield, Ohio Bankruptcy Attorney Can Help You Protect Your Credit   For decades, bankruptcy has been available to consumers seeking debt-relief and the fresh start it represents. There have been significant changes, most recently The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, but bankruptcy is still the best option for many consumers seeking a way to reorganize their finances and move on to a brighter future. “That sounds fine, but won’t bankruptcy damage my credit?” It’s a great question and we’re glad you asked it. The truth about bankruptcy and credit is that if you are a candidate for bankruptcy your credit is already in dire straits. Barely making the minimum payments, making late payments or – worse – missing payments, has likely resulted in a low credit score. This has already limited your ability to obtain loans and other forms of credit at competitive rates. Filing for bankruptcy will do short-term damage to your credit but, once your bankruptcy is final, you can immediately begin rebuilding your credit. In fact, some people have received credit card offers within a year of completing bankruptcy and have been able to take out a mortgage within a few years. That’s Not All Perhaps most importantly, filing for bankruptcy will put an immediate stop to creditor harassment and threats of wage garnishment. This can provide you with peace of mind in addition to an opportunity to wipe your debt away and start over financially. Are you dreaming of a fresh start, free from debt-collector calls and letters from billing departments? Contact us today to schedule your free initial consultation. Our bankruptcy attorneys in Troy, Ohio, can show you the way. The post Springfield, Ohio Bankruptcy Attorney Can Help Protect Credit appeared first on Chris Wesner Law Office.

  The 4th Circuit Court of Appeals sustained lower court's rulings that a chapter 7 debtor's case was filed in good faith, despite having been involved in a ponzi scheme and having had substantial income.  Janvey v. Romero, No. 17-1197, 2018 WL 987801 (4th Cir. Feb. 21, 2018).  The debtor, Mr. Romero, was a former foreign service officer serving 24 years with the state department, and rising to Ambassador and Secretary of State for Western Hemisphere Affairs.   Upon retirement he founded a consulting business regarding overseas business affairs.  One of the clients of this consulting business which earned him over $700,000 was Stamford Financial Group, was used to carry out a multi billion dollar ponzi  scheme, which was unearthed in 2009, at which time Romero cut ties with the business.  When Stamford was sued by the S.E.C., the receiver appointed sued Romero (among others) to recover the consulting fees.  The receiver rejected settlement offers, and ultimately received a judgment against Romero for $1.275 in damages, interest, and fees.  Romero then, after another rejected settlement offer, filed for relief under chapter 7.  His schedules reflected $5.348 million in assets, most of which were exempt by tenancy by the entireties or as retirement accounts.  Romero did turn over nonexempt assets consisting of two boats and a car to the trustee, and agreed to pay docking and insurance fees for one of the boats until it was sold.  The judgment constituted 90% of the unsecured debt scheduled with the remaining $150,000 being unpaid legal fees.    The budget showed $12,000/month in medical expenses related to a bacterial infection contracted by his wife incapacitating her and requiring extensive care.  Subsequent to filing Mr. Romero was able to cut back slightly on the daily care for his wife, but 2 of 3 disability policies were terminated.  He also scheduled $1,000/month in entertainment expenses, primarily for costs for the boat being turned over to the trustee.  Both Mr. Romero and his spouse were unemployed, due to his inability to find work after the ponzi scheme was discovered and due to her illness.  Their income as of filing was from pensions, retirements, and rental income on two tenancy by the entireties properties; and totaled about $350 less than their shown expenses. The receiver sought to dismiss the chapter 7 case under §707(a) which was denied by the bankruptcy court, finding that while the judgment was a primary reason for filing, contributing factors included the spouse's illness, inability to find work, and the aggressive litigation tactics of the receiver.  The district court affirmed.  The relevant statute at hand is The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including—(1) unreasonable delay by the debtor that is prejudicial to creditors;(2) nonpayment of any fees or charges required under chapter 123 of title 28; and(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521(a), but only on a motion by the United States trustee.11 U.S.C. § 707(a). What constitutes cause for dismissal is not defined, and the examples given are not exhaustive.  They have accordingly emphasized that the bar for finding bad faith is a high one. See, e.g., In re Zick, 931 F.2d 1124, 1129 (6th Cir. 1991) (explaining that bad faith exists “only in those egregious cases that entail concealed or misrepresented assets and/or sources of income, and excessive and continued expenditures, lavish life-style, and intention to avoid a large single debt based on conduct akin to fraud, misconduct, or gross negligence”). In short, bad faith exists only where “the petitioner has abused the provisions, purpose, or spirit of bankruptcy law.” In re Tamecki, 229 F.3d  205, 207 (3rd Cir. 2000).   The bad faith examination looks at the totality of the circumstances, and is best left to the discretion of the trial judge who can consider the credibility of the witnesses.  The factors in such examination include “[t]he debtor's lack of candor and completeness in his statements and schedules”; “[t]he debtor has sufficient resources to repay his debts, and leads a lavish lifestyle”; “[t]he debtor's motivation in filing is to avoid a large single debt incurred through conduct akin to fraud, misconduct, or gross negligence”; and “[t]he debtor's lack of attempt to repay creditors.”   McDow v. Smith, 295 B.R. 69, 79 at n 22 (E.D. Va. 2003).  The bankruptcy court held a three hour trial a substantial factor in filing was the wife's illness leaving her 100% incapacitated, resulting in requiring remodeling the home to allow her to live on the first floor, and requires substantial personal care for her.  Another substantial factor was that two of the disability policies were about to expire as of the filing date, which would result in a substantial increase in out of pocket medical expenses.  As to Mr. Romero, the court found his association with Stamford resulted in his inability to find work, and that he still owed $150,000 in legal fees resulting from the aggressive litigation of the receiver.  It noted Mr. Romero's attempts to settle the matter prior to filing, his turnover of nonexempt assets, and cooperation with the chapter 7 trustee.  It found his lifestyle comfortable but not extravagant, and found nothing duplicitous in his efforts to retain assets he would need to live off of in the future.  The receiver first complains that the case was filed solely to discharge his judgment.  The 4th Circuit first found this was not accurate for the reasons detailed by the bankruptcy court, but further found that filing in response to a single debt was not necessarily in bad faith without evidence of fraud or misconduct.   Next the receiver complained that bad faith was evidenced by Mr. Romero's attempts to pressure the receiver to settle the case with bankruptcy threatened as the alternative.  The 4th Circuit rejected this, noting that parties are encouraged to engage in settlement negotiations.    The final argument by the receiver was that he had the ability to repay the debt by selling his exempt assets.  The court noted a consensus that an ability to repay debts alone is not a grounds for dismissal of chapter 7.  In re Bushyhead, 525 B.R. 136, 148 (Bankr. N.D. Okla. 2015).  As the House Report noted, “[t]he section [§ 707(a) ] does not contemplate ... that the ability of the debtor to repay his debts in whole or in part constitutes adequate cause for dismissal.” H.R. Rep. No. 95-595, at 380 (1977). Such a conclusion also follows logically from the Code's fresh-start philosophy. A penniless start is not a fresh start. Were absolute depletion of one's assets a prerequisite for bankruptcy relief, debtors and their families would be left destitute and without the means to become productive members of society. This would increase the strain on our social safety net by increasing the number of people who might potentially qualify for government benefits.  Such a requirement would also undercut Congress' exemption scheme.         Finally, the court stressed that it remains for bankruptcy judges to detect in the first instance those cases of fraud upon the court and creditors that constitute cause for dismissal under § 707(a) or reason for a denial of discharge under the scenarios set forth in 11 U.S.C. § 727(a). The standard of review—one of abuse of discretion—is of paramount importance here. Michael Barnett hillsboroughbankruptcy.com   

By Judith OhikuareIn ye olden days, people were routinely tossed into debtors' prisons for bills in arrears. And, just this month, the ACLU charged that private debt collectors around the country have manipulated local courts and prosecutors' offices to resurrect the practice today. The shame that comes with being unable to pay a bill can be bad enough without the stress of being locked up for it. If you've been contacted by a creditor or collector, the first thing to do is to not freak out. You're not alone: Last year, the Consumer Financial Protection Bureau (CFPB) found that one-in-three people with a credit record had been contacted by a creditor or collector. Here are a few things to know if you're facing this issue and are wondering where to start.What Does It Mean When A Bill Goes Into Collections?The most basic thing to know about a collector is that they're calling to ask you to pay a bill. Debts that a collector may seek can include loans (such as a car loan or student loan), and past-due bills, such as a doctor's bill or a phone bill. "When you haven’t paid a bill for a certain amount of time, typically a few months, that service provider can send your account to a third party that deals with the effort of getting that debt from you," explains Lisa Rowan a lifestyle and personal finance expert at The Penny Hoarder. "That outside company is a collections agency that specializes in getting people to pay their bills, and they can often be aggressive." Some laws have been established to prevent debt collectors from harassing people who owe money, so don't feel like you have to be silent about shady tactics. "Don't panic!" Rowan advises. "Yes, they want your money, but debt collectors are not permitted to harass you or even call you outside of reasonable hours of the day. Before you respond to a late notice or call from a collector, go through your files (contracts, bills, estimates) and make sure you are informed about your situation. Think about some options, whether it be a payment plan or a lump-sum negotiation offer, before you call back or respond by mail." She also advises tamping down on worst-case scenarios by talking to a trusted friend or family member who can help you look over any paperwork with you, or sit in on a phone call.Is There Any Recourse Before A Bill Goes Into Collections?Contact your service provider (a doctor’s office, for example) directly instead of waiting for the bill to get sent to collections as many companies will offer payment plans, Rowan advises. If you're unable or too freaked out to make a plan with the company, commit to making one yourself. "Partial payments won't stop the overdue notices from coming, but showing progress on your balance can prevent your bill from going to collections," she adds. Once you get going, you might help your case by taking a deep breath and calling or writing to the company to let them know you are making progress and will keep doing so until you're back in the black.What Is The Potential Impact Of A Bill Going Into Collections?Debt collectors can report your unpaid debt to the major credit bureaus, who mark them on your report as delinquencies. Rowan says an unpaid bill can affect your credit score for up to seven years.  That's a long time — but it's not forever. Remember that an important factor of determining your credit score is your credit saturation limit: the ratio of total available credit you have to the amount you use. That ratio is ideally 30% or less. When you pay off debt — whether it's in collections or not, Rowan says — you are actively reducing that utilization rate. So focus on knocking out as much as you can, as soon as you can. "When that negative mark finally comes off your credit report, you’ll likely see an increase of about 14 points on your credit score, according to a study FICO conducted on its own data," Rowan says.Can You Ever Challenge Or Negotiate A Claim? You'll have more success doing so if you keep track of your paperwork. Before you speak to someone to set things straight, gather any records of what you spent and what you owe, Rowan says. Doing so will make it easier to avoid being steamrolled over the phone. "It's easy to get overwhelmed, but having whatever information handy can help you keep your cool and know where you stand," she explains. "So don’t throw out past-due bills, even if you know you can’t pay them right now. You need to be aware of the original charges and any late fees." If you're seeking a payment plan, be realistic rather than appeasing, she adds. Don't succumb to pressure to pay everything upfront if you simply can't and keep in mind what you can really afford to pay. "There may be fees for breaking the bill up into parts or accruing interest you'll need to keep in mind. For instance, if a bill collector wants you to pay $200 per month when you know you can only send in $150 per month reliably, tell them that," she says. "They'd rather get a smaller amount of money on a regular basis than have you flake on a payment plan." Finally, Rowan adds, you may also be able to drive a hard bargain by paying a large fraction of the full sum upfront in exchange for the full cost being forgiven. For example, if you owe $1,500 on a late bill but have $1,000 in your savings account, you can inquire about paying them that money on the terms that the bill goes away forever. "Ask about it," she urges. "They just might accept the offer. A business would rather wait a little while and get all the money it's owed" — you choosing to work out a payment plan directly with them, for example — "but the debt collection game is about making as much money as quickly as possible. A collector may take a smaller amount in exchange for being able to mark your name off the list." If they accept your terms, pat yourself on the back — and make sure to get whatever agreement you make in writing. © 2018 Refinery29

By Jessica Dickler Student loan borrowers may finally have their day in court. The Education Department said this week it will review when borrowers can discharge student loans, an indication it could become easier to expunge those loans in bankruptcy. The department said it is seeking public comment on how to evaluate undue hardship claims asserted by student loan borrowers to determine whether there is any need to modify how those claims in bankruptcy are evaluated. As of now, "it's almost impossible to discharge student loans in bankruptcy," said Mark Kantrowitz, a student loan expert. "The problem was undue hardship was never defined, and the case law has never led to a standardized definition." Meanwhile, college-loan balances in the United States have jumped to an all-time high of $1.4 trillion, according to Experian. The average outstanding balance is $34,144, up 62 percent over the last 10 years. Roughly 4.6 million borrowers were in default as of Sept. 30, also up significantly from previous years. The national student loan default rate is now over 11 percent, according to Department of Education data. Student loans are considered in default if you fail to make a monthly payment for 270 days. Your loan becomes delinquent the first day after you miss a payment. "I'm encouraged that they are asking the question," Kantrowitz said of the Department of Education's request for comment, although "this doesn't necessarily mean there will be any policy changes." Still, he added, bankruptcy should only be considered as a very last resort. People with unmanageable student debt have several options to consider: For starters, you may be able to postpone payments with a deferment or forbearance. A deferment lets you put your loan on hold for up to three years. If you don't qualify for a deferment, forbearance lets you temporarily suspend payments for up to one year. As a longer-term fix, income-based repayment plans allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold. And in certain situations, you can have your federal student loan forgiven, canceled or discharged, although that often comes with its own administrative hurdles. © 2018 CNBC LLC. All Rights Reserved. A Division of NBC Universal