Can You Stop Your Foreclosure?   If you have received a letter, you may feel overwhelmed, thinking that your life will never be the same. However, just because you got the letter doesn’t mean that you will have to leave your home. So, can you stop your foreclosure? The answer is yes. There are two different ways to stop it. There are technical defenses which are against the procedure itself. You may be able to fight the foreclosure if you weren’t given enough time to pay the lender what you owe s Save your home from foreclosure o that you can keep your home. Technical defenses are not often very successful because the lender can just start the foreclosure procedure again. The best chance you have of saving your home is through substantive defenses. This means that you are going to look into the terms of your mortgage. You may fight, saying that you have not defaulted on your loan, meaning that you have paid everything on time. If you are behind on payments, you can pay off the loan, along with any costs associated with the foreclosure. If you are unable to pay, you might want to look into bankruptcy. If you file before the lender sells your home, you might be able to temporarily stop the foreclosure. If you plan on fighting the foreclosure, you are going to have to file an objection to the sale with the court. You can do this at any time. However, before you get this far, you might want to talk to your lender. They don’t like to foreclosure on homes because it costs too much money. Instead, they might be willing to work with you. Before you do anything, you should discuss your options with a lawyer who specializes in foreclosure so that you can decide what you want to do. It helps to have all of the information before you proceed. Contact us for all of your legal needs. The post Can you Stop Your Foreclosure? appeared first on Chris Wesner Law Office.

By Liz McCormickU.S. student loan debt now equals the size of the $1.3 trillion U.S. high-yield corporate bond market, presenting investors with a whole different range of risks.“Delinquency rates on student loans are much higher than those on auto loans or mortgages, due to loose student loan underwriting standards, the unsecured nature of student debt, and the inability to charge off non-performing student loans in bankruptcy,” Goldman Sachs Group Inc. analysts Marty Young and Lotfi Karoui wrote in a note Tuesday. “The substantial majority of student loan default risk is borne by the U.S. Treasury.”While the trend of rising defaults on student loans doesn’t pose “systemic financial risks,” it does impact household behavior as the debt load itself hurts home ownership rates, Young and Karoui said. The share of student loan debt that is securitized, meaning it’s backed by assets and known as asset-backed securities, is about $190 billion, according to Goldman Sachs. Of that, about $150 billion is linked to loans where the repayment of the principal is guaranteed by the U.S. government.“Most of the remaining student loan debt not in ABS format is provided to students by the U.S. government through its Federal Direct lending program,” wrote Young and Karoui.Copyright 2017 Bloomberg L.P.  All rights reserved.

If your family is suffering under the weight of one financial crisis after another, isn’t it time you did something about it? Perhaps you’ve already considered bankruptcy; but you’re a fighter, so you’ve decided to tough it out until every bill is paid. Perhaps you believe that bankruptcy is the right choice only for those few individuals whose financial situations are far worse than yours. But before you decide to dismiss it as a viable option for you, you should get the right information from the right source. Consider a consultation with a Troy, Ohio Bankruptcy Attorney. He’s a local professional who can give you the information you need, explain your options, and help you make the decision that’s right for you. Bankruptcy is probably more common than you think  More Ohio residents than you might imagine have turned to bankruptcy for a fresh financial start. U.S. Court statistics show that during the 12 month period ending September 2013, there were 26,404 filings in Ohio’s Northern District, and 22,291 in the Southern District. That’s a total of 944 businesses and 47,751 individuals who sought the protection of the bankruptcy courts. Bankruptcy is not a simple option  Discharging your debts through an extended court process isn’t necessarily a simple solution. There are guidelines that determine if you are even eligible for a bankruptcy option. And some states have their own rules about what debts can and cannot be discharged. That’s why it’s important to have a Troy professional addressing your concerns and guiding you through the process. He has the Ohio knowledge and experience that’s important to getting your case resolved as quickly and smoothly as possible. There’s more than one option to consider Federal  codes include several “chapters” for debt resolution. Some apply to corporations, farmers, municipalities, and other entities. The most common chapters for individuals are Chapter 13 and Chapter 7. A Chapter 13 is sometimes called the “wage earner” plan. It allows a person with a regular income to file for protection from creditors under federal bankruptcy statutes. The courts then oversee the repayment of debt over an extended period of time. Chapter 7 provides for a sale of the debtors “nonexempt” assets. A trustee arranges distribution of any proceeds to creditors in full satisfaction of the debts. You shouldn’t make the decision alone Your decision to file for debt relief is important and it should not be taken lightly. The process will relieve your heavy debt burden, but it will also effect your credit standing for years to come. Before you commit to such an crucial life decision, it’s important to get the facts from a Troy, Ohio attorney. To talk more about bankruptcy, or any other legal matters, please Contact Us. The post Troy Bankruptcy Attorney Can Help appeared first on Chris Wesner Law Office.

  What is Chapter 7? Chapter 7 discharges most debt.  According to the U.S. Bankruptcy Code, Chapter 7 bankruptcy will, in most cases, discharge an individual’s debt. In fact, it is estimated that a discharge of debt is received in 99 percent of Chapter 7 bankruptcy cases. This form of bankruptcy is often referred to as “straight bankruptcy” or a “fresh start.” How Do you file? A Chapter 7 bankruptcy case begins when a debtor files a petition in bankruptcy court where he or she lives. Within this petition and associated forms, the individual will be asked to provide a list of all creditors and the amount and nature of their claims; the source, amount and frequency of the debtor’s income; a list of all the debtor’s property; and a detailed list of the debtor’s monthly expenses. Filing this petition automatically stops most collection actions against the individual and his or her property. What Debts are not Discharged in a Bankruptcy? Not all debts are eligible for discharge. Some of the debts that can’t be discharged in a Chapter 7 bankruptcy case include child support or alimony, certain taxes, educational benefits such as government-issued student loans and debts due to personal injury or wrongful death claims against the debtor. Chapter 7 bankruptcy is a good option for those with unsecured debts such as credit card debts or medical bills. Who has the right to File a Bankruptcy? Troy, Ohio Bankruptcy Attorney, Chris Wesner, has heard many locals state that they don’t feel that they have the right to file for bankruptcy. Bankruptcy is your right, however, set forth in the Constitution. While it is certainly not an action to be taken lightly, you can file for bankruptcy discreetly and in order to have a fresh start just as many, many other people — including famous athletes and corporations have done. For more information on whether Chapter 7 is right for you, contact us. The post Chapter 7 – Troy, Ohio Bankruptcy appeared first on Chris Wesner Law Office.

By JESSICA SILVER-GREENBERG, STACY COWLEY and NATALIE KITROEFF Fall behind on your student loan payments, lose your job.Few people realize that the loans they take out to pay for their education couldeventually derail their careers. But in 19 states, government agencies can seize stateissuedprofessional licenses from residents who default on their educational debts.Another state, South Dakota, suspends driver’s licenses, making it nearly impossiblefor people to get to work.As debt levels rise, creditors are taking increasingly tough actions to chasepeople who fall behind on student loans. Going after professional licenses stands outas especially punitive.Firefighters, nurses, teachers, lawyers, massage therapists, barbers,psychologists and real estate brokers have all had their credentials suspended orrevoked.Determining the number of people who have lost their licenses is impossiblebecause many state agencies and licensing boards don’t track the information. Publicrecords requests by The New York Times identified at least 8,700 cases in whichlicenses were taken away or put at risk of suspension in recent years, although thattally almost certainly understates the true number.Shannon Otto, who lives in Nashville, can pinpoint the moment that she realized shewanted to be a nurse. She was 16, shadowing her aunt who worked in an emergencyroom. She gaped as a doctor used a hand crank to drill a hole into a patient’s skull.She wanted to be part of the action.It took years of school and thousands of dollars of loans, but she eventuallylanded her dream job, in Tennessee, a state facing a shortage of nurses.Then, after working for more than a decade, she started having epilepticseizures. They arrived without warning, in terrifying gusts. She couldn’t care forherself, let alone anyone else. Unable to work, she defaulted on her student loans.Ms. Otto eventually got her seizures under control, and prepared to go back towork and resume payments on her debt. But Tennessee’s Board of Nursingsuspended her license after she defaulted. To get the license back, she said, shewould have to pay more than $1,500. She couldn’t.“I absolutely loved my job, and it seems unbelievable that I can’t do it anymore,”Ms. Otto said.With student debt levels soaring — the loans are now the largest source ofhousehold debt outside of mortgages — so are defaults. Lenders have always pursueddelinquent borrowers: by filing lawsuits, garnishing their wages, putting liens ontheir property and seizing tax refunds. Blocking licenses is a more aggressiveweapon, and states are using it on behalf of themselves and the federal government.Proponents of the little-known state licensing laws say they are in taxpayers’interest. Many student loans are backed by guarantees by the state or federalgovernment, which foot the bills if borrowers default. Faced with losing theirlicenses, the reasoning goes, debtors will find the money.But critics from both parties say the laws shove some borrowers off a financialcliff.Tennessee is one of the most aggressive states at revoking licenses, the recordsshow. From 2012 to 2017, officials reported more than 5,400 people to professionallicensing agencies. Many — nobody knows how many — lost their licenses. Some,like Ms. Otto, lost their careers.“It’s an attention-getter,” said Peter Abernathy, chief aid and compliance officerfor the Tennessee Student Assistance Corporation, a state-run commission that isresponsible for enforcing the law. “They made a promise to the federal governmentthat they would repay these funds. This is the last resort to get them back intopayment.”In Louisiana, the nursing board notified 87 nurses last year that their studentloans were in default and that their licenses would not be renewed until they becamecurrent on their payments.Eighty-four paid their debts. The three who did not are now unable to work inthe field, according to a report published by the nursing board.“It’s like shooting yourself in the foot, to take away the only way for these peopleto get back on track,” said Daniel Zolnikov, a Republican state representative inMontana.People who don’t pay their loans back are punished “with credit scoresdropping, being traced by collection agencies, just having liens,” he said. “The freemarket has a solution to this already. What is the state doing with this hammer?”In 2015, Mr. Zolnikov co-sponsored a bill with Representative Moffie Funk, aDemocrat, that stopped Montana from revoking licenses for people with unpaidstudent debt — a rare instance of bipartisanship.The government’s interest in compelling student borrowers to pay back theirdebts has its roots in a policy adopted more than 50 years ago.In 1965, President Lyndon B. Johnson signed the Higher Education Act, whichcreated financial aid programs for college-bound students. To entice banks to makestudent loans, the government offered them insurance: If a borrower defaulted, itwould step in and pick up the tab. The federal government relied on a network ofstate agencies to administer the program and pursue delinquent borrowers. (Since2010, the federal government has directly funded all student loans, instead of relyingon banks.)By the late 1980s, the government’s losses climbed past $1 billion a year, andstate agencies started experimenting with aggressive collection tactics. Some statesgarnished wages. Others put liens on borrowers’ cars and houses. Texas and Illinoisstopped renewing professional licenses of those with unresolved debts.The federal Department of Education urged other states to act similarly. “Denyprofessional licenses to defaulters until they take steps to repayment,” thedepartment urged in 1990.Two years ago, South Dakota ordered officials to withhold various licenses frompeople who owe the state money. Nearly 1,000 residents are barred from holdingdriver’s licenses because of debts owed to state universities, and 1,500 people areprohibited from getting hunting, fishing and camping permits.“It’s been quite successful,” said Nathan Sanderson, the director of policy andoperations for Gov. Dennis Daugaard. The state’s debt collection center — whichpursues various debts, including overdue taxes and fines — has brought in $3.3million since it opened last year. Much of that has flowed back to strapped towns andcounties.But Jeff Barth, a commissioner in South Dakota’s Minnehaha County, said thatthe laws were shortsighted and that it was “better to have people gainfullyemployed.”In a state with little public transit, people who lose their driver’s licenses oftencan’t get to work.“I don’t like people skipping out on their debts,” Mr. Barth said, “but the state istaking a pound of flesh.”Mr. Sanderson countered that people did not have to pay off their debt to regaintheir licenses — entering into a payment plan was enough.But those payment plans can be beyond some borrowers’ means.Tabitha McArdle earned $48,000 when she started out as a teacher in Houston.  A single mother, she couldn’t keep up with her monthly $800 student loanpayments. In March, the Texas Education Agency put her on a list of 390 teacherswhose certifications cannot be renewed until they make steady payments. She nowhas no license.Randi Weingarten, president of the American Federation of Teachers, who hasworked to overturn these laws, called them “tantamount to modern-day debtors’prison.”States differ in their rules and enforcement mechanisms. Some, like Tennessee,carefully track how many borrowers are affected, but others do not keep eveninformal tallies.In Kentucky, the Higher Education Assistance Authority is responsible fornotifying licensing boards when borrowers default. The agency has no master list ofhow many people it has reported, according to Melissa F. Justice, a lawyer for theagency.But when the agency sends out default notifications, licensing boards takeaction. A public records request to the state’s nursing board revealed that thelicenses of at least 308 nurses in Kentucky had been revoked or flagged for review.In some states, the laws are unused. Hawaii has a broad statute, enacted in2002, that allows it to suspend vocational licenses if the borrower defaults on astudent loan. But the state’s licensing board has never done so, said William Nhieu, aspokesman for Hawaii’s Department of Commerce and Consumer Affairs, becauseno state or federal student loan agencies have given it the names of delinquentborrowers.Officials from Alaska, Iowa, Massachusetts and Washington also said their lawswere not being used. Oklahoma and New Jersey eliminated or defanged their lawslast year, with bipartisan support.But in places where the laws remain active, they haunt people struggling to payback loans.Debra Curry, a nurse in Georgia, fell behind on her student loan payments whenshe took a decade off from work to raise her six children. In 2015, after two yearsback on the job, she received a letter saying that her nursing license would besuspended unless she contacted the state to set up a payment plan.Ms. Curry, 58, responded to the notice immediately, but state officialsterminated her license anyway — a mistake, she was told. It took a week to get itreinstated.“It was traumatic,” Ms. Curry said. She now pays about $1,500 each month toher creditors, nearly half her paycheck. She said she worried that her debt wouldagain threaten her ability to work.“I really do want to pay the loans back,” she said. “How do you think I’m goingto be able to pay it back if I don’t have a job?”Copyright 2017 The New York Times Company.  All rights reserved.

By Michael Corkery and Jessica Silver GreenbergThe Toys “R” Us world headquarters are on a sprawling wooded campus next to areservoir in Wayne, N.J., on a street that bears the name of the company’s iconicmascot, Geoffrey the giraffe.But in September, when Toys “R” Us filed for one of the largest bankruptcies ofthe year, it did not go to nearby Newark.Instead, the toy company followed an increasing number of corporations —from Gymboree to a major coal company to a Pennsylvania fracking company — thatare choosing to file for bankruptcy in Richmond, Va.In recent years, Richmond has become the destination wedding spot for failed companies. The United States Bankruptcy Court there offers several features attractive to the executives, bankers and lawyers trying to get an edge in the proceedings.First, Richmond’s bankruptcy court offers a so-called rocket docket that moves cases along swiftly. Chapter 11 bankruptcy filings can be laborious proceedings that drag on for years. Gymboree’s bankruptcy was completed in less than four months.Second, the legal record in that court district includes precedents favorable tocompanies, like making it easier to walk away from union contracts.But perhaps one of the biggest draws, according to bankruptcy lawyers andacademics, is the hefty rates lawyers are able to charge there. The New York law firmrepresenting Toys “R” Us, Kirkland & Ellis, told the judge that its lawyers werecharging as much as $1,745 an hour. That is 25 percent more than the averagehighest rate in 10 of the largest bankruptcies this year, according an analysis by TheNew York Times.“The numbers are stratospheric,” said Kevin Barrett, a lawyer at the firm BaileyGlasser, who represented the State of West Virginia in two coal bankruptcy casesfiled in Richmond.Companies can file for bankruptcy in a court district where they have an affiliate— a loophole that allows them to shop for the court they think will provide the bestoutcome.For an affiliate to be incorporated in Virginia, it can use a “registered agent”with a local address, according to the state. For its bankruptcy filing, state recordsshow, Toys “R” Us used a Richmond affiliate whose registered agent has an office indowntown Richmond.Representatives for Kirkland & Ellis and Toys “R” Us declined to comment forthis article. So did a spokesman for the federal bankruptcy court in Richmond.It’s not just the lawyers who stand to gain from the Toys “R” Us bankruptcy. Thebankers and other professionals who helped arrange $3.1 billion in new debt to keepthe company operating in bankruptcy will collect $96 million in fees, according to acourt document filed by Toys “R” Us.Executives at bankrupt companies typically agree to the high fees, bankruptcyexperts say, because they think the cost will have been worth it if the lawyers andbankers can save their business. Kirkland & Ellis has a long track record of gettingcompanies back on their feet in bankruptcy.The two judges in Richmond are also known for their expertise. “The judges understand the complexities of large corporate bankruptcies and can handle cases expeditiously,” said Dion Hayes, a local bankruptcy lawyer.Still, the huge fees can eat into the money that is left over for small creditors —typically vendors, suppliers and pensioners.In the Toys “R” Us case, dozens of suppliers of scooters, rubber duckies andteething rings could lose millions in the bankruptcy.Linda Parry Murphy, chief executive of Product Launchers, a distributor forseveral small toy suppliers, said her clients were owed about $1.2 million from Toys“R” Us. She worries that they may recover as little as $120,000.“For some of these clients it was very devastating,” she said.Nationally, professional fees for bankruptcies have been increasing about 9.5percent a year, about four times the rate of inflation, according to Lynn LoPucki, abankruptcy professor at the University of California, Los Angeles.Mr. LoPucki said the higher fees were fueled, in part, by court shopping. Lawyers advising troubled companies tend to gravitate to courts that approve their fees, he said. Judges who balk at high fees see far fewer cases.“They become pariah courts,” Mr. LoPucki said.Down the road, creditors in the Toys “R” Us bankruptcy can challenge howmany hours the lawyers bill at the high rates. Another check on the costs is theUnited States Trustee Program, which helps oversee the process and can object if thelegal bill seems unreasonable.The vast majority of companies — more than 76 percent — now file forbankruptcy in a different state from where they are based, Mr. LoPucki said.Delaware and New York — which have long been popular bankruptcydestinations — still see the lion’s share of the filings.But Richmond is gaining ground. In July, an article in The Virginia Lawyers Weekly declared the city a “bankruptcy haven” and quoted a local lawyer who said the high legal fees charged there would give judges in other courts a “heart attack.”the high legal fees charged there would give judges in other courts a “heart attack.”Then in September, the court landed the Toys “R” Us bankruptcy.Toys “R” Us started out in 1948 as a company that sold cribs and strollers out ofthe ground floor of a house in Washington, D.C.It expanded into the world’s leading toy retailer with about 2,000 stores and anadvertising jingle — “I Don’t Want to Grow Up, I’m a Toys ‘R’ Us Kid” — that couldstick in its customers’ heads like glue.Seeing opportunity in a consolidated toy industry, the private equity investorsBain Capital and Kohlberg Kravis Roberts and the real estate firm Vornado RealtyTrust bought the company in 2005 and loaded it up with debt that today stands at$5.3 billion. It was a burden that proved too much to overcome.Toys “R” Us has dozens of affiliates around the globe employing 64,000 people.But when it came time to file for bankruptcy, the company opted for Richmond,where its law firm, Kirkland & Ellis, had success in the past.The law firm had represented Patriot Coal, a coal miner based in West Virginiathat filed for bankruptcy twice in four years, most recently in Richmond in 2015.In that case, the most profitable mines went to another coal company backed byPatriot’s lenders, while the others were closed.Mr. Barrett, the lawyer who represented the State of West Virginia in that case,was stunned by the fees.“I remember five lawyers in one meeting, and I joked that meeting cost$10,000,” he said.This year, Kirkland worked on another bankruptcy case in Richmond —Gymboree, the children’s clothing retailer, based in San Francisco.Like Toys “R” Us, Gymboree was owned by private equity and was weighed siwn bt debt.After emerging from bankruptcy in September, the company closed 350 of itsstores across the country, but the retailer is still in business.The Toys “R” Us bankruptcy case kicked off in September at a packed hearing.Kirkland & Ellis set the stage by playing the Toys “R” Us theme song for the judge.The toy company, the lawyer explained, had tried to turn around its business.But it couldn’t afford to sufficiently spruce up its stores and compete with retailerslike Walmart and Amazon because it had billions of dollars in debt. He emphasizedhow Toys “R” Us had brought joy to many children and how the bankruptcy processwould help the company survive.“We are all Toys ‘R’ Us kids,” he said.Copyright 2017 The New York Times Company.  All rights reserved.

Here at Shenwick & Associates, we’re often asked about the dischargeability of tax debts, which we’ve covered on our blog hereand mostly recently here.  In brief, it’s a very complex topic that depends on the type of tax, the date of tax and other factors.  But the latest wrinkle in the analysis of tax dischargeability comes in the form of a riddle: when is a tax return not a tax return?As many of you know, in 2005, Congress enacted the first major reform of bankruptcy law in 27 years, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).  In §523, which governs exceptions to discharge, the following “hanging paragraph” was added to subsection (a): “[f]or purposes of this subsection, the term ‘return’ means a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements).”  So, the question is, does a late filed tax return count as a tax return for the dischargeablity of a tax debt?Different courts have come to different conclusions regarding this question.  The first case that held that late filed returns were not returns for the purposes of tax dischargeability was McCoy v. Miss. State Tax Comm’n (In re McCoy), a 2012 case from the Fifth Circuit Court of Appeals.  Other appellate courts, including the Tenth Circuitand the First Circuit issued opinions following McCoy’s reasoning.  In a recent petition for certiorari to the Supreme Court in Smith v. IRS (In re Smith) (which was denied), the appellant taxpayer explained the deep division of the courts on this issue:The circuits are actually divided three ways as to whether late-filed returns are “returns” under§ 523(a)(1)(B). The Eighth Circuit holds that a duly filed return, even if late, is still a “return” and thus permits discharge two years after filing. Other circuits, including the Ninth Circuit below, hold that returns filed after the IRS assesses a tax liability are not “returns” at all, and thus trigger the permanent bar to discharge. Still other circuits have ruled that any belatedness in return filing bars discharge—even if filing occurs before assessment.Earlier this year, in Giacchi v. U.S. (In re Giacchi), the Third Circuit Court of Appeals held that returns filed after the IRS assesses a tax liability are not “returns” for the purpose of tax dischargeability.  Please note that the Second Circuit Court of Appeals (which includes New York) has not yet ruled on this issue.For more information about the dischargeability of taxes in bankruptcy, please contact Jim Shenwick.

    A bankruptcy court in Virginia overruled the chapter 13 trustee's objection to confirmation, finding that the mortgage payments on which only the non-filing spouse was liable, was properly allowed as a marital adjustment reducing the income of the non-filing spouse contributed toward current monthly income for the debtor's means test.  In re: Marian Leah Baker, Debtor., No. 17-32061-KLP, 2017 WL 5197120 (Bankr. E.D. Va. Nov. 8, 2017).  The house has been purchased by the spouse prior to the marriage, and both mortgages were obtained prior to the mortgage and were just in his name.      §1325(b)(10(B) requires that all of a debtor's projected disposable income be used to pay unsecured creditors if the trustee or an unsecured creditor objects to confirmation of a chapter 13 plan.  Disposable income is calculated based on debtor's current monthly income (CMI) with certain adjustments.  §1325(b)(2).  CMI is computed under §101(10A) to include income received by the debtor(s), and any amount 'paid by any entity other than the debtor...on a regular basis for the household expenses of the debtor or the debtor's dependents...'   §101(10A)(B).  The bankruptcy form implementing the means test, Form 122C-1, implements this test by permitting a 'marital adjustment' to reduce a debtor's CMI by the amount of the non-filing spouse's income that is not regularly paid for the household expenses of the debtor or dependents.    Here, the debtor claimed as $1200 marital adjustment for her spouse's payments on the first and second mortgages.  The marital adjustment adjusts income before computing whether a debtor is above or below median income, so affects the required length of the plan (11 U.S.C. 1325(b)(4)),, and whether the payment to unsecured creditors is based on the means test or the income and expenses reflected on schedules I and J.    This issue has arisen in other cases which disallowed the marital adjustment for payments on debts, asserting that §707(b)(2)(A) specifically distinguishes 'expenses' from 'payments on debts'.  In re Hall, 559 B.R. 463 (Bankr. S.D. Tex. 2016).  §707(b)(2)(A)(iii) separately allows a deduction for secured debts on the means test.  Given this distinction under the code, payments on debts cannot qualify as payments for the expenses of debtor, and thus should be allowed under the marital adjustment.    Alternatively, even if such expense were considered a household expense, it would still be allowed because the mortgage expenses are not expenses of the debtor or the debtor's dependents since only the spouse is liable for such payments.      Two approaches are taken by courts in considering whether mortgage payments by a non-filing spouse may be expenses of the debtor and debtor's dependents to exclude them from the marital adjustment.  the household-centric approach holds that when a debtor benefits from the mortgage payments, they must be included in the CMI.  eg. Trimarchi, 421 B.R. 914, 922 (Bankr. N.D. Ill. 2010).  The better, debtor-centric approach, concludes that when a debtor has no ownership in teh home, and is not liable thereon, the payments may be excluded from the debtor's CMI.  This approach comports better with §101(10A).  Disallowing the marital adjustment would artificially inflate disposable income and deprive the spouse of the income needed to make the mortgage payment on which he alone is liable.  The Court also cited In re Toxvard, 485 B.R. 423 (Bankr. D.Col. 2013) holding in facts similar to the case at bar that when the expense was solely that of the non-filing spouse, it would be entirely deductible under the marital adjustment.  If the mortgage is a joint debt then normally 50% of the total expense should be allowed as a marital adjustment.  Id. 485 B.R. at 436.  Such outcome is mandated by Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) wherein the Supreme Court held a debtor may not deduct loan or lease expenses under §707(b)(2)(A)(ii) if the debtor does not own a vehicle on the date of filing.    Another court allowed the marital adjustment finding that to disallow it would abolish the distinction between a single and joint filing.  Sturm v. U.S. Trustee, 455 B.R. 130 (N.D. Ohio 2011).       The trustee's argument that the payment should be included in CMI but then allow the debtor a deduction under secured debt payments on line 33 of Form 122C-2 is rejected, as §707)(b)(2)(A)(iii) limits debt deductions to debts secured by an interest in property you own.  The trustee's alternative argument to allow the deduction as a special circumstance is improper as special circumstances are not intended to include deductions otherwise addressed inform 122C-2.    

By STACY COWLEY and JESSICA SILVER-GREENBERGA woman in a suburb of Columbus, Ohio, was sued twice, by two different creditors,over the same overdue student loan. Another person, in Illinois, was taken to courtover a loan that had already been paid off. And hundreds of borrowers faced lawsuitsover debts so old that they were no longer legally collectible.The cases all involved the same debt collector: Transworld Systems.Student loans have soared over the last decade, becoming the largest source ofhousehold debt outside of mortgages. The tide of rising defaults has also turned intoa lucrative business, with companies collecting tens of millions of dollars throughsettlements, wage garnishments and other compelled payments.Transworld Systems has been one of most prolific debt collectors, filing morethan 38,000 lawsuits in the last three years on behalf of a single client, the NationalCollegiate Student Loan Trusts. But many of the cases were flawed, as the debtcollector churned out mass-produced documentation based on scant verification,according to legal filings by a federal regulator and a New York Times analysis of court records from hundreds of cases.In September, the regulator, the Consumer Financial Protection Bureau,accused National Collegiate and Transworld, in separate complaints, of using sloppyand illegal collections methods. Both parties agreed to settle and pay more than $21million in penalties and refunds.National Collegiate and Transworld “sued consumers for student loans theycouldn’t prove were owed and filed false and misleading affidavits in courts acrossthe country,” said Richard Cordray, the consumer bureau’s director.Most of the nearly $1.5 trillion that Americans owe in student debt is backed by thefederal government. When borrowers fall behind on those loans, the government cangarnish their wages or seize their tax refunds.Private loans, like those owned by National Collegiate, amount to more than$100 billion. Those players have to go to court to get what they are owed.Transworld’s high-volume tactics in such cases are common across the industry,according to borrowers’ lawyers and lawsuits. Court dockets are choked with faultycases. Students have been sued for debts they no longer owed, by companies theynever borrowed from, and by creditors that lacked the legal standing to sue in thefirst place, records show.Alarmed by such problems, judges in Arizona, California, Florida, Louisiana,New Jersey, New York and other states have quashed hundreds of lawsuits.“This is robosigning all over again,” said Robyn Smith, a lawyer with theNational Consumer Law Center, a nonprofit advocacy group, referring to the waythat banks, at the height of the mortgage crisis, brought thousands of foreclosurelawsuits without reviewing the underlying paperwork.Assembly-Line ReviewsFrom the outside, the squat, industrial office park in Norcross, Ga., isunremarkable, just another in a stretch of low-hung buildings along a road dotted with pines.Inside, Transworld’s litigation machine cranks out the paperwork for thousandsof lawsuits each year against borrowers who have fallen behind on their studentloans.The process for producing legal filings runs like an assembly line for makingwidgets. Transworld employees review 30 or 40 borrower files in a typical day,according to testimony from Bradley Luke, the company’s senior litigation paralegal,during a deposition in June.When an affidavit, a legally binding statement laying out evidence in a case, isneeded, Transworld’s software automatically fills in details like the amount owed,according to Mr. Luke’s testimony. From there, a document production teamfinishes preparing the file, then hands it over to an “affiant” — typically a low-levelemployee with no legal training — for a review and signature.The affiants are a critical link in the litigation chain, swearing in many cases thatthey had “personal knowledge of the business records,” according to court records.But Transworld’s employees did not have personal knowledge, the consumer bureausaid in its complaint against the debt collector.Other companies had created the records reviewed by Transworld employees.Those workers, the consumer bureau said, did not know how the data wasmaintained and whether it was correct. Even so, employees signed the forms “forfear of losing their jobs,” according to the bureau’s complaint.The hasty review process obscured defects. More than 800 cases involvedapparent time travel: In those instances, Transworld employees swore thatborrowers’ loans had been purchased by investors on dates that were months or evenyears before the loans were actually made.Transworld, based in Fort Washington, Pa., said it disagreed with many of theconsumer bureau’s accusations. The company agreed to settle the case, it said in astatement, to avoid the cost and distraction of litigation.The company’s review process “accords with all industry best practices andrelevant law,” David Zwick, Transworld’s chief financial officer, said in a statementTransworld “processes thousands of affidavits, and while our error rate isexceptionally low, we believe that any mistake is unacceptable,” Mr. Zwick said. “Wewill continue to regularly review everything we do in order to ensure the higheststandards of quality control.”Lisa Kyser, in Pataskala, Ohio, said she got tangled up in one of Transworld’smistakes. She took out half a dozen student loans as she juggled her college studieswith full-time jobs, but she thought she had all of them under control.In June 2016, Ms. Kyser got a summons notifying her that she was being suedfor falling behind on a $12,000 loan made in 2006. Two weeks later, she got asecond summons also seeking payment — to a different creditor, for a differentamount — on the same loan.“I called the opposing counsel from both firms and said, ‘You can’t both beright,’” said Emily White, a lawyer in Columbus, Ohio, who represented Ms. Kyser.The cases lingered for five months, while Ms. Kyser racked up legal fees. In theend, after her lawyer continually pestered them, the law firms that sued Ms. Kyser —both working for Transworld — withdrew the cases.Courts Digging DeeperThe stacks of legal documents Transworld prepared in that Georgia office parkmade their way to courts across the country.Many of the cases sailed through, unchallenged. Borrowers often do not fightcollection lawsuits, which allows the creditor to win by default.Even when defendants did respond, some judges brushed off their objections. InMiami, a law firm working for Transworld brought a lawsuit last year againstAntonio Fuentes, seeking payment on a $13,356 student loan. With interest and fees,Mr. Fuentes now owed $25,322.31, according to the complaint.Mr. Fuentes, representing himself, admitted that he had taken the loan but disputed the amount he was said to owe. A Transworld employee swore in an affidavit that the tally was correct. The judge sided with Transworld and ordered Mr. Fuentes to pay the full amount.“The courts are often not sympathetic to these cases,” said N. James Turner, alawyer in Orlando, Fla., who represents borrowers. “Many judges take the attitude: ‘Ipaid my student loans. You ought to pay yours. Don’t give me this nonsense abouttechnicalities.’”But some judges are starting to raise questions about collection cases.Last year, a California appeals court cast doubt on the company’s affidavits.Employees of Transword, then known as NCO Financial Systems, were not“personally familiar” with the records they swore were accurate, the judges wrote,and therefore could not vouch for them in court. The case was tossed out.It’s not just debt collectors facing judicial skepticism, but also the creditorsthemselves.A New York judge questioned whether Navient, the nation’s largest owner ofprivate student loan debt, had a right to collect on some loans at all in the state.At the center of that decision was Stefanie Gray, who fell behind on $36,000 inprivate student loans from Navient, with interest rates as high as 14 percent.Ms. Gray, 29, said she pleaded with the company for relief, but it would notbudge. “I could barely pay rent, and was on food stamps at the time,” she said.Unable to keep up with the ballooning debt, she defaulted.Navient filed four lawsuits against Ms. Gray in 2013. With help from KevinThomas, a lawyer with the New York Legal Assistance Group, a nonprofitorganization that helps low-income residents, she fought back by challenging thecreditor’s standing to sue in New York courts. Navient’s student loan trusts — theinvestment vehicles that owned her debt — had not registered to do business in thestate, she claimed in her legal filings.Judge James d’Auguste of the New York State Supreme Court’s civil division in in Manhattan agreed. He dismissed all four lawsuits, on the grounds that Navient’s trusts did not have standing to pursue the cases.A justice on the New York State Supreme Court ruled differently last year on aseparate case that raised the same defense. He denied a dismissal motion and saidthat the standing of Navient’s trusts to sue should be addressed at trial. The case isstill pending.Patricia Nash Christel, a spokeswoman for Navient, declined to comment onspecific cases.“We pursue litigation as a last resort for a tiny fraction of individuals — less than1 percent of defaulted private education loan borrowers — and each case isindividually reviewed and prepared,” Ms. Christel said. A Brawl BrewsThe consumer bureau’s action against National Collegiate and Transworld wasintended to sideline the aggressive litigators.Under the settlement terms, National Collegiate would be forbidden fromcollecting on the judgments its trusts have already won, or bringing any new cases,until it had completed an audit of the paperwork underpinning every single one of its800,000 loans — an expensive and time-consuming slog.But the deal, struck in September, may be falling apart.The settlement requires court approval, usually a rubber stamp when both sideshave agreed to the terms. The case was submitted to the United States District Courtin Delaware.The trusts’ beneficial owner, Donald Uderitz, the founder of Vantage CapitalGroup, a private equity firm in Delray Beach, Fla., approved the agreement with theconsumer bureau. Within days of its announcement, though, seven other partiesinvolved in or working for the trusts, including Transworld, filed motions asking thecourt to reject it.(The separate settlement that Transworld reached with the consumer bureauTransworld from hiring law firms to file debt collection cases.)Until the court sorts out the dispute on National Collegiate settlement — whichcould take months, if not years — most of the deal is blocked from taking effect. Thatmeans that Transworld can continue bringing new lawsuits for National Collegiateagainst borrowers behind on their student loans.In Ohio, Ms. Kyser’s home state, law firms acting on Transworld’s behalf havealready filed at least 30 new collection cases in the past month.Copyright 2017 The New York Times Company.

Here at Shenwick & Associates, many clients, lawyers and accountants have contacted us regarding the discharge of taxes in bankruptcy filings. Many kinds of “old” state and federal income taxes are dischargeable in bankruptcy. In the case of income taxes, they are dischargeable in Chapter 7 if all the following criteria are met:1. The tax is for a year for which a tax return is due more than 3 years prior to the filing of the bankruptcy petition;2. A tax return was filed more than two years prior to the filing of the bankruptcy petition;3. The tax was assessed more than 240 days prior to filing of the bankruptcy petition;4. The tax was not due to a fraudulent tax return, nor did the taxpayer attempt to evade or defeat the tax;5. The tax was not assessable at the time of the filing of the bankruptcy petition; and6. The tax was unsecured. However, more recent taxes won’t meet these rules.  In that case, the taxpayer can’t file for bankruptcy to discharge these tax debts, and the taxing authorities will start the collections process.If a taxpayer fails to pay his or her debt to a taxing authority, a lien is created on all the taxpayer’s current and future property.  The taxing authority may also file a notice of the tax lien to give public notice to other creditors and establish the priority of its claim over other creditors.  If the taxpayer still doesn’t pay his or her tax debt, the taxing authority will send a notice of its intent to levy (seize and sell) the taxpayer’s property to satisfy the tax debt.However, there’s a way to stop liens and levies–by entering into an installment agreement, which is an agreement with the taxing authority to pay the tax debt within an extended timeframe.  In the case of the IRS, entering into an installment agreement will get the IRS to withdraw a Notice of Federal Tax Lien (unless the agreement provides otherwise).  This notices other creditors that the IRS is abandoning its lien priority.  It doesn’t mean that the tax lien is released or that the taxpayer is no longer liable for the tax debt.  In the case of a levy, entering into an installment agreement will release the levy (if the terms of the agreement don’t allow the levy to continue) and the IRS will return previously levied property (unless the agreement provides otherwise).  However, note that entering into an installment agreement doesn’t affect or impact the statute of limitations on the taxing authority’s time to collect on the debt!By entering into AND complying with the terms of an installment agreement, the taxpayer can not only have a notice of lien withdrawn, a levy released  and levied property returned, but can also “age the tax debt so that it meets the criteria for dischargeability”.  Then subsequently the taxpayer can file for bankruptcy to discharge the balance of the tax debt.For more information about the dischargeability of taxes and the collection process, please contact Jim Shenwick.