Since 1991, David Siegel has been helping people get out of debt in Chicago and in the suburbs. Over 75% of prior bankruptcy clients filed a chapter 7 bankruptcy. Chapter 7 bankruptcy is also known as fresh start bankruptcy. It allows someone who has unsecured debts to gain a fresh start within a matter of+ Read MoreThe post Chicago Bankruptcy Attorney Has Helped Thousands, Since 1991 appeared first on David M. Siegel.

The answer depends on what is the situation in your life right now. You may be struggling with credit cards, medical bills, personal loans or any other type of debt. Sometimes you have creditors calling you on the phone, harassing you at work or just sending you letters making your life miserable. At other times,+ Read MoreThe post Will Filing For Chapter 7 Bankruptcy Save My Life? appeared first on David M. Siegel.

January 16, 2014 Noon PST Just when you think you’ve mastered the rules of the game, they change. Mark your calendar for January 16, 2014 (!) for an introduction to the new RESPA rules on mortgage servicing presented by John Rao of NCLC. There’s lots that new: new rules on Qualified Written Requests force-placed insurance who owns the note mortgage payment accounting Not only are there new rules, but there is a private right of action for your client. But only if you know what their rights are can you help enforce those rights Sign up The California Home Owners Bill of Rights Collaborative and NCLC have teamed up to present this webinar, which I note is labeled “Part I”. CLE credit is available and it’s free.  What could be better? Sign up here. Image courtesy of FreeClipArt.

Finding that 11 U.S.C. §329(b) limited the court to disgorgement of the actual amount received, the Fifth Circuit has reversed the most draconian penalties assessed against an attorney who represented a former chapter 13 debtor.   However, the portions of the case that were not appealed raise serious questions. The case is Baker v. Cage, No. 12-41125 (5thCir. 12/16/13), which can be found here. What HappenedJames Glen Whitley (Debtor or Whitley) filed a pro se chapter 13 bankruptcy in 2008 in an attempt to save his rental properties.  At the court’s urging, he engaged counsel.   The lawyer he hired was Reese Baker (Baker), an attorney who is board certified in both consumer and business bankruptcy.   During the 2008 case, Whitley paid Baker a retainer of $1,800.   Baker did not seek court approval for this payment and did not file a disclosure of compensation until much later.   Baker was not able to salvage the 2008 case and it was dismissed without objection on March 4, 2009.   After the case was dismissed, Baker filed a fee application but withdrew it after several parties objected.On April 6, 2009, Whitley paid Baker an additional $10,274.00 consisting of $10,000 to be applied against the fees from the 2008 case and $274.00 to pay the filing fee on the new case.   The next day, on April 7, 2009, Baker filed a second chapter 13 case for Whitley.   After Whitley unsuccessfully filed five plans, the 2009 case was dismissed with prejudice on July 20, 2009.This is where it gets interesting.   First, Baker moved for reconsideration on whether the dismissal should be with or without prejudice.  Second, on August 3, 2009, Baker filed a fee application.Third, on August 27, 2009, Whitley deeded two properties to an affiliate of Baker in partial payment of fees owed.    At the time the properties were transferred to Baker’s affiliate, they were posted for foreclosure.   On September 1, 2009, Baker’s agent appeared at the foreclosure sale and was the successful bidder for the properties.Fourth, on September 29, 2009, five months after the 2009 case was filed, Baker filed his disclosure of compensation for the 2009 case.    He did not disclose the transfer of the two properties.This set the stage for a hearing on October 6, 2009.   At the hearing, Baker attempted to withdraw both the motion for reconsideration and the fee application.   At this hearing, there was testimony about the transfer of the two properties.   Judge Wesley Steen vacated his prior order of dismissal and instead converted the case to chapter 7.   Lowell Cage was appointed as chapter 7 trustee.The Trustee filed an adversary proceeding against Baker.   However, Judge Steen denied a motion for summary judgment.At this point, Judge Steen retired and Judge Jeff Bohm took over the case.   On February 2, 2011, Judge Bohm issued a Show Cause Order to determine the reasonable value of the services provided by Baker pursuant to 11 U.S.C. Sec. 329(b).The Bankruptcy Court RulingThe Court held hearings on six days between April 8, 2011 and September 15, 2011.   By this time, Whitley had been sentenced to life in prison for sexual assault of a minor.   He also had his discharge denied.   On November 21, 2011, the Court released its opinion, which can be found here.   The Court found that Baker should disgorge all compensation received in the 2008 and 2009 cases because:  He did not file timely disclosures of compensation.He received a post-petition payment in the 2008 case without court approval.He failed to disclose “all connections that he, or any entity with which he is affiliated, had relating to any party in interest in the Debtor’s case.”He did not disclose transfer of the two properties.He did not provide an “identifiable, tangible and material the Debtor or the Chapter 13 estate.    That’s right, Judge Bohm applied Pro-Snax to fees in a chapter 13 case.Judge Bohm ordered Baker to return the money that he received from the Debtor in the amount of $12,074 and to transfer the two properties that he purchased at foreclosure to the estate.The Fifth Circuit RulingBaker did not appeal the ruling with respect to disgorgement of the monies received from the Debtor.   However, he did appeal the order requiring him to transfer the properties.   The Fifth Circuit reversed and remanded.    It found that the Court had ordered Baker to show cause why “any compensation previously paid” should be disgorged, but exceeded this remedy when it ordered that the properties be disgorged.  Because Baker had satisfied $98,775 in liens against the properties, the Court not only ordered disgorgement but an additional penalty of nearly one hundred thousand dollars.    The Fifth Circuit noted that the Bankruptcy Court did not address the payment of $98,775 in its order, did not value the properties at the time they were transferred and did not value them at the time that they were ordered returned.    Nevertheless, the Fifth Circuit did hold out the possibility that additional sanctions could be imposed if proper procedures were followed but cautioned that any sanction should be awarded with restraint and discretion.   The Court stated: The bankruptcy court has authority to impose disciplinary sanctions on attorneys beyond the return of compensation, but the amount of the sanction imposed is essential to a bankruptcy court’s sanction analysis because “[w]hen a court metes out a sanction, it must exercise such power with restraint and discretion.” (citation omitted). Although a $98,775 sanction may have been appropriate considering Baker’s conduct as adverted to in these proceedings (e.g. Baker’s “ill-gotten gains” and his “nasty habit of non-disclosure”), in order to ensure that a sanction is “chosen to employ the least possible power to the end proposed,” the bankruptcy court must in the first instance compare the sanction amount to the sanctioned party’s conduct. (citation omitted). Opinion, pp. 11-12.Lessons Learned The first lesson to be learned from this case, as in all bankruptcies, is DISCLOSE, DISCLOSE, DISCLOSE.  Baker got in trouble because he waited to file his disclosure of compensation until after the cases were dismissed.   The rules require that it be filed within fourteen days after the petition is filed.   While the information contained within the disclosure of compensation was apparently contained within the Statement of Financial Affairs, the attorney had an obligation to make his own disclosure in a required filing under his own signature.  Furthermore, when the case was reinstated, he should have amended his disclosure to reflect the properties transferred to him.  Making timely disclosure of compensation is an important practice point.  I have seen judges penalize attorneys who filed accurate but tardy disclosures under circumstances much less egregious than here.   Be forewarned that this judges and trustees can be expected to look carefully for attorney disclosures.The other unfortunate lesson that Mr. Baker learned was that it’s not over until it’s over.   After the 2009 case was dismissed with prejudice, the Court would have lost the ability to police post-dismissal payments to the attorney.   However, because Baker sought to temper the Court’s order by seeking reconsideration of the “with prejudice” aspect, the Court arguably retained jurisdiction and this allowed bad things to happen to him.   No doubt Baker viewed the properties as of no value to the debtor or the estate because of the pending foreclosure.   However, because the Court unwound its dismissal order, the properties arguably reverted to their status as property of the estate.    With the benefit of 20/20 hindsight, Baker either should not have sought reconsideration of the court’s order or should not have accepted property from his client.   Things That Are Sort of Disturbing About This CaseBesides the obvious, glaring problem that was corrected by the Fifth Circuit, there are several other aspects of this case which are disturbing to this author.   First, what authority did the Bankruptcy Court have to convert the case to chapter 7?   Baker filed a motion to reconsider whether the dismissal order should be with prejudice.   The Chapter 13 Trustee filed a response which contended that dismissal with prejudice was proper.    Prior to the hearing, Baker filed a Motion to Withdraw his Motion for Reconsideration.   Once Baker withdrew his motion and no other party had requested affirmative relief, there should not have been a live case or controversy for the Court to hear.   Nevertheless, the Court proceeded to conduct a hearing and enter relief.   In its ruling, the Court did not give any justification for the relief it was granting.   Thus, while I am willing to be proven wrong, it sure looks like the Court granted sua sponte relief in a situation where there was not a live controversy before it.   Next, what was Judge Bohm thinking when he referred to the obligation of a chapter 13 debtor’s attorney to disclose all connections?    The requirement to disclose connections is contained in Fed.R.Bankr.P. 2014(a).   This rule only applies to applications for employment of a professional by the bankruptcy estate.   A chapter 13 debtor’s lawyer is not a professional employed by the estate.    If you compare section 327 with section 330, you will notice that professionals employed by the estate must be formally employed while compensation may be awarded to estate professionals as well as debtor’s attorneys in cases under chapters 12 and 13.   The obvious conclusion is that chapter 12 and 13 debtor’s attorneys do not represent the estate and need not be employed.    Nevertheless, Judge Bohm cited chapter 11 case law for the proposition that the chapter 13 debtor’s attorney had an obligation to make the disclosures required by rule 2014(a).   I do not understand this ruling.Even More Cause for ConcernFinally, and most disturbingly, the Court applied the Pro-Snaxstandard to the debtor’s attorney in a chapter 13 case.    Although the order to show cause was issued under section 329(b), the Court applied section 330(a) to deny compensation.    This appears questionable since sections 329 and 330(a) are quite different sections.   Section 329 allows the court to examine “compensation paid or agreed to be paid” within one year before the filing of the case “in contemplation of or in connection with the case.”   The Court has the ability to order the return of compensation if “such compensation exceeds the reasonable value of such services.”    Section 329 serves two important purposes.   First, it is a consumer protection statute protecting clients from being overcharged by attorneys.   It also protects the interest of the creditors by ensuring that debtors do not transfer property to their attorney to keep it out of the estate.   The legislative history to section 329 expresses this purpose: Payments to a debtor's attorney provide serious potential for evasion of creditor protection provisions of the bankruptcy laws, and serious potential for overreaching by the debtor's attorney, and should be subject to careful scrutiny.On the other hand, section 330 allows compensation to “officers” of the estate for services provided during the bankruptcy.    The statute allows compensation to attorneys representing individual chapter 12 and 13 debtors for “representing the interests of the debtor in connection with the bankruptcy case.”     The standard for allowing compensation to officers of the estate is “reasonable compensation for actual, necessary services,” while the standard for chapter 12 and 13 debtor’s attorneys is “reasonable compensation . . . based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section.”In addition to these more general statements, section 330 includes six factors to be included in awarding compensation and two factors to be considered in denying compensation.   See 11 U.S.C. Sec. 330(a)(3) and (4).   To further complicate things, the Fifth Circuit has added a judicial gloss (which may or may not contradict the statutory language as well as other language within the opinion) requiring that any services provide an “identifiable, tangible and material benefit.”   Matter of Pro-Snax Distributors, Inc., 157 F.3d 414 (5th Cir. 1998).     Following chapter 11 case law, Judge Bohm found that in order to be compensable, services had to be reasonable at the time they were rendered and result in an identifiable, tangible and material benefit.    Judge Bohm found that the services “were probably necessary to the administration of the Debtor’s case at the time that Baker rendered the services.”   Opinion, p. 16.   However, he found that Baker failed to meet the benefit test. Turning to the retroactive analysis, the Court concludes that Baker's services did not result in an identifiable, tangible, and material benefit to the Debtor's interest. None of the plans that Baker proposed were confirmed, [Finding of Fact No.7]; nor did the Debtor retain any properties. See [Finding of Fact No. 13]. Baker presented no evidence of any result beneficial to the Debtor or-for that matter-to the estate. Baker's services did nothing other than delay foreclosure on the properties owned by the Debtor. Moreover, the Debtor failed to receive his discharge. [Finding of Fact No. 12]. It is therefore no understatement to conclude that Baker's services rendered absolutely no benefit to the Debtor, which is exactly what the Debtor said in his testimony.  Opinion, p. 16.I have three problems with this ruling.   (Keep in mind that as the author of a blog, my opinions carry no weight beyond whether anyone finds them persuasive.  When I take issue with an opinion, as I have done here, it is meant to encourage discussion among those who care about these issues.   However, it is important to remember that the opinions of Judge Bohm and his colleagues have the force of law and mine do not).First, section 330(a) does not apply to services rendered pre-petition; that is what section 329 is for.   Section 329(b) incorporates a reasonable value standard which presumably refers to what is reasonable in the marketplace.  It does not incorporate section 330(a) or the Pro-Snax gloss.Second, Pro-Snax is a dubious and controversial decision.   Section 330(a)(3)(C) provides that the Court may consider whether services were beneficial “at the time” they were rendered.   Section 330(a)(4)(a)(ii)(I) provides that the Court may deny compensation for services that were “not reasonably likely to benefit the debtor’s estate.”  As a result, Pro-Snax appears to add a new requirement beyond what Congress required.   Additionally, the Pro-Snax case itself referred to identifiable, tangible and material in one place and reasonably likely to result in a benefit in another.   So which is it?  Is it the standard in the statute or something more?  Given Pro-Snax’s dubious provenance, courts would do well to limit it to its original context of chapter 11 fees.Finally, even the cases that scrupulously follow Pro-Snaxallow compensation for those services which the attorney is required to perform under the Code.    I have not seen any other case that says that you get nothing because the case turned out badly.Hard Facts Make Bad Law (A Personal Rant)It is very clear that Judge Bohm did not like the way that the attorney handled this case.   His disclosures were untimely and omitted important details.   He also invited trouble by dealing in his client’s property.    There is also the very human tendency to taint the attorney with the fact that his client went to prison for life and lost his discharge.    However, Judge Bohm did not limit his opinion to holding that attorneys who fail to make timely and accurate disclosures while representing child abusers should forfeit their compensation.   He relied on Pro-Snax to rule that if a chapter 13 case does not succeed, the attorney may not receive any additional compensation and must return all compensation received in that case and prior cases.    Considering that close to two-thirds of chapter 13 cases fail, this ruling amounts to declaring open season on chapter 13 debtor’s attorneys.   Think about that for a moment.   If this case is carried to its logical conclusion, then chapter 13 debtor’s lawyers should receive no compensation whatsoever for 67% of their cases.  In my mind, the high rate of failure in chapter 13 cases is an important distinction from the chapter 11 case which gave birth to Pro-Snax. Why would any competent lawyer practice under such a regime?The danger inherent in this ruling is further shown by the element of prosecutorial discretion. Trustees are not going to file disgorgement motions in every failed chapter 13 case.   If they did, they would spend more time litigating over fees than disbursing money to creditors. As a result, the trustee's self-interest will prevent the consequences of this decision from metastasizing out of control.    However, the open-ended legal standard, if generally applied, could allow trustees to seek disgorgement in most cases.   While one expects that trustees will limit their attempts to seek return of fees to truly bad cases, it is entirely possible that trustees could use this enormous power to retaliate against attorneys they do not like.   (I am not suggesting that any trustee in the State of Texas would do this.   I am merely pointing out the application of the dictum that power corrupts and absolute power corrupts absolutely).In every court, there are attorneys who go along to get along and others who zealously represent their clients even if it means clashing with the standing trustee or the U.S. Trustee.    The go along to get along attorneys are likely to remain below the radar and avoid having their fees targeted.   On the other hand, the attorneys who make a pain of themselves and stick their necks out are likely to face additional scrutiny.   Even if you assume the good intentions of those doing the objecting, it is simply human nature to pay more attention to cases in which they have actively participated.   Whether objections are motivated by malice, frustration or simply randomness, a selectively applied legal standard which mandates denial of compensation in most cases will deter zealous advocacy and harm the profession.   Even if you assume that trustees and judges will exercise restraint and discretion (to use the Fifth Circuit’s term), even the possibility of being financially destroyed will cause a rational attorney to hold back.    To put it mildly, I think this is a bad thing.  On this note, I will end my rant.Disclosure:  I do not know any of the parties to this case and was not involved. My knowledge about the case is limited solely to the published opinions and other documents in the case that I read.  This means that there may be nuances that I missed.  Additionally, I have a personal interest in these issues because I have represented an attorney who was faced with a disgorgement motion under section 329 and I have an appeal involving application of Pro-Snax to my firm's fees pending before the Fifth Circuit.

I was the third lawyer Lisa saw for a Virginia Bankruptcy Consultation Lisa had a Virginia Bankruptcy consultation with two well known bankruptcy lawyers.   Then she came to see me. Both of those lawyers told her that her income was too high.  She could not file a Chapter 7 bankruptcy.  She would need to file […]The post Virginia Bankruptcy Consultation: Preparation Makes a Difference appeared first on Robert Weed.

Here’s what happened when Jennifer reaffirmed her car loan with Apple Federal Credit Union. Jennifer filed bankruptcy with another bankruptcy lawyer here in Northern Virginia.  She had a car loan with Apple Federal Credit Union, and she wanted to keep the car.  So she reaffirmed the car loan. When you “reaffirm” a loan you take […]The post Don’t reaffirm your car loan with Apple FCU appeared first on Robert Weed.

For some people, Chapter 7 bankruptcy is the best way to stop foreclosure in Virginia. Some people think the only way to stop a foreclosure is a Chapter 13 bankruptcy. Mark and Tina Allen (not their real names) got a Virginia bankruptcy lawyer who thought that.  When they told him they wanted to stop foreclosure […]The post Stop Foreclosure in Virginia with Chapter 7 Bankruptcy appeared first on Robert Weed.

Is it legal to get garnished under Virginia garnishment law in a county that you don’t live in any more? I’m a Virginia bankruptcy lawyer.  I see people all the time who get garnished with no notice.  (You NEVER get enough notice–I explain that here.  But you SHOULD get a copy of the Virginia garnishment […]The post Virginia Garnishment Law Article in Virginia Bankruptcy Law News appeared first on Robert Weed.

By NATALIE KITROEFF Stacy Jorgensen fought her way through pancreatic cancer. But her struggle was just beginning. Before she became ill, Ms. Jorgensen took out $43,000 in student loans. As her payments piled up along with medical bills, she took the unusual step of filing for bankruptcy, requiring legal proof of “undue hardship.” The agency charged with monitoring such bankruptcy declarations, a nonprofit with an exclusive government agreement, argued that Ms. Jorgensen did not qualify and should pay in full, dismissing her concerns about the cancer’s return. “The mere possibility of recurrence is not enough,” a lawyer representing the agency said. “Survival rates for younger patients tend to be higher,” another wrote, citing a study presented in court. There is $1 trillion in federal student debt today, and the possibility of default on those taxpayer-backed loans poses an acute risk to the economy’s recovery. Congress, faced with troubling default rates in the past, has made it especially hard for borrowers to get bankruptcy relief for student loans, and so only some hundreds try every year. And while there has been attention to aggressive student debt collectors hired by the federal government, the organization pursuing Ms. Jorgensen does something else: it brings legal challenges to those few who are desperate enough to seek bankruptcy relief. That organization is the Educational Credit Management Corporation, which, since its founding in Minnesota nearly two decades ago, has been the main private entity hired by the Department of Education to fight student debtors who file for bankruptcy on federal loans. Founded in 1994, just after the largest agency backstopping federal student loans collapsed, Educational Credit is now facing concerns that its tactics have grown ruthless. A review of hundreds of pages of court documents as well as interviews with consumer advocates, experts and bankruptcy lawyers suggest that Educational Credit’s pursuit of student borrowers has veered more than occasionally into dubious terrain. A law professor and critic of Educational Credit, Rafael Pardo of Emory University, estimates that the agency oversteps in dozens of cases per year. Others have also been highly critical. A panel of bankruptcy appeal judges in 2012 denounced what it called Educational Credit’s “waste of judicial resources,” and said that the agency’s collection activities “constituted an abuse of the bankruptcy process and defiance of the court’s authority.” Representative Steve Cohen, a Tennessee Democrat who has introduced a bill to limit predatory tactics, said, “The government should hold its agents to the highest standards, and I don’t know that we’ve been doing that.” He added that the government has a special responsibility to use “a standard that’s reasonable.” The case that caused the bankruptcy judges to accuse the agency of abuse concerned Barbara Hann, who took a particularly drawn-out beating from Educational Credit. In 2004, when Ms. Hann filed for bankruptcy, Educational Credit claimed that she owed over $50,000 in outstanding debt. In a hearing that Educational Credit did not attend, Ms. Hann provided ample evidence that she had, in fact, already repaid her student loans in full. But when her bankruptcy case ended in 2010, Educational Credit began hounding Ms. Hann anew, and, on behalf of the government, garnished her Social Security — all to repay a loan that she had long since paid off. When Ms. Hann took the issue to a New Hampshire court, the judge sanctioned Educational Credit, citing the lawyers’ “violation of the Bankruptcy Code’s discharge injunction.” Educational Credit went on to appeal the sanctions twice, earning a reprimand from Judge Norman H. Stahl of the United States Court of Appeals for the First Circuit, who agreed with the bankruptcy judges that the agency “had abused the bankruptcy process.” Asked for comment, Educational Credit responded that the case was not related to undue hardship and that it was based on “complicated issues of legal procedure.” Another case dating from 2012 involved Karen Lynn Schaffer, 54, who took out a loan for her son to attend college. Her husband, Ronney, had a steady job at the time. But Mr. Schaffer’s hepatitis C began to flare up, and he was found to have diabetes and liver cancer. He became bedridden and could no longer work. Ms. Schaffer said she did her best to cut expenses. She began charging her adult son rent, got loan modifications for her mortgages and cut back on watering the yard and washing clothes to save on utilities. She woke up at 4 every morning to take care of her husband before leaving for a full day at a security job. But Educational Credit said Ms. Schaffer was spending too much on food by dining out. According to Ms. Schaffer, that was a reference to the $12 she spent at McDonald’s. She and Mr. Schaffer normally split a “value meal,” a small sandwich and fries. “I was taking care of Ron and working a full-time job, so lots of times I didn’t have time to fix dinner, or I was just too darn tired,” Ms. Schaffer said in an interview. The lawyers also suggested she should charge her son for using their car, require him to pay more in rent and rent out the other room in their house. Asked for comment, Educational Credit said that Ms. Schaffer “did not meet the legal standard for undue hardship,” and that she declined an income-based payment plan. Her lawyer argued that the plan would treat any forgiven loans as taxable income at the end of the repayment period so it was not a viable option. Supporters of the agency’s tactics say they are necessary to hold borrowers accountable. “For every dollar that the aggressive debt-collection firm fails to recoup, that’s a dollar that someone else is going to have to pay,” said G. Marcus Cole, a law professor at Stanford University. Professor Cole added that if it were easy to discharge student loans in bankruptcy, lenders would simply not lend money to students without clear assets or prospects. “We need a standard like that to be able to allow students who can’t afford an education to be able to borrow,” he said. The Educational Credit Management Corporation is the product of a scandal that almost brought down the government’s student loan program two decades ago. In 1990, the Higher Education Assistance Foundation, the nation’s largest student loan guarantee agency for federal loans, announced that it had become insolvent, evidence that no one was paying very close attention to where student loans went, and whether they were ever paid off. “The high default rates had a particularly high impact with the press,” said Frank Holleman, deputy secretary of education at the time. Lawmakers began arming the Department of Education with a set of unprecedented collection tools, including the ability to garnish debtors’ wages and Social Security, and appropriate their tax rebates. The changes helped cut default rates from a high of 22 percent in 1990 to around 10 percent in the 2011 fiscal year. But critics of Educational Credit said it had stepped over a line between legitimate efforts to collect on defaulted loans and legal harassment. “We should be outraged when a student-loan creditor like E.C.M.C. can use bulldog tactics to scare away someone who has a legitimate claim for relief,” said Professor Pardo, who has analyzed hundreds of adversary proceedings involving the nonprofit. “Part of the outrage is that ultimately E.C.M.C. is defending the federal government’s interest.” Professor Pardo called the agency’s tactics a “war of attrition, death by a thousand cuts.” Asked to respond, Educational Credit issued a statement saying that its practices strictly follow federal law and that it strives to avoid lengthy court proceedings by working with borrowers to help them apply for income-based repayment plans. When appropriate, it said it “consents to a discharge as an undue hardship.” It acknowledged that some cases are “close calls.” Chris Greene, a spokesman for the Department of Education, said that the department offers flexible repayment options and believes that Educational Credit complies with the law and government policies. He said that if there was evidence of wrongdoing, the department would investigate. One of the places where Educational Credit has had the biggest impact has been to shape the meaning of the phrase “undue hardship,” the standard required since the 1970s for relief from student debt. In 2009, for example, the agency persuaded the United States Court of Appeals for the Eighth Circuit to adopt stricter standards. One argument it made was that if student borrowers seeking bankruptcy could qualify for a repayment plan tied to their incomes they were, by definition, ineligible for relief. The dissenting judge, Kermit E. Bye, said the decision “improperly limits the inherent discretion afforded to bankruptcy judges when evaluating requests” for relief. He also said the new standards subjected debtors to a higher burden of proof than was actually required by law. These and other changes have been regretted by others as well. “We thought we were doing God’s work,” said David A. Longanecker, a former Department of Education official, referring to efforts to strengthen collection. “We didn’t realize the full extent to which our actions would lead to some activities that would be unfair to borrowers.”  Copyright 2014 The New York Times Company.  All rights reserved.

Last time, I listed my 10 favorite Bankruptcy Mastery posts from 2013. Just for fun, I went back and looked at the 2013 traffic numbers for the top 10  Mastery posts, by readership. The two lists do not share a single post! What you read and hopefully found useful was an entirely different set of posts from my list. Now, the traffic numbers take in all posts since Mastery started in 2008.  But none of my 2013 favorites were on the top ten pages for visits in 2013. Oldies but goodies Here are the 10 most trafficked stories on Mastery during 2013.  I threw out the “front page” since its content was the latest post at the time of the visit and I threw out the 10th page, which was the “about me” page. From bottom up, your favorite posts this year: 10.   The Worm In Debt Forgiveness Offer - beware the tax on the forgiven mortgage 9.     Ten Ways To Deal With Excess Cash-  exemptions and how to maximize what your client keeps 8.     Sleepless in Sacramento-  of lien stripping, service of motions, and other terrorizing topics 7.     The Reopened Case  just when does a case have to be reopened to get relief 6.      The Mystery of Adequate Protection -  what is it, who gets it, and what difference does it make? 5.     Four Ways Around the Debt Limits-  strategies when the number add up too well 4.     Lien Strip Cases Are Time Bombs -  Wall Street poised to profit on our mistakes 3.     How Stripping Differs From Avoiding  – mortgage liens vs judgment liens 2.     Surrendering Property in Bankruptcy  – what’s the effect of the statement of intentions 1.     Bankruptcy Abuse and Schedule J   Setting debtor up for a 707(b)(3) challenge Rather than a chorus of Auld Lang Syne, we could key up a round of “Let’s Call The Whole Thing Off”. But rather, get what you need from Mastery.  I’ll keep writing and you keep reading in 2014. Happy New Year. p.s.  I’m still open to suggestions for topics or themes for the next year.  Leave me a comment. Hat tip to Jay Fleischman for the comment about analytics that got me started here. Image courtesy of Flickr and Sam Churchill.