Student Loan debt? Here are some resources and ideas

May 30, 2013 By Leave a Comment

Student loans are one of the largest categories of consumer debt today. Many people are worried or struggling to pay these loans. Worse, any student loan under a government sponsored program or with government guarantees, AND private student loans that meet tax qualifications under section 221(d)(1) of the Internal Revenue Code are not dischargeable in bankruptcy.

However, there are programs that provide assistance with repayment or partial or full discharge of certain types of loans.

Federal loans have a variety of payment plans and options for those who qualify, including partial forgiveness of the loan, income contingent repayment plans, or extended payment terms, up to 25 years. These options are, at present, limited or non-existent for ParentPlus loans

Certain types of public service can qualify you for a partial discharge.

Loan consolidation is available, but has to be approached carefully. Done wrong it could result in loss of available repayment plan benefits.

Loan foregiveness may be available, especially if the loan was given to fund a trade school education where the school failed to pay a refund, falsified certain representations as to student benefit or made other false statements.

The first thing to do in these situations is to find or obtain the loan documents. A financial aid department may be a good resource. Better yet, when you take out the loans, be sure to keep all the paperwork and applications!

This area is complex and the results are very much a product of the particular type of loan and the facts. It never hurts to ask the government agency administering the loan program for advice and information. However, you should do your own research.

Here are some on-line resources we have heard about:

http://ibrinfo.org/

http://paybacksmarter.com/

For some people who are drowning in debt, a personal bankruptcy may be what is needed to eliminate other debt so more income can be devoted to repaying student loans.

 



Filed Under: Credit Issues, Student Loans, Uncategorized

Rebuilding Credit after Filing for Bankruptcy

April 8, 2013 By Leave a Comment

Fox Business highlighted the important steps that one must take to restore a credit rating after filing for bankruptcy. There are limited ways to get out of the financial hole that many Americans are being trapped in. The most important first step is the one most people find hardest. Develop a household budget and stick to it. Know how much money is coming in and where it has to be spent. Identify and close off the “money leaks”, those little expenses that add up (e.g Buying lunch at $5/day equals $100 a month; buying coffee out at $3 a pop; cigarettes, liquor).

A credit score is compiled from several factors, including payment history, length of credit history, and amount of debt relative to income. Whatever debt you still have (eg car loans or leases, or mortgage payments if current) needs to be paid on time without fail. Many of our clients will eventually get a new credit card. One early option here is to apply for a secured credit card. By having a secured credit card, you are only able to charge items on your card as you put money on the card account. Most secured credit card companies will report the activity of your card to the credit bureaus, which increases your credit score with time. There are a number of other ways to start to buy and pay off items in order to keep raising your score.

But having credit is not nearly as important as how you use it. We recommend that clients have a credit card, and use it only for limited purposes, such as buying gas, then pay it off in full each month.

For those who have not already done so, filing for bankruptcy may be a positive step in tightening your financial belt, and taking back control of your life. We insist that our clients put together a personal budget and make getting back to financial stability as their all-important long term goal. In this regard, one bankruptcy requirement (we call it the “ticket out”) can be quite helpful if taken seriously. I refer to the “debtor education” financial management course that is required to receive a bankruptcy discharge. This course, from a credit counseling agency approved by the United States Trustee, can be done on-line, usually in about an hour. It typically covers the basics of budgeting and avoiding the traps that put debtors back in trouble.

Completing the financial management course after filing bankruptcy, and filing of the certificate form is essential. If not done, the case will be closed without a discharge of debts. Since the discharge is the whole point of a banrkuptcy filing, all the benefit can be lost unless the case is reopened. This will require a new filing fee and additional work by a lawyer.is usually taken during bankruptcy, although it can be completed before filing.

The point is that the damage to ones credit from a bankruptcy is not permanent. Indeed, we believe that for those who are drowning in debt, a bankruptcy is the best step back onto the road to financial stability, and an ability to pay debt that in turn will result in a return to a better credit rating.

Nuener & Ventura are experienced attorneys who are federally recognized as a debt relief agency. Our attorneys can help you take back control of your lives. We know how to point you in the financially responsible direction that you need to head after filing for bankruptcy. Please contact Nuener & Ventura at 856-596-2828 for a consultation to start a new financially responsible life.



Filed Under: Credit Issues Tagged With: ,

Federal Trade Commission reveals the truth about debt buyers- debtors be savvy and demand proof

February 4, 2013 By

A large portion of past due debts are bought by professional “debt buyers” who then attempt to collect the bad debt. The Federal Trade Commission just issued a 162 page report after studying this practice for over 3 years. The report is eye-opening.

The FTC notes that it “receives more consumer complaints about debt collectors, including debt buyers, than about any other single industry. Many of these complaints appear to have their origins in the quantity and quality of information that collectors have about debts.”

The FTC found that debt buyers pay an average of 4 percent of face value, and for older debts, the cost is “significantly lower”. The debt is still fully due, but the buyer’s have a large profit percentage. This reflects, we believe, the inherent riskiness of what is being purchased.

Debt buyers will commonly buy these debts in bulk on an “AS IS” basis. Buyers typically received the basic information required for notices required under federal law, such as the amount of the debt. They also commonly had other information which has to be requested by the debtor by disputing the debt in writing.  This information, the FTC found “ included the name of the original creditor, the original creditor’s account number, the debtor’s social security number, the date of last payment, and the date of charge-off.”

What is revealing is what Debt Buyers did not receive upon buying the debt. This includes the history of previous disputes on the account  or information that would allow them to break down the outstanding balance into principal, interest, and fees.  Most of the time, the FTC found, Debt Buyers received “few underlying documents about debts” such as account statements, loan agreements or other documents showing the terms and conditions of credit. Yet these are the very kinds of proof that a court of law is likely to require if suit is filed.

The FTC found that some debt that was purchased was beyond the statute of limitations, meaning that a suit on the claim could be readily dismissed as time barred, IF the defendant asked.

These findings square with our experience. It usually pays if there is a basis for question to demand the underlying documents and proof of the debt. The results may not be immediate. We have found the same disputed debt being passed from collection agency to collection agency. But many times, the original signed agreements or purchase or charge records simply do not exist.

Of course, no one should ignore collection efforts. It just pays to be savvy and demand proof when appropriate.

 



Filed Under: Credit Issues, Debt Collector Abuse, Lawsuits, Uncategorized

Judgments have life after bankruptcy, a New Jersey Court rules

October 22, 2012 By

We recently posted a discussion of Gaskill v Citi Mortgage, a September 2012 decision by the New Jersey Appellate Division where it denied an application to cancel a judgment under a New Jersey statute allowing that relief any time more than 12 months after a bankruptcy discharge. There is another point the court made: even though the personal obligation underlying a judgment may be discharged and uncollectible against the debtor personally, the judgment creditor can continue to levy on the residence and try to have it sold at Sheriff sale,  for another year! At first this sounds surprising, (how can they collect against my house a debt I do not have to pay?) but on this point, the court got it right. As we will see, this is a problem that can be easily prevented.

The reason is that a judgment in New Jersey becomes a lien on real estate until it is satisfied or removed. A bankruptcy discharge does neither. In most cases, the judgment creditor does not bother trying to have the Sheriff levy and sell post bankruptcy. The reason is simple: most houses have no equity or substantial mortgages. Any money from a Sheriff sale on a judgment must first satisfy the existing taxes and mortgages, and few houses have enough equity to risk the sale price being too low to leave anything for the judgment holder.

Happily, if the homeowner is in a position to keep their home after bankruptcy, there is an easy solution. The Bankruptcy Code has a provision for homeowners to “avoid” a judgment lien to the extent it “impairs an exemption”. In most cases this is the case. [There is a seemingly complicated formula, found at 11 USC 522(f)]. For our clients who want to keep their home and have judgments this is an option. The additional cost of these motions (which are rarely challenged) is worth the peace of mind. The result is a federal court order removing the judgment as a valid lien right away.

This little wrinkle is just one of the many “gotchas” that can lie in wait for the unsuspecting and poorly advised debtor. As in so much more in life, when it comes to hiring the right bankruptcy lawyer, “penny-wise is pound-foolish”. The small extra cost to have it done right is worth it.



Filed Under: Chapter 7 Bankruptcy, Credit Issues, Debt Collector Abuse, Foreclosure & Repossession, Uncategorized

Student Loan debt is the looming new crisis- but some options are open to dealing with collectors

September 10, 2012 By

Student Loans are now bigger than credit card debt, and cannot be discharged in bankruptcy (except for the really destitute and hopeless; very hard to show). And the government has access to information and collection methods not available to other creditors. As a result, the New York Times reports, debt collectors are pursuing these types of collection accounts and making much higher collection percentages. http://www.nytimes.com/2012/09/09/business/once-a-student-now-dogged-by-collection-agencies.html?_r=1

In many cases, this situation is putting an enormous strain on some unfortunate borrowers.

But, as the article points out, there are some programs to help. These include income based payment programs and discharges for those in public service. http://studentaid.ed.gov/repay-loans/forgiveness-cancellation. The first step for anyone is to get, keep and save all your student loan applications and documents.

And even though a personal bankruptcy will not discharge all student loan debt, it can help. In some cases, a Chapter 13 can be used to funnel payment to these debts.

As I have written before on these pages, the whole student loan situation is a ticking time bomb…



Filed Under: Blog, Credit Issues, Uncategorized

Getting a business loan requires planning

August 27, 2012 By

A recent article in the New York Times underscores that getting business loans requires thought and planning. http://boss.blogs.nytimes.com/2012/08/16/when-looking-for-a-loan-you-cant-fight-gravity/. More times than I can count, business people have come to me because they put their homes and future income up to obtain a loan for a business that later began failing. Sometimes the loans are used to pay the owners salaries, so that they are in effect borrowing to pay themselves!

Before getting any loan for a business, the owners need to have a plan how the loan is going to be paid back. If the loan is being used to keep the doors open instead of expanding or investing in making the business better, this is a big red flag.

One banker recently confided to me that banks are competing to sign up customers, but the customers they are chasing are the cream of the crop. Otherwise they are not interested. To get the best terms, you the business owner need to make your business model attractive. This requires  well-thought-out planning supported by realistic projections and solid data.

In these tough times, the businesses that survive will be the ones that thrive. Make yours one of the success stories.

For more about avoiding or dealing with business problems, take a look at our website and blog.



Filed Under: Blog, Business Issues, Credit Issues

Credit is a two-edged sword: Businesses, like people, have to be careful how they use it

August 2, 2012 By

This article in the August 2, 2012 New York Times, http://www.nytimes.com/2012/08/02/business/smallbusiness/for-small-businesses-bank-loan-alternatives.html?_r=1 details how businesses can borrow money from more expensive sources than bank loans, but at much higher cost. It is informative, but it should remind us all that credit is a two-edget sword. Used properly and with proper planning it can help us thrive but used carelessly it can destroy hard earned success and impose a blight on the future.

Too often we have seen business people who used debt, including factoring or asset based lending (described in this article) to paper over more serious problems. If a business wants or needs to borrow, the first questions have to be “why do we need this?” and “how are we going to pay it back?” If borrowing is used to invest in improvements to business operations, or to expand into a profitable new area, it can be the germinator of future success. But if new debt is being used to pay the owners or carry the business, caution is necessary. Too often we have seen businesses that “kicked the can down the road” by borrowing in this way. Sooner or later the day of reckoning comes.

As with anyone using credit, thought and planning is critical. Business owners need to carefully evaluate present and future cashflow. Evaluate how the new money is going to be used, and balance the benefit against the cost. If a business is losing money, borrowing to make up the loss will simply accelerate the losses. Consideration should be given to reducing expenses before borrowing more.

And throughout this process, the best money a business owner may spend is for accounting or legal advice from professionals experienced in business and turnaround issues. No matter the situation, it always helps to understand all the issues and alternatives, including use of Chapter 11 bankruptcy, or bankruptcy alternatives such as business workouts or assignments for the benefit of creidtors.



Filed Under: Blog, Business Issues, Chapter 11 Bankruptcy, Credit Issues

Navigating the tricky waters of medical bills-to protect yourself against errors and abuses you need to watch and keep good records

July 11, 2012 By

This article in the New York Times highlights a problem we have seen increasingly of late, the sometimes confusing morass of medical bills.  http://www.nytimes.com/2012/06/23/your-money/health-insurance/navigating-the-labyrinth-of-medical-costs-your-money.html?_r=1. In this day and age, everyone needs to watch closely and keep careful records. In law as in life “those with the best paperwork tend to win”. Fighting and challenging medical bills, and demanding that insurance companies pay what they should is time consuming, and sadly, sometimes necessary.

Doing this, we know, can only compound the stress and distress of other problems. Unpaid medical bills may, and are often only part of the problem. If you are loaded with other debt, various forms of debt relief, or debt relief planning may be essential.  Medical bill collectors are held to the same rules and standards as other bill collectors.

We recommend:

1. Keep all your medical bills and medical records for at least 12 months, or until your treatment with that provides is finished and fully paid for 6 months.

2. Read the notices on your right to appeal limitations or denials of insurance and exercise your rights.

3. Anytime you speak to someone, take notes of the date, who you spoke to and what was said. If possible and something significant was said, confirm by fax or email.

4. Read all bills or Explanation of Benefits when you get them. Keep complete copies of all medical insurance policies for at least the past 4 years.

5. When signing agreements with providers, always ask for a copy of what you signed. This is your right. Watch out when signing for someone else.

6. If the bill is old, (ie over 6 years in New Jersey) watch out that by making even a small payment you may resurred an old and timebarred debt.

7. Don’t accept any abusive behavior from any debt collector.

Seek qualified legal advice.

 



Filed Under: Blog, Credit Issues, Debt Collector Abuse, Uncategorized

Is the foreclosure mess ending? Hopeful signs but careful planning still needed.

July 5, 2012 By

Recently, the New York Times has reported that the residential housing market is showing signs of life, with prices and sale activity in certain aress going up.  http://www.nytimes.com/2012/06/28/business/economy/new-indications-housing-recovery-is-under-way.html. Another article reports that increasing numbers of homeowners in financial trouble have been able to get help through a refinancing program called HARP. http://www.nytimes.com/2012/06/24/realestate/mortgages-increased-interest-in-expanded-harp.html. (HAMP is the other program people have heard about. HARP is for people who are current on their mortgages)

This is good news for many, but we caution not to look at the problem piecemeal. Too many of our clients did just that, thinking that refinancing their home or taking money out of pensions or IRA’s would solve all their problems when in fact the underlying problem of too little income and too much expense or debt remained. When we help people with a mortgage modification or restructuring, we always counsel that this is only part of the solution. A close look at spending vs income, with planning for future needs (the car will need tires! I need that root canal!) is essential.

Most important is a long term change in lifestyle and priorities. Just as a crash diet fails without long term changes in eating habits, any credit fix will fail if overspending continues. We always explore all the choices our clients have with a  broader long term view in mind.

We hope that all our clients will find their way to long term financial stability, and will learn to enjoy not having to worry about how to pay the next unexpected bill.



Filed Under: Bankruptcy Alternatives, Blog, Credit Issues, Foreclosure & Repossession

Estate Planning property transfers and gifts-the hidden trap of fraudulent transfer liability

June 18, 2012 By

Lately I have read two articles in bar journals discussing aspects of “estate planning” involving transferring property to relatives or into self-settled “special needs” trusts. Neither article mentions much less discusses the New Jersey Uniform Fraudulent Transfer Act. Yet the prospect of a transfer being unwound by a creditor or creditor representative (such as a bankruptcy trustee) is a real concern. Both those engaged in such planning activites and their lawyers need to keep this in mind.

Under both state and federal law (11 USC 548), a transfer can be “avoided” and the transferred property or its value recovered by creditors where the transfer was either with intent to “hinder delay or defraud” creditors, OR the transfer was made for less than “reasonably equivalent value” in exchange, at a time the person making the transfer was insolvent, rendered insolvent, or put into a position of not being able to meet current or reasonably anticipated future debts.

Stated in simpler terms, you cannot give away your property that creditors could seize to pay your debts, unless you get money or value in exchange that is roughly equivalent to what it is worth. Of course, if you pay off all your debts and stay debt free for a reasonable period of time afterwards, this may not be a problem.

Claiming that you intended to do estate planning rather than depriving your creditors is a defense that any good attorney can defeat, especially if the transfer was made to close family members, or creditors were starting to hound you. Intent to defraud can (and usually is) proven by looking to various “badges of fraud”. Not getting fair value in exchange is one of them.

Transferring your assets into a trust for your own benefit does not protect them from the claims of creditors. These “self-settled” trusts cannot, under New Jersey statutes, be used to insulate the property from creditors.

Most importantly, the creditors who can pursue fraudulent transfer claims include “future” creditors, not just those who were owed money when the transfer was made. While a 4 year statute of limitations applies to many such  state law claims, even after the 4 years is up, a creditor can sue up to a year after he or she learns of the transfer. And federal agencies, such as the IRS (or a bankrutpcy trustee in a bankruptcy case where taxes are owed) has up to 6 years.

We often say that those who want to engage in “asset protection” need to do it at a time when they do not need it. Usually, the impetus to these efforts is some impending problem, legal, medical or otherwise. Like so much else, timely counselling by someone who knows this area and has both pursued and defended these types of claims is invaluable. With proper guidance and planning, the problems I have outlined here can be minimized or avoided.



Filed Under: Blog, Credit Issues, Fraud, Lawsuits, Uncategorized Tagged With: , , ,
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