June 2008

30 Jun Is Administrative Discharge of Student Loans Available in Bankruptcy?

Administrative standards for discharge of a trade schoolstudentloanare not available in a bankruptcy case according to the United States Bankruptcy Court for the Northern District of Ohio in the case of Gregory v. U.S. Department of Education (April 1, 2008), which ruled that the requirement of undue hardship must always apply to the discharge of student loans in bankruptcy. The court then used the potential availability of a closed-school administrative discharge under 34 C.F.R. 682.402(d) as one reason for denying a hardship discharge for which the debtor qualified under two of the three prongs of the Brunner test . The record of this case suggests thatthe debtorrepeatedly informed the Department of Education and its collection agents that the school had closed before she completed the program, but was never provided with information on how to apply for an administrative discharge. The opinion is also silent as to whether such information was provided to the debtor or her attorney when the Department of Education filed its proof of claim in the Bankruptcy case.
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30 Jun Thoughts From The Lawyer’s Office Paralegal: Top Ten Don’ts

Recently, Jill Michaux discussed, the "33 Don'ts For Preparing To File Bankruptcy". My staff reviewed the list and found it to be excellent, but then, they started discussing their own list, recognizing that the "33 Don'ts" involved mostly dealings with the attorney and consequences from the Court. The staff believes that they spend more time with the client and would add the following: 1. Do NOT tell me you have faxed six months of paystubs or have all six months stufffed in an envelope, when really, the most important one, the one with your bonus on it, is missing. I will figure it out and then you will have to meet with the attorney.
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30 Jun You Are Responsible for Getting Payments to Your Chapter 13 on Time

If you have been researching the Chapter 13 process, you know that your Chapter 13 plan amounts to a three to five year repayment plan in which you send money to the Chapter 13 trustee, who then disburses that money to your creditors. There are a number of things that can go wrong in a Chapter 13, most of which can be fixed or negotiated by your lawyer.  The one thing your lawyer cannot do, however, is make your Chapter 13 payments. In the 20+ years I have been representing debtors in Chapter 13 cases, missed, late or misplaced Chapter 13 payments cause the most problems with cases that are otherwise viable.  In my Northern District of Georgia bankruptcy practice, I make it a point to educate my clients about the importance of keeping the funding of their Chapter 13 plans current, but the advice I give my clients is not limited to cases filed in Atlanta. Here are a few rules to keep in mind:
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30 Jun Credit Card Companies Are Reducing Credit Lines. Why?

Just when you thought you had heard it all in the world of credit card rip-offs, debt collection and bankruptcy, something interesting happened in the office last week.  I met with two different potential clients who stated that their credit cards were cancelled, despite the clients having zero balances on the credit lines and decent credit scores.  

When I asked why that happened?  Their responses were both the same: I have no idea.  The card had not been used lately, and there was no abuse.  So, it must have been either one of two things that can be happening that I could think of: 

First, the banks are starting to close down credit lines before they become a problem, or second the lenders underwriting the department store cards are requiring the retailers to start monitoring their existing credit lines and tighten up the available credit lines now, in an effort to stop the bleeding.  I actually laughed a little at this.

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