Where an undisclosed debt was automatically discharged in the debtor’s chapter 7 bankruptcy, the court declined to reopen to permit the debtor to add the debt to her schedules. In re Mohammed, No. 13-73191 (Bankr. E.D. N.Y. Sept. 4, 2015). [Read more…] about Undisclosed Debt Discharged In No-Asset Chapter 7
Separate Treatment of Student Loan Must Not Unfairly Discriminate
A debtor who seeks to treat her student loan differently under section 1322(b)(5) must demonstrate that such treatment does not unfairly discriminate between unsecured creditors under section 1322(b)(1). Jordahl v. Burrell (In re Jordahl), No. 15-6009 (B.A.P. 8th Cir. Nov. 2, 2015). [Read more…] about Separate Treatment of Student Loan Must Not Unfairly Discriminate
Creditor’s Motion to Reopen Is Too Late
The doctrine of laches applied a fatal blow to the creditor’s motion to reopen to compel surrender. In re Kourogenis, 2015 Bankr. LEXIS 3400, No. 09-32936 (Bankr. S.D. Fla. Oct. 7, 2015). Five years after discharge, a creditor, Green Tree Servicing, sought to reopen Ms. Kourogenis’s Chapter 7 bankruptcy to compel the surrender of real property which Ms. Kourogenis had opted to surrender in her Statement of Intentions. The court denied the motion. [Read more…] about Creditor’s Motion to Reopen Is Too Late
Discharge Injunction Claim Subject to Arbitration – Overturned on Reconsideration
Discharge of the credit card debts did not render the arbitration clause of the credit card agreement unenforceable and, where the clause was valid and not in conflict with the Code, the credit card companies’ motion to compel should have been granted. Belton v. GE Capital Consumer Lending Inc., No. 15-1934, consolidated with In re Bruce, No.15-3311 (S.D. N.Y. Oct. 14, 2015). [Read more…] about Discharge Injunction Claim Subject to Arbitration – Overturned on Reconsideration
CFPB Sues Over Student Financial Aid Scam
Taking advantage of confusion and concern over the costs of higher education, a financial aid scam has garnered millions of dollars in fees for bogus student loan financial services. The scam is run by Armond Aria using companies called Global Financial Support, Inc., Student Financial Resource Center, and College Financial Advisory. The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against the companies and Aria in the District Court for the Southern District of California alleging that Aria and his companies violated the Dodd-Frank Wall Street Reform and Consumer Protection Act by misleading consumers about their services. Specifically, the complaint alleges that the company issues marketing letters to students and their families offering to conduct searches to match students with individualized financial aid opportunities. The letters falsely represent affiliation with the government or academic institution and demand a fee ranging from $59 to $78 to search. Students are instructed to fill out an application and pay the fee by a meaningless deadline or risk losing the opportunity to receive financial aid. In return, the applicants receive either nothing at all or a general booklet on financial aid. The Department of Education operates the Free Application for Federal Student Aid (FAFSA), a national program enabling students to apply for college loans and grants. There is no fee associated with this program.
The lawsuit seeks both injunctive relief to stop the unlawful practices and restitution for those consumers harmed by the illegal conduct.
Debtor with No Mortgage May Take Housing Expense Deduction
May a bankruptcy debtor with no mortgage payments nonetheless take the deduction for “Local Standards: Housing and Utilities; mortgage/rent expense” when calculating her disposable income on the Means Test? The Bankruptcy Court for the Central District of Illinois said, “yes.” In re Currie, No. 14-71331 (Sept. 17, 2015). [Read more…] about Debtor with No Mortgage May Take Housing Expense Deduction
Post-Harris Attorney Fee Review
Since the Supreme Court’s decision in Harris v. Viegelahn, 135 S. Ct. 1829 (2015), the issue of payment of the debtor’s Chapter 13 attorney’s fees out of undisbursed funds held by the Chapter 13 trustee upon conversion to Chapter 7 has split the courts. [Read more…] about Post-Harris Attorney Fee Review
Cautionary Tale: Pro Se Debtor Stuck with Reaffirmation Agreement
The court was powerless to permit the pro se debtor to rescind her reaffirmation agreement with her car creditor where she failed to rescind the agreement within the sixty-day time limit outlined in section 524(c)(4). In re Galloway-O’Connor, 2015 Bankr. LEXIS 3283, No. 15-70981 (Bankr. E.D. N.Y. September 29, 2015). [Read more…] about Cautionary Tale: Pro Se Debtor Stuck with Reaffirmation Agreement
NCBRC Gains Support of the American College of Bankruptcy Foundation
The National Consumer Bankruptcy Rights Center (NCBRC) is honored to have received a 2015 Pro Bono Grant for $10,000.00 from the American College of Bankruptcy Foundation. NCBRC is a 501(c)(3) organization dedicated to protecting the integrity of the bankruptcy system and preserving the rights of consumer bankruptcy debtors. NCBRC advances these goals by assisting either through working directly with debtors’ attorneys or by filing amicus briefs in courts throughout the country.
Formed in 1989, the ACB is an honorary public service association of bankruptcy and insolvency professionals invited to join based on their established record of the highest standards of professionalism and public service to the profession. It is the largest financial supporter of bankruptcy and insolvency-related pro bono legal service programs in the United States. The ACB’s stated missions of: “sponsorship and encouragement of legal research, publications, and forums; establishment of scholarships; providing for the collection and maintenance of data and documents for scholarly research; and fostering the institution and maintenance of legal aid facilities for the indigent,” harmonize with those of NCBRC to support the bankruptcy bar and assist the most financially vulnerable members of society.
NCBRC’s Board of Directors is grateful to the American College of Bankruptcy Foundation for its confidence in our mission and support in our mutual goals of providing the best and broadest assistance to consumer debtors in their quest for a fresh start. Without the support of donors like the ACB Foundation, the assistance provided by NCBRC would not be possible.
Pernicious Scam Targets Bankruptcy Filers
A new scam targeting bankruptcy filers has emerged in several states under which con artists, posing as the intended victim’s bankruptcy attorney or a staff member, are calling and telling the consumer to wire money immediately to satisfy a debt. The callers may threaten the consumer with dismissal of their ongoing bankruptcy case, discharge revocation, or even arrest. Callers tend to be sophisticated and well-informed with knowledge of details about the case, perhaps through access to PACER, including the judge’s name and case status.
One bankruptcy attorney reported the following scenario. His client received a call during non-business hours using “spoofing” technology to make it appear on Caller ID that the call was coming from the bankruptcy attorney’s office. The caller identified himself as an associate of the intended victim’s attorney and explained that a creditor was opposing discharge and that, to prevent the unraveling of the case, the attorney had negotiated a settlement outside bankruptcy under which the debtor must immediately wire money directly to the creditor. Failure to do so was likely to result in dismissal or discharge revocation. Fortunately, the client suspected a scam and hung up.
In light of this and other scams, it would be wise for bankruptcy attorneys to explain to all clients the specific method of communication they employ when contacting clients. Clients should be warned that under no circumstances would a bankruptcy attorney or staff member telephone and ask for a wire transfer immediately to satisfy a debt. Nor would the bankruptcy attorney or staff member ever threaten arrest if a debt is not paid. Clients should be advised that the best thing to do upon receipt of one of these calls is to hang up without giving out any personal or account information and contact their bankruptcy attorney as soon as possible. Recipients of these calls should also contact their state Attorney General’s Consumer Assistance Program.