The federal Consumer Financial Protection Bureau (CFPB) has released important advice on avoiding the debt consolidation and debt relief programs many people use to deal with debt. According to the CFPB, debtors should avoid doing business with a company that promises to settle debt if it: Charges fees before it settles debt (this may be an illegal practice) see Freedom Debt Relief Ordered to Repay Millions; Makes representations that it can settle all the debt for a promised percentage reductionRead more
Freedom Debt Relief Ordered to Repay Millions
As millions of people struggle financially because of the pandemic and its impact on the economy, many are turning to debt consolidation and debt relief programs they see on television and the internet. Apparently wanting to not file bankruptcy, victims of these debt relief programs find they’ve only traded one debt crisis for another. In 2017 the nation’s largest debt relief program, Freedom Debt Relief, was sued by federal regulators, alleging violation of consumer protection laws. In 2019 the ConsumerRead more
Reaffirmation Myth Busted
One of the most difficult decisions for bankruptcy lawyers and debtors is whether to “reaffirm” debts that would otherwise be discharged in bankruptcy. Reaffirmation means a debtor agrees to still be responsible for debts even though the bankruptcy discharges their personal liability. Reaffirmation agreements are usually only signed on secured debts like mortgages and car loans. Secured debt against the property itself will survive bankruptcy but the personal liability for a debt is discharged unless reaffirmed. Reaffirmation is never advisableRead more
Why Can’t I Repay My Parents Before Filing Bankruptcy?
One of the most important powers a Chapter 7 bankruptcy trustee has is the ability to set aside or void certain transfers of property or payments of money. The trustee uses this power to recover money that can be distributed to all the debtor’s unsecured creditors. The two general situations where a trustee can set aside a transfer or payment are where the debtor sells or gives away property for less than its fair market value or where the debtorRead more
Credit Counseling in Bankruptcy
One of the requirements for filing Chapter 7 and Chapter 13 bankruptcy is the need to take a credit counseling course before and after filing. The credit counseling requirement was added in 2005 and is a silly and generally useless expenditure of time, but it’s not something to be feared. It can be done on a computer or over the phone and usually takes no more than 2-3 hours of time total for both courses. The cost for both coursesRead more
What Are Bankruptcy Trustees?
After someone files bankruptcy, their first (and probably last) event will be a meeting with the bankruptcy trustee assigned to their case. In Iowa these trustees are attorneys appointed to oversee and administer the case for the benefit of creditors. The trustee’s role differs somewhat depending on whether it’s a Chapter 7 or a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy the trustee reviews all the court documents (called “schedules”) filed by debtors, along with tax returns and bankRead more
“Meeting of Creditors” in Bankruptcy
After a Chapter 7 or Chapter 13 bankruptcy case is filed, the first event that takes place is something called a “First Meeting of Creditors.” It’s also usually the last event that takes place in the bankruptcy. The meeting is sometimes called the “341 hearing” because it’s required by Section 341 of the Bankruptcy Code. The meeting name is misleading because no creditors usually attend. It’s just a meeting where the Chapter 7 or Chapter 13 bankruptcy trustee asks debtorsRead more
Debt Collection Complaints in Iowa
Using data from the Federal Trade Commission (FTC), the National Consumer Law Center (NCLC) has compiled an analysis of the complaints made by Iowans about debt collection agencies. According to the data, 813 Iowans filed complaints with the FTC in 2017. Most of the complaints claimed that the debt collection agencies called repeatedly or called after getting a notice from the debtor to stop calling. Other complaints were that the debt collectors made false representations about the debt, threatened toRead more
Collection of Medical Debt
One of the best places to get good information about debt collection and other consumer issues is the website of the National Consumer Law Center. Found at https://www.nclc.org, the website contains links to a variety of articles about financial and legal problems faced by consumers. NCLC recently published an article on how consumers should deal with medical debt. Some of the highlights of the advice offered by NCLC include: Medical debt should usually be the lowest priority in repaying. UnlikeRead more
A History of Discharging Student Loans in Bankruptcy
With $1.5 billion in student loan debt, many observers believe the economy would get a boost if at least some of that debt could be discharged in bankruptcy, like almost all other consumer debt. The excuses used for treating federal and private student loans differently in bankruptcy start to crumble when you look at how other debt is treated, even loans owed to other government agencies. A borrower can easily discharge in bankruptcy an unsecured loan to the Small BusinessRead more
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