Posted in: Student Loans
The Consumer Financial Protection Bureau announced its lawsuit today against for-profit college ITT Educational Services (known around here as ITT Tech). The complaint was filed in the U.S. District Court in Indianapolis.
The CFPB alleges that ITT misled students by overstating job prospects and graduation salaries. The students were allegedly pushed by financial aid staff into taking out high-interest rate “Temporary Credit” during their first enrolled year, before they were eligible for federal assistance.
The CFPB further alleges that ITT knew students would face interest rates of up to 16%, and projected a 64% default rate on their private student loans. Further, the CFPB alleges that students would remain stuck at ITT because their credits would not transfer to more affordable public or not-for-profit schools.
CFPB Director Richard Cordray compared the for-profit college market to the predatory mortgage lending that led in part to the ’08 financial crisis. He stated, “(m)oving forward, the Consumer Bureau will subject the financial products and services offered by for-profit colleges and their partners to the same standards as any other consumer financial product or service.”
The Tennessee Bar Association‘s Public Education Committee has provided The Legal Handbook for Tennessee Seniors, updated for 2014. The book provides helpful guidance for Tennessee seniors and their families on a number of issues, including social security, retirement accounts, veteran’s benefits, tax relief, Medicare, long-term care, housing, grandparent visitation rights, and estate planning.
The handbook also contains helpful information for people of any age on the general topic of consumer protection. Topics covered include credit cards, resolving billing errors, debt collection, deceptive sales practices, and scams.
The handbook is provided free and can be downloaded here.
Posted in: General Bankruptcy
On Friday, Detroit’s emergency manager filed a proposed plan of adjustment in the city’s bankruptcy case. The document lays out a plan to restructure debt and exit the largest municipal bankruptcy in United States history.
The plan calls for spending $1.5 billion over the next ten years on improvements to the city, including blight removal, technology upgrades, and infrastructure repairs. These investments aim to prevent further population loss and revitalize the city once known as the Paris of the West.
The plan relies on state and private donations to prevent the sale of city-owned art pieces at the Detroit Institute of Arts. The DIA has pledged to raise $100 million for city pensions and will take control of city-owned art.
The bankruptcy’s impact will be felt heaviest by non-uniformed city retirees, who would see their pensions cut by nearly one-third if the plan is approved. The plan would spare pensions for police and firefighters somewhat, with those pensions cut by only ten percent.
The plan faces numerous challenges before its final approval, with many points being negotiated in continuing mediation sessions. The city retirees have argued that their pensions are protected under the Michigan state constitution. The court ruled in December, however, that the bankruptcy case controls the pensions just like Detroit’s other financial obligations. That ruling is being appealed to the Sixth Circuit.
When you want to file for bankruptcy protection, but have already filed before, how long do you have to wait in between? While technically you can refile at any time, your goal is probably to obtain a discharge of your debts. In that case, you must carefully time the filing of your next bankruptcy petition.
I have filed a Chapter 13 before, and now I want to file another Chapter 13. Have more than two years passed from the prior filing date? If yes, you may proceed. You can also file at any time but you will not be eligible for a discharge.
I have filed a Chapter 7 before, and now I want to file a Chapter 13. Have more than four years passed from the prior filing date? If yes, you may proceed and be eligible for a discharge. If less than four years have passed, you can file to stop foreclosure and catch up your mortgage arrears, but you won’t get a discharge.
I have filed a Chapter 13 before, and now I want to file a Chapter 7. Have more than six years passed from the prior filing date? If yes, you may proceed. Also, you may proceed if you paid 100% of unsecured debt in your prior repayment plan, or if you paid 70% and your repayment plan was offered in good faith.
I have filed a Chapter 7 before, and now I want to file another Chapter 7. Have more than eight years passed from prior filing date to current filing date? If yes, you may proceed.
Posted in: Other Areas of the Law
Tennessee Attorney General Robert Cooper announced in a press release today that the State filed a lawsuit against a vacation timeshare membership club. The club, compromised of Festiva and various affiliates, is accused of using fraudulent and deceptive tactics against Tennessee consumers.
The complaint cites to the Federal Telemarketing Act and the Tennessee Consumer Protection Act. The State alleges that Tennessee consumers were led to believe they had won a prize, but in order to claim the prize were required to attend high-pressure sales presentations. The complaint also alleges that terms of membership programs are confusing, difficult to use, and differ from what was represented to the consumer at the sales presentations.
Those who purchased memberships claimed to be unable to schedule their vacations due to the resorts being fully booked. They claim they then lost vacation “points” after being told they could save them for use in the next year.
Tennessee is not the first state to call out the company on these alleged practices. Festiva was sued by the states of Maine and Louisiana just last month. Attorney General Cooper stated that “(i)f you are tempted by a travel or vacation company that uses high pressure sales, it’s probably best to take your time and do your homework before you pay thousands of dollars and commit to paying maintenance fees and special assessments.” Consumers affected by the situation are encouraged to visit www.tn.gov/consumer to report their complaint.
Posted in: Debt Collection
A man who operated several debt collection companies over the last five years reached a settlement with the state of New York last month. According to the Buffalo News, the man allegedly operated his company using illegal debt collection practices. Joseph Bella’s debt collection companies operated for just a short time, then closed up shop to move to a different location under a different business name.
Pay day loans, where a debtor borrows money at a high interest rate in anticipation of paying off the loan with their next paycheck, are illegal in New York. Despite this, Mr. Bella continued to offer these loans and then attempt to collect on them.
The companies sent requests to debtor’s employers requesting illegal information such as their social security number, hourly wage, and dates of hire. The companies also sent letters to debtors using the name of an attorney. However, the attorney had never reviewed the files or determined whether a letter could legitimately be sent. They continued to reference the attorney’s name even after that attorney no longer worked for them.
Under the terms of the settlement, Mr. Bella agreed to cease the above-referenced practices. He did not, however, admit any wrongdoing. He will pay a total of $165,000 in restitution to affected debtors and penalties to the State of New York. New York Attorney General Eric T. Schneiderman stated that he was “pleased that consumers who paid on payday loans will receive full restitution and Bella will receive heavy penalties.”
According to Parade.com, the top most common New Year’s Resolutions are:
1. Lose weight
2. Improve finances
4. Get a new job
5. Eat healthier
6. Manage stress better
7. Stop smoking
8. Improve a relationship
9. Stop procrastinating
10. Set aside time for yourself.
I would like to add another one to this list. Like many people, you may have a legal issue that you just don’t know what to do about. You may be facing financial difficulties. You may have a small business you would like to get set up properly. You may have divorce or custody issues. You may have been contacted by the IRS, but don’t know how to respond. So here is resolution number 11: Start 2014 off with greater knowledge and understanding of your legal issues.
Take advantage of a free consultation with an attorney at The McKellar Law Firm, PLLC. Don’t put off until next year what could be done today with a simple telephone call to our firm.
Since Casey Anthony was acquitted in 2011 of killing her two-year-old daughter Caylee, she has remained largely in hiding and out of the glare of the media. She resurfaced as a result of filing for bankruptcy in January of this year. In the bankruptcy petition, she claimed only 1,084 in assets. She listed around 80 creditors and debts totaling almost $800,000, including a $500,000 debt to her lead criminal defense attorney.
The bankruptcy case involved some novel issues. First, the bankruptcy trustee in Anthony’s case argued that the rights to Anthony’s life story should be put up for auction. Anthony’s attorneys argued that a trustee does not have the authority to sell something that has not yet been created. They further argued that Anthony’s life story is contained within her thoughts and memories, and requiring her to give up the rights to those would be a judicial invasion of her privacy. This issue was resolved when Anthony agreed to pay $25,000 to the bankruptcy estate to avoid having to sell her life story.
Another issue involved Texas EquuSearch, the nonprofit horseback search and rescue group that helped search for missing Caylee. The group claims it spent over $100,000 and objected to the bankruptcy. Debts incurred by fraud are not dischargeable in bankruptcy, and the group claimed Anthony already knew Caylee was dead during the time the group conducted searches. This issue was settled by the paties in November, with Anthony agreeing to allow EquuSearch to file an unsecured claim of $75,000. Whether or not they or other creditors will recieve a distribution of funds remains to be seen.
On Tuesday, December 17, Anthony received her discharge order. The order means she no longer has a legal obligation to repay debts that had incurred by the date of the bankruptcy filing. Debts that are typically not dischargeable include student loans, criminal fines, many taxes, and child support.
Posted in: General Bankruptcy
In a ruling issued today, Judge Steven Rhodes held that Detroit is eligible to proceed with Chapter 9 bankruptcy. The ruling follows a nine-day trial in November on the city’s eligibility to take advantage of bankruptcy protection.
Judge Rhodes ruled that the city met all factors for insolvency, was unable to pay its debts, and was unable to provide a minimum level of basic services to residents.
Opponents of the bankruptcy had argued that the city did not negotiate in good faith with creditors, particularly those retired city workers receiving pensions. Those workers also argued that their pensions are protected by the Michigan state constitution.
The city will now be able to propose a plan to pay creditors and eliminate eligible debt. The city is nearly $20 billion in debt, and in the last five years the city spent an average of $100 million more than it brought in.
While the majority of secured creditors will likely receive a comfortable pay-off, unsecured creditors will be forced to argue in court over how the remainder, if any, will be distributed. Many fear that unsecured creditors will only receive pennies on the dollar. The unsecured debt amounts to around $11 billion an includes health care for retirees, pensions, and general-obligation bonds.
Posted in: Bankruptcy and the Holidays
If you are living with financial difficulties, the holiday season can feel especially overwhelming. This Thanksgiving, however, there are still things to pause and be thankful for. A few of these include:
- Title 11 of the United States Code (Bankruptcy), which allows a debtor the pathway to release from certain specified types of debts. The discharge of debts permanently prohibits creditors from contacting a debtor or taking collection action on discharged debts.
- The Consumer Financial Protection Bureau, established in 2010 to handle consumer complaints, promote financial education, and enforce federal consumer financial laws.
- The Fair Debt Collection Practices Act, which prohibits a debt collector from using obscene or profane language, threatening you with violence or harm, calling you before 8:00 a.m. or after 9:00 p.m., contacting you at work if you request they stop, contacting you directly if you have hired an attorney, and many other protections for consumers.
- The automatic stay that goes into effect as soon as you file a bankruptcy petition. The automatic stay stops most debt-collection activity. During the stay, most creditors cannot file suit or pursue a suit already filed, contact you via telephone or mail, and usually must stop wage garnishments.
- Attorneys at the McKellar Law Firm, PLLC who offer free consultations regarding many areas of the law including bankruptcy and debt defense.
Have a Happy Thanksgiving!