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Student Loans Increase 149% in 10 Years

According to an article from ACA International, the credit reporting agency, Experian recently conducted a study which found that student loan debt has increased to an all-time high of $1.4 trillion. “And while student loan debt has surpassed home equity loans/lines of credit, credit card and automotive debt, the percentage of consumers with delinquent student loans has declined from 9.9 percent in 2009 to 8.9 percent in 2017.” Student loans are usually very difficult to discharge in a bankruptcy because an undue hardship has to be shown, and the courts have made this standard a very high hurdle to overcome. If you are having difficulty with repayment of a student loan, it is usually going to be a better approach to contact your lender to see if you qualify for an Income Based Repayment Plan rather than trying to qualify for an undue hardship in bankruptcy.

Connecticut’s Capital City Threatens to File for Bankruptcy

According to an article by Joseph De Avila in the Wall Street Journal, “[Hartford]City officials warned Gov. Dannel Malloy, a Democrat, and state lawmakers that Hartford, which has a deficit approaching $50 million, wouldn’t be able to pay all of its bills within 60 days. Hartford officials said it would file for bankruptcy at that point unless the state legislature passes a budget that gives the city more funding or otherwise provides it with more cash.” Municipalities can file for bankruptcy under Chapter 9 of the Bankruptcy Code, a chapter that is rarely used compared to the other bankruptcy chapters. The article reports that according to Attorney James Spiotto only 64 bankruptcies have been filed by municipalities in the past 63 years.

Debt From Willful and Malicious Copyright Violation Not Dischargeable in Bankruptcy

Bloomberg BNA reports, “A $4.4 million damages award for copyright and trademark infringement can’t be wiped out in a Chapter 7 debtor’s bankruptcy case, the U.S. Bankruptcy Court for the Middle District of Florida held ( China Cent. Television v. Bhalla (In re Bhalla) , 2017 BL 291130, Bankr. M.D. Fla., No. 8:16-ap-285-KRM, 8/18/17 ).” The Debtor in this case sold an electronic device which allowed one to watch television programs for free that were sold by broadcasters who had won a copyright infringement lawsuit against the Debtor. “The court found that the judgment wasn’t dischargeable under Bankruptcy Code Section 523(a)(6) because [the Debtor’s] conduct was willful and malicious.” You can read the whole article here: https://www.bna.com/damages-copyright-violation-n73014463582/

Can I Change My Mind About Surrendering My Property in a Chapter 13 Bankruptcy ?

If you are in a Chapter 13 Bankruptcy and had decided to keep your car and pay for it through the Plan, can you change your mind after your Plan is confirmed if your change of mind is in good faith? It seems that according to an article by Bobby Wilbert of the NACBA you can. In the case he reports on the debtor made a motion to modify the Chapter 13 Bankruptcy Plan 16 months after it was confirmed. The debtor had proposed to retain personal property that secured a debt with a whopping 38.72% interest rate. The debtor wanted to change the Plan to allow for surrender of the property and then to reclassify the deficiency that remained after the property was sold into an unsecured non-priority debt that would then get discharged at the end of the bankruptcy. Note that this must be done in good faith. If the court was presented with evidence that the debtor never intended to keep the property through the duration of the bankruptcy, that would likely be considered a good example of bad faith.

“Bank of America to Pay $6 Million to Bankrupt Couple”

“Bank of America Corp. has agreed to pay more than $6 million to a California couple whom a federal judge said had been harassed and illegally foreclosed upon by the bank’s mortgage unit, ending an eight-year-long dispute.” according to foxbusiness.com. After the couple fell behind on their mortgage payments approximately 20 loan modification requests were made and rejected, and then the couple filed a bankruptcy. The filing of the bankruptcy should have halted the bank’s efforts to foreclose on the couple, but instead the stay issued by the bankruptcy court was ignored by the bank and they forced the couple out of their home. Later efforts by the bank to reverse course were deemed to be too little and too late by the court. It is hard to believe that such a sophisticated lender would not comprehend the gravity of violating the Automatic Stay in a bankruptcy case. The automatic stay is interpreted very broadly and forbids creditors from trying to collect money from a debtor outside of the bankruptcy process. The automatic stay is so important to a bankruptcy that the lifting of the stay can make a bankruptcy pointless. If you are facing a foreclosure, it would be wise to talk to a bankruptcy attorney to find out whether a Chapter 13 bankruptcy will allow you to keep your house.