Thursday, December 3, 2015

Yet another depressing article about student loan debt

Student loan debt continues to be a hot button issue in America.  In some cases, people can easily accumulate tens of thousands of dollars of student loan debt.  In this case (rare albeit), a high school teacher racked up $410,000 of student loan debt!

Her story is not typical, since most people have much less student loan debt than this, but it still helps illustrate the problem of student loan debt in our country.

Student Debt in America: Lend With a Smile, Collect With a Fist

Liz Kelley, left, and her sister and fellow teacher, Sheryl Silverberg, 45, at Ms. Kelley's home in Ballwin, Mo. Ms. Kelley, a high school English teacher and mother of four, has accrued $410,000 in student loan debt.Credit      -Whitney Curtis for The New York Times
The American student loan crisis is often seen as a problem of profligacy and predation. Wasteful colleges raise tuition every year, we are told, even as middle-class wages stagnate and unscrupulous for-profit colleges bilk the unwary. The result is mounting unmanageable debt.

Read the whole article from the NY Times, here. 

Friday, October 23, 2015

Pay Debts With Blood or Go to Jail: The New Reality If You Don't Have Cash

Here is a great article about the reality of not paying debts and court fines for many people.

“What we’re seeing is that in cities big and small, urban and rural people are being jailed, because they can’t afford to pay fines. [And] what appears to be fueling the rise of debtors' prisons is the tightening of municipal budgets and the desire to look towards fines and fees as a source of municipal revenue.”
Many of my clients have several thousands of dollars of unpaid tickets and fines. Once you have your driver's license suspended it is very difficult to reinstate your license through the State.
Chapter 13 Bankruptcy offers a more affordable repayment plan for your debt, and you can avoid jail time for driving with a suspended license.

Friday, July 17, 2015

Divorce and Bankruptcy FAQ

It's no secret that divorce and bankruptcy go hand in hand.  Bankruptcy can be a good way to finalize your divorce and get rid of all of your debts that you incurred while married.  There are however some nuances to filing bankruptcy while in the process of getting divorced that you should consider.  I've put together a list of FAQ that I get asked often when discussing divorce and bankruptcy.

1. Am I liable for my spouse's credit card debt? 
Not usually.  Unless you specifically co-signed on the debt.  

2. What if my spouse files for bankruptcy, do I have to file too? 
Not necessarily.  If your debt is truly separate then only the person who has the debt in their name needs to file.  But if you have joint debt, if one person files the other person remains liable for the debt.  This is why it's recommended that you file one joint bankruptcy petition while still married to discharge ALL debt.  

3. Can we file one bankruptcy petition while married? 
Yes.  It's easier and cheaper to file one petition while you are still married.  You can be separated you just have to still be legally married.  Once you divorce you must file 2 separate bankruptcy petitions. 

4. What about child support? Can that be discharged in bankruptcy? 
A big fat NO. 

5. I owe $50,000 to my divorce attorney, can I include this debt in my bankruptcy? 
This is a tricky one.  If the attorney fees are YOUR fees and they are not associated with child support or child custody issues then you can probably discharge them in your case.  If you were assigned to pay your spouse's attorneys fees then you probably cannot discharge them in bankruptcy. 

6. My spouse and I both own our house together and have a mortgage on the home.  I don't want the home but my spouse does.  Can I file bankruptcy and get rid of my house? 
Sort of.  If you file for bankruptcy and list your home as as property to be surrendered, then the mortgage company can never come after you for a deficiency balance if it goes to foreclosure.  But you remain the legal owner of the home until your name is removed from the title in a sale.  Bankruptcy does not remove your name from the title of the home.  Instead, it relieves you of personal liability in paying the mortgage.  Your spouse can remain in the home and if they keep paying the mortgage they can keep the home.  This means that you should try to sell the home or refinance the property to remove your name from the title at a future date. 

7. My spouse and I owe taxes to the IRS.  Can we discharge those in bankruptcy?  
Maybe.  There are very specific rules to discharging IRS debt in bankruptcy.  See your local bankruptcy attorney to discuss them.  If you believe you did not incur the tax liability and your spouse only did you can try to contact the IRS for an innocent spouse form to try and get out of the debt obligation. 

Other issues that can have an impact on your bankruptcy case during a divorce are:
  • dividing assets
  • dividing retirement accounts
  • alimony/child support payments
  • assigning debt to the other party in your divorce decree
  • who pays the divorce attorney fees

Tuesday, July 14, 2015

50 cent files for bankruptcy! Wait, what does that mean anyway?

Tip: don't show up to your 341 meeting wearing all your gold chains.

As you all have heard by now, Curtis James Jackson III (aka 50 cent) has filed for bankruptcy protection.  Many of the articles I've read online make it seem like he's broke and living on the streets.  But 50 cent filed for Chapter 11 Bankruptcy, a type of bankruptcy most regular people don't know much about.  Very long story short, he can keep assets and continue making money, he just has to pay back creditors according to a bankruptcy plan and most importantly, creditors have to wait!  This article from sort of explains it: "50 Cent Filing for Bankruptcy Does Not Mean He's Broke".

For most regular folks your bankruptcy options are usually a Chapter 7 or Chapter 13.  Either you have no assets and low income and you get rid of your unsecured debt in a Chapter 7, or you might have some assets and a big higher income and you repay some of your debt in a Chapter 13.  Read more about your choices here.

And just for fun here is a list of famous people who have filed for bankruptcy:

  • Abe Lincoln
  • Thomas Jefferson
  • Walt Disney
  • Henry Ford
  • Larry King
  • Donald Trump
  • Mark Twain
  • Burt Reynolds
  • M.C. Hammer
  • Cindy Lauper
  • Mike Tyson
  • Toni Braxton

and many more.

For many people bankruptcy is a necessary step to reorganize their lives after a financial set back.

Tuesday, July 7, 2015

US Department of Education issues advisory letter on student loans and bankruptcy!

If you know anything about bankruptcy and student loans, you know that they do not work well together.  Student loans are not dischargeable in either a Chapter 7 or Chapter 13 Bankruptcy unless you file an adversary proceeding and can show that the loans present an undue hardship on the Debtor.  The test called the "Brunner Test" is very difficult to pass unless a Debtor has a severe illness and no prospect of ever repaying the debts again.

The US Department of Education issued a letter today providing guidance to lenders when dealing with student loan discharge claims.  The letter reiterates how only a Debtor in an extreme situation should be issued a discharge of their student loans in bankruptcy.  Although the letter does direct student loan lenders to follow a two-step analysis to determine whether they should object to an attempt at discharging student loans in a bankruptcy case, the result is essentially the same: Student loans are extremely difficult to discharge in bankruptcy.

The two-step analysis suggested by the US Department of Education is as follows:

1. First a loan holder must evaluate a borrower's undue hardship claim and determine whether the holder believes the repayment would constitute an undue hardship according to the legal standard set by the Federal Courts.  (Essentially the Brunner test).  If the loan holder determines that there would be an undue hardship, they can consent and not oppose the discharge.  (Although they could still object at this point).

If the loan holder believes there is no undue hardship they then move on to step 2.

2. The loan holder should then weigh the cost of objecting to the undue hardship claim in court, with consenting to the discharge.

Long story short, this letter provides an analysis of student loan debt dischargeability and provides some guidance to lenders on how to approach adversary proceedings, but the takeaway is the same: Student loans are VERY difficult to discharge in bankruptcy.

It is also important to note that an adversary proceeding is often times a lengthy and expensive proceeding, and many Debtor can not afford to hire their bankruptcy attorney to litigate these matters.

The entire letter issued by the US Department of Education can be found here.

Friday, June 26, 2015

Summary of recent Supreme Court Decisions

So much is happening in the Supreme Court this month!  Here are all the holdings for some of the recent Supreme Court decisions.  You can read them all here.


     "No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right. 
     The judgment of the Court of Appeals for the Sixth Circuit is reversed." 

To read more about this important decision go to the white house website.  


    "We hold that imposing an increased sentence under the residual clause of the Armed Career Criminal Act violates the Constitution’s guarantee of due process. Our contrary holdings in James and Sykes are overruled. Today’s decision does not call into question application of the Act to the four enumerated offenses, or the remainder of the Act’s definition of a violent felony. We reverse the judgment of the Court of Appeals for the Eighth Circuit and remand the case for further proceedings consistent with this opinion."


     "The judgment of the Court of Appeals for the Fifth Circuit is affirmed, and the case is remanded for further proceedings consistent with this opinion." (Disparate-impact claims are cognizable under the Fair Housing Act.)


     "The judgment of the United States Court of Appeals for the Fourth Circuit is Affirmed." (Section 36B’s tax credits are available to individuals in States that have a Federal Exchange)


    "What we can decide, we can undecide. But stare decisis teaches that we should exercise that authority sparingly. Cf. S. Lee and S. Ditko, Amazing Fantasy No. 15: “SpiderMan,” p. 13 (1962) (“[I]n this world, with great power there must also come—great responsibility”). Finding many reasons for staying the stare decisis course and no “special justification” for departing from it, we decline Kimble’s invitation to overrule Brulotte. For the reasons stated, the judgment of the Court of Appeals is affirmed."
(Court does not overrule  Brulotte v. Thys Co., 379 U. S. 29, in which this Court held that a patentee cannot continue to receive royalties for sales made after his patent expires.)


     "For the foregoing reasons, we agree with the Ninth Circuit that §41.49(3)(a) is facially invalid insofar as it fails to provide any opportunity for precompliance review before a hotel must give its guest registry to the police for inspection. Accordingly, the judgment of the Ninth Circuit is affirmed."
(Supreme Court agreed with the Ninth Circuit that inspections of hotel records under §41.49(3)(a) are Fourth Amendment searches and that such searches are unreasonable under the Fourth Amendment because hotel owners are subjected to punishment for failure to turn over their records without first being afforded the opportunity for precompliance review.)


     "In this case, an individual detained in a jail prior to trial brought a claim under Rev. Stat. §1979, 42 U. S. C. §1983, against several jail officers, alleging that they used excessive force against him, in violation of the Fourteenth Amendment’s Due Process Clause. The officers concede that they intended to use the force that they used. But the parties disagree about whether the force used was excessive. The question before us is whether, to prove an excessive force claim, a pretrial detainee must show that the officers were subjectively aware that their use of force was unreasonable, or only that the officers’ use of that force was objectively unreasonable. We conclude that the latter standard is the correct one."
Held: Under 42 U. S. C. §1983, a pretrial detainee must show only that the force purposely or knowingly used against him was objectively unreasonable to prevail on an excessive force claim.


     "Texas’s specialty license plate designs constitute government speech, and thus Texas was entitled to refuse to issue plates featuring SCV’s proposed design."

"The determination that Texas’s specialty license plate designs are government speech does not mean that the designs do not also implicate the free speech rights of private persons. The Court has acknowledged that drivers who display a State’s selected license plate designs convey the messages communicated through those designs. See Wooley v. Maynard, 430 U. S. 705, 717, n. 15. The Court has also recognized that the First Amendment stringently limits a State’s authority to compel a private party to express a view with which the private party disagrees. Just as Texas cannot require SCV to convey “the State’s ideological message,” id., at 715, SCV cannot force Texas to include a Confederate battle flag on its specialty license plates."


"When a controlled substance is an analogue, §841(a)(1) requires the Government to establish that the defendant knew he was dealing with a substance regulated under the Controlled Substances Act or Analogue Act."

"We hold that §841(a)(1) requires the Government to establish that the defendant knew he was dealing with “a controlled substance.” When the substance is an analogue, that knowledge requirement is met if the defendant knew that the substance was controlled under the CSA or the Analogue Act, even if he did not know its identity. The knowledge requirement is also met if the defendant knew 2 MCFADDEN v. UNITED STATES Opinion of the Court the specific features of the substance that make it a “‘controlled substance analogue.’” §802(32)(A). Because the U. S. Court of Appeals for the Fourth Circuit approved a jury instruction that did not accurately convey this knowledge requirement, we vacate its judgment and remand for that court to determine whether the error was harmless."

"An alien ordered to leave the country has a statutory right to file a motion to reopen his removal proceedings. See 8 U. S. C. §1229a(c)(7)(A). If immigration officials deny that motion, a federal court of appeals has jurisdiction to consider a petition to review their decision. See Kucana v. Holder, 558 U. S. 233, 242, 253 (2010). Notwithstanding that rule, the court below declined to take jurisdiction over such an appeal because the motion to reopen had been denied as untimely. We hold that was error."


"Section 327(a) of the Bankruptcy Code allows bankruptcy trustees to hire attorneys, accountants, and other professionals to assist them in carrying out their statutory duties. 11 U. S. C. §327(a). Another provision, §330(a)(1), states that a bankruptcy court “may award . . . reasonable compensation for actual, necessary services rendered by” those professionals. The question before us is whether §330(a)(1) permits a bankruptcy court to award attorney’s fees for work performed in defending a fee application in court. We hold that it does not and therefore affirm the judgment of the Court of Appeals."


     "Respondent Fauzia Din petitioned to have her husband, Kanishka Berashk, a resident citizen of Afghanistan and former civil servant in the Taliban regime, classified as an “immediate relative” entitled to priority immigration status. Din’s petition was approved, but Berashk’s visa application was ultimately denied. A consular officer informed Berashk that he was inadmissible under §1182(a)(3)(B), which excludes aliens who have engaged in “[t]errorist activities,” but the officer provided no further information. Unable to obtain a more detailed explanation for Berashk’s visa denial, Din filed suit in Federal District Court, which dismissed her complaint. The Ninth Circuit reversed, holding that Din had a protected liberty interest in her marriage that entitled her to review of the denial of Berashk’s visa. It further held that the Government deprived her of that liberty interest without due process when it denied Berashk’s visa application without providing a more detailed explanation of its reasons. Held: The judgment is vacated, and the case is remanded." 

     "Because Fauzia Din was not deprived of “life, liberty, or property” when the Government denied Kanishka Berashk admission to the United States, there is no process due to her under the Constitution. To the extent that she received any explanation for the Government’s decision, this was more than the Due Process Clause required. The judgment of the Ninth Circuit is vacated, and the case is remanded for further proceedings."


     "Mellouli’s Kansas conviction for concealing unnamed pills in his sock did not trigger removal under §1227(a)(2)(B)(i)."


     "A debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under §506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral if the creditor’s claim is both secured by a lien and allowed under §502 of the Bankruptcy Code."

Tuesday, June 16, 2015

New Lactation Bill in Illinois passes both Houses

Senate Bill 0344, also known as the "Lactation Accommodation in Airports Act" is in the works in Illinois.  The bill recently passed both houses.  This is very exciting news for mothers who travel and need a safe and private place to express milk or feed their babies.  To be clear, in Illinois, women can already nurse their babies without covering anywhere they are legally authorized to be.   But as any nursing mom knows, nursing in public and pumping in public are two very different things.  Many women are comfortable nursing their babies in the open with or without a cover.  However, in order to express breast milk you have to be hooked up to a loud and obnoxious breast pump.  Some pumps require an electrical connection and many working mothers must express breast milk around the clock every 2 or 3 hours when they are without their babies.  This new proposed bill would require Illinois airports to provide a clean and private place to express milk.  I know many working mothers who travel for work who would benefit greatly from this law.   If passed, the law would go into effect January 1, 2017.

To learn about all the breastfeeding laws on the books in Illinois, click here.

Sunday, June 14, 2015


Believe it or not, it has been 10 years since the Bankruptcy Abuse and Consumer Protection Act was passed in 2005.  The law made it more difficult for people to file bankruptcy and added hurdles to the filing of a regular bankruptcy case.  It added a component called the "means test" to a bankruptcy filing that uses a Debtor's past six months of income to determine whether they qualify for bankruptcy.  A credit counseling requirement was added and other requirements and restrictions were imposed that made it more difficult for debtors and attorneys to prepare a bankruptcy petition.  Some of the changes included:

  • ​A mandatory credit counseling requirement
  • ​Stricter eligibility for Chapter 7 filings
  • ​Tax returns and proof of income required
  • ​More people filing Chapter 13 instead of Chapter 7
  • ​Fewer automatic stay protection for filers
  • New priority for unpaid child support and alimony
  • Mandatory financial management education
Despite a significant reduction in filings after BAPCPA, bankruptcy remains a viable option for many people who find themselves overwhelmed by debt.  An experienced bankruptcy attorney can help you navigate the intricacies of the bankruptcy laws and help you decide if bankruptcy is a good option for you.

Tuesday, June 2, 2015


Deciding if you should file for bankruptcy is a tough decision.  Most people who find themselves in debt qualify for at least one type of consumer bankruptcy.  If you have over $10,000 of debt and are unable to pay your bills or are dealing with a foreclosure, wage garnishment or lawsuit you may want to consider filing for bankruptcy.  

Chapter 7 Bankruptcy
When you file Chapter 7 bankruptcy you eliminate your unsecured debt such as credit cards and medical bills.  Most of the time you can keep your home and car.  In order to qualify for Chapter 7 bankruptcy you cannot have substantial assets or earn over the median income in your county.  

Chapter 7 bankruptcy will stop a wage garnishment and lawsuits against you. 

Some debt is not eliminated in Chapter 7 such as student loans, secured mortgage debt, child support and alimony, parking tickets and tax debt.  

Many people qualify for Chapter 7 bankruptcy and can eliminate most of their debt.   Chapter 7 attorney fees range from $1,000-2,000 depending on your case.  The court filing fee is $335.00.   

Chapter 13 Bankruptcy
When you file Chapter 13 bankruptcy you file a  bankruptcy plan that pays back some of your debt over a 3 to 5 year period.  Many times, people who might not qualify for Chapter 7 due to income or assets, can file a Chapter 13 case and have a manageable payment for the life of the plan. 

Chapter 13 bankruptcy can include parking tickets and lift a license suspension, can void a second mortgage lien, and can include tax debts owed to the IRS or state. 

To qualify for Chapter 13 bankruptcy you must have some form of regular income, such as a regular job, child support, or a pension or social security. 

Chapter 13 fees are set by the court in this jurisdiction and are $4,000.00 plus the court filing fee of $310.00.  However many times you can have your case filed with little or no money down, depending on your situation. 

Call us today for a free consultation and we will help you determine which type of bankruptcy is right for you. 

Monday, June 1, 2015


Let's talk about today's Supreme Court decision in Bank of America, N.A. v. Caulkett.  First of all, it's pretty rare that the US Supreme Court actually talks about a real consumer bankruptcy case that affects consumer bankruptcy attorneys and their clients.  But this one actually discusses important issues that everyone who practices bankruptcy law should know. 

The facts of the case involved two Debtors who filed Chapter 7 and tried to void their second mortgage liens through bankruptcy.  Basically their homes were underwater and they had wholly unsecured second mortgages that they were looking to cancel in a Chapter 7.  In this jurisdiction everyone knows that you can't do that and I would never try.  But in other places like the Eleventh Circuit apparently, it had been allowed.  

This means that you would be allowed to file Chapter 7 bankruptcy and completely eliminate your second mortgage if the house was underwater!  I imagine I would be filing 10 bankruptcy cases a day if I had the power to do this in this jurisdiction!  

In this case, the Supreme Court held once and for all that:

Most bankruptcy attorneys already knew this and it doesn't really cause much reaction in this jurisdiction. 

However, did you know that you can completely void a second mortgage in a Chapter 13 Bankruptcy? If your home is underwater and you owe more than the house is worth, you can file Chapter 13 and repay some of your unsecured debt for a period of 3-5 years.  If your second mortgage is wholly unsecured you can throw it in with the rest of your unsecured creditors and pay as little as 10% to your second mortgage.  At the end of your Chapter 13 plan the mortgage company is required to remove the lien!

This means that if you owe $50,000 on a second mortgage and your income and assets are low enough, you can potentially repay only $5,000 of that mortgage through your bankruptcy and eliminate the rest!

To qualify generally for a Chapter 13 to lien strip your second mortgage there are some rules: 

  • You have to have income of some kind. 
  • Your home must be underwater and the second mortgage has to be completely unsecured. 
  • You have to have some sort of Comparative Market Analysis or proof of the property's value. 
  • You have to qualify under the "means test" as a Debtor with no disposable income or very little disposable income. 
  • You cannot have assets that exceed your exemptions. 

Call me today for a free consultation if you want to discuss a Chapter 7 or Chapter 13.  

You can read the entire Supreme Court Case here.