Posted by NCBRC - November 30th, 2015
The abrogation of the six-year statute of limitations on government actions to collect student loan debts paid by loan guaranty agency was not a due process violation. United States v. Falcon, No. 13-16588 (9th Cir. Nov. 9, 2015) (per curiam). Read More
Posted by NCBRC - November 25th, 2015
The Consumer Federal Protection Bureau and the New York Department of Financial Services are seeking to enjoin deceptive lending practices by two pension advance companies. CFPB v. Pension Funding LLC, No. 8:15-cv-01329 (C.D. Cal.). On August 20, 2015, the agencies filed suit against Pension Funding LLC and Pension Income LLC and managing members, Steven Covey, Edwin Lichtig, and Rex Hofelter, alleging that the individuals and companies were in “violation of federal and New York law through the offering of pension advance products that came with hidden fees and interest charges that were not properly disclosed to consumers.” Specifically, the complaint alleges that the companies engaged in a scheme under which elderly consumers would send them eight years’ worth of pension payments in exchange for a lump sum. Though the consumers would be promised little to no fees or interest, in fact, the transactions included a hidden effective interest rate of more than 28 percent and were in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and New York usury laws.
The agencies moved for preliminary injunction and the companies responded that the transactions at issue were sales rather than loans and, therefore, the companies and individuals were not “lenders” over which the CFPB and DFS could exercise jurisdiction.
The agencies responded that “the facts establish that Defendants’ pension-advance transactions constituted loans under the CFPA, as consumers incurred debt and were granted the right to defer its payment, in this case typically over a period of eight years. That pension payments the consumers were entitled to receive were expected to be used to repay the debt does not change the fundamental character of the transaction, and Defendants’ arguments to the contrary are unavailing.”
A hearing on the motion for preliminary injunction is scheduled for December 18, 2015.
CFPB v. Pension Plan complaint CD Cal
Posted by NCBRC - November 19th, 2015
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
Posted by NCBRC - November 18th, 2015
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
Posted by NCBRC - November 12th, 2015
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 surrender of real property which Ms. Kourogenis had opted to surrender in her Statement of Intentions. The court denied the motion. Read More
Posted by NCBRC - November 10th, 2015
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
Posted by NCBRC - November 4th, 2015
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 conduct the search. Students are instructed to fill out an application and pay the fee in accordance with 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. In fact, 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.
Posted by NCBRC - November 3rd, 2015
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
Posted by NCBRC - October 30th, 2015
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
Posted by NCBRC - October 27th, 2015
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 set forth 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