Posted by NCBRC - January 19th, 2017
In a Press Release issued on January 18, the CFPB announced that it was suing the nation’s largest student loan servicer, Navient Corporation, for illegal activity at every stage of the student loan process. The company is accused of systematically creating obstacles to repayment by providing bad information, incorrectly processing payments and failing to act on customer complaints. The complaint alleges that Navient’s conduct resulted in borrowers paying much more than they would have had their loans been properly serviced and had they been given accurate information about alternative repayment plans.
Navient, formerly part of Sallie Mae, Inc., services more than 12 million student loans approximately half of which are through its contract with the Department of Education.
According to CFPB Director, Richared Cordray, “For years, Navient failed consumers who counted on the company to help give them a fair chance to pay back their student loans. At every stage of repayment, Navient chose to shortcut and deceive consumers to save on operating costs. Too many borrowers paid more for their loans because Navient illegally cheated them and today’s action seeks to hold them accountable.”
Specifically, the CFPB accuses Navient and two of its subsidiaries, Pioneer Credit Recovery and Navient Solutions, of:
- Failing to correctly apply or allocate payments to borrower’s accounts,
- Steering borrowers who had trouble repaying their loans away from the lower repayment plans they were entitled to under federal law and into forbearance programs which allow interest to accrue while the borrower is on hiatus from repaying the loan,
- Failing to inform borrowers enrolled in income-driven repayment plans of the need to renew those plans annually,
- Deceiving private student loan borrowers as to the steps necessary to release a co-signer from the loan,
- Harming the credit of disabled borrowers including severely injured veterans.
The lawsuit alleges violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the FCRA and the FDCPA.
Posted by NCBRC - January 18th, 2017
The City of Philadelphia lacked standing to object to the debtor’s plan provision under which he proposed to redeem over the life of the plan property sold in a tax sale. In re Wilson, No. 15-6385 (E.D. Pa. Dec. 28, 2016)
Earl Wilson failed to pay his city property tax. As a result, the property was sold at auction and sold again to a “subsequent purchaser” in accordance with Pennsylvania’s Municipal Claims and Tax Lien Act (“MCTLA”). That law permits a tax debtor to redeem property within nine months of sale. Mr. Wilson filed for chapter 13 bankruptcy in which his revised Fifth Amended Plan proposed to pay the redemption amount over the course of the plan. The bankruptcy court confirmed the plan over the City’s objection specifically finding that the City lacked standing to object to that portion of the plan providing for redemption of the property. Read More
Posted by NCBRC - January 17th, 2017
Oral argument in Midland v. Johnson was today. See the transcript here.
Posted by NCBRC - January 13th, 2017
The FTC has been going after fraudulent payday lending operations centered in Missouri and Kansas, with settlements as high as $1.266 billion.
In a press release dated January 9, 2017, the FTC announced charges against businessman, Joel Jerome Tucker, and his companies, SQ Capital LLC, JT Holding Inc., and HPD LLC, for selling portfolios made up of fake payday loans. According to the FTC, the loans listed in the portfolios named phony lenders and debtors, including their social security and bank account numbers, and led to collection activities against consumers who had not taken out loans. The FTC previously brought actions against two debt collectors that used the fake portfolios. Read More
Posted by NCBRC - January 11th, 2017
In a flurry of party and amici briefs, the issue of whether a proof of claim for a stale debt gives rise to an FDCPA claim has been briefed before the Supreme Court. Midland Funding v. Johnson, No. 16-348 (petition filed Sept. 16, 2016). The case is on appeal from the Eleventh Circuit decision that the “Bankruptcy Code does not preclude an FDCPA claim in the context of a Chapter 13 bankruptcy when a debt collector files a proof of claim it knows to be time-barred.” Johnson v. Midland Funding, LLC, C.A. No. 15-11240, 2016 U.S. App. LEXIS 9478 (11th Cir. May 24, 2016). The issue is currently pending in courts around the country including the First, Third, Sixth, Seventh and Eighth Circuits. Oral argument is scheduled for January 17.
Johnson ACA Intl amicus
Johnson Brunstad Amicus
Johnson Chamber of Commerce amicus
Johnson DBA intl amicus
Johnson NABT Amicus
Johnson NACBA Amicus SCt Dec 2016
Johnson NARCA amicus
Johnson NCLC etc amicus
Johnson Petition brief
Johnson petition reply
Johnson Reprinted brief of respondent
Johnson Resurgent Capital Amicus
Johnson US amicus
Posted by NCBRC - January 4th, 2017
Section 707(b)(2) permits a debtor to take the full National and Local Standard amounts for expenses even though the debtor’s actual expenses are less. Lynch v. Jackson, No. 16-1358 (4th Cir. Jan. 4, 2017).
When above-median debtors, Gabriel and Monte Jackson, filed for chapter 7 bankruptcy they complied with Form 22A’s instructions to list their expenses using the IRS National and Local Standard amounts rather than their actual expenses which were less. The bankruptcy administrator moved to dismiss their case as abusive under section 707(b)(2)(A)(i). The bankruptcy court denied the motion to dismiss. In re Jackson, 537 B.R. 238 (Bankr. E.D. N.C. 2015), and the Fourth Circuit accepted direct appeal. Read More
Posted by NCBRC - January 2nd, 2017
Bankruptcy’s co-debtor stay was intended to prevent indirect pressure created by creditors attempting to collect against a co-signatory on a debt belonging to the bankruptcy debtor. Therefore, it does not apply to a debt solely belonging to the bankruptcy debtor’s spouse even though state law provides for collection of that debt through marital property. Smith v. Capital One Bank, No. 16‐1422 & 16‐1423 (7th Cir. Dec. 22, 2016). Read More
Posted by NCBRC - December 29th, 2016
NCBRC is wrapping up its year-end funding campaign. There’s still time to make a tax-deductible contribution for 2016.
Meanwhile…NCBRC and NACBA weighed in on the Midland v. Johnson case pending before the Supreme Court. Click here for the brief. A big thank you to Whitman Holt, Robert Pfister, Daniel Bussel, and Ken Klee at Klee, Tuchin, Bogdanoff & Stern, LLP for all their work on the brief.
Posted by NCBRC - December 21st, 2016
An IRS 1099-A Form sent post-foreclosure by the mortgagee and misstating that the debtors were personally liable on the mortgage debt, was not an attempt to collect a debt in violation of the discharge injunction. Bates v. CitiMortgage, Inc.,– F.3d – , 2016 WL 7229754 (1st Cir. Dec. 14, 2016). Read More
Posted by NCBRC - December 16th, 2016
Notwithstanding actual knowledge of the adversary complaint, where the debtor failed to serve the “insured depository institution” by certified mail, the Bank was not obliged to respond, and the bankruptcy court erred in granting default judgment. Citizens Bank v. Decena, No. 16-1918 (E.D. N.Y. Nov. 29, 2016).
Lorelei Decena attended St. Christopher’s College of Medicine for three years. She funded her education from St. Christopher’s through five separate student loans from Citizens Bank. After completing her studies, she sought to sit for the medical boards in the United States and was told that she was not eligible because St. Christopher’s was not an accredited medical school. Read More