By James DoubekThe vast majority of Uber and Lyft drivers are earning less than minimum wage and almost a third of them are actually losing money by driving, according to researchers at the Massachusetts Institute of Technology. A working paper by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT's Center for Energy and Environmental Policy Research says the median pretax profit earned from driving is $3.37 per hour after taking expenses into account. Seventy-four percent of drivers earn less than their state's minimum wage, the researchers say. Thirty percent of drivers "are actually losing money once vehicle expenses are included," the authors found. The conclusions are based on surveys of more than 1,100 drivers who told researchers about their revenue, how many miles they drove and what type of car they used. The study's authors then combined that with typical costs associated with a certain car's insurance, maintenance, gas and depreciation, which was gathered in data from Edmunds, Kelley Blue Book and the Environmental Protection Agency. Drivers earning the median amount of revenue are getting $0.59 per mile driven, researchers say, but expenses work out to $0.30 per mile, meaning a driver makes a median profit of $0.29 for each mile. An Uber spokesperson responded to the finding in a statement to The Guardian: "While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We've reached out to the paper's authors to share our concerns and suggest ways we might work together to refine their approach." The newspaper also noted, "Other studies and surveys have found higher hourly earnings for Uber drivers, in part because there are numerous ways to report income and to calculate costs and time and miles spent on the job." MIT authors also calculated that it's possible for billions of dollars in driver profits to be untaxed because "nearly half of drivers can declare a loss on their taxes." Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower," researchers write. "If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed," they add. According to MIT researchers, 80 percent of drivers said they work less than 40 hours per week. An NPR/Marist poll in January found that 1 in 5 jobs in the U.S. is held by a contract worker; contractors often juggle multiple part-time jobs. Uber and Lyft both have "notoriously high" turnover rates among drivers. A report last year said just 4 percent of Uber drivers work for the company for at least a year. NPR's Aarti Shahani reported in December that Lyft began a program to give drivers "access to discounted GED and college courses online" in a recruiting effort. It was only last year that Uber introduced the option to tip drivers into its app for customers. Recode listed the initiatives Uber rolled out in 2017 in order to appeal to drivers, including 24-hour phone support, paid wait time and paying drivers if customers cancel after a certain amount of time. Both Uber and Lyft have been fighting legal battles for years against initiatives to classify their drivers as "employees" instead of "independent contractors" — meaning drivers don't receive benefits like health care or sick leave.© 2018 npr.  All rights reserved.

By Aaron Elstein First Jersey Credit Union of Wayne, N.J., was closed Wednesday by the National Credit Union Administration. Its accounts were transferred to the US Alliance Federal Credit Union of Rye, N.Y. First Jersey had more than 9,000 members and $86 million in assets.Like Melrose Credit Union, Montauk Credit Union and Lomto Federal Credit Union, First Jersey was seized after too many of its taxi-medallion loans went bad. Keith Leggett, an economist who tracks credit unions, estimates that taxi medallions accounted for nearly 20% of First Jersey’s loan book at one point. Medallions in New York have lost about 80% of their value in the past five years amid the rise of Uber and other e-hailing apps.First Jersey, chartered in 1929, hasn’t had a profitable year since 2013. It piled up about $15 million in losses during the past four years.The credit union had been trying to avoid the fate it suffered Wednesday by auctioning medallions. On Jan. 11 in the rotunda of the state Supreme Court building, it sold six to a bulk buyer for $1.11 million, or $185,000 apiece. In early 2014 individual medallions were selling for about $800,000. Prices are much lower now because medallions generate less revenue than they once did and because once-prolific medallion lenders are no longer financing such purchases.© 2018 Crain Communications Inc.  All rights reserved.

When filing a Bankruptcy is Beneficial Unfortunately, it seems that as a last resort, more and more people are filing for personal bankruptcy. The figures have risen to over 1.5 million bankruptcy filings each year. It is no longer an unheard of option and the repercussions can be effectively managed. The two types of personal bankruptcy filings are Chapter 13 and Chapter 7. Each type is significantly different in rules and outcomes. You should not enter into bankruptcy lightly. It is best to seek professional counsel from qualified Troy, Ohio Bankruptcy Attorney before making the decision to file for bankruptcy. Bankruptcy, although not a desirable option, may be the best solution for you if you are hopelessly behind on bills such as car payments, loans, medical expenses, mortgages, or other bills. Of course, if at all possible, you want to work out a solution with your creditors. However, sometimes creditors can be less than understanding to people who are unemployed, laid off from work, disabled, or without income through circumstances beyond their control. If this sounds like you, contact a qualified attorney before your creditors take you to court. Once your creditors have sued you in court, they may be able to obtain a judgment against you and may be able to garnish your wages until you have paid your balance in full. Chapter 13 personal bankruptcy involves the court setting up a repayment plan for you to pay off your existing creditors and the debts you owe them. In most cases, before a person is allowed to file for Chapter 13 bankruptcy, he must first undergo an approved debt counseling program. Once you have completed your debt counseling program, you will need to consult with your attorney to begin proceedings. He can give you more information about the paperwork that will be required in the process including documentation you will need such as bank statements, recent tax returns, schedules of liabilities and assets, case filing fees, and other important information. Once you file Chapter 13 bankruptcy, this should stop any garnishments or foreclosure proceedings. It can be a way for you to gain a fresh start financially. Chapter 7 bankruptcy differs from Chapter 13 bankruptcy in that your assets will be liquidated and the money turned over to the court to pay towards your debts. Again, you must undergo approved credit counseling before filing. There are filing fees you will have to pay to file Chapter 7 bankruptcy in court. For certain low-income cases, the judge can approve that these fees be waived. Under Chapter 7 bankruptcy, some debts may be completely discharged. The presiding judge will make the determination as to which debts you will not be responsible for repaying. Initial consultations with a bankruptcy attorney are free. You can discuss your case and get the best legal advice available. Bankruptcy may not be desirable, but it is survivable and may be the best solution to helping you get your finances back in order. If you think you may need to file bankruptcy or want to discuss your legal options with a qualified legal representative, contact us to schedule a consultation. The post Springfiled, Ohio Bankrutpcy Attorney when to file Bankruptcy appeared first on Chris Wesner Law Office.

Crushed by debt A Springfield, Ohio Bankruptcy Attorney Can Help You Protect Your Credit   For decades, bankruptcy has been available to consumers seeking debt-relief and the fresh start it represents. There have been significant changes, most recently The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, but bankruptcy is still the best option for many consumers seeking a way to reorganize their finances and move on to a brighter future. “That sounds fine, but won’t bankruptcy damage my credit?” It’s a great question and we’re glad you asked it. The truth about bankruptcy and credit is that if you are a candidate for bankruptcy your credit is already in dire straits. Barely making the minimum payments, making late payments or – worse – missing payments, has likely resulted in a low credit score. This has already limited your ability to obtain loans and other forms of credit at competitive rates. Filing for bankruptcy will do short-term damage to your credit but, once your bankruptcy is final, you can immediately begin rebuilding your credit. In fact, some people have received credit card offers within a year of completing bankruptcy and have been able to take out a mortgage within a few years. That’s Not All Perhaps most importantly, filing for bankruptcy will put an immediate stop to creditor harassment and threats of wage garnishment. This can provide you with peace of mind in addition to an opportunity to wipe your debt away and start over financially. Are you dreaming of a fresh start, free from debt-collector calls and letters from billing departments? Contact us today to schedule your free initial consultation. Our bankruptcy attorneys in Troy, Ohio, can show you the way. The post Springfield, Ohio Bankruptcy Attorney Can Help Protect Credit appeared first on Chris Wesner Law Office.

  The 4th Circuit Court of Appeals sustained lower court's rulings that a chapter 7 debtor's case was filed in good faith, despite having been involved in a ponzi scheme and having had substantial income.  Janvey v. Romero, No. 17-1197, 2018 WL 987801 (4th Cir. Feb. 21, 2018).  The debtor, Mr. Romero, was a former foreign service officer serving 24 years with the state department, and rising to Ambassador and Secretary of State for Western Hemisphere Affairs.   Upon retirement he founded a consulting business regarding overseas business affairs.  One of the clients of this consulting business which earned him over $700,000 was Stamford Financial Group, was used to carry out a multi billion dollar ponzi  scheme, which was unearthed in 2009, at which time Romero cut ties with the business.  When Stamford was sued by the S.E.C., the receiver appointed sued Romero (among others) to recover the consulting fees.  The receiver rejected settlement offers, and ultimately received a judgment against Romero for $1.275 in damages, interest, and fees.  Romero then, after another rejected settlement offer, filed for relief under chapter 7.  His schedules reflected $5.348 million in assets, most of which were exempt by tenancy by the entireties or as retirement accounts.  Romero did turn over nonexempt assets consisting of two boats and a car to the trustee, and agreed to pay docking and insurance fees for one of the boats until it was sold.  The judgment constituted 90% of the unsecured debt scheduled with the remaining $150,000 being unpaid legal fees.    The budget showed $12,000/month in medical expenses related to a bacterial infection contracted by his wife incapacitating her and requiring extensive care.  Subsequent to filing Mr. Romero was able to cut back slightly on the daily care for his wife, but 2 of 3 disability policies were terminated.  He also scheduled $1,000/month in entertainment expenses, primarily for costs for the boat being turned over to the trustee.  Both Mr. Romero and his spouse were unemployed, due to his inability to find work after the ponzi scheme was discovered and due to her illness.  Their income as of filing was from pensions, retirements, and rental income on two tenancy by the entireties properties; and totaled about $350 less than their shown expenses. The receiver sought to dismiss the chapter 7 case under §707(a) which was denied by the bankruptcy court, finding that while the judgment was a primary reason for filing, contributing factors included the spouse's illness, inability to find work, and the aggressive litigation tactics of the receiver.  The district court affirmed.  The relevant statute at hand is The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including—(1) unreasonable delay by the debtor that is prejudicial to creditors;(2) nonpayment of any fees or charges required under chapter 123 of title 28; and(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521(a), but only on a motion by the United States trustee.11 U.S.C. § 707(a). What constitutes cause for dismissal is not defined, and the examples given are not exhaustive.  They have accordingly emphasized that the bar for finding bad faith is a high one. See, e.g., In re Zick, 931 F.2d 1124, 1129 (6th Cir. 1991) (explaining that bad faith exists “only in those egregious cases that entail concealed or misrepresented assets and/or sources of income, and excessive and continued expenditures, lavish life-style, and intention to avoid a large single debt based on conduct akin to fraud, misconduct, or gross negligence”). In short, bad faith exists only where “the petitioner has abused the provisions, purpose, or spirit of bankruptcy law.” In re Tamecki, 229 F.3d  205, 207 (3rd Cir. 2000).   The bad faith examination looks at the totality of the circumstances, and is best left to the discretion of the trial judge who can consider the credibility of the witnesses.  The factors in such examination include “[t]he debtor's lack of candor and completeness in his statements and schedules”; “[t]he debtor has sufficient resources to repay his debts, and leads a lavish lifestyle”; “[t]he debtor's motivation in filing is to avoid a large single debt incurred through conduct akin to fraud, misconduct, or gross negligence”; and “[t]he debtor's lack of attempt to repay creditors.”   McDow v. Smith, 295 B.R. 69, 79 at n 22 (E.D. Va. 2003).  The bankruptcy court held a three hour trial a substantial factor in filing was the wife's illness leaving her 100% incapacitated, resulting in requiring remodeling the home to allow her to live on the first floor, and requires substantial personal care for her.  Another substantial factor was that two of the disability policies were about to expire as of the filing date, which would result in a substantial increase in out of pocket medical expenses.  As to Mr. Romero, the court found his association with Stamford resulted in his inability to find work, and that he still owed $150,000 in legal fees resulting from the aggressive litigation of the receiver.  It noted Mr. Romero's attempts to settle the matter prior to filing, his turnover of nonexempt assets, and cooperation with the chapter 7 trustee.  It found his lifestyle comfortable but not extravagant, and found nothing duplicitous in his efforts to retain assets he would need to live off of in the future.  The receiver first complains that the case was filed solely to discharge his judgment.  The 4th Circuit first found this was not accurate for the reasons detailed by the bankruptcy court, but further found that filing in response to a single debt was not necessarily in bad faith without evidence of fraud or misconduct.   Next the receiver complained that bad faith was evidenced by Mr. Romero's attempts to pressure the receiver to settle the case with bankruptcy threatened as the alternative.  The 4th Circuit rejected this, noting that parties are encouraged to engage in settlement negotiations.    The final argument by the receiver was that he had the ability to repay the debt by selling his exempt assets.  The court noted a consensus that an ability to repay debts alone is not a grounds for dismissal of chapter 7.  In re Bushyhead, 525 B.R. 136, 148 (Bankr. N.D. Okla. 2015).  As the House Report noted, “[t]he section [§ 707(a) ] does not contemplate ... that the ability of the debtor to repay his debts in whole or in part constitutes adequate cause for dismissal.” H.R. Rep. No. 95-595, at 380 (1977). Such a conclusion also follows logically from the Code's fresh-start philosophy. A penniless start is not a fresh start. Were absolute depletion of one's assets a prerequisite for bankruptcy relief, debtors and their families would be left destitute and without the means to become productive members of society. This would increase the strain on our social safety net by increasing the number of people who might potentially qualify for government benefits.  Such a requirement would also undercut Congress' exemption scheme.         Finally, the court stressed that it remains for bankruptcy judges to detect in the first instance those cases of fraud upon the court and creditors that constitute cause for dismissal under § 707(a) or reason for a denial of discharge under the scenarios set forth in 11 U.S.C. § 727(a). The standard of review—one of abuse of discretion—is of paramount importance here. Michael Barnett hillsboroughbankruptcy.com   

By Judith OhikuareIn ye olden days, people were routinely tossed into debtors' prisons for bills in arrears. And, just this month, the ACLU charged that private debt collectors around the country have manipulated local courts and prosecutors' offices to resurrect the practice today. The shame that comes with being unable to pay a bill can be bad enough without the stress of being locked up for it. If you've been contacted by a creditor or collector, the first thing to do is to not freak out. You're not alone: Last year, the Consumer Financial Protection Bureau (CFPB) found that one-in-three people with a credit record had been contacted by a creditor or collector. Here are a few things to know if you're facing this issue and are wondering where to start.What Does It Mean When A Bill Goes Into Collections?The most basic thing to know about a collector is that they're calling to ask you to pay a bill. Debts that a collector may seek can include loans (such as a car loan or student loan), and past-due bills, such as a doctor's bill or a phone bill. "When you haven’t paid a bill for a certain amount of time, typically a few months, that service provider can send your account to a third party that deals with the effort of getting that debt from you," explains Lisa Rowan a lifestyle and personal finance expert at The Penny Hoarder. "That outside company is a collections agency that specializes in getting people to pay their bills, and they can often be aggressive." Some laws have been established to prevent debt collectors from harassing people who owe money, so don't feel like you have to be silent about shady tactics. "Don't panic!" Rowan advises. "Yes, they want your money, but debt collectors are not permitted to harass you or even call you outside of reasonable hours of the day. Before you respond to a late notice or call from a collector, go through your files (contracts, bills, estimates) and make sure you are informed about your situation. Think about some options, whether it be a payment plan or a lump-sum negotiation offer, before you call back or respond by mail." She also advises tamping down on worst-case scenarios by talking to a trusted friend or family member who can help you look over any paperwork with you, or sit in on a phone call.Is There Any Recourse Before A Bill Goes Into Collections?Contact your service provider (a doctor’s office, for example) directly instead of waiting for the bill to get sent to collections as many companies will offer payment plans, Rowan advises. If you're unable or too freaked out to make a plan with the company, commit to making one yourself. "Partial payments won't stop the overdue notices from coming, but showing progress on your balance can prevent your bill from going to collections," she adds. Once you get going, you might help your case by taking a deep breath and calling or writing to the company to let them know you are making progress and will keep doing so until you're back in the black.What Is The Potential Impact Of A Bill Going Into Collections?Debt collectors can report your unpaid debt to the major credit bureaus, who mark them on your report as delinquencies. Rowan says an unpaid bill can affect your credit score for up to seven years.  That's a long time — but it's not forever. Remember that an important factor of determining your credit score is your credit saturation limit: the ratio of total available credit you have to the amount you use. That ratio is ideally 30% or less. When you pay off debt — whether it's in collections or not, Rowan says — you are actively reducing that utilization rate. So focus on knocking out as much as you can, as soon as you can. "When that negative mark finally comes off your credit report, you’ll likely see an increase of about 14 points on your credit score, according to a study FICO conducted on its own data," Rowan says.Can You Ever Challenge Or Negotiate A Claim? You'll have more success doing so if you keep track of your paperwork. Before you speak to someone to set things straight, gather any records of what you spent and what you owe, Rowan says. Doing so will make it easier to avoid being steamrolled over the phone. "It's easy to get overwhelmed, but having whatever information handy can help you keep your cool and know where you stand," she explains. "So don’t throw out past-due bills, even if you know you can’t pay them right now. You need to be aware of the original charges and any late fees." If you're seeking a payment plan, be realistic rather than appeasing, she adds. Don't succumb to pressure to pay everything upfront if you simply can't and keep in mind what you can really afford to pay. "There may be fees for breaking the bill up into parts or accruing interest you'll need to keep in mind. For instance, if a bill collector wants you to pay $200 per month when you know you can only send in $150 per month reliably, tell them that," she says. "They'd rather get a smaller amount of money on a regular basis than have you flake on a payment plan." Finally, Rowan adds, you may also be able to drive a hard bargain by paying a large fraction of the full sum upfront in exchange for the full cost being forgiven. For example, if you owe $1,500 on a late bill but have $1,000 in your savings account, you can inquire about paying them that money on the terms that the bill goes away forever. "Ask about it," she urges. "They just might accept the offer. A business would rather wait a little while and get all the money it's owed" — you choosing to work out a payment plan directly with them, for example — "but the debt collection game is about making as much money as quickly as possible. A collector may take a smaller amount in exchange for being able to mark your name off the list." If they accept your terms, pat yourself on the back — and make sure to get whatever agreement you make in writing. © 2018 Refinery29

By Jessica Dickler Student loan borrowers may finally have their day in court. The Education Department said this week it will review when borrowers can discharge student loans, an indication it could become easier to expunge those loans in bankruptcy. The department said it is seeking public comment on how to evaluate undue hardship claims asserted by student loan borrowers to determine whether there is any need to modify how those claims in bankruptcy are evaluated. As of now, "it's almost impossible to discharge student loans in bankruptcy," said Mark Kantrowitz, a student loan expert. "The problem was undue hardship was never defined, and the case law has never led to a standardized definition." Meanwhile, college-loan balances in the United States have jumped to an all-time high of $1.4 trillion, according to Experian. The average outstanding balance is $34,144, up 62 percent over the last 10 years. Roughly 4.6 million borrowers were in default as of Sept. 30, also up significantly from previous years. The national student loan default rate is now over 11 percent, according to Department of Education data. Student loans are considered in default if you fail to make a monthly payment for 270 days. Your loan becomes delinquent the first day after you miss a payment. "I'm encouraged that they are asking the question," Kantrowitz said of the Department of Education's request for comment, although "this doesn't necessarily mean there will be any policy changes." Still, he added, bankruptcy should only be considered as a very last resort. People with unmanageable student debt have several options to consider: For starters, you may be able to postpone payments with a deferment or forbearance. A deferment lets you put your loan on hold for up to three years. If you don't qualify for a deferment, forbearance lets you temporarily suspend payments for up to one year. As a longer-term fix, income-based repayment plans allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold. And in certain situations, you can have your federal student loan forgiven, canceled or discharged, although that often comes with its own administrative hurdles. © 2018 CNBC LLC. All Rights Reserved. A Division of NBC Universal

   Judge Grandy in Illinois rejected a chapter 13 trustee's request to require debtors to pay interest to unsecured creditors on a 100% plan if they were extending the payment over a longer term than would have been required if they paid all of their disposable income. In re Eubanks, No. 17-40227, 2018 WL 947646  (Bankr. S.D. Ill. Feb. 16, 2018).  The debtors proposed a plan with a five year repayment schedule paying 100% to the unsecured claims.  The means test, form 122C-1 and 122C-2 showed $1,443.71 disposable income, but the plan proposed to only pay $1,220/month for 60 months.  The requirements as to disposable income in chapter 13 is set forth in Section 1325(b)(1) of the Bankruptcy Code.  This reads:(b)(1) If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan—(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or(B) the plan provides that all of the debtor's projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.  The requirement is set forth in the disjunctive.  Debtors are requirement to meet either of the two requirements: paying 100 to unsecured creditors or paying all their projected disposable income, not both.    The trustee also argued that the debtors failed to meet the good faith requirement of §1325(a). The trustee asserted that good faith would require either (1) a guarantee payment of excess disposable income in post confirmation modifications of the plan, or (2) to accelerate payment to unsecured creditors by including all disposable income in their monthly plan payment. The debtor argued that pursuant to Matter of Smith, 848 F.2d 813 (7th Cir. 1988) that the 'totality of circumstances' test for good faith continued to apply after passage of BAPCPA. as modified by §1325(b)(1) which removed the prior requirement for a specific payment or percentage payment to unsecured creditors. The trustee countered with In re Smith, 286 F.3d 461 (7th Cir. 2002) asserting that the 7th Circuit revised and expanded the good faith analysis by incorporating the following factors into the good faith inquiry: (1) whether the debtor is really trying to pay creditors to the reasonable limit of his ability or trying to thwart them; (2) whether the plan accurately reflects the debtor's financial condition and affords substantial protection to unsecured creditors; and (3) whether the plan, taken as a whole, indicates a fundamental fairness in dealing with one's creditors. In re Smith, 286 F.3d at 466.    Judge Grandy found the earlier Smith case more on point as to the disposable income argument.  Since Congress has now dealt with the issue [of a debtor's ability to pay] in the ability-to-pay provisions, there is no longer any reason for the amount of a debtor's payments to be considered as even a part of the good faith standard.... Only where there has been a showing of serious debtor misconduct or abuse should a chapter 13 plan be found lacking in good faith.Matter of Smith, 848 F.2d at 820–21 (citing 5 Collier on Bankruptcy, ¶ 1325.04[3] at 1325–17 (15th ed. 1988)   In order to fail the good faith test of §1325(b), the trustee must cite some other issue besides failure to pay all disposable income if the plan otherwise pays 100% to unsecured creditors.  For example a debtor who deducts substantial payments on the means test for luxury items may fail the good faith test despite satisfying the technical requirements of §1325(b). The court followed the intermediate approach to good faith.  If the proposed plan payment meets the requirements of § 1325(b)(1)(A) or (B), the amount of the payment will not be considered in a good faith analysis unless other, additional facts suggest bad faith. The ultimate determination of good faith will be made on a case-by-case basis using the Seventh Circuit's “totality of circumstances” test. That test includes consideration of such factors as (1) whether the plan accurately states the secured and unsecured debts of the debtor; (2) whether the plan correctly states debtor's expenses; (3) whether the percentage of repayment of unsecured debts is correct; (4) whether inaccuracies in the plan amount to an attempt to mislead the bankruptcy court; (5) whether the proposed payments indicate a fundamental fairness in dealing with creditors; (6) whether the debtor is really trying to pay creditors to the reasonable limit of his ability or trying to thwart them; and (7) whether the plan accurately reflects the debtor's financial condition and affords substantial protection to unsecured creditors.  As the only objection raised by the trustee was as to disposable income, the objection was overruled.     The trustee also requested that the debtor commit the excess disposable income to any future plan modifications.  Even if no such requirement exists under §1325(a)(3) the trustee argues for such a requirement under §105(a) of the code.  Such a requirement was included in the case of In re Crawford, 2016 WL 4089241 (Bankr.W.D.Tx. Aug. 24, 2016).  Judge Grandy rejected that argument, finding that nothing in the Code requires Debtors to make such a pledge. Furthermore, the Court finds that it cannot use its equitable powers under § 105(a) to impose the pledge as a condition of confirmation. Doing so modifies § 1325 by adding a requirement for confirmation not otherwise found in § 1325(a) or (b). Section 1325(a) provides that the court shall confirm a plan if all provisions of that statute are satisfied. Section 1325(b) contains additional provisions that must be met if an objection to confirmation is filed. In this case, the Debtors have satisfied the provisions of both § 1325(a)and § 1325(b). Using § 105(a) to impose further confirmation requirements—thereby modifying the Code's provisions governing chapter 13 plan confirmation—is clearly prohibited by Law v. Siegel, 134 S.Ct. 1188 (2014).  Finally, the trustee argued that §1325(b)(1)(A) requires the payment of interest to unsecured creditors if all disposable income is not paid in the plan.  The Trustee focuses on the language of § 1325(b)(1)(A). As previously stated, the statute provides that if the Trustee or an unsecured creditor objects to confirmation, the court may not approve the plan “unless, as of the effective date of the plan, the value of property to be distributed under the plan on account of such claim is not less than the amount of such claim.” 11 U.S.C. § 1325(b)(1)(A) (emphasis added). According to the Trustee, a present value requirement is inherent in the statute's language.  He compares the statute's language to that found in § 1325(a)(4) (liquidation test) and § 1325(a)(5)(B)(ii) (cramdown provision). The pertinent wording contained in those two statutes is as follows: “the value, as of the effective date of the plan, of property to be distributed under the plan.” 11 U.S.C. §§ 1325(a)(4) and 1325(a)(5)(B)(ii) (emphasis added).  Judge Grandy found that the different placement of the word value in the statute changed the resulting requirement as to interest.  The phrase “as of the effective date of the plan” in § 1325(b)(1) precedes the word “value.” In §§ 1325(a)(4) and (a)(5)(B)(ii) (and other “present value” Code provisions), however, the phrase “as of the effective date of the plan” follows and clearly modifies the word “value.” In re Stewart–Harrel, 443 B.R. 219, 222 (Bankr.N.D.Ga. 2011). As explained by the court in  In re Edward, 560 B.R. 797 (Bankr.W.D.Wa. 2016), “the phrase ‘as of the effective date of the plan’ [in § 1325(b)(1) ] is simply a reference to when the Court determines what is being paid to the allowed unsecured claims, i.e., either (A) the amount of such claim, or (B) the debtor's projected disposable income in the applicable commitment period.” In re Edward, 560 B.R. at 800 (emphasis in original). See also In re Stewart Harrel, 443 B.R. at 222 (“effective date of the plan” in § 1325(b)(1) refers to the date as of which the court is to make the determination of either (A), payment in full, or (B), payment of all projected disposable income). Collier's supports this interpretation of § 1325(b)(1)(A):[T]his subsection requires only payment of such claims in full, and not payment of property having a “value as of the effective date of the plan” equal to full payment. It does not require payment of the present value of the claim, though such payment may be independently required under the best interests of the creditors standard.... Although the words “as of the effective date of the plan” appear earlier in subsection 1325(b), their presence does not appear to indicate a requirement of plan payments having a present value equal to the full amount of unsecured claims. If this had been Congress's intent, Congress would presumably have used the same language as it used elsewhere to indicate a present value test, “value, as of the effective date of the plan....” It seems more likely that the words “as of the effective date of the plan” in subsection 1325(b) refer only to the timing of the court's analysis under that subsection.8 Collier on Bankruptcy, ¶ 1325.11[3] at 1325–57 (16th ed. 2017).   §1325(a)(4) logically would require payment of interest in that chapter 7 creditors have a right to immediate payment of their claim upon liquidation of nonexempt assets, thus interest is required in chapter 13 to put the creditors back in the position they would have been if it had been a chapter 7 case.  However creditors in chapter 13 have no such right to immediate payment of their claims.  Michael Barnett Hillsboroughbankruptcy.com

   A credit union found out the hard way that the sole fact that a debt was incurred fairly recently before filing chapter 7 does not make it nondischargeable.  In IN RE: BYRON STEWART DEBTOR LOUISIANA CENTRAL CREDIT UNION PLAINTIFF V. BYRON STEWART DEFENDANT, No. 17-11031, 2018 WL 909970 (Bankr. E.D. La. Feb. 14, 2018), a credit union sued a debtor under §727(a)(4) and (a)(5) as well as §523(a)(2)(A) and (a)(6) over a refinancing of a loan done 62 days prior to filing a chapter 7 petition.  The loan was originally taken out in 2006, and the Mr. Stewart periodically refinanced the loan with the credit union, taking out additional advances on each refinancing.  The payments on the loan were made by debits against his wages.  In February 2017 debtor sought a 6th refinancing with a $2,000 advance to pay down past due loans to three finance companies.  The credit union ran a credit report showing he was past due on the three finance company debts, but agreed to refinance the current balance of the credit union loan of $1,753.21 at 24% and provide Mr. Stewart an additional $500.  The credit union was aware this would be insufficient to bring the finance company loans current.  No financial statement was requested by the credit union for this refinancing.  In April 2017 one of the finance companies sued Mr. Stewart, resulting in a chapter 7 bankruptcy filing on 24 April 2017.  Mr. Stewart had made 9 weekly payments on the refinanced credit union loan at the time of filing, and was current on the loan.  The credit union filed a complaint objecting to the discharge under §727(a)(4) and (a)(5) and objecting to the dischargeability of their debt under §523(a)(2)(A) and (a)(6).  Section 727 provides:(a) The court shall grant the debtor a discharge, unless- ...(4) the debtor knowingly and fraudulently, in or in connection with the case-(A) made a false oath or account; ...(5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities; ...  The credit union did not attend the 341 meeting, and did not seek to examine the debtor under Rule 2004 or to depose the debtor.  It did not present any evidence of a misrepresentation of assets or a loss of assets, and the counts under §727 were denied. Section 523 provides:(a) A discharge under section 727 ... does no discharge an individual debtor from any debt- ...(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by-(A) false pretenses, false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition;...(6) for willful and malicious injury by the debtor to another entity or to the property of another entity; ...     In order to show a fraudulent representation, a creditor must show 1) the debtor made representations; (2) at the time they were made the debtor knew they were false; (3) the debtor made the representations with the intention and purpose to deceive the creditor; (4) that the creditor relied on such representations; and (5) that the creditor sustained losses as a proximate result of the representations.  Matter of Selenberg, 856 F.3d 393, 398 (5th Cir. 2017).   At the time of the refinancing, the credit union was aware Mr. Stewart wanted $2,000 to catch up the finance company loans, and had pulled a credit report showing the debts and delinquency on them, as well as that the amount provided in the refinancing would be insufficient to bring the debts current.  The evidence does not support any misrepresentation by Mr. Steward, rather shows he intended to, and in fact did pay the credit union until the lawsuit by the finance company was filed.     The credit union also sought to have the debt determined nondischargeable under §523(a)(6).  This requires a showing of willful and malicious injury.   An injury is “willful and malicious” where there is either an objective substantial certainty of harm or a subjective motive to cause harm.  Mr. Stewart's repeated prior refinancing and payments of this debt show there was no  “objective substantial certainty of harm and continued payments until the bankruptcy filing in this case show that he had no “subjective motive to cause harm.”  Thus the credit union failed to meet it's burden under §523.  Mr. Stewart's counsel requested that the credit union pay his fees under Section 523(d).  This provides:If a creditor requests a determination of dischargeability of a consumer debt under subsection (a)(2) of this section, and such debt is discharged, the court shall grant judgment in favor of the debtor for the costs of, and a reasonable attorney's fee for, the proceeding if the court finds that the position of the creditor was not substantially justified, except that the court shall not award such costs and fees if special circumstances would make the award unjust.  Since the credit union filed under §523(a)(2) and the request was denied, the court is required to assess fees against it if it finds the complaint was not substantially justified.  Substantially justified” means “justified to a degree that could satisfy a reasonable person.  Pierce v. Underwood, 487 U.S. 552, 566, 108 S.Ct. 2541, 1550 (1988).    The collection manager made the decision to file the complaint because she inaccurately believed that a debt incurred within 90 days of the bankruptcy could not be discharged in the bankruptcy.  It was frivolous to file such a suit without researching the law and understanding the burden of proof.  The credit union did no investigation prior to filing, such as questioning the debtor at the 341 meeting or deposing him; and did not ask whether there was a change in circumstances such as the filing of the suit by the finance company. The great majority of the credit union loan was the refinancing of the prior loan.  The continued payments until the filing also show a lack of fraudulent intent.    The Court granted Mr. Stewart's counsel's request for fees to be taxed against the credit union.Michael Barnett hillsboroughbankruptcy.com

By Andrew Kreighbaum The Department of Education signaled Monday that it is interested in tweaking the standards used for determining whether student loan debt can be discharged in bankruptcy. That could point to an opening for potential bipartisan cooperation between the department and Democrats like Senator Elizabeth Warren, who have long sought to loosen bankruptcy law so student borrowers can discharge their debt. However, what steps the department might take in that regard, including issuing new guidance or working with Congress to change the law, are unclear. In a Federal Register notice, it requested public comments on the process for evaluating claims of “undue hardship” -- the standard student borrowers must clear to be able to discharge their loans through bankruptcy. An Education Department spokeswoman said the notice should speak for itself. The document doesn’t indicate the steps the department may take, but consumer groups that work on student loans and bankruptcy issues said it would be hard to narrow the current standards. Getting student loans discharged through bankruptcy is notoriously difficult. A 2005 federal law barred most student loan borrowers from that option unless they could demonstrate that they would suffer undue hardship from being forced to pay the loans. Congress, however, has never defined what undue hardship means and didn’t delegate to the department the ability to do so. That’s left it to the courts to establish their own standards. But debt holders and Department of Education contractors have often sought to aggressively block those undue hardship claims via litigation. “It’s a very difficult hurdle for most consumers,” said John Rao, an attorney with the National Consumer Law Center and an expert on bankruptcy issues. In 2014, the obstacles created by contractors prompted congressional Democrats, including Warren, to write to then education secretary Arne Duncan urging new federal guidance that would make clear specific minimum criteria for an undue hardship claim. Among those criteria, the Democrats wrote that receiving disability benefits under the Social Security Act or being determined to be unemployable because of a service-connected disability should qualify a borrower as having an undue hardship. Contractors should accept proof of those or other criteria from a borrower without a formal litigation discovery process, the Democrats said. The guidance released by the department the following year disappointed many Democrats and consumer advocates. Clare McCann, deputy director of higher education policy at New America and a former Obama Education Department official, said the department’s call for comments appears to signal that it wants to broaden the definition of undue hardship. She said whatever change the department or Congress makes will have to strike the proper balance. “You want to make sure it captures people who aren’t able to pay and won’t be able to pay over the long run, so you’re not wasting energy collecting debts you’ll never be able to collect on,” she said of the standards. Opening up bankruptcy standards too wide, McCann said, could mean the federal student loan program becomes much more costly. A report this month from the Department of Education’s inspector general found that the popularity of income-driven repayment plans and loan forgiveness programs could mean the federal government soon starts losing money on the student loan program. But Rao said only a small percentage of consumer borrowers file for bankruptcy now. “These are individuals who have some kind of hardship that is lasting, or they’re in a position where maybe they went to college and never got a degree,” he said. “In the case of some borrowers, they’re just not going to be able to repay the loan.” Jason Delisle, a resident fellow at the American Enterprise Institute, said after the addition of multiple income-driven repayment programs for student loans since 2005, there is less of a case to be made for widening bankruptcy standards for federal student loans than for private loans. “There are costs that go well beyond discharging loans for people who can’t pay,” he said. “There are also costs to discharge loans for people who can pay.”  Copyright 2018 Inside Higher Ed.  All rights reserved.