Fast Track Debt Relief Violates Virginia Consumer Protection Law I’m a bankruptcy lawyer, in Woodbridge Virginia. I see a lot of people ripped off by debt settlement scams, before they come to see me. Last month, a judge in Fairfax County agreed with me that Fast Track Debt Relief violated the Virginia Consumer Protection Act. […]The post Fast Track Debt Relief Violates Virginia Consumer Law by Robert Weed appeared first on Robert Weed.

Written By: Daniel Hart Edited By: Salene Kraemer                    From time to time, we have clients buy into a franchise or occasionally want to franchise his or her own business concept.                  Franchising is a business model that combines aspects of working for yourself and working for someone else.  It is an efficient system for an individual who wants to own/run a business but lacks the experience to do so.  Within the United States, there are about 3,000 established franchise brands operating in over 200 different lines of business.  A franchise is a legal and commercial relationship between the owner of a trademark, trade name, and business system (franchisor) and an individual or group wishing to use that identification in a business (franchisee).  The most common form of franchising is product/trade name franchising in which a franchisor owns the right to a trade name and/or trademark and licenses the rights to use those. Buying a franchise offers many advantages that is not available to an individual starting a business from scratch.  Here are a few examples:  Proven business system and brand name. Through years of experience and trial and error, franchisors have developed a business system and brand name that are successful. Pre-existing business relationships. Many franchises have existing relationships with suppliers, distributers, and advertisers that franchisees can utilize.  Entrepreneurs must develop these relationships on their own. Quality market research. Typically, a franchisor will perform substantial market research into competition and the demand for the product or service in a specific location before allowing a franchisee to open a franchise there. Similar to an entrepreneur opening their own business, a franchisee must spend a substantial amount in order to obtain their own franchise. First, there is an initial franchise fee, which is a one-time charge assessed to a franchisee in order to use the business concept and trademarks, attend training program, and learn the entire business.  Franchise fees can have varying ranges depending on the size of the franchise system.  This can range from as low as $2,000 to over $100,000. Depending on the specific type of business that you franchise, a variety of additional up-front costs can occur.  These costs include rent/construction cost of building new facility, equipment, signage, initial inventory, working capital, and advertising fees. After these initial costs and fees, a franchisee generally pays the franchisor royalties running around 5 to 8 percent of gross revenue plus contributing funds to a company-wide advertising program. Many people may ask “why should I pay tens of thousands or hundreds of thousands of dollars before I start and then a royalty percentage every year after that?”  For some, the answer is clear.  By opening their own franchise of an already successful name-brand business, many can make more money quicker than opening their own business.  Also, there is a greater likelihood that long-term return on their investment will be realized. As with starting any business, it is vital to perform due diligence before investing in a franchise.  Here are some examples of basic information you need to discover before committing to a franchise:   Research growth potential. Simply, you need to make sure that there is a strong-likelihood that you can increase profits and have a successful business.  Also, is there a market for your business where your location will be? Check consumer and franchise regulators. Check these within your state to see if there are any serious problems with that company. Check with the Better Business Bureau for any complaints against the company. Search public court records. Is the company involved in any litigation? If so, determine the nature of the lawsuit.  If the nature of the lawsuit involves fraud or regulatory violations, that is a bad sign. Request a Franchise Disclosure Statement: By law, this document must be given to all prospective franchisees at least 10 business days before any agreement is signed. A franchise disclosure statement (FDD) contains an extensive description of the company.  It includes information such as amount of fees required, any litigation/bankruptcy history, trademark information, advertising program, equipment you are required to purchase, and the contractual obligations of both franchisor and franchisee.  If a franchise will not give you a FDD, you probably should not do business with that company. Contact other franchisees: The FDD should contain a list of existing and terminated franchisees. Use this list to your advantage.  Contact current franchisees in order to gain insight as to whether or not the training was helpful, how well the franchisor responds to your needs, and whether sales/profits met their expectations.  Reach out to a couple terminated franchisees as well.  Ask why their franchise agreement was terminated.  Was it due to lack of business, bad franchisor, or for some other reason?  Also, if the list of terminated franchisees is quite lengthy, that might be a sign that that franchise is not doing well. Visit a current franchise location: This can give you a lot of information. You can determine whether or not that franchise has a healthy flow of customers.  You might get an in-person conversation with a current franchisee and see how the operations are run. By performing due diligence, you will have a clear picture as to whether or not you will buy a successful franchise and whether or not you will be doing business with a helpful franchisor or not. Finally, work with a lawyer and accountant when undergoing the franchising process.  Lawyers have expertise in performing research and can assist in reviewing and negotiating the franchising contract.  An accountant can review any financial reports concerning the franchise and project profitability for the future.

I came across a woman recently who was considering chapter 7 bankruptcy. She had a home that was underwater by more than $175,000. She had absolutely no intention of keeping the home. Her goal was to stay in the home for as long as possible, surrender it to the lender after a sheriff sale, and+ Read More The post When Assets Are Potentially At Risk, Stick With Chapter 13 appeared first on David M. Siegel.

Nobody wants to file for bankruptcy.  However, circumstances can spiral out of control and you can find yourself without any choice.  You were laid off from work or had unexpected medical bills. You had to make a choice between paying the monthly credit card bills or putting food on the table.  The choice is easy. + Read More The post Taxes Owed To The IRS Could Be Discharged In A Chapter 7 Bankruptcy appeared first on David M. Siegel.

By Ron LieberSo someone has asked you to co-sign for a student loan.Chances are, it’s your child or grandchild, or perhaps a niece or nephew. You have unrelenting faith in this teenage freshman, or near certainty that graduate school will lead to a lifetime of gainful employment. And maybe you feel badly that the family has not been able to save enough to pay the bills outright.Fine. But be very, very careful.When you co-sign for a loan, you, too, are responsible for it. If the primary borrower can’t pay, you have to. If that borrower pays late, your credit could get nicked as well. And the mere existence of the loan on your credit report may keep you from being able to get other kinds of loans, since lenders don’t always want to do business with people who already have a lot of debt.In some cases, the lender will try to collect from a co-signer even if the primary borrower is dead, as a recent collaboration between ProPublica and The New York Times revealed. Legislators in New Jersey held hearings on the matter this week.After a postrecession lull, the so-called private loans — which generally have less favorable rates and terms than federal loans, and tend to require co-signers — are making a comeback of sorts. About one in 10 undergraduates takes one out, according to Sallie Mae, the biggest lender. Undergraduate and graduate students together borrow $10 billion to $12 billion in new private loans each year, according to MeasureOne, a market research and consulting firm, and the trajectory has been upward since the 2010-11 school year. The $102 billion in outstanding private student loans make up just 7.5 percent of the $1.36 trillion in total student loan debt; the rest is made up of federal student loans. Undergraduates, however, can borrow only so much each year from the federal government before hitting limits.So for anyone who wants to borrow more, there are the private loans, which usually come from Sallie Mae, banks and credit unions or other entities. The Consumer Financial Protection Bureau has a helpful guide on its site that explains the difference between federal and private loans in some detail.Most private lenders require borrowers to have a co-signer to get a loan at all or to get a better rate. During the 2015-16 academic year, 94 percent of new undergraduate private loans had a co-signer, while 61 percent of graduate school loans did, according to MeasureOne’s analysis of data from six large lenders that make up about two-thirds of the overall market. Tempted to help out by lending your signature and good credit history to someone? Your participation could indeed make a difference. Credible, an online loan marketplace, examined about 8,000 loans and found that undergraduates looking for loans who had co-signers qualified for loans with (mostly variable) interest rates averaging 5.37 percent. Students flying solo got a 7.46 percent quote.For graduate students, the numbers were 4.59 percent for duos and 6.21 percent for people going it alone. For its average undergraduate loan — $19,232, paid off in eight years — the savings over time would be $1,896, which comes to about $20 a month.But co-signing comes with plenty of risk. The Consumer Financial Protection Bureau outlined a number of them in a report it issued last year. In theory, most lenders provide a process by which the co-signer can be removed from the loan at the primary borrower’s request.Perhaps the biggest concern for co-signers ought to be the bureau’s assertion last year that lenders turn down 90 percent of the borrowers who apply for these releases. The bureau’s director, Richard Cordray, described the process as “broken.”But Sallie Mae said that more than half of its borrowers who make this request succeed. For PNC, the figure was 45 percent for the last 12 months. Citizens Bank reported a 64 percent number, while Wells Fargo said so few people had asked for a release that it did not track the number. (It’s possible that many don’t know that it’s possible, as the bureau chided lenders for not making the rules clear.)What accounts for this gap? The bureau’s sample includes many loans that the original lenders sold to investors. These anonymous loan owners may not have the same incentive to be customer-friendly as big-name banks.Some co-signers can’t get a release because the primary borrower doesn’t have sufficient income or a good enough credit score — fair and square. But sometimes it’s neither fair nor square. The bureau reports numerous instances where people make several months’ worth of payments in a lump sum but then don’t get credit for the consecutive monthly payments that some lenders use to keep score on people who are aiming to release their co-signers.Worse still, co-signers who make payments themselves may discover after the fact that the lender requires the primary borrower to make years of on-time monthly payments before it will consider a release. So efforts by the co-signer to help the primary borrower stay on track may foil their very attempt to get themselves off the loan later.There are rarer horrors, too, where the death or the bankruptcy of the co-signer causes an automatic default, according to the bureau. At that point, a mourning child can receive a bill for the full balance, and debt collectors may chase after the executor of the estate for a dead grandfather who co-signed a loan years ago. The big banks that offer private student loans say they do no such things.As for more likely events, like credit-sullying late payments, just 4.37 percent of borrowers were at least 30 days late on their loans at the end of the first quarter, according to MeasureOne’s look at the big private lenders. But it’s not necessarily the same 4.37 percent who are overdue at any given moment. Moreover, that number will go higher during the next downturn, and there might be more than one bad economic cycle during any individual’s tenure as a co-signer.A CreditCards.com survey of people who had co-signed on loans of all sorts found that 38 percent ended up paying at least some money, 28 percent were aware of damage to their credit and 26 percent saw relationships suffer as a result.So where does this leave someone trying to help and tempted to co-sign? The tough-love reply goes like this: If you need a private loan as an undergraduate especially, then your college of choice is simply not affordable. Federal loans plus savings and current income should be enough to pay all of your costs, and if they aren’t, then it’s community college and living at home for you. And no, we won’t take the debt on in our names only or yank money from home equity, since we need to think about retirement and not be a burden to you later.But can you really bring yourself, as a parent in particular, to deny a teenager or an ambitious graduate student a shot at the better opportunities that a more prestigious and expensive school might bring, as long as the debt isn’t outsize? Even an aspiring engineer who will earn plenty?Many people simply will not be able to say no. So a few words for them. First, keep in mind that the teenagers you’re betting on may never graduate. And if they don’t, the odds are higher of the co-signer being liable for the private loan while the college dropout earns a modest hourly wage. So be especially wary if you think there is even a chance that your child or grandchild is not committed to college.Finally, look the primary borrower in the eye and draw out a commitment of total and utter transparency. “Don’t assume that the primary borrower is making the payments, and make sure you have an open enough dialogue that they will tell you about it before they miss that payment,” said Dan Macklin, co-founder of SoFi, a company that helps many people refinance older student loans. “I’ve seen too many people where it’s an embarrassment and not spoken about, and it’s not very healthy.”Copyright 2016 The New York Times Company.  All rights reserved.

Loan modifications come in many different forms and at many different times as they relate to a bankruptcy filing. The most common loan modification is one that avoids bankruptcy entirely. I’m referring to a person or couple that fall behind on their mortgage, reach out to their lender for loss mitigation opportunities and are lucky+ Read More The post Filing Bankruptcy Should Not Kill A Loan Modification appeared first on David M. Siegel.

Bankruptcy is The Best Credit Repair for Most People Is bad credit costing you thousands of dollars every year?  It is, if you are paying more than 5% on your car loan.  People with great credit are paying less than 3.0%.  The difference between 3% car loan and an 18% car loan on a $24,000 car […]The post Bankruptcy: The Best Credit Repair for Most People by Robert Weed appeared first on Robert Weed.

This is the bankruptcy case study for Ms. Jones who resides in Joliet, Illinois. Ms. Jones was in the office today to determine whether or not Chapter 7 or Chapter 13 bankruptcy will provide some needed relief. Let’s go through the facts and details of her case. Ms. Jones is not a homeowner. She is+ Read More The post Bankruptcy Case Study For Ms. Jones appeared first on David M. Siegel.

One of the challenges faced when filing bankruptcy is dealing with automobiles. This is even more challenging when a couple is filing joint bankruptcy and they owe money on one or more automobiles. Because it is important to understand just how to deal with cars, a Troy, Ohio Bankruptcy Attorney explains the various options. When you owe nothing on the car Reaffirmation agreements in bankruptcy When you file for Chapter 7 bankruptcy, the trustee may consider liquidating some of your assets in order to pay your debts. Fortunately, there is an exemption for your motor vehicle that is just under $4,000. For joint bankruptcy, this exemption may be doubled. However, it is important to note that your name must be on the title and if you are filing a joint bankruptcy, both spouses names must be on the title. If you own two vehicles, the trustee may “force” the sale of one in order to pay off other debts. When you owe money on the car There are two scenarios what may occur if you owe money on your vehicle and are going through a Chapter 7 bankruptcy. Both are slightly complicated and are: Reaffirmation of debt – you basically reaffirm the debt and agree to make all payments on your car in spite of the bankruptcy Redemption – in this scenario, you will need the assistance of your creditor. As a debtor, you offer to pay for the vehicle at the current market value. If the creditor accepts these terms, then you will be able to keep your vehicle and will owe nothing more Possible exclusions and options Keep in mind that bankruptcy laws offer debtors some protections. There are some possible exclusions and additional options when dealing with vehicles. Some of these include: Use for employment – for those who use their vehicle for employment purposes (e.g., salesman, trucks for landscaping, etc.) there is an option to keep your vehicle Assistive equipment – if your vehicle is specifically designed to assist you with mobility due to a disability, you may also claim an exemption Wildcard combination – if you have two vehicles, you may be able to use your “wildcard” exemption to protect the second vehicle Bankruptcy law is very confusing and if you have one or more motor vehicles you may be even more confused. Instead of trying to figure out if you can keep your car (or cars), it’s a good idea to contact Chris Wesner Law Office, LLC for help. We can help make sure you understand what options are available to help you keep your car. The post Troy, Ohio Bankruptcy Attorney discusses automobiles and bankruptcy appeared first on Chris Wesner Law Office.

One challenge in confirming a chapter 11 plan is finding an impaired accepting class without counting votes of insiders as required by 11 U.S.C. Sec. 1129(a)(10).   A new opinion from the District Court of Arizona makes that job easier in cases with jointly administered debtors.   In re Transwest Properties, Inc., 2016 U.S. Dist. LEXIS 102575 (D. Ariz. 6/22/16).  The Transwest case involved five cases that were jointly administered but not substantively consolidated.    The organizational structure consisted of a holding company, two mezzanine companies and two operating companies.   The debtors proposed a plan in which the mezzanine debtors would be dissolved and the operating companies would be owned by an investor contributing new capital under the plan.    The principal secured creditor (Lender), which had acquired the mezzanine debt during the case, voted against the plan.   Lender argued that because it held the only claim in the mezzanine debtor cases that the plan could not be confirmed under section 1129(a)(10).   The bankruptcy court approved the plan.   Lender appealed.    On the first appeal, the district court dismissed the case as equitably moot.   The Ninth Circuit reversed and sent the case back to the district court.On remand, the District Court noted a split in authority as to whether section 1129(a)(10) applied on a per plan or a per debtor basis.   The Lender relied on two cases from the Bankruptcy Court of Delaware to argue that there had to be an accepting vote in each case.  In re Tribune, 464 B.R. 126 (Bankr. D. Del. 2011), and In re JER/Jameson Mezz Borrower II, LLC, 461 B.R. 293 (Bankr. D. Del. 2011).    The Debtors relied on cases from the bankruptcy courts for the Southern District of New York and Middle District of Pennsylvania.  In re SPGA, Inc., 2001 WL 34750646 (Bankr. M.D. Pa. 2001), In re Enron Corp., 2004 Bankr. LEXIS 2549 (Bankr. S.D.N.Y. 2004), and In re Charter Communications, 419 B.R. 221, 266 (Bankr. S.D.N.Y. 2009).   Thus, a district court in Arizona was called upon to resolve a split between East Coast bankruptcy courts.Rather than relying on the rationales advanced by the competing bankruptcy courts, the District Court applied a plain meaning analysis.    Here, the Court finds that § 1129(a)(10) applies on a per-plan basis. First, unlike the Tribunecourt, this Court finds the plain language of the statute to be dispositive. The statute states that "[i]f a class of claims is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan" then the court shall confirm the plan if additional requirements are met. 11 U.S.C. § 1129(a)(10) (emphasis added). Thus, once an impaired class has accepted the plan, § 1129(a)(10) is satisfied as to all debtors because all debtors are being reorganized under a joint plan of reorganization.In re Transwest Properties, Inc., at *15.   The District Court opinion takes a perfectly defensible position.    Section 1129(a)(10) is a technical requirement.   Therefore, technical compliance should be sufficient.