<![CDATA[Holly Roark, Bankruptcy Attorney in Idaho - Blog]]>Mon, 09 Sep 2024 15:26:56 -0700Weebly<![CDATA[Things to look out for with credit unions]]>Mon, 17 Oct 2016 03:08:32 GMThttp://hollyroarklaw.com/blog/things-to-look-out-for-with-credit-unionsIf you have a car loan with a credit union, most likely the car also serves as collateral for any other sums you may owe them, such as on a credit card or a line of credit. Read the find print on the security agreement for your car loan. This is called "cross-collateralization" and is important when you are filing a bankruptcy. You may find yourself in a situation several years after a bankruptcy discharge, when you pay off your car loan and ask for your title to the vehicle, the credit union may refuse to send you the title until you pay off the credit card as well! You might tell them that the credit card was discharged in the bankruptcy, at which point they will pull out the security agreement and advise you that, actually, the car is collateral for the credit card and so the credit card was actually a "secured debt"!

A way to avoid this would be to not take any any credit lines or credit cards with your credit union if you also owe them on a car loan. Alternatively, prior to filing bankruptcy, you could refinance the car loan with another lender and effectively "take out" the credit union. If at the time the new loan "takes out" the old loan the credit union does not ask that the new lender also pay off the credit line/credit card, then you will likely be in the clear and the credit union will effectively lose its "collateral" for the credit line since they will have released the collateral that was the subject of the security agreement.

Another thing to look out for is that more and more credit unions are starting to close people's bank accounts when they file bankruptcy if there is also a balance owed. So, prior to filing bankruptcy, you may want to switch your checking and savings accounts to a bank where you don't also owe money, along with switching your direct deposits and bill payments.  Unfortunately, non-credit unions are also starting to close checking and savings accounts as well when a person files bankruptcy and owes the bank money. Since, in my experience, no credit union or bank is uniform in their policies with respect to this issue, it's impossible to predict who may do this and to whom. It is just something to be alert about and something you may want to address prior to filing your bankruptcy case.]]><![CDATA[Questions and Answers]]>Sun, 24 Jan 2016 14:09:12 GMThttp://hollyroarklaw.com/blog/january-24th-2016 ]]><![CDATA[How Does Debt Settlement Work?]]>Sun, 24 Jan 2016 13:03:55 GMThttp://hollyroarklaw.com/blog/debt-settlementHow does debt settlement work? Settling debt requires skillful negotiation with the creditor.  Often, to get the best settlement, you will need to be able to pay a lump sum. Some creditors will accept long term payment plans, but in those instances, the creditor will want a higher overall amount in order to account for the risk of accepting payments long term.

Creditors are not inclined to work with you if you haven't defaulted. They figure that since you seem to be making your minimum payments just fine, there is no reason to cut you a break.  The exception may be if you are elderly and on social security, or you lost your job and will not be returning to the work place due to illness or injury. If you can show that your circumstances have just recently changed and that your situation is likely to persist, they may be willing to negotiate before you have actually defaulted.

In cases where you have long defaulted, the longer you default, the better the deal you are likely to get. Even if the creditor has sued you, or even if they have obtained a judgment and are garnishing your wages, a settlement can still generally be reached. I have personally negotiated settlements on the eve of trial, and also after a judgment has been entered.

One thing to keep in mind is that any sums forgiven in a debt settlement will result in a tax consequence for that year. The IRS considers this to be "cancellation of debt" income, and the creditor will send you a 1099 for that tax year.  You will need to consult with a CPA to see whether you qualify for an exception to this tax. If you are insolvent under the IRS definition of insolvency, you might qualify for an exception and not have to pay the tax.  Be sure to ask your CPA about this.

Keep track of all your communications with any creditor or collection agency. If they are abusive to you in any way, including threatening you on the phone, or calling your friends and neighbors and disclosing that you allegedly owe money, you may have rights against them and may be entitled to damages.

Be aware that there are a lot of scams out there these days where the alleged creditor will call and threaten you will jail if you don't pay up. This is not how collection works. You will not go to jail for not paying your credit card bill. If you get a phone call of this type, including from someone claiming to be from the IRS, please take down their information and call me immediately. This is a scam. The IRS does not work this way. I have had several vulnerable clients be frightened into paying money to these horrible fraudsters. Do not be afraid of such people. They do not have the power to put you in jail. They are scammers.

Be careful of "debt settlement" companies or "debt consolidation" companies.  I have had at least two clients who have paid in excess of $15,000 each to such companies, only to have those companies close down and run off with the money without settling any of the debts.

At Roark Law Offices, I take debt settlement cases on a contingency fee basis. You will pay nothing to me unless I successfully settle a debt to your satisfaction.  (If the creditor has already sued you and I need to represent you in the lawsuit, you will have to pay court costs such as filing fees.)

Call me at 208-536-3638 to inquire about my debt settlement services.
]]><![CDATA[From the National Consumer Bankruptcy Rights Center - Proposed Bill Eliminates Student Loan Discharge Exception]]>Fri, 18 Sep 2015 05:23:33 GMThttp://hollyroarklaw.com/blog/-from-the-national-consumer-bankruptcy-rights-center-proposed-bill-eliminates-student-loan-discharge-exceptionFrom the National Consumer Bankruptcy Rights Center:  http://www.ncbrc.org/blog/2015/09/15/proposed-bill-eliminates-student-loan-discharge-exception/

On September 8, 2015, Michigan Congressman Dan Kildee introduced a bill in Congress intended to reduce the burden on students and their families caused by the ever-increasing costs of higher education and the financial stress of student loans. H.R. 3451. The proposed legislation removes student loans from section 523(a)’s exceptions to discharge, thereby clearing the way for student loans to be discharged in bankruptcy just as credit card debts and car loans are currently dischargeable. In a statement issued by Mr. Kildee’s office, the necessity for the legislation was founded on his concern that “[s]tudent loan debt has soared in recent years, and there are now over 40 million federal and private student loan borrowers who collectively owe $1.2 trillion in student loans. The average student has $28,400 of loan debt, and total student loan debt in the U.S. has now surpassed credit card and auto loan debt totals.” In a press conference, Mr. Kildee explained: “It’s increasing[ly] clear that well educated society is absolutely necessary to a sustainable economy and to an equitable society that more fairly allocates the vast wealth that we create in this nation. The path to doing that is to make college affordable to more and more people. I think it’s important for us to remind ourselves that a college education for a young person in our state is valuable not just to them [but] for all of us and we should be willing to invest in it.”

Mr. Kildee also introduced two other bills dealing with student loans, one of which would exempt Pell Grants and scholarships from income taxes, and the other which would eliminate some private lenders’ unfair practice of automatically treating loans as being in default when a student’s cosigner dies even where the payments on those loans are current.

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