Sonoma County Lawyer Blog

After years of studying and spending tens of hundreds of hours in the library, you're finally free from school.

Unfortunately, you're not free of the student loan debt you accumulated.

If you just graduated from law school or medical school, your student loans will be even higher and possibly saddle you with debt you'll need to repay for many years to come.

The good news - if you consider this good news - is that you're not alone. It is now estimated that 70 percent of the graduating classes of 2013 owe an average of $35,200.

$1.1 Trillion in Student Loan Debt

According to the Consumer Financial Protection Bureau and the Department of Education, 38 million student-loan borrowers now owe in excess of $1.1 trillion. Their debt includes federal, state and private loans and loans made by their families. Some students placed a portion of their debt on their credit cards and are paying exorbitant interest rates.

The student loan debt in California is lower than the debt in New York but more students in California are delinquent in repaying their debt, according to a Wall Street Journal report. Some experts believe this discrepancy is due to students attending East Coast private schools that better equipped them to repay their loan debt.

Hello, McDonalds!

Continue reading "Are Santa Rosa College Students Headed for Bankruptcy?" »

Sonoma County foreclosures may be less common than they were two years ago, but they continue to besiege financially vulnerable homeowners.

According to The Real Estate Report, notices of default in Sonoma County - the first step in the foreclosure process - jumped 52.1% in February. But the good news is that there were still down by 70.1% from the previous year.

Due to the avalanche of foreclosures in recent years, banks continue to own about 685 properties in the county.

Financial Vulnerability Breeds New Forms of Fraud

The Great Recession saw too many people lose their jobs and their homes. Unfortunately, unscrupulous individuals saw a window of opportunity amid this atmosphere of pain and financial uncertainty.

As part of their fraud, companies cropped up, claiming they could prevent foreclosure by negotiating with a consumer's lender or obtaining a loan modification.
These services were offered at a price and naïve and desperate homeowners facing the prospect of foreclosure gladly paid the fee.

Many of the companies pretended to be affiliated with the government or government housing assistance programs. Others falsely claimed to offer legal services or "audits" of consumers' loan paperwork to help them negotiate a resolution with their lenders.
Unfortunately, promised services were never delivered.

Continue reading "Financial Instability of Sonoma County Families Breeds New Forms of Fraud" »

Have you checked your credit card report lately? It could have errors that are causing you to unnecessarily pay higher interest payments, mortgage and vehicle loans, and insurance premiums. Those errors could even prevent you from landing a new job.

According to a study by the Federal Trade Commission (FTC), as many as five percent of consumers had errors on one of three major credit reports. In some cases, the errors worsened the consumer's overall credit rating.

Credit reports contain more than a record of your debts. It also includes information about whether pay your bills on a timely basis and will note if you've been sued or filed for bankruptcy.

Your Credit Information Is for Sale

Continue reading "What Do You Do When Your Credit Report Is Wrong?" »

The Federal Trade Commission (FTC) receives more complaints about debt collectors, including debt buyers, than about any other single industry.

The Problems with Debt Buying

What is debt buying? It occurs when companies purchase a creditor's debt and then tries to collect the amount owed. Debt purchasing can be a lucrative business, with companies known to purchase debt for just a few cents on the dollar.

For consumers, debt buying can become a nightmare. There are cases in which debt collectors seek to recover funds from the wrong consumer for an erroneous amount.

In 2009, the FTC studied the issue by obtaining information from nine of the largest debt buyers that together amassed 76.1% of all debt sold in 2008.

As part of the study, the FTC studied 5,000 portfolios containing nearly 90 million consumer accounts. Although the accounts were worth $143 billion, debt buying companies purchased the debt for $6.5 billion. Credit card debt accounted for 62% of the portfolios.

Continue reading "What Happens When Your Debt is Purchased?" »

If you remember nothing else from this post, remember this one rule, lenders don't give a damn about what your judgment for dissolution says.

A marital dissolution judgment addresses, among other things, division of both the assets and debts accrued during the marriage. This includes credit card debt. However credit card companies, and other third parties not a party to the action are not bound by the judgment.

Unless you are careful right from the moment you decide to separate, you can end up being liable for credit card debt incurred by your ex. It is best if divorcing couples exit the marriage without any joint debt.

When divorce is anticipated, make every effort to close any joint accounts, paying off the existing debt or allocating it to new credit card accounts - one for each of the responsible spouses.

If you rely instead on a divorce degree that allocates a portion of the debt to your ex, but both names stay on the account, creditors can still come after you for any unpaid debts if you ex fails to make payments or declares bankruptcy. These debts become yours. In addition, your ex's late or missed payments will damage your credit record.

Some credit cards are in one spouse's name, with the other listed as an authorized user. Authorized users cannot be held liable for charges on this type of account. If you are the owner of the account, immediately request that your spouse be removed as an authorized user. If you are the user, ask to have you name removed from the account.

Continue reading "You May be Responsible for Your Ex's Credit Card Debt - Santa Rosa Divorce" »

According to the 5th Circuit Court of Appeals the answer is NO! In the case of In re Chilton, 426 B.R. 612 (Bankr. E.D. Tex. 2010), A bankruptcy debtor inherited an individual retirement account (IRA) from the debtor's deceased parent prior to the debtor's bankruptcy, and the debtor claimed an exemption in the property pursuant to 11 U.S.C.S. § 522(d)(12).

Pursuant to 11 U.S.C. § 522(d)(12), a debtor is permitted to exempt certain property, including "Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986The bankruptcy trustee objected to the exemption.

The debtor placed the funds distributed from the parent's IRA into a new account created in the deceased parent's name from which the debtor, as the beneficiary of the new account, was required take distributions prior to retirement. The debtor contended that the new account was tax exempt and contained retirement funds, and thus the funds in the account were exempt from claims of creditors.

Continue reading "Are Inherited IRA's Exempt From The Bankruptcy Estate?" »

The following summary was written by Robert Christopher and is being reproduced by permission of Mr. Christopher. The views and opinions expressed in his article are those of the author and do not necessarily reflect the official opinion of JVS Law. The information and/or opinions in Mr. Christopher's summary are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness.

Chapter 13 bankruptcy vs debt management - Which outperforms the other?

If you've racked up piles of debt on your credit cards, you must be looking for an option to delete your financial worries. When it comes to choosing between debt management programs and bankruptcy, this may be a difficult choice. Nowadays, due to lack of funds among the Americans, it is becoming increasingly difficult to deal with high interest credit cards, car loan payments and medical bills. When people are running from shortage of cash, what steps are they supposed to take in order to forget their debt woes? Should they opt for debt management programs or should they file bankruptcy? Debt management is more like debt consolidation through which you can combine your debts into single monthly payments but Chapter 13 is not much different from this. Read on the concerns of this article in order to know which option suits your financial conditions better.

Continue reading "Chapter 13 bankruptcy vs. Debt Management Programs" »

Payday loan companies, or as they used to be called "loan sharks", are creating a real problem for consumers who are in dire need of a quick buck for an unexpected expense.

The Federal Trade Commission (FTC) is an independent agency of the United States government. Its principal mission is the promotion of consumer protection and the elimination and prevention of what regulators perceive to be harmfully anti-competitive business practices.

On April 11, the FTC announced a temporary restraining order against Broadway Global Master, Inc. a debtor collector enjoining them from conducting business or withdrawing any funds from their bank accounts. Broadway obtained detailed information about payday borrowers from an unknown source and engaged in intimidation to collect over $4 million from them.

According to the FTC, representatives from Broadway would contact debtors and pretend to be law enforcement officers, use a FBI caller ID, threaten arrest, a state placement of the debtor's children, or to call the debtor's employer, and use obscene language.

Continue reading "FTC Enjoins Fake, Harassing, Payday Loan Debt Collector's Business" »

In HSBC Bank Nevada, N.A. v. Aguilar, the Appellate Division of the Los Angeles County Superior Court held that a bank was not required to present any proof in order to obtain a default judgment against a holder of a credit card.

HSBC Bank Nevada, N.A., sued Lizet Aguilar for money damages based on Aguilar's alleged default on a credit-card agreement. Aguilar did not respond. HSBC requested entry of default and a clerk's judgment.

The clerk entered Aguilar's default, but refused to enter judgment. The clerk instructed HSBC to submit either an original promissory note or contract or, if necessary, a declaration of a lost original. HSBC did not comply with those instructions. The trial court ordered a show-cause hearing.

Continue reading "Banks Are Not Required To Present Any Proof In Order To Obtain Default Judgment" »

The National Association of Consumer Bankruptcy Attorneys (NACBA) prepared a report regarding the dischargeability of student loans in the bankruptcy court. I have summarized the report below, but click here to review the entire report .

According to the NACBA, Americans now owe more on student loans than on credit cards. The amount of student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans and exceeded $1 trillion for the first time last year. The reason: Students and workers seeking retraining are borrowing extraordinary amounts of money through federal and private loan programs to help cover the rising cost of college and training. In many cases, parents responsible for the student loans are in or near retirement years and facing repayment demands.

How big is the danger to the U.S. economy? "Evidence is mounting that student loans could be the next trouble spot for lenders," said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs.

With rising debt comes increased risk, both to borrowers and to the economy in general. Even in the best of economic times when jobs are plentiful, young people with considerable debt burdens end up delaying life-cycle events such as buying a car, purchasing a home, getting married and having children. Piling up student loans in middle age is even more troublesome. Aside from the simple truth that there is less time to earn back the money, it also means facing retirement years still deeply in debt. And, parents who take out loans for children or co-sign loans will find those loans more difficult to pay as they stop working and their incomes decline.

Continue reading "The Student Loan Debt Bomb: America's Next Mortgage Economic Crisis" »

The debtor and West Vernon Energy Corporation had been engaged in lengthy litigation. Prior to the debtor's bankruptcy filing, a jury awarded West Vernon a verdict of $178,207. The debtor's bankruptcy included a debt owed to "West Vernon Petroleum" at an address different than West Vernon's address.

Although it appeared that West Vernon's never received notice of the bankruptcy filing from the Clerk of the Bankruptcy Court, the company received actual notice of the filing from the debtor's attorney. This notice was received two months prior to the claims bar date. Despite this opportunity to file a claim before the deadline, West Vernon filed its claim several weeks after the deadline.

West Vernon then asked the court to have its claim deemed timely filed. The court denied the request, and disallowed the claim, stating that since Section 502(b)(9) was added to the Code, bankruptcy courts have almost uniformly ruled that proofs of claim that are untimely filed in a Chapter 13 case may not be deemed timely filed.
As such, the bankruptcy court denied an improperly scheduled creditor's request that its tardily filed claim be deemed timely filed.

If you are a creditor in a pending bankruptcy case there are very quick critical deadlines that must be followed to preserve your rights. The Law Offices of James V. Sansone is located in Santa Rosa, California and serves clients, debtors and creditors, with their bankruptcy needs throughout the North Bay area of California, including Sonoma County, Mendocino County, Lake County, Santa Rosa, Napa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport and Kelseyville.

Credit card delinquencies have reached a six-year low, according to the latest Credit Card Index from Fitch Ratings according to Consumer Bankruptcy News. The report also shows credit card charge-offs ticking up for the first time in the past several months.

Credit card accounts more than 60 days past due dropped to 2.15 percent in August, marking the 19th straight month of decline from a record high of 4.5%. Accounts on which consumers have missed one payment declined from 3.34% to 3.02%.

Credit card defaults increased from 6.33% to 6.41%. The Fitch Ratings Report said the increase was driven by two of the larger trusts--Citibank and Bank of America--posting higher losses. The report added that charge-off rates of 6% are considered normal.
Consumers repaid 21.14% of their credit card debt in August. That figure was less than the 21.76% paid in July, but was well above the index average of 16.3%.

Some may point to this as an indication that the economy is improving. I'm not convinced. Is it possible that credit card delinquencies have decreased because credit is harder to get? Can it be that credit is no longer considered an American citizen's right but a qualified privilege?

If you are suffering from an unhealthy amount of credit card debt the Law Offices of James V. Sansone can help. We are located in Santa Rosa, California and serve clients with their bankruptcy needs throughout the North Bay area of California, including Sonoma County, Mendocino County, Lake County, Santa Rosa, Napa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport and Kelseyville.

I recently wrote a blog post entitled "No Lien Stripping in Chapter 20 Cases In The Ninth Circuit - Santa Rosa Bankruptcy". In that post, I overstated the meaning of that case when I represented the issue is now settled in the 9th circuit. As the case I was discussing, In re: Ricardo and Jenny Victorio, was a bankruptcy district court case, it is not binding on other California Bankruptcy Courts, it is only persuasive.

In fact, another bankruptcy court in the 9th circuit has come up with a different opinion. In the case of Jose Manuel Garcia and Maria Garcia, Judge Stephen Johnson held that a debtor may lien strip in a Chapter 20 bankruptcy.

Judge Johnson held that the availability of a Chapter 13 Discharge is not a predicate to lien stripping in Chapter 13. In coming to this conclusion the judge relied, at least in part, on Judge Jellen of the Oakland Division analysis of this question. Judge Jellen analyzed this question of whether a debtor in what has been called a "no discharge" chapter 13, (aka Chapter 20), can confirm a plan which modifies the rights of secured creditors using sections 506(a) and 1325(a) of the Bankruptcy Code. Judge Jellen found that the power to strip off wholly unsecured junior liens on real property is not conditioned on a debtor's right to a discharge under section 1328(f), but on the debtor's compliance with chapter 13 plan and confirmation requirements under sections 1322 and 1325.

So what is the answer to this question? Can you lien strip in a Chapter 20 Bankruptcy filing? Right now, it depends on who you ask. This question is sure to make its way up to the United States Supreme Court in time.

The Law Offices of James V. Sansone is located in Santa Rosa, California and serves clients with their bankruptcy needs throughout the North Bay area of California, including Sonoma County, Mendocino County, Lake County, Santa Rosa, Napa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport and Kelseyville.

Under the current state of bankruptcy law, a debtor can't cram down the mortgage on the principal residence in a Chapter 13 Bankruptcy. However, a Principal Paydown (PPP) bill may soon pass thanks to the National Association of Consumer Bankruptcy Attorneys (NACBA). Thirty-two members of the California delegation in the U.S. House of Representatives sent a "call to action" to President Obama that read in relevant part:

"One promising possibility would be a temporary reduction in the interest rates of certain homeowners who file for Chapter 13 bankruptcy, so that the entirety of their monthly payments would go to paying down their principal balances for five years. Coordination with the bankruptcy process would make these reductions more likely to succeed than other types of loan modifications, while also limiting the program to those who truly need it and avoiding the administrative failures that have plagued many other initiatives. Such a plan could be implemented for mortgages held by Fannie Mae and Freddie Mac, as we believe that such a plan would be entirely consistent with FHFA's obligation to minimize taxpayer losses in the Enterprises. This plan could also be implemented as part of the nationwide settlement currently being negotiated by a group of state attorneys general."

Continue reading "Support Growing Among Policymakers For NACBA's Principal Paydown Plan" »

How do you know if you have violated the automatic stay in bankruptcy? A debtor filed for Chapter 13 relief, and then later received a mortgage loan statement from Chase Home Finance. The debtor and his wife sued Chase alleging violations of the automatic stay, the Pennsylvania Fair Trade Extension Uniformity Act, the Pennsylvania Unfair Trade and Consumer Protection Act, and the Fair Debt Collection Practices Act.

The bankruptcy court granted Chase's motion to dismiss. Because the debtor's wife was not a debtor, she was not protected by the automatic stay. The court said the statement did not state that the account was past due nor demand immediate payment but did include a disclaimer that did not violate the stay as to the debtor.

The court characterized the Statement as being informative rather than an attempt to collect a prepetition debt. The language of the Statement was unambiguous and makes it aware that the Debtor is protected by the automatic stay and the statement is for compliance and informational purposes only which does not constitute an attempt to collect debt.

The court did not accept that the automatic stay prohibits all communication between a creditor and a bankruptcy debtor. The court granted the motion regarding consumer protection violations based on the court's lack of subject matter jurisdiction. The cause of the action was due to the debtor's property rather than the bankruptcy.

The Law Offices of James V. Sansone is located in Santa Rosa, California and serves clients, debtors and creditors, with their bankruptcy needs throughout the North Bay area of California, including Sonoma County, Mendocino County, Lake County, Santa Rosa, Napa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport and Kelseyville.