All items from Nebraska Debt and Bankruptcy Blog

I will be attending the American Bankruptcy Institute's Student Loan Debt Crisis Symposium being held in in Washington DC on May 30.  The timing of this event could not be better.  The student loan problem keeps getting worse and it is high time that bankruptcy practictioners create workable solutions for the millions of Americans who are trapped under the weight of these debts.  The common belief that student loans are never dischargeable is absolutely not true.  What is true is that Courts are looking at these debts with fresh eyes and the lenders have created new options to help struggeling borrowers. 
If you are attending this conference or if you have questions regarding student loans please contact me.
Sam Turco

Posted 3 weeks 1 day ago

Spider Web
What happens when a bank cannot produce a copy of their credit card agreement during a lawsuit for an unpaid account balance?  Well, that was exactly the situation when CitiBank sued Teresa Cooper in the Superior Court of Vermont, and that case typifies the current status of credit card lawsuits nationwide.  Banks cannot seem to produce a copy of their contracts when litigating unpaid accounts.
What CitiBank was able to provide the court was a copy of the monthly billing statements mailed to its customer and the bank sought to recover a summary judgment on the legal theory of Account Stated.  In short, the account was stated month to month via the billing statements, no objections were made by the borrower, so the balance must be true.
Amazingly, credit card companies have tremendous difficulties producing a copy of the written contract. This is because the contract is not contained in one document but is a result of several documents, perhaps dozens or hundreds of documents, generated during the time the account exists that must be read together to come up with the terms of the agreement. 

Posted 12 weeks 22 hours ago

Lori Swanson.jpgMinnesota Attorney General Lori Swanson has filed a lawsuit against a junk-debt buyer, Bradstreet & Associates, accusing that firm of charging an inflated interest of 22% on debts for overdrawn bank accounts that may only charge 6% interest under Minnesota law. 

Companies have the right to collect legitimate debt.  But they shouldn't be charging peoeple for interest they don't owe."  Minnesota Attorney General Lori Swanson

Bradstreet & Associates spent $646,000 to purchase $9 million of overdrawn bank accounts from U.S. Bank and Wells Fargo.  The accounts were purchased from a Florida debt buyer for 3 to 7 cents on the dollar.
Bradstreet filed lawsuits in Minnesota misrepresenting the maximum interest rate that could be charged for these debts and in most cases obtained default judgments when consummers failed to respond to the lawsuit.
How did Bradstreet & Associates decide to charge 22% interest instead of the legal maximum of 6%?  The company has refused to comment on the lawsuit so we can only speculate.

Posted 12 weeks 1 day ago

If you have been sued by a credit card company or by a debt buyer such as Midland Funding, CACH LLC, LVNV Funding, Portfolio Recovery, Cavalry SPV, Asset Acceptance, Unifund CCR Partners or Encore Capital, you need to take immediate action.  Here are three things you must immediately do to win the credit card lawsuit in Nebraska:

Posted 13 weeks 6 days ago

Stinking Badges.png
I sued you, you didn’t file an answer,
and you didn’t come to court.
What more do I need to prove?
 --Remark made by an attorney for a junk-debt buyer.*
Junk debt is a debt that is sold by creditors at a deep discount with very little or no documentation of the original contract, no record of the payments and finance charges, and no records of the debt assignments.   In many cases the consumer owes no debt at all, and in most cases the consumer does not owe the interest, late fees, and legal fees demanded.
The shocking truth of credit card lawsuits is that it is nearly impossible for the plaintiff to provide a complete copy of the credit card agreement.  This is contrary to almost every other type of loan agreement.  Gosh, banks always keep a copy of the loan agreement, but when it comes to credit cards the banks make so many different offers to so many different people at so many different times that . . . well . . . it is hard to keep track of all those agreements.   

Posted 15 weeks 22 hours ago

Across the State of Nebraska, you could have heard a collective groan of debtor attorneys as the Nebraska Bankruptcy Court issued a new ruling limiting the ability of debtors to avoid liens in motor vehicles.  In the case of In re Cardwell, the Court ruled that a debtor may not utilize the “Tool of the Trade” exemption of Nebraska statute 25-1556 to avoid such liens unless the vehicle is actually used in the debtor’s trade.
The debtors owned a 2006 Pontiac Montana worth $1,200 and a 1992 Ford F-150 pickup truck worth $800, and they pledged both car titles to First State Bank for a new loan.  After the bankruptcy case was filed, their attorney filed a motion seeking to avoid the liens since Bankruptcy Code 522(f) allows debtors to void liens.

Posted 17 weeks 3 days ago

How much does it cost to file Chapter 13?  I have answered that question for nearly 20 years, and it seems that about every 5 years the local court rules provide a different answer.  Well, the Nebraska Bankruptcy Court rolled out yet another compensation system for debtor’s attorneys effective December 1, and this time I think the Court got it right.
To start with, a $281 court fee is due when the case is filed.  If the debtor cannot afford to pay all of that fee at once, the Court will allow a debtor to pay $75 with the filing of the case and the remaining balance of $206 within 90 days typically.  In addition, most bankruptcy attorneys charge for credit reports they purchase.  However, attorney fees are usually paid out over the term of the 3 to 5 year payment plan, although some attorneys charge a portion of that fee up front.

Posted 17 weeks 5 days ago

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The Nebraska Bankruptcy Court has ruled that a $40,913 federal student loan owed by a 67 year old debtor whose sole source of income was from Social Security retirement in the amount of $830 per month should be discharged.   In re Grimes, Case #06-81303 (2013).   In coming to its decision, the court applied the “Totality of the Circumstances Test” focusing on three factors:

Posted 23 weeks 4 days ago

There has been a definite change in the attitude of bankruptcy courts are taking towards the discharge of student loans in bankruptcy.  I am reading cases throughout the nation that indicate a greater willingness of the Courts to discharge these debts.  A case affecting debtors in Nebraska with student loan debt underscore this recent change in judicial attitude.

Posted 24 weeks 1 day ago

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Whether a business is incorporated or not can have a dramatic impact on the outcome of a bankruptcy case, especially in Chapter 7 cases where the bankruptcy trustee has the power to sell non-exempt assets.  Successfully filing a business bankruptcy in Nebraska depends on understanding the important difference between incorporated and unincorporated business assets. 
Let’s assume a debtor owns a paint store that has $100,000 of liabilities and $25,000 of inventory and another $25,000 of receivables.  Looking at the business as a whole it is apparent that the business is insolvent—it has $50,000 of assets (the inventory plus the receivables) but $100,000 of debt.  If I were to ask you what the business is worth you might be tempted to reply that it is worth nothing since there is twice as much debt as there are assets.  Nothing could be further from the truth.

Posted 26 weeks 12 hours ago