The landmark $25 billion settlement between the state attorneys general and the 5 leading banks is pretty amazing.  While everyone is still trying to decipher through the massive settlement documents, some highlights of the settlement are:
1. 60% of $17 billion for principal balance reductions for borrowers in default or at risk of default of loan payments;
2.  $5.2 billion for other homeowner assistance such as short sale approvals, unemployment forebearance, deficiency balance waivers, relocation assistance, and payments to fix blighted properties;
3.  $3 billion Refinancing Underwater Homes for those not late on mortgage payments
4. New standards requiring bank servicers to adhere to tougher foreclosure and loss mitigation processes and documentation (including an appeal process), hopefully stopping foreclosure while borrowers are actively seeking loan modification;
5. $1.5 billion to foreclosure victims who were wrongfully foreclosed upon, approximately $2,000 per borrower
6. $2.5 billion to participating states for additioal housing relief programs, foreclosure relief, and alternatives as distributed by the attorneys general.

Pretty amazing right? But now what?  If you're like me you are asking questions like "Do I qualify?" "How do I apply for relief?" "What relief is available to me?" and so on.   I am excited to attend this year's upcoming National Association of Consumer Bankruptcy Attorneys annual convention in San Antonio next month where a special panel with Joseph A. Smith Jr. - the former North Carolina banking commissioner who has been named to oversee the independent monitoring and enforecement under the agreement, pending approval of the settlement by the U.S. District Court for Washington, D.C., will be held and yours truly and hundreds of other bankruptcy lawyers can ask more questions and get the answers you want. Stay tuned!

With the costs of higher education sky rocketing, many students are faced with accepting student loan packages that include subsidized loans as well as private loans totalling tens of thousands of dollars.  Graduates who are struggling with finding employment post graduation are faced with little repayment options for their private student loans.  Current bankruptcy laws do not allow debtors to discharge student loan debt, except in very limited exceptions.  There are no consumer protections for debtors who are facing financial hardship in repaying private student debt.  Fortunately, a new bill introduced by Illinois Senator Dick Durbin proposes elimination of the bankruptcy provision which makes private student debt nondischargeable.  Whether this will pass despite growing support for the need of student loan reform, is anyone's guess.  I am holding my breath. 

For more information, http://www.bloomberg.com/news/2012-03-20/durbin-urges-private-student-loans-be-discharged-in-bankruptcy.html

How an Automatic Stay Stops Harassing Creditor Calls
  
     There is nothing more annoying than receiving 10-20 phone calls or more every day from creditors, credit card companies, and collection  agencies asking you why you have not been paying your balances and threatening legal action unless you begin paying now.
    
     You may have lost your job or had to use your cards to pay off medical bills for an emergency medical situation. Although some credit card or collection agencies may seem sympathetic and try to work out a payment plan, most of these companies only want you to use any means possible to pay them, and to pay them now. 
 
    One way to stop harassing phone calls is for you to refer the creditor to the Fair Debt Collection Practices Act, which was passed to  prohibit particularly offensive creditor calls. These include threats to put you  in jail, of possible bodily harm, of misrepresenting the amount of the debt or that you even owe it, or calling you dozens of times per day at all hours of  the day and night. Some creditors pretend to be attorneys or someone else. They cannot call you at work if you tell them it is prohibited by your employer, and cannot use profanity or obscenities. You do have to at least answer one of the calls and advise the caller to stop calling you.
 
     However, if your debt has become unmanageable, you do have the   option of filing for either a Chapter 7 or a Chapter 13 bankruptcy. The difference between the two is that a Chapter 7 is a liquidation and will discharge or eliminate unsecured debt such as credit cards, and a Chapter 13 is a debt reorganization. You do have to qualify based upon your disposable income to file a Chapter 7. 
    
     Both filings are similar, however, in that filing either initiates an automatic stay of any legal proceedings, including foreclosures,
  collection activities, lawsuits, and any contact or attempt to collect a  debt. The automatic stay goes into effect when your petition is filed. When a creditor, collection agency, or attorney calls, you merely advise  them that you have filed either a Chapter 7 or 13 and give them the court file number on your documents. At this point, the creditor will stop calling you.
  
    There are instances when creditors keep calling, which is a violation of the automatic stay. If this occurs, you should write down the dates of the calls, times, who called, the name of the person who spoke to you, and for which debt they are calling. Then, call your attorney with this information.
    
     A creditor who continues to contact you after the automatic stay becomes effective and the creditor has been so advised is in contempt of a federal court order. Once your bankruptcy case has been granted a discharge and the unsecured debts eliminated, these creditors are permanently enjoined from contacting you. A contempt violation can result in a fine.

    There are some situations where a creditor can obtain relief from the automatic stay. The most common situation is where a homeowner is in arrearages on the mortgage and the lender needs to continue to foreclose on the property. Other “interested parties” may also obtain relief, usually for secured  debts. The bankruptcy code lists situations where a creditor can request relief
from the automatic stay and then continue to contact you.