From the near $1 trillion price tag in national education debt to Senator Elizabeth Warren’s first piece of legislation into congress, student loan debt is becoming the headliner of our nation’s overall debt problem.
Warren has been known as an active consumer advocate protecting the rights of the middle class since she began leading the Consumer Federal Protection Bureau before Rich Cordray took over the title. Now that Senator Warren is in congress, she has introduced her first bill as the "Bank on Student Loans Fairness Act." Warren proposes that individuals receive the same interest rate on school loans that the big Wall Street banks obtain. School loan interest rates are set to double to 6.8% by July while big banks maintain .75% interest on the loans they receive from the government.
In her proposal, Warren states, "In other words, the federal government’s going to charge interest rates nine times higher than the rates they charge the biggest banks -- the same banks that destroyed millions of jobs and nearly broke the economy."
In addition to Sen. Warren’s bill, Republican Representative, John Kline, introduced legislation titled “Smarter Solution for Student’s Act” which would amend the higher education act of 1965 and establish a new interest rate on or before July 1, 2013.
Today’s online culture is joining in on the conversation using platforms like Reddit to express their interest in the interest rate debate.
Track the bills:
S.897: Bank on Student Loans Fairness Act - introduced by Sen. Elizabeth Warren on May 8. 2013
H.R.1911: Smarter Solution for Student's Act - introduced by Rep. John Kline on May 9, 2013
NextChapter had a chance to visit beautiful San Diego last weekend for the NACBA Convention. While working on the application and meeting with attorneys to discuss new ideas, we were also happy to meet a few of the Clio team members and build relationships with several other legal vedors.
The expo hall was full of booths covering the areas of: law practice management software, bankruptcy form desktop software, credit counseling agencies (with high competition), credit report services, post-bankruptcy counseling for debtors and other bankruptcy related services. Another industry that definitely made its mark in the vendor hall was lead generation and attorney marketing in the forms of email marketing, direct mail marketing, website design services and search engine optimization.
Although we did not have a booth in this year's expo hall, we are already getting excited for the 2014 NACBA convention in New York City!
Did you attend the conference this year? If so, What was your favorite session? Which booth or vendor blew you away? Was any of the swag was memorable? I'd love ot hear your thoughts. Send an email to Hello@NextChapterBK.com
The National Association of Consumer Bankruptcy Attorneys (NACBA) is holding their 21st Annual Convention in beautiful San Diego this weekend. With a three-day packed schedule, it looks like there will be a pretty big turnout of both vendors and attorneys alike. As we attend the NACBA convention this weekend, we hope to meet with lawyers and express our vision of changing the way attorneys practice bankruptcy law with our intuitive cloud-based solution.
We are looking for bankruptcy attorneys nationwide to test our software and be the very first private beta users. In exchange for your feedback and support, we will offer you a promotional rate on your first 10 bankruptcies prepared and filed with NextChapter.
If you are attending the NACBA convention or even just in the San Diego area this weekend, we invite you to send an email with your name and time you are available to meet for coffee this weekend and we will be sure to meet up! Email to: firstname.lastname@example.org.
For more information about our founder and the story behind NextChapter, be sure to visit our news article in The Metropreneur. And if you haven't seen it yet, NACBA re-designed their website! Head over to nacba.org to check it out.
Do you budget? Keep close track of your spendings and savings? As it turns out, most Americans would grade their own financial literacy with a C, D or F and 65% of adults have neglected to review their credit report this year.
Take a look at this infographic from Mint.com and consider yourself one step closer to financial literacy.
If a Debtor on social security who drives an ATV is not interesting news in and of itself, a recent Court decision involving one in the Ninth Circuit will have a positive impact on your bankruptcy practice. In the case In re Welsh, 2013 U.S. App. LEXIS 5880 (9th Cir. 2013), the Court of Appeals ruled in favor of a Debtor in regards to social security income and “luxury items” and a trustee’s claim of bad faith. As many of us have witnessed over the years, Trustees have been making arguments that even though Social Security income is exempt from creditors and not listed on Form 22, that under the “good faith” requirement of the Code, it should still be devoted to paying unsecured creditors.
If you have been asking yourself for years how this makes any sense, you are now not alone. The Ninth Circuit, on March 25th, joined the Fifth and Tenth Circuits in ruling against the Trustee on this argument and in favor of an elderly Debtor. The Court of Appeals held that that it was not bad faith for a Debtor to not devote social security income to paying unsecured creditors in a chapter 13 plan. The Court also agreed with the Eight Circuit and stated that although there are many factors to determine “good faith,” the amount of money paid to the creditors should not even be a part of that analysis. The Court disagreed with the Trustee’s position that if a Debtor has money left over, it has to be used to pay unsecured creditors and held that:
Congress chose to remove from the bankruptcy court's discretion the determination of what is or is not "reasonably necessary.” It substituted a calculation that allows debtors to deduct payments on secured debts in determining disposable income. That policy choice may seem unpalatable either to some judges or to unsecured creditors. Nevertheless, that is the explicit choice that Congress has made. We are not at liberty to overrule that choice.
Trustees also commonly argue that a Debtor should not have their creditors pay for their luxury items by continuing to pay for those expenses at the expense of the unsecured creditors. The Court also disagreed with the Trustee’s position on this issue as the Debtor was proposing to pay for two ATVs and an Airstream trailer “at the expense” of their unsecured creditors. The Court held that the language in the Code is clear:
The calculation of "disposable income" under the BAPCPA requires debtors to subtract their payments to secured creditors from their current monthly income. In enacting the BAPCPA, Congress did not see fit to limit or qualify the kinds of secured payments that are subtracted from current monthly income to reach a disposable income figure. Given the very detailed means test that Congress adopted, we cannot conclude that this omission was the result of oversight. Moreover, even if it were, we would not be justified in imposing such a limitation under "the guise of interpreting 'good faith'.”
This is a great win for Debtors, and of course their attorneys, in not only those Circuits, but this expanding line of cases can be used in your Circuit to show the trend in recent decisions. The result of this case can be extremely helpful in future cases in your practice and some of the credit should be provided to the National Association of Consumer Bankruptcy Attorneys (NACBA) who filed a brief with the Ninth Circuit in this case in an effort to fight for Debtors, and particularly elderly and disabled citizens on social security income. As a Bankruptcy practitioner, an organization such as NACBA that fights daily for Debtors and their attorneys should be applauded.
Based on this decision, whether your elderly clients ride ATVs, road hogs, or a Vespa, they now can breathe easier as their bankruptcy payments could at least be a little lower, and as we all know, every little bit counts.