When the federal bankruptcy laws were changed back in 2005, a code section was added that requires all bankruptcy debtors to attend two credit management classes.  The first class is called credit counseling and its purpose is to expose you to non-bankruptcy options for dealing with your debt.

The second counseling requirement is called the financial management course requirement.  This course must be taken after you file but before discharge.  Its goal is to help you avoid financial problems in the future so that you will not end up having to file bankruptcy again.

While each credit management course vendor has its own curriculum, all of these education vendors discuss the dangers of credit cards.   Credit cards are dangerous because using them may seem like something other than spending money.  This is the same philosophy used by gambling casinos.  It is no mistake that casinos make you exchange cash for decorative chips – they don’t want you to disassociate fun (gambling) with money (your cash).

If you hope to avoid bankruptcy or to avoid getting in trouble with credit cards in the future, here are a few thoughts to consider.

1. Keep track of your finances.

The post Control Credit Card Use – the Key to Financial Independence appeared first on Tampa Bankruptcy Blog.

The post Are You Too Broke to File Bankruptcy? appeared first on Tampa Bankruptcy Blog.

We ran across an interesting article on the Huffington Post entitled “Private Student Loan Bankruptcy Rule Traps Graduates With Debt Amid Calls For Reform.”   The article tells the story of an unfortunate young woman who cannot work because of a chronic medical condition, but who is saddled with a student loan debt of $33,000 from an online vocational school offering classes to prepare students for jobs in high tech careers.

The young woman has no degree and cannot work, yet she has little chance for relief from the student loan debt.  Under Bankruptcy Code Section 523, student loan debt – whether government backed or private – is not dischargeable absent a showing of undue hardship.

Bankruptcy judges in central Florida as well as elsewhere in the country have been reluctant to sanction the discharge of student loan debt except in very limited cases involving permanent, “no hope of recovery” medical issues.   Age also seems to be a factor – debtors younger than 50 have even more of an uphill battle.

The HuffPost article raises the question of whether for-profit vocational schools ought to enjoy the same protection as government backed student loans:

• private loans almost always carry a significantly higher interest rate
• government backed loan programs typically offer alternatives to cash repayment (i.e. public service options) that are not available to private student loan debtors
• private student loan creditors almost always demand a co-signer, meaning that a payment default will impact someone else in addition to the debtor

Though not stated, our experience has been that private vocational schools – and this includes traditional job training programs such as truck driving, culinary schools and hotel management, in addition to computer skills training – often do a poor job in helping graduates find work, and are more likely that public institutions to go out of business.

Illinois Senator Dick Durbin has tried to introduce legislation to reduce the protection for private student loan creditors but has faced stiff opposition from bank lobbyists as well as lobbyists for vocational schools.   Durbin acknowledges that the chances for change are slim at this time.

Supporters of private vocational training schools argue that their educational product offers legitimate opportunities to individuals not otherwise served by traditional colleges and that borrowers need to consider the risks involved with any credit extension.

What do you think?  Should private student loans get the same protection as government backed student loans?  Use the comment box to offer your opinion.

The post Should Private Student Loans be Dischargeable in Bankruptcy? appeared first on Tampa Bankruptcy Blog.

Last May, we wrote about an 8th Circuit decision which held that inherited IRAs were protected assets in bankruptcy.   Florida is part of the 11th Circuit, not the 8th Circuit, which means that bankruptcy judges and federal court judges are not bound to follow 8th Circuit Court of Appeals precedent, although circuit court decisions are often influential.

In the 8th circuit case, a bankruptcy trustee argued that inherited IRAs deserved less protection that IRAs that contained money from the debtor’s own labors.  The 8th Circuit judges disagreed and found that IRAs are protected retirement accounts, regardless of their origin.

Relatively few debtors in Florida or elsewhere have huge IRAs so Florida bankruptcy judges rarely address this question.  However, Florida lawyers have not had any specific direction about what federal judges in Florida would do with the question of whether inherited IRAs are protected in bankruptcy.

Now, it appears we have an answer.  Florida asset protection lawyer Jonathan Alper report on his blog that Florida statute section 222.21 will be amended to specifically included inherited IRAs as well as rollover IRAs.  This is favorable news for Florida residents and should provide some reassurance to individuals who need to file bankruptcy but who have been left an IRA or who expect to be the beneficiary of an estate that includes an IRA.

As always, consult with your lawyer before actually filing bankruptcy for an opinion specific to your situation at the time you need to file.

The post New Florida Law Adds Bankruptcy Protection to Inherited IRAs appeared first on Tampa Bankruptcy Blog.

Judicial foreclosure laws in Florida require lenders to file a lawsuit against a homeowner.  These lawsuits should include documentation showing that the plaintiff has standing to sue and that the homeowner is in fact delinquent.

Some mortgage servicing companies, however, are not following the requirements of the law.  In some cases, documents are being forged and delinquency claims are based on nothing but someone’s imagination.

In this video, Florida representative Alan Grayson describes some of the abuses that his constituents have reported.

If you believe that a foreclosure associated with your home is or was tainted like some of the foreclosures described by Mr. Grayson, you should seek appropriate legal counsel.

The post Florida Foreclosures = Fraud Factories? appeared first on Tampa Bankruptcy Blog.