Cincinnati Bankruptcy Lawyer Blog

News spread rapidly earlier this month that the attorneys general of 49 states, including Ohio, settled their differences regarding the foreclosure crisis. The parties agreed to settle matters in a deal that came with a $25 billion price tag for the major banks. The agreement includes a provision that is aimed at writing down debt on the principal balance of some homeowners across the country. The major banks will direct roughly $17 billion to write down debt on underwater mortgages.

CoreLogic, a real estate data company, estimates that 11 million homes across the country are currently underwater on their mortgage. An underwater mortgage involves a home that has a market value that is less than the outstanding balance of the home loan.

Student loan debt in the United States totals nearly $1 trillion. Last year, federal and private student loan debt surpassed overall credit card debt in the country. Cincinnati bankruptcy attorneys know that student loan debt is rarely dischargeable in bankruptcy under current law.

A recent survey of bankruptcy lawyers across the country indicates that the number of people running into financial distress who are carrying large student loan balances has jumped dramatically in recent years. Student loans do not only necessarily affect America's youth, as many students have obtained loans that were granted only after the student's parents co-signed on the loan. That parent signature obligates the parent on the loan if the student runs into financial problems after graduation.

Longtime professional basketball player Allen Iverson reportedly may have his bank account assets garnished in a Southern U.S. state. Although each state controls what steps a creditor must follow to lawfully seize bank accounts or garnish wages, creditors generally can sue to collect on a debt in every state of the union, including Ohio.

The National Basketball Association veteran may be seeing the money in his bank account seized after a judge allowed the creditor access to the ball player's Wells Fargo bank account. Seizure of money from a bank account can differ greatly than a wage garnishment order.

In the last post, this blog reported that the Obama administration has announced an extension, and at least one expansion, of some federal foreclosure prevention programs. The White House is expected to announce new legislation in the near future aimed at home loan refinancing under a separate federal program known as the Home Affordable Refinance Program.

Distressed homeowners in Ohio--even people with underwater mortgages, may have options to find meaningful debt relief under federal programs and also under federal bankruptcy law.

Consumers and home owners across the country have complained that banks have been sloppy in maintaining or tracking paperwork under the federal home loan modification program. Banks have reportedly lost documents of numerous homeowners and denied loan modifications based upon the alleged lack of documentation, or potentially based upon allegations of miscommunication between bank departments.

The Obama administration announced Friday that it is extending the federal foreclosure-prevention program, including the Home Affordable Modification Program. The White House says that the program will be extended one more year, through 2013. The federal government plans to increase the incentives the government pays private banks to reduce the principle balances on homes at risk for foreclosure.

Cincinnati bankruptcy lawyers know that many Ohio homeowners have found some relief from the federal programs. However, many distressed homeowners here and nationwide have experienced various difficulties with mortgage lenders while seeking relief under the programs.

The "Occupy movement" seems to have faded somewhat from the national press. One of the issues that arose at the height of the daily protests was a call for student loan debt reform. Student loan debt has saddled more and more of the nation's youth as college tuition continues to skyrocket. The president recently began calling on colleges and universities to reign in the overall cost of education.

In November, this blog reported that overall student loan debt has exceeded credit card debt in America. And although the Occupy movement may be fading, the issue of student loan debt continues to resonate in the national dialogue. Generally, student loans are not dischargeable in bankruptcy. A debtor must show undue hardship to avoid the general rule. Showing undue hardship may in some cases be possible, but the burden is high.

The Center for Studying Health System Change recently released its findings in a study of medical debt in the United States. Many bankruptcy lawyers agree that medical debt is one of the issues that can tip the scale for a family, leading to financial distress. Often large medical debt can arise from an unexpected medical emergency. The recent study says that one in five study participants reported having trouble paying medical bills in 2010.

The study authors were somewhat surprised by the findings, as the numbers did not change much from 2007 to 2010. The authors say they expected to see some form of change after the economy collapsed in 2008. However, the authors conclude that some of the expected change may have been absorbed by a decrease in discretionary medical visits during the recession, something that other studies have found to be true.

Last month, a federal judge ordered a man to fork over nearly $300,000 after an investigation showed that the man and two companies that he controlled were running a payday lending scheme. The man and his two companies were ordered to pay because the Federal trade Commission says the contract for the payday loans contained an inconspicuous "wage assignment" clause. Loan applicants were asked to click a box in online applications to indicate that they agreed with the loan terms, including that sneaky assignment clause.

The FTC claimed in a lawsuit that the man's two companies then illegally took money from the consumer's paychecks to pay back the loans. The scheme involved illegal wage garnishment. The FTC says federal agencies are allowed under the law to garnish worker's paychecks without a court order when a consumer owes the federal government money. That law does not apply to private companies.