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Ask Congress to Undo Anti-Consumer Rule Implemented in Final Days of Prior Administration

4/15/2021

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Urge Congress to Support a Congressional Review Act Resolution to Overturn the OCC's "Fake Lender" Rule
Dear friends and allies,

Congress has a short window of time to pass a resolution under the Congressional Review Act to invalidate the Office of the Comptroller of the Currency’s (OCC’s) "fake lender” rule. The fake-lender rule enables predatory consumer and small business lenders charging 179% APR or more to evade state- and voter-approved interest rate caps.


ACT NOW! Email your senators and representative to ask them to support the resolution (S.J. Res. 15 or H.J. Res. 35) to overturn the OCC's "fake lender" rule.



The rushed “fake lender” took effect in December and protects “rent-a-bank” schemes whereby predatory lenders (the true lender) launder their loans through a few rogue banks (the fake lender), in order to claim that it is a “bank loan” exempt from state interest rate caps. The fake lender rule overrides 200 years worth of caselaw allowing courts to see through usury evasions to the truth, and replaces it with a pro-evasion rule that looks only at the fine print on the loan agreement.


Congress can use the Congressional Review Act to overturn the rule with only a simple majority vote in the Senate -- no filibuster. But the deadline is approaching, so Congress must act soon.


Please also urge your members of Congress to support the Veterans and Consumers Fair Credit Act, which would stop predatory cost rent-a-bank loans by extending to all lenders, including banks, the 36% APR rate cap that currently protects active duty servicemembers.


Tell Congress to overturn the OCC's "fake lender" rule!
Thank you!

Lauren Saunders
Associate Director
National Consumer Law Center

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Another great resource for your COVID-related legal questions

4/18/2020

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Links to http://www.consumer.law/
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Outstanding FREE Online Resource "SURVIVING DEBT" to read if you are struggling financially due to COVID-19 (or for any other reason)

4/6/2020

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The heroes at the National Consumer Law Center (NCLC.org) have made their comprehensive 50th Anniversary guide for debtors called “Surviving Debt” available at no charge for ANYONE.

This is an outstanding resource for ordinary folks who don’t want to try to read law books or statutes etc.  It’s in clear, plain English.  I have given away more than two dozen copies to friends and clients and it’s usually the first book I reach for when someone has a question about how to manage their debts of ANY kind.


While you isolate in place, if you are worried at all about your finances, take the time to read the first 10 short chapters and then the chapters for your type of debts. So you don't have to read it all -- just the first couple chapters and then the chapters that pertain to your type of problem.

(And if you yourself are able to make a contribution to NCLC, they would welcome it and put it to good use.)

Find it here:  https://library.nclc.org/SD


  • Chapters
    • Glossary
    • Chapter 1 Six Essential Rules for Surviving Debt
    • Chapter 2 Responding to Debt Collectors
    • Chapter 3 What You Need to Know About Your Credit Report
    • Chapter 4 Collection Lawsuits
    • Chapter 5 Taking Out New Loans to Pay for Old Debts
    • Chapter 6 Reverse Mortgages
    • Chapter 7 Choices to Avoid at All Costs
    • Chapter 8 Reducing Your Expenses
    • Chapter 9 Options for Increasing Your Income
    • Chapter 10 Keeping Track of Income, Expenses, and Debt
    • Chapter 11 Medical Debt
    • Chapter 12 Credit Card Debt
    • Chapter 13 Student Loans
    • Chapter 14 Car Loans and Repossessions
    • Chapter 15 Utility Terminations
    • Chapter 16 What Every Homeowner Should Know About Mortgage Payments
    • Chapter 17 When You Are Having Trouble Making Mortgage Payments
    • Chapter 18 Defending Your Home from Foreclosure
    • Chapter 19 Property Taxes and Tax Sales
    • Chapter 20 Evictions and Getting Out of a Lease
    • Chapter 21 Civil Court Judgment Debt
    • Chapter 22 Debts Related to Criminal Law
    • Chapter 23 Federal Income Tax Debt
    • Chapter 24 Deciding Whether and When to File Bankruptcy
    • Chapter 25 How the Bankruptcy Process Works
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Please watch if you need relief from your bills during COVID-19 slowdown

3/26/2020

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Fellow consumer attorney Ian Lyngklip of Michigan produced this helpful video that you should watch if you are stressed about bills during work interruption from COVID-19.
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Good Advice if you Have Medical Debt

2/17/2020

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PictureImage of Cover of "Collection Actions: Defending Consumers and Their Assets" Fourth Edition by NCLC (National Consumer Law Center)

Guide to Reducing Hospital Bills for Lower-Income Patients
by Andrea Bopp Stark

As described below, hospital debt poses a significant problem for millions of Americans. This article provides a nine step approach for lower-income patients seeking to eliminate or reduce hospital debt.

Medical Debt Is a Widespread and Serious Problem

More than 27 million Americans lack any health insurance—58% of low-income working adults, 44% of young adults, and 35% of Latinx adults. In addition, almost 50% of nonelderly adults have insurance that requires high deductibles and significant out-of-pocket costs. In recent years the number of Americans uninsured or underinsured has been growing.

As a result, a high number of families are burdened with medical debt:
  • • 20% of uninsured adults went without needed medical care in 2018 because of the cost;
  • • 59% of people contacted by a debt collector said it was over a medical debt;
  • • 20% of Americans have at least one medical debt collection item on their credit reports and 58% of debt collection accounts reported on credit reports are for medical debt;
  • • 66% of all bankruptcies were tied to the cost of medical care or time lost from work due to an illness or injury.
For more detail on the extent of medical debt and for the sources for the above data, see NCLC’s recent report, An Ounce of Prevention: A Review of Hospital Financial Assistance Policies in the States (Jan. 2020).


As a result, there is an urgent need to address consumers’ medical debt problems. A detailed discussion is found in NCLC’s Collection Actions Chapter 9. This article provides a nine step approach for lower-income Americans to reduce or avoid their hospital bills.


Step 1: Don’t Prematurely Pay Even Part of the Hospital BillDepending on the state and the patient’s income, the bill may be waived in whole or significantly reduced—there is no benefit in making payments that may not be owed. Nor is there any downside in delaying payment:

  • • The major credit reporting agencies (Equifax, Experian, and TransUnion) have agreed pursuant to a nationwide attorney general enforcement action not to report negative information about medical bills for 180 days.

  • • State actions may provide other limits on credit reporting of hospital debt. Minnesota hospitals and their debt collectors cannot report a patient to a credit reporting agency for any patient’s failure to pay a medical bill. Maine prohibits credit bureaus from reporting medical debt on a credit report for 180 days after the first delinquency. Washington prohibits collection agencies from reporting medical debt to credit bureaus until at least 180 days after the collection agency receives the debt for collection or by assignment. See generally NCLC’s Don’t Add Insult to Injury: Medical Debt & Credit Reports (Nov. 2019).

  • • Bills are unlikely to be immediately sent out to a collection agency, and if that happens a simple letter from the patient or the patient’s attorney often will stop the collection contacts. See NCLC’s Fair Debt Collection § 5.10.

    •  By federal law, a hospital cannot deny a patient emergency room services because of unpaid hospital bills. See NCLC’s Collection Actions § 9.3.3 Nonprofit hospitals cannot deny any form of care for at least 120 days after the hospital bill is sent. See NCLC’s Collection Actions § 9.3.1.5.2. Nor is the hospital likely to deny the consumer other services for at least a short period after the bill remains unpaid.


Thus the first step in dealing with debt from a nonprofit hospital is delaying any payment on the hospital bill until a determination is made whether the patient qualifies for financial assistance that will lower or eliminate the bill. This includes never putting the hospital bill on a credit card. A card company will charge interest on amounts that the consumer might not ever have to pay. Putting the bill on a credit card is never a good idea because the patient loses the ability to negotiate for lower amounts, either due to financial assistance policies or because the bill is for “chargemaster” prices, which are often several times what insurance companies or Medicare/Medicaid pay. Also, a hospital almost certainly will charge less interest and be more forgiving than a credit card issuer.

Step 2: Determine If the Consumer Is Medicaid EligibleDetermine if the patient is Medicaid eligible. In some but not all states Medicaid coverage is retroactive to hospital bills incurred over the prior three months. Even where a state does not allow retroactive coverage, if the patient is found to be Medicaid eligible then at least for future bills they will have that source of payment for any follow-up treatment or other conditions.

Apply for Medicaid by going to www.healthcare.gov or calling 800-318-2596, or at the local public assistance office. Eligibility for Medicaid varies from state to state and depends on family income and may also depend on family resources. Some states limit Medicaid to certain groups of people, such as children and pregnant women. However, people in many states automatically qualify so long as their income is 138% of the poverty line or below. (In 2020 the income limits are: $17,236 for a family of one; $23,336 for a family of two; $29,435 for a family of three; and $6,100 for each additional family member. The poverty line is higher in Alaska and Hawaii.)

Sometimes children are eligible for Medicaid even if their parent is not. Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) requirements mandate coverage of a broad array of diagnostic, preventive, and treatment services for beneficiaries under age 21.

In addition to Medicaid, some states may offer other programs to help lower-income patients with healthcare bills. Ask the hospital financial counselor or patient advocacy organizations in your state for more information.

Step 3: Determine If a Hospital Is a NonprofitAs described below, a consumer has additional federal rights concerning a hospital bill if the hospital is a nonprofit 501(c)(3) entity, and additional state law rights may apply as well in a few states. To determine if a hospital is a nonprofit, go to the IRS website. In particular, go to the IRS tax exempt organization search page and search by organization name (under the drop down starting with employment identification number). The website will only identify if a hospital is a 501(c)(3) entity. If the hospital is not found, it may be that it is still nonprofit but under a different name (such as hospital’s parent entity) or the name has not been included in this database.

It is always wise to check to see if a hospital is a nonprofit even if it does not show up on the above website. Alternative methods of determining if a hospital is nonprofit include checking the hospital’s website, asking a hospital administrator, or talking to the hospital’s billing office.

Step 4: If the Hospital Is a Nonprofit, Understand Consumer Rights Under Federal LawThe Affordable Care Act (ACA) (also known as Obamacare) imposes certain requirements on nonprofit hospitals with 501(c)(3) IRS tax status concerning their financial assistance policies for low-income patients. Hospitals must create a written financial assistance policy (FAP) and a written emergency medical care policy. The financial assistance policy must disclose:
  • • The eligibility criteria established by the hospital for receiving financial assistance and whether such assistance includes free or discounted care;

  • • The basis used to calculate how much patients are charged for care;

  • • A description of the methods for applying for financial assistance;

  • • If applicable, any information other than that supplied by the patient used by the hospital to determine financial assistance eligibility, including prior determinations of eligibility; and

  • • A list that shows which of the hospital’s doctors and health care providers are covered by the financial assistance policy and which are not covered.
Federal law does not require hospitals to offer any special level of financial assistance and does not specify who is eligible for financial assistance. Federal law only requires that nonprofit hospitals have a written policy and that this policy and the method for applying for assistance be disclosed.


Step 5: Whether the Hospital Is Nonprofit or For-Profit, Understand Rights Under State LawUnlike federal law, state laws often specify standards for how much financial assistance a hospital must provide a patient of a given income level, and these state laws typically apply both to for-profit and nonprofit hospitals. But applicable state law varies significantly from state to state.

For example, ten states have enacted laws that require hospitals to provide a full spectrum of free and discount care for patients under specific eligibility standards, primarily based on income: California, Connecticut, Illinois, Maine, New Jersey, New York, Nevada, Rhode Island, Washington, and Maryland. On the other hand, five states (Hawaii, Montana, New Hampshire, Wisconsin, and Wyoming) have no financial assistance requirements. The other thirty-five states are somewhere in between.
Even among the ten states that have strong protections, there are differences. In Maine, all hospitals must provide free care for patients whose household income is up to 150% of the federal poverty level (FPL), but there is no discount care at all for those with higher incomes. Illinois on the other hand requires all hospitals to provide free care for those who are uninsured with family income of up to 200% of the FPL or up to 125% FPL for rural or critical access hospitals. But Illinois also mandates discount care for those with family income of up to 600% of FPL.


A number of states provide requirements only for nonprofit or state hospitals (Oregon, Texas, and Louisiana)
. Some states provide assistance directly from the state for hospital bills (Massachusetts, Colorado, and South Carolina). There are even more variations in other states.


Detailed state-by-state summaries of financial assistance requirements are available from two NCLC resources: NCLC’s An Ounce of Prevention: A Review of Hospital Financial Assistance Policies in the States (Jan. 2020) and NCLC’s Collection Actions § 9.4.3. An Ounce of Prevention includes eight appendices summarizing each jurisdiction’s type of financial assistance as well as who is eligible, the source of funding for the plans, and the statutes (if any) that mandate the assistance, which allows advocates and legislators to compare their state with the policies in other states.


NCLC’s Model Medical Debt Protection Act (Sept. 2019) provides language for a model state law mandating financial assistance for lower-income hospital patients. The model act specifies eligibility guidelines for financial assistance, provides specific guidelines for charity and discounted care, and includes procedural safeguards to protect consumers from aggressive or unfair debt collection practices.


A growing number of states have also enacted “surprise” medical debt legislation—at present about half the states have this legislation. Surprise medical debt laws limit bills from out-of-network physicians providing services at an in-network hospital. These laws address the situation in which a patient assumes their insurance covers care at an in-network hospital only to be surprised that an individual doctor’s bill at the hospital is not covered by insurance. There are also some state laws dealing with balance billing—where a hospital agrees to receive less than the full chargemaster price from the insurance company and then bills the patient for the difference. See NCLC’s Collection Actions § 9.4.3.1.


Step 6: Obtain the Hospital's Financial Assistance PolicyIt should not be difficult to obtain a hospital’s financial assistance policy (FAP). For nonprofit hospitals, federal law requires hospitals to:

  • • Provide the FAP, a plain language summary of the FAP, and the FAP application on the hospital’s website and, upon request, by mail and in public locations including the hospital’s emergency room and admission area;

  • • Offer paper copies of the FAP’s plain language summary as part of the intake or discharge process;

  • • Set up conspicuous public displays that notify patients about the FAP, including at a minimum, in the hospital’s emergency room and admission area;

  • • Include a conspicuous written notice on billing statements that alerts and informs patients about the availability of financial assistance under the hospital’s FAP, the telephone number of the hospital department that can provide information on the FAP and application process, and the website where copies of the FAP can be obtained;

  • • For certain communities, hospitals must provide written translations of the FAP, the plain language summary, and the FAP application into the primary language spoken by that limited-English-proficiency population.

The above requirements apply to nonprofit hospitals, but for-profit hospitals may use some of the same methods to publicize their policies. If all else fails, ask the billing office for a copy of any financial assistance policy.

Step 7: Compare the Financial Assistance Policy with State Requirements and the Individual Patient’s CircumstancesMany hospitals will have a financial assistance policy. Federal law requires every nonprofit hospital to have one, some states require all hospitals to have one, and even where a for-profit hospital is not required to have one by federal or state law, it may still voluntarily have such a policy. For example, Vermont hospitals have all voluntarily created financial assistance plans.

Compare the policy with any state requirements. In a shockingly large number of cases hospital financial assistance policies do not comply with state law. See NCLC’s Collection Actions § 9.4.3.1. Then compare the policy with the patient’s income and the type of care the patient received to see if the patient qualifies for assistance.


Step 8: Applying for Financial Assistance
After determining whether the patient’s income and family size qualify under the financial assistance policy, make sure that the hospital procedure is covered by the financial assistance policy. Some procedures such as cosmetic surgery may not be covered.
Next, find out how to apply for the assistance. The patient may have to provide a detailed budget, list of assets, information about family members, tax returns, or proof of income. Federal law requires nonprofit hospitals to explain in their financial assistance plan the procedure for applying for financial assistance. If the financial assistance plan does not fully explain the application process, call the hospital’s billing office for more information. Do not delay as many programs only give you about 240 days after the care or procedure to apply for assistance.

Federal law places certain requirements on a nonprofit hospital’s handling of an application for financial assistance, such as a denial cannot take place because of missing information not specified in the hospitals disclosure of application requirements. If a nonprofit hospital provides limited financial assistance without even reviewing an application for assistance, the patient still has the right to seek additional assistance. See generally NCLC’s Collection Actions § 9.3.1.5.5.


Step 9: If an Application for Financial Assistance Is DeniedIf a patient is denied assistance, some hospitals may have an appeals process. Pay attention to the time allowed for any appeal. There may be steps to preserve a claim for financial assistance.
If the patient ultimately does not qualify for assistance, some hospitals provide payment plans to pay off the debt over an extended period of time. But a patient should never agree to a payment plan that the patient cannot afford or that would prevent payment of other of the patient’s debts.


Hospital debt should be treated as a lower priority debt compared with rent, utility, mortgage and automobile loans, and most other forms of debt. Non-payment of that other debt will have serious immediate adverse consequences, while hospital debt may have little negative effect for six months (as described above) and it may be years, if ever, before a judgment is taken against the consumer for the debt. Also, hospital debt is unsecured debt that is fully dischargeable in bankruptcy.


When a judgment is taken against a patient, it will be important to determine the patient’s exposure to wage garnishment and seizure of bank accounts or other property. But some low-income patients may be totally judgment proof.


Be aware that under state necessaries statutes or common law doctrines a spouse may be liable for the other spouse’s treatment and a parent for children’s treatment. For more detail, see NCLC’s Collection Actions § 9.6.

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How Much Cheaper Could Car Loans Be if Dealers Had to be Honest?

7/22/2019

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Good Washington Post Article on How Car Dealers Rip You Off with Financing

Ian Ayres is the William K. Townsend professor at Yale Law School.


As websites such as Cars.com and TrueCar have made car pricing more transparent, auto dealers have turned to boosting their profits with hidden fees on loans.

When a consumer chooses in-house financing with an auto dealer, the dealer sends the customer’s financial information to a lender and is told the rate that the customer qualifies for. But it’s legal for the dealer to turn around and charge the customer a higher interest rate. You might qualify for a 5.9 percent interest rate, but if the dealer can get you to agree to a loan at 11 percent, the lender will kick back more than $1,000 to the dealership as pure profit. This discretionary markup of the interest rate allows auto dealers to arbitrarily increase their fees.

An analysis by the independent online auto-loan marketplace Outside Financial has found that dealers are charging an average markup of $1,791 per loan. By contrast, in 2003, Vanderbilt University economist Mark Cohen estimated that 10 percent of loans to Nissan’s borrowers were marked up more than $1,600. Now the average loan is boosted more than that.

. . .

Economists have had evidence for decades that car dealers tend to charge minorities higher prices. A series of studies I authored and co-authored in the 1990s found that auto dealers consistently charge black consumers prices that are hundreds or thousands of dollars more than their offers to white shoppers. These inflated prices can more than double the dealer’s profits compared with selling the same vehicle to a similar white customer.


. . .


The CFPB and other government agencies should be on the lookout for ways to better curtail dealership lending abuses. Yet instead of stepping up enforcement and protecting customers, the CFPB has rolled back rules on discriminatory lending practices and decreased enforcement of existing protections. Just last year, the Senate used the Congressional Review Act to overturn a CFPB rule that explicitly banned auto lenders from charging discriminatory fees on the basis of race.  . . .


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The Car is Just the Bait: used car dealers are Payday Lenders in disguise

4/1/2019

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 Turns out I'm not alone in recognizing that most used car dealers (not all, but most) are really just shady payday lenders disguised as merchants.

But I've been too optimistic!

Below is a quoted comment from an auto industry expert in the midwest. And this ins't me talking or another consumer attorney. This is a car industry guy talking - someone who helps dealers!

BHPH = "buy here, pay here" -- the classic small independent car lot.

He warns that even the big chain used car places have the same practices!

For used car dealers, the car is just the bait for the important part -- selling you an outrageous loan and optional "extras" that give the dealer much more profit than the car ever could. (Because, think about it -- the only reason 99% of the customers step onto the lot at one of these places is that they have such poor credit that they have to buy the car that someone else felt good about getting rid of.)

With the horrible increase in economic inequality in the US, this isn't going to change anytime soon.

But at least understand what you're dealing with -- if you feel like you have to buy a used car from a dealer, do everything possible to GET YOUR OWN FINANCING first, before you get anywhere within 100 miles of a dealer. Know what you are approved for IN TOTAL as well as in weekly or monthly payments, and walk away the minute the dealer tries to sell you financing.

Dealers are pushing out financing terms to absurd lengths to make used cars "affordable," but that just puts you into a negative equity trap (you owe much more than the car is worth) at trade-in time ... if the car even lasts long enough for a trade to be possible.


BHPH dealers are usually their own bank for holding the notes and collecting, and skirt the financial disclosure regulations in the process and in the re-titling of repos. (Assuming the title is ever placed in the buyer's name.) Often, their floor plan is private or through major auctions, and the finance arm is a wholly-owned subsidiary of the dealership.  

This particular predatory practice is not limited to the sketchy downscale boulevard dealers, but is often found in the flashy franchised used car groups, doing high volume sales with extremely detailed buyer qualification handbooks. They've been with us for years, but the increase in the mass of low income workers who need mobility 
now make the problem more visible. 

Often, the condition of the vehicles are blamed for the repo, but it's more likely to be the burden of repayment that triggers. It's a better business model to sell the best cars the particular market will bear, setting the markup aside. These dealers are selling money, and the car is just a mechanism that recognizes a need and opens the door to a payment process. It's a lot more profitable to repo a decent vehicle if you're going to resell it. 

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Nice new neutral resource for people with student loans/loan troubles

3/25/2019

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About Us
The Institute of Student Loan Advisors Corporation (TISLA) was founded to ensure that all student loan borrowers have access to free, neutral and clear student loan advice and dispute resolution assistance. We are a 501(c)(3) non-profit who believes that these borrowers have a right to a trusted resource with industry experience to mentor, educate and advocate for them. Student loan borrowers have a right to such a resource without being charged a fee, barraged with advertisements or forced to provide personal information that may later be sold.

Our goal is to help you help yourself. We are not here to manage your student loans for you, but to give you expert advice and help you to manage them successfully. We will offer fair, neutral advice that outlines what you are eligible for that is in line with current regulation and statute.

What We Can Do For You

  • Offer expert advice on your student loans
  • Help you decide which repayment plan make the most sense for you
  • Determine if you are eligible for loan forgiveness or discharge
  • Offer guidance in any dispute you may have regarding your student loans
  • Guide you through completing required forms and applications
  • Help you get out of a default or delinquency status

What We Cannot Do For you

  • Offer legal advice
  • Offer opinions on a particular company or servicer
  • Fill out or submit your forms for you
  • Pay your loans
  • Change the law or regulations
  • Manage your loan accounts for you

Testimonials
From James D. August 1, 2018

“I am very happy that I found freestudentloanadvice.org. I was very frustrated with trying to solve my student loan issues on my own and Betsy was such a great help with advice and follow up. Thank you so much!”

How We Are Funded

At the core of TISLA’s values is the promise of free, neutral and transparent student loan advice. For that reason, we do not accept advertising funds from any businesses nor fees from consumers. TISLA is funded through grants, donations and our fee for service products we offer to employers, schools and associations with constituencies concerned with student debt. 

Such donations and partnerships will be listed on this page to ensure continued transparency. If you are interested in helping to fund TISLA, a 501(c)(3) non-profit organization, please contact betsy “at” freestudentloanadvice.org or donate through donorbox online.

TISLA 2018 Annual Report

Partnership Opportunities

TISLA offers several affordable and customizable packages to suit your constituencies needs for expert student loan repayment education and assistance.  These offerings are suitable for employers looking to attract and retain valuable employees or schools who wish to provide student loan assistance to their alumni, students and employees.  Our services can also be a way for associations to provide additional value to their members.  Please contact betsy “at” freestudentloanadvice.org for more information on partnering with TISLA.

Our Leadership

TISLA is currently completing its board roster. If you, or someone you know, has a passion for the issue of student debt, can contribute their business, non-profit or other expertise and influence, and would like to consider serving, please contact betsy “at” freestudentloanadvice.org

Our Mission

To make certain that all student loan borrowers have access to free, neutral and accurate resources and mentoring to ensure they can successfully manage their student loan debt.

Our Values
  • Accuracy
  • Clarity
  • Integrity
  • Professionalism
  • Approachable
  • Respect
  • Neutrality
  • Transparency
  • To be of service to others
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New bankruptcy exemptions apply after 1 April - better for debtors

3/20/2019

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Bankruptcy Exemption Limits (what you can keep) Amounts Going Up

Bankruptcy Code § 104(b) provides that the exemption amounts and other dollar figures in the Code are automatically adjusted for inflation every three years. The adjustments are based on changes to the Consumer Price Index for All Urban Consumers published by the Department of Labor, rounded to the nearest $25.


New dollar amounts take effect on April 1, 2019, and will apply to all cases filed on or after that date. Consumer debtors who may benefit from the higher dollar amounts, particularly with respect to exemptions, the means test, and chapter 13 debt limitations, may wish to delay a bankruptcy filing until the new amounts take effect on April 1, 2019.


Despite popular belief, many lower-income bankruptcy filers can retain all or almost all of their assets in a chapter 7 bankruptcy. The new higher exemption limits means that it is even more likely that consumers can protect their assets in a chapter 7 filing.


New Exemption Amounts Protect More Consumer Property

Consumers in states that have not opted out of the federal exemptions may claim the bankruptcy exemptions under Bankruptcy Code § 522(d), as discussed in NCLC’s Consumer Bankruptcy Law and Practice § 10.2.1.1.

The federal bankruptcy exemptions may also be claimed if the “safe harbor” in Bankruptcy Code § 522(b)(3)(A) applies due to the consumer’s domicile for exemption purposes, even if the state in which the consumer’s domicile is located is otherwise an opt-out state, as discussed in id. § 10.2.1.2.

Exemption amounts refer not to the value of property, but to the consumer’s equity in the property after deducting outstanding credit secured by that property. The exemption amounts in Bankruptcy Code § 522(d) are doubled when a married couple files a joint case. 11 U.S.C. § 522(m).

For a state-by-state summary of state exemption amounts that apply to bankruptcies in certain states and that also protect property from seizure by judgment creditors, see NCLC’s Consumer Bankruptcy Law and Practice Appendix J. The same state-by-state survey is found in NCLC’s Collection Actions Appendix G.

As of April 1, the digital version of NCLC’s Consumer Bankruptcy Law and Practice will be updated throughout showing the new higher dollar amounts, both in the chapters and the Bankruptcy Code appendix (with footnotes showing the old dollar amounts). The following are the new exemption amounts:


Homestead - § 522(d)(1)                                      $25,150
Motor Vehicle - § 522(d)(2)                                   $ 4,000
Household Goods - § 522(d)(3) Per Item Limit        $ 625
Aggregate Limit Household goods                       $13,400
Jewelry - § 522(d)(4)                                             $ 1,700
Wild Card - § 522(d)(5) Any property                    $ 1,325
Wild Card Unused homestead § 522(d)(1)          $12,575
Tools of the Trade - § 522(d)(6)                            $ 2,525
Unmatured Life Insurance - § 522(d)(8)               $13,400
Personal Injury Claims - § 522(d)(11)(D)              $25,150


Exemption for Retirement Accounts

As discussed in NCLC’s Consumer Bankruptcy Law and Practice § 10.2.3.3, the federal bankruptcy exemption for retirement funds in pension plans and individual retirement accounts is available to all debtors, even those in “opt-out” states who would not otherwise be permitted to claim the federal exemptions. 11 U.S.C. § 522(d)(12) and § 522(b)(3)(C). The maximum dollar amount for this exemption also adjusts every three years. 11 U.S.C. § 522(n). The new maximum aggregate value of funds in retirement accounts that may be exempted will be $1,362,800.

Other Dollar Amount Adjustments in the Code

The inflation adjustment also applies to other dollar amounts in the Code, including:

  • • Priority for wages and employee benefits under Bankruptcy Code § 507(a)(4) will now be $13,650, and the priority for consumer deposits under Bankruptcy Code § 507(a)(7) will be $3,025. Distribution to priority creditors is discussed in NCLC’s Consumer Bankruptcy Law and Practice § 3.5.4 and § 18.5.5.

  • • Debt limits for eligibility for chapter 13 under Bankruptcy Code § 109(e) will also go up—to $419,275 in unsecured debt and to $1,257,850 in secured debt. The chapter 13 debt limitations are discussed at id. § 4.2.1.3.

  • • Threshold for the presumption of nondischargeability under Bankruptcy Code § 523(a)(2)(C) for purchases of luxury goods or services incurred within 90 days prior to filing will be $725 and for cash advances within 70 days prior to filing will be $1,000. A discussion of when these presumptions arise can be found at id. § 15.4.3.2.3.2.

  • • Dollar amounts under the means test for determining whether a presumption of abuse exists, based on the debtor’s income after expenses over a 60-month period, will now be: (i) $8,175 ($136.25 per month based on 60 period) or 25% of nonpriority unsecured debt, whichever is greater, or (ii) $13,650 ($227.50 per month). 11 U.S.C. § 707(b)(2)(A)(i). These dollar amounts are discussed at id. § 13.4.6.1.

  • • The cap on homestead property acquired within 1215 days before the bankruptcy filing under Bankruptcy Code § 522(p) or based on the commission of certain bad acts by the debtor under Bankruptcy Code § 522 (q) will be $170,350. These limitations on state homestead exemptions are discussed at id. § 10.2.3.4.

  • • The minimum aggregate amount of property that a trustee may seek to recover as preference in a case filed by a debtor whose debts are primarily consumer debts will now be $6,825. 11 U.S.C. § 547(c)(9). This limitation on a trustee’s ability to avoid transfers as a preference is discussed at id. § 10.4.2.6.4.2.

  • • The amount in an education IRA, a section 529 tuition savings program, and a qualified ABLE account that is excluded from property of the estate, if placed in such an account between 365 and 720 days before the petition was filed, will now be $6,825. 11 U.S.C. §§ 541(b)(5)(C), 541(b)(6)(C), 541(b)(10)(C). This exclusion from the bankruptcy estate is discussed at id. § 2.5.3.
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ALERT! Lender Attorneys Trying to Get Immunity for Abusing Consumers

11/19/2018

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Clear proof of Lily Tomlin's saying that

"No matter how cynical you get, you can't keep up."

Attorneys for Wall Street and bottom on the barrel debt collectors alike are trying to get out of having to follow federal law that protects consumers by limiting the kinds of tactics that collectors can use.

Right now, the Fair Debt Collection Practices Act covers debt collecting attorneys the same as all other debt collectors. Lawyers for the collectors are trying to give themselves an immunity shield so that they can go back to using these abusive tactics without fear of being held to account by consumers.


If anything, by virtue of being attorneys, attorneys who collect debts should be held to a HIGHER standard, not allowed to break the law with impunity.

Let your congressional representatives know that you
OPPOSE ANY EFFORT TO EXEMPT ATTORNEYS FROM THE FDCPA.

Here's the text of an alert on the subject from the National Consumer Law Center. The complete text with end notes is at the end (click on it below to download file).


A bill pending in the U.S. House of Representatives, H.R. 5082, Practice of Law Technical Clarification Act of 2018 (Mooney-Gonzalez) (amending the previously filed H.R. 4550), would exempt attorneys and law firms engaged in litigation from the Fair Debt Collection Practices Act (FDCPA) and eliminate Consumer Financial Protection Bureau (CFPB) authority over them.

The changes made in HR 5082 make it even more harmful to consumers than H.R. 4550 because it would add an exemption from the FDCPA for “any other activities engaged in as part of the practice of law . . . that relate to the legal action.” This vague language expands the scope of the exemption significantly. While the bill requires attorneys to “attempt” to give the consumer legal notice of the lawsuit, abusive activities would be exempt even if the consumer never had actual notice.

Congress1 and the courts2 have recognized for decades that consumers must be protected from false, deceptive, misleading, and unfair practices by lawyers collecting debts in courts. This bill attempts to turn back the clock, and would allow collection attorneys to engage in egregious practices such as:

•     Proceeding to trial without any witnesses or admissible evidence, hoping that consumers will not show up or asking the court to reschedule if they do.3

•     Routinely filing court documents without confirming the accuracy of that information,4 often resulting in default judgments based on inaccurate information.

•     Filing lawsuits in courts hundreds of miles away from the consumers’ homes,5 making it nearly impossible for most consumers to appear in court to defend themselves.6

*     Filing lawsuits on ancient zombie debt after legal time limit to sue has expired7 and when consumers are less likely to have critical records to prove their payments.

•     Seeking fees or costs that are not legally allowable,8 adding to the amount of judgments against consumers who cannot afford attorneys.

•     Misusing state garnishment proceedings,9 such as by knowingly seizing Social Security or other income or property that is exempt from collection."

State Consumer Protection Laws May Not Cover Attorneys.

Maintaining coverage of attorneys under the FDCPA is important because many states do not have laws that are equivalent to the FDCPA. In these states, exempting attorneys from coverage under the FDCPA would mean that no federal or state laws would protect consumers from abusive litigation practices by consumer attorneys.10"

States Do Not Have the Capacity to Protect Consumers.

Even in states that have the legal authority, resources are insufficient to monitor the tens of thousands of debt collection lawsuits that are filed yearly in each state11 or to bring sufficient enforcement or disciplinary actions in response to abusive litigation activity.

Court and Ethical Rules Are No Substitute for the FDCPA.


To date, neither the courts nor bar associations have been effective in policing litigation abuses by collection attorneys.12

There is no reason to believe that these agencies will suddenly step up now if FDCPA sanctions against collection attorneys for litigation abuses are eliminated.

Collection Attorneys Would File More Lawsuits.


H.R. 5082 would exempt lawyers from the FDCPA for conduct in litigation that would be a violation outside of court. For example, misstating the amount owed in a lawsuit would be exempt from FDCPA liability but misstating the amount owed in a pre-litigation letter or phone call would be a violation. As a result, attorneys would be encouraged to file suit first rather than attempting to reach a resolution with consumers outside of court. This would drive a huge increase in collection lawsuits filed in state courts, further clogging the already overburdened trial courts.

H.R. 5082 Would Prohibit CFPB Supervision and Enforcement.

The CFPB has special insights into abusive collection practices through extensive national data from consumer complaints and information gleaned from industry supervision. H.R. 5082 would tie the CFPB's hands and prevent it from acting on abusive practices by attorneys or law firms when they are engaging in debt collection litigation. Previous CFPB enforcement actions against collection law firms have focused on law firms operating large debt collection “mills” churning through a high volume of lawsuits with minimal attorney oversite.13

H.R. 5082 would protect attorneys who engage in abusive litigation collection practices that hurt American consumers. We urge members of Congress to oppose this bill.

For more information, contact attorneys April Kuehnhoff (akuehnhoff@nclc.org or" "617.542.8010) or Margot Saunders (msaunders@nclc.org or 202.595.7844).

hb4550_exempts_attorneys_from_fdcpa.pdf
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