Robin Miller of CBAR reports on a case that could have a dramatic impact on means testing: Rejecting the “heads on bed” and “IRS dependency” approaches, the court adopted the “economic unit” approach to determining a debtor’s “household size.” In applying this approach, the court adopted rebuttable presumptions that an individual listed as a dependent on the debtor or the debtor’s non-filing spouse’s most recent income tax return was a member of the debtor’s bankruptcy “household,” while an individual not listed as a dependent on the debtor or the debtor’s non-filing spouse’s most recent tax return was not a part of the debtor’s “household.” Moreover, a child who lives with the debtor only part of the time constitutes a fractional member of the debtor’s household….

As reported by the American Bankruptcy Institute, the federal government is stepping up wage garnishments of student-loan borrowers who have defaulted on their loan. Administrative wage garnishments are just another lingering effect of the nation’s ballooning college debt, as reported by the Wall Street Journal. 175,000 defaulting borrowers saw the US Department of Education Department take some money out of at least one paycheck in the 2013 fiscal year. That figure was up 45 percent from 10 years earlier and excludes individuals working for the federal government. The US Department of Education can automatically begin taking as much as 15 percent of borrowers’ after-tax wages without court approval. Most borrowers who wind up in garnishment stay there for a while. About 72 percent of garnished…

As reported by Robin Miller of CBAR: Agreeing with the one other Court of Appeals decision on the issue, In re Davis, 716 F.3d 331 (4th Cir. 2013), and with what it called the majority view on the issue, the Eleventh Circuit Court of Appeals today held that a Chapter 13 debtor may strip a wholly-unsecured lien from the debtor’s principal residence (or other collateral) even when the debtor is ineligible for a discharge. Declaring that “BAPCPA did not amend 506 or 1322(b), so the analysis permitting strip offs in Chapter 20 cases is no different than that in any other Chapter 13 case,” the court concluded that “the debtor’s ineligibility for a discharge is irrelevant to a strip off in a Chapter 20 case.”…

As report in the Huffinton Post on June 13, 2014 – The Senate on Wednesday declined to approve a measure that would have enabled millions of Americans with expensive student loans to refinance into cheaper debt. The 56-38 vote on the refinancing proposal, sponsored by Sen. Elizabeth Warren (D-Mass.), failed to garner the 60 votes needed to overcome a Republican filibuster. Warren’s proposal, which mostly targeted student loans owned or guaranteed by the Department of Education, sought to fund the reduction in borrowers’ student loan payments by increasing taxes on wealthy households. “With this vote we show the American people who we work for in the United States Senate: Billionaires or students,” Warren said minutes before the vote. Other than Senate Majority Leader Harry Reid…

Today the Supreme Court, in a unanimous decision in Clark v. Rameker, 2014 WL 2608860 (U.S., June 12, 2014) (case no. 13-299), held that an inherited IRA is not exempt under Code § 522(b)(3)(C) or § 522(d)(12) because the funds in an inherited IRA are not “retirement funds” within the meaning of those provisions, each of which exempts “retirement funds to the extent those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code.” Accordingly, the court affirmed In re Clark, 714 F.3d 559 (7th Cir., April 23, 2013) while abrogating In re Chilton, 674 F.3d 486 (5th Cir., March 12, 2012) and other cases that allowed the exemption of inherited…

Senator Elizabeth Warren is sponsoring legislation that would let borrowers with federal and private loans refinance their balances at lower interest rates, Bloomberg News reported today. Student-loan borrowers have amassed more than $1.2 trillion in debt and even the President is finally waking up to the urgency of this crisis and the resultant drag on the overall economy. Recently, the President issued an executive order to expand a program easing student-loan payments and he also endorsed Warren’s bill. Senator Warren proposal would help former graduate students, whose federal loans typically carry higher rates than those of undergraduates – some as high as 8.5 percent. Senator Warren’s bill was co-sponsored by Democratic Senator Al Franken of Minnesota and Dick Durbin of Illinois. The important component of…

Identity theft occurs when someone uses your name, Social Security number, date of birth, or other identifying information, without authority, to commit fraud. For example, someone may have committed identity theft by using your personal information to open a credit card account or get a loan in your name. For more information, visit www.consumerfinance.gov or write to: Consumer Financial Protection Bureau, 1700 G Street N.W., Washington, DC 20006. The Fair Credit Reporting Act (FCRA) gives you specific rights when you are, or believe that you are, the victim of identity theft. Here is a brief summary of the rights designed to help you recover from identity theft. 1. You have the right to ask that nationwide consumer reporting agencies place “fraud alerts” in your file…