tag:blogger.com,1999:blog-225736012024-02-06T23:35:56.833-08:00Bankruptcy TodayInformation about major bankruptcy cases that I am handling and important developments in bankruptcy law.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comBlogger110125tag:blogger.com,1999:blog-22573601.post-10380764270966598752019-04-02T18:20:00.000-07:002019-04-02T18:22:02.735-07:00Certified Specialist + Free Consultation = A Great Idea!I want to help as many people as possible. I don't want anyone who could use my help to be afraid to call me. This is why I offer all potential new clients a free consultation. I will take as long as it takes to analyze your case for you for free. This typically is an hour or less, but in some cases can be two hours or more. I give you the same quality review that I charge $595.00/hour for, but I give it to you for free.<br />
<br />
As an attorney with 37 years of experience, as a certified specialist in bankruptcy law, and as a very smart person, I can offer you great insight as to what steps are best for you. I can prevent you from making very costly mistakes. Every week, I meet people who have made terrible bankruptcy mistakes, either representing themselves or going to less qualified attorneys. When you have broken things, it is usually much more expensive or impossible for me to fix them. Call me first. Call me BEFORE you make a mess of things yourself. The call is free. The in person initial consultation is free. You have NOTHING to lose and everything to gain.<br />
<br />
310-271-6223.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-67092453600129358732016-01-06T18:27:00.000-08:002016-01-06T18:48:11.837-08:00KeyBank Gives UpKeyBank is forgiving loans for my former Silver State Helicopters student clients that never made any payments on their loans. This is an exciting new development. Up until now, KeyBank was threatening litigation and in many cases demanding payment in full. Within the last week, 2 of my clients have forwarded to me letters from KeyBank National Association that state, <br />
<br /><br />
"As part of a review of our accounts and internal processes, we have decided not to pursue the amount remaining due on your obligation because the applicable statute of limitations period may have expired.<br />
<br /><br />
Since we strive to be as transparent as possible in how we work with you, here is some additional information:<br />
<br /><br />
The statute of limitations is the time period creditors have to file a lawsuit to collect a debt.<br />
<br /><br />
The statute of limitations does not necessarily prohibit a creditor from attempting to collect a debt. In your case, however, we have decided to make no further attempts to collect this debt."<br />
<br /><br />
The first two of my clients to receive this letter received debt cancellation of $78,242.80 and $76,520.96.<br />
<br /><br />
Each one of these clients paid me a flat fee of $800.00 back in 2008 to help them deal with their student loan problem. I call that money well spent!Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-72917312964349829762013-10-06T18:02:00.000-07:002013-10-06T18:02:00.324-07:00End Of The Line for Silver State Helicopters Bankruptcy
<br />
On February 4, 2008, Sliver State Helicopters filed a voluntary Chapter 7
petition. On December 29, 2009, I was the first and only person to
publicly give an estimated value for the student creditor proof of claims
in the Silver State Helicopters Bankruptcy Case. In a Q and A on this
blog, I wrote, " My best estimate is that each one of the former SSH
students proof of claim will be worth somewhere between $0 and $3,000.00."
Based on this valuation, most of my clients traded their proofs of claims for
tens of thousands of dollars in discounts on their student loans. This
turned out to be a wise move, as on September 24, 2013 United States Bankruptcy
Court Judge Mike K. Nakagawa issued his Order on the Trustee's Final Report and
Application for Compensation and Expenses. This Order, made over my
objection on behalf of the Student Creditors, confirmed that the Student
Creditors will get nothing in the Silver State Bankruptcy. Judge Nakagawa's
order notes that "The Student Creditors object to the lack of any payments
on their . . . claims. They argue that professionals employed in the case
are being paid an excessive amount and that professional fees generally should
be reduced by the court so that funds will be available for distribution to
general unsecured claims." The Silver State Helicopters case ended
up being a liquidation proceeding for the benefit of the secured creditor Orix
and for the benefit of the professionals (attorneys and accountants) and
other administrative claimants, with no benefit to the unsecured creditors.
Judge Nakagawa found that under the bankruptcy code, the secured and
Administrative claim creditors had priority over the student creditors, and in
total approved $8,106,011.54 in "approved administrative expenses of the
bankruptcy estate, . . . including professional fees." Not one penny will
be paid out for student creditor claims. Judge Nakagawa notes that
"While the Student Creditors are perhaps unique victims of what may have
been an airborne Ponzi Scheme, Congress has not afforded their claims a
priority of payment ahead of the categories set forth in Section 507(a) that
the Trustee must follow under Section 742(b)(2) and Section 726(a)(1).<o:p></o:p><br />
Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-53462174942725361812013-06-13T10:15:00.000-07:002013-06-13T11:09:37.343-07:00Defending Preference Claims In Bankruptcy: In re New Meatco Provisions, LLC, d/b/a/ King SeafoodThis week, I was contacted by several creditors that received letters from Arent Fox LLP demanding repayment of payments that they received within 90 days of the filing of a Chapter 11 bankruptcy for New Meatco Provisions, LLC, d/b/a/ King Seafood. In each case, Arent Fox listed all payments that the creditor had received and demanded repayment, but failed to provide any information regarding the defenses that are available to the creditors. The fact that a payment is received within 90 days of a bankruptcy filing is only one part of the preference analysis. In each case, my new clients had a complete defense to the preference claim -- something that was not mentioned anywhere in the threatening demand letters that they received. <br />
<br />
Based on my review of New Meatco's bankruptcy schedules, it appears that their attorneys sent out approximately 200 letters demanding a return of alleged preference payments ranging from $6,225.00 to more than $2,000,000. If you have received a letter demanding repayment of an alleged preference, you should immediately consult with a certified specialist in bankruptcy law (like me) to see if you have defenses to the claim. I have extensive experience representing debtors and creditors in Chapter 11 cases. I offer a free consultation to anyone with a bankruptcy question or problem. Call me at (310) 271-6223.<br />
<br />
New Meatco's bankruptcy schedules list more than $33,000,000.00 in debts and less than $1,000,000.00 in assets. The vast majority of these assets are security deposits for 2 leases. Debtor's secured claims exceed $16,000,000.00 suggesting that there may be little if anything for unsecured creditors if the company ends up being liquidated in a Chapter 7. Many of the companies that New Meatco is threatening to sue in order to recover preference payments are also creditors, with amounts still owed by New Meatco ranging from less than $100.00 to more than $4,500,000.00. <br />
<br />
The judge originally assigned to the New Meatco Provisions Chapter 11 was United States Bankruptcy Court Judge Richard Neiter, a judge that knows me well and that I have appeared before successfully many times since he was first appointed as a Bankruptcy Court Judge in 2006. Judge Neiter is highly intelligent, compassionate, and a leader in the Jewish community. He was born in 1937 and practiced for many years as a bankruptcy attorney before becoming a Bankruptcy Court Judge. <br />
<br />
On June 3, 2013, Judge Neiter signed an order recusing himself, and the case was transferred to Bankruptcy Judge Peter Carroll for all further proceedings. Judge Carroll is one of my favorite Bankruptcy Court Judges. In 2002, Judge Carroll was appointed to serve as a Bankruptcy Judge in the Central District of California. In January of 2011, he was appointed to be the Chief Judge of the Bankruptcy Court for the Central District of California, an appointment that he still holds and will maintain until the end of 2014. Judge Carroll is super smart, caring, patient, fun and a real problem solver. He is a leader in promoting pro bono work to help debtors and a frequent participant in educational programs for bankruptcy attorneys. I have appeared successfully before him many times and enjoyed his company at many educational functions.<br />
<br />
For a little self-help, start by looking at 11 U.S.C. Section 547 Preferences. This bankruptcy code section defines what a preference is and outlines what is needed to establish certain defenses to preference claims, such as the "new value" exception and the "ordinary course of business" exception. Don't let aggressive attorneys for the bankruptcy debtor trick you into paying money that you do not owe. Above all, do not let attorneys take your default based on a complaint with false or incomplete allegations. Know and protect your rights. <br />
<br />
Here is a copy of 11 USC § 547 - Preferences<br />
<br />
<span class="enumbell">(a)</span><span class="ptext-">In this section—</span><br />
<div class="psection-2">
<a href="http://www.blogger.com/null" name="a_1"></a><span class="enumbell">(1)</span><span class="ptext-">“inventory” means personal property leased or furnished, held for sale or lease, or to be furnished under a contract for service, raw materials, work in process, or materials used or consumed in a business, including farm products such as crops or livestock, held for sale or lease;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="a_2"></a><span class="enumbell">(2)</span><span class="ptext-">“new value” means money or money’s worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, including proceeds of such property, but does not include an obligation substituted for an existing obligation;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="a_3"></a><span class="enumbell">(3)</span><span class="ptext-">“receivable” means right to payment, whether or not such right has been earned by performance; and</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="a_4"></a><span class="enumbell">(4)</span><span class="ptext-">a debt for a tax is incurred on the day when such tax is last payable without penalty, including any extension.</span></div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="b"></a><span class="enumbell">(b)</span><span class="ptext-">Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property—</span><br />
<div class="psection-2">
<a href="http://www.blogger.com/null" name="b_1"></a><span class="enumbell">(1)</span><span class="ptext-">to or for the benefit of a creditor;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="b_2"></a><span class="enumbell">(2)</span><span class="ptext-">for or on account of an antecedent debt owed by the debtor before such transfer was made;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="b_3"></a><span class="enumbell">(3)</span><span class="ptext-">made while the debtor was insolvent;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="b_4"></a><span class="enumbell">(4)</span><span class="ptext-">made—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="b_4_A"></a><span class="enumbell">(A)</span><span class="ptext-">on or within 90 days before the date of the filing of the petition; or</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="b_4_B"></a><span class="enumbell">(B)</span><span class="ptext-">between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="b_5"></a><span class="enumbell">(5)</span><span class="ptext-">that enables such creditor to receive more than such creditor would receive if—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="b_5_A"></a><span class="enumbell">(A)</span><span class="ptext-">the case were a case under chapter <a alt="Chapter 7 - LIQUIDATION" href="http://www.law.cornell.edu/uscode/text/11/chapter-7" title="Chapter 7 - LIQUIDATION">7</a> of this title;</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="b_5_B"></a><span class="enumbell">(B)</span><span class="ptext-">the transfer had not been made; and</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="b_5_C"></a><span class="enumbell">(C)</span><span class="ptext-">such creditor received payment of such debt to the extent provided by the provisions of this title.</span></div>
</div>
</div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="c"></a><span class="enumbell">(c)</span><span class="ptext-">The trustee may not avoid under this section a transfer—</span><br />
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_1"></a><span class="enumbell">(1)</span><span class="ptext-">to the extent that such transfer was—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_1_A"></a><span class="enumbell">(A)</span><span class="ptext-">intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor; and</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_1_B"></a><span class="enumbell">(B)</span><span class="ptext-">in fact a substantially contemporaneous exchange;</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_2"></a><span class="enumbell">(2)</span><span class="ptext-">to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_2_A"></a><span class="enumbell">(A)</span><span class="ptext-">made in the ordinary course of business or financial affairs of the debtor and the transferee; or</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_2_B"></a><span class="enumbell">(B)</span><span class="ptext-">made according to ordinary business terms;</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_3"></a><span class="enumbell">(3)</span><span class="ptext-">that creates a security interest in property acquired by the debtor—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_3_A"></a><span class="enumbell">(A)</span><span class="ptext-">to the extent such security interest secures new value that was—</span><br />
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_3_A_i"></a><span class="enumbell">(i)</span><span class="ptext-">given at or after the signing of a security agreement that contains a description of such property as collateral;</span></div>
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_3_A_ii"></a><span class="enumbell">(ii)</span><span class="ptext-">given by or on behalf of the secured party under such agreement;</span></div>
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_3_A_iii"></a><span class="enumbell">(iii)</span><span class="ptext-">given to enable the debtor to acquire such property; and</span></div>
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_3_A_iv"></a><span class="enumbell">(iv)</span><span class="ptext-">in fact used by the debtor to acquire such property; and</span></div>
</div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_3_B"></a><span class="enumbell">(B)</span><span class="ptext-">that is perfected on or before 30 days after the debtor receives possession of such property;</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_4"></a><span class="enumbell">(4)</span><span class="ptext-">to or for the benefit of a creditor, to the extent that, after such transfer, such creditor gave new value to or for the benefit of the debtor—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_4_A"></a><span class="enumbell">(A)</span><span class="ptext-">not secured by an otherwise unavoidable security interest; and</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_4_B"></a><span class="enumbell">(B)</span><span class="ptext-">on account of which new value the debtor did not make an otherwise unavoidable transfer to or for the benefit of such creditor;</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_5"></a><span class="enumbell">(5)</span><span class="ptext-">that creates a perfected security interest in inventory or a receivable or the proceeds of either, except to the extent that the aggregate of all such transfers to the transferee caused a reduction, as of the date of the filing of the petition and to the prejudice of other creditors holding unsecured claims, of any amount by which the debt secured by such security interest exceeded the value of all security interests for such debt on the later of—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_5_A"></a><span class="enumbell">(A)</span><br />
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_5_A_i"></a><span class="enumbell">(i)</span><span class="ptext-">with respect to a transfer to which subsection (b)(4)(A) of this section applies, 90 days before the date of the filing of the petition; or</span></div>
<div class="psection-4">
<a href="http://www.blogger.com/null" name="c_5_A_ii"></a><span class="enumbell">(ii)</span><span class="ptext-">with respect to a transfer to which subsection (b)(4)(B) of this section applies, one year before the date of the filing of the petition; or</span></div>
</div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="c_5_B"></a><span class="enumbell">(B)</span><span class="ptext-">the date on which new value was first given under the security agreement creating such security interest;</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_6"></a><span class="enumbell">(6)</span><span class="ptext-">that is the fixing of a statutory lien that is not avoidable under section <a alt="§ 545 - Statutory liens" href="http://www.law.cornell.edu/uscode/text/11/545" title="§ 545 - Statutory liens">545</a> of this title;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_7"></a><span class="enumbell">(7)</span><span class="ptext-">to the extent such transfer was a bona fide payment of a debt for a domestic support obligation;</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_8"></a><span class="enumbell">(8)</span><span class="ptext-">if, in a case filed by an individual debtor whose debts are primarily consumer debts, the aggregate value of all property that constitutes or is affected by such transfer is less than $600; or</span></div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="c_9"></a><span class="enumbell">(9)</span><span class="ptext-">if, in a case filed by a debtor whose debts are not primarily consumer debts, the aggregate value of all property that constitutes or is affected by such transfer is less than $5,000.</span></div>
</div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="d"></a><span class="enumbell">(d)</span><span class="ptext-">The trustee may avoid a transfer of an interest in property of the debtor transferred to or for the benefit of a surety to secure reimbursement of such a surety that furnished a bond or other obligation to dissolve a judicial lien that would have been avoidable by the trustee under subsection (b) of this section. The liability of such surety under such bond or obligation shall be discharged to the extent of the value of such property recovered by the trustee or the amount paid to the trustee.</span></div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="e"></a><span class="enumbell">(e)</span><br />
<div class="psection-2">
<a href="http://www.blogger.com/null" name="e_1"></a><span class="enumbell">(1)</span><span class="ptext-">For the purposes of this section—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="e_1_A"></a><span class="enumbell">(A)</span><span class="ptext-">a transfer of real property other than fixtures, but including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona fide purchaser of such property from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of the transferee; and</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="e_1_B"></a><span class="enumbell">(B)</span><span class="ptext-">a transfer of a fixture or property other than real property is perfected when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest of the transferee.</span></div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="e_2"></a><span class="enumbell">(2)</span><span class="ptext-">For the purposes of this section, except as provided in paragraph (3) of this subsection, a transfer is made—</span><br />
<div class="psection-3">
<a href="http://www.blogger.com/null" name="e_2_A"></a><span class="enumbell">(A)</span><span class="ptext-">at the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 30 days after, such time, except as provided in subsection (c)(3)(B);</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="e_2_B"></a><span class="enumbell">(B)</span><span class="ptext-">at the time such transfer is perfected, if such transfer is perfected after such 30 days; or</span></div>
<div class="psection-3">
<a href="http://www.blogger.com/null" name="e_2_C"></a><span class="enumbell">(C)</span><span class="ptext-">immediately before the date of the filing of the petition, if such transfer is not perfected at the later of—</span><br />
<div class="psection-4">
<a href="http://www.blogger.com/null" name="e_2_C_i"></a><span class="enumbell">(i)</span><span class="ptext-">the commencement of the case; or</span></div>
<div class="psection-4">
<a href="http://www.blogger.com/null" name="e_2_C_ii"></a><span class="enumbell">(ii)</span><span class="ptext-">30 days after such transfer takes effect between the transferor and the transferee.</span></div>
</div>
</div>
<div class="psection-2">
<a href="http://www.blogger.com/null" name="e_3"></a><span class="enumbell">(3)</span><span class="ptext-">For the purposes of this section, a transfer is not made until the debtor has acquired rights in the property transferred.</span></div>
</div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="f"></a><span class="enumbell">(f)</span><span class="ptext-">For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition.</span></div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="g"></a><span class="enumbell">(g)</span><span class="ptext-">For the purposes of this section, the trustee has the burden of proving the avoidability of a transfer under subsection (b) of this section, and the creditor or party in interest against whom recovery or avoidance is sought has the burden of proving the nonavoidability of a transfer under subsection (c) of this section.</span></div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="h"></a><span class="enumbell">(h)</span><span class="ptext-">The trustee may not avoid a transfer if such transfer was made as a part of an alternative repayment schedule between the debtor and any creditor of the debtor created by an approved nonprofit budget and credit counseling agency.</span></div>
<div class="psection-1">
<a href="http://www.blogger.com/null" name="i"></a><span class="enumbell">(i)</span><span class="ptext-">If the trustee avoids under subsection (b) a transfer made between 90 days and 1 year before the date of the filing of the petition, by the debtor to an entity that is not an insider for the benefit of a creditor that is an insider, such transfer shall be considered to be avoided under this section only with respect to the creditor that is an insider.</span></div>
<br />Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-57593055993446483492013-05-21T14:48:00.000-07:002013-05-21T14:48:30.320-07:00AVOIDING BANKRUPTCY<strong><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"><o:p></o:p></span></strong>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<strong><span style="font-family: "Arial","sans-serif"; font-size: 12pt;">Here
are 15 Tips to help you avoid filing bankruptcy. It took me 30 years to learn
what I will now teach you in 5 minutes:</span></strong><u><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-bidi-font-weight: bold;"><o:p></o:p></span></u></div>
<u1:p></u1:p><br />
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<div class="MsoNormal" style="margin: 0in 0in 0pt 45pt; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">Don’t make your happiness depend on buying things that you can’t afford. To be more happy and healthy, try eating healthy, exercising and enjoying time with friends and loved ones. Studies show that buying things does not work as well as you might think in terms of making you happy. Sharing experiences with loved ones and friends does help. <o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"><o:p> </o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">Avoid buying a car that you cannot afford. Avoid car payments that you cannot afford. Car repossessions almost always are accompanied by a large balance due that the lender sues for and gets.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">To the maximum extent possible, use debit cards, not credit cards. If you don’t have the money now, you can’t afford it. This is really an extension of #1 – don’t buy things that you cannot afford.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">If you have a job, be a good employee. Many of my clients find that losing their job is what drives them into bankruptcy. Being unemployed makes it harder to get the next job and harder to pay your bills.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">If you can, get a job that also provides good health insurance. Health insurance is expensive and even more expensive for individuals than for group plans. Many of my clients have large medical bills as a factor that contributes to their having to file bankruptcy.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"><o:p> </o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">5.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">When times are good, save money for a rainy day. Don’t assume that your income will always continue at its highest level.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">6.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"> Buy and learn how to use personal financial software like Quicken or QuickBooks. It gives you a great way to see, understand and manage your finances, and it helps motivate you to make more money and hold your expenses down. What you measure is easier to improve. If you do not pay attention to something, it usually does not get better by itself.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">7.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">Don’t personally guarantee debts for anyone. In my experience, people often get sued for debts that they personally guaranteed for others. Personally guaranteeing debts looks easy at first – just sign here – <span style="mso-spacerun: yes;"> </span>but then ends up very hard when you get sued. Personal guarantees alone can be enough to force you info bankruptcy<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">8.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">If you own a business, avoid signing long term leases. One broken lease can drive you into bankruptcy.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">9.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">If you have employees, use a payroll tax service. Don’t risk having the IRS come after you for the unpaid trust fund portion of your payroll taxes. If you cannot afford the payroll tax, you cannot afford the employee.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">10.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"> File your tax returns on time. If you don’t, you will incur substantial penalties and risk having the IRS create returns for you that invariably result in you owing much more to the IRS.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"><o:p> </o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">11.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"> Limit your student loans. Think about your realistic prospects for a job with and without the education that you are borrowing money for, and what your income is likely to be. Many people come to me with student loans of $100,000.00, $200,000.00 or more. These loans can almost never be discharged in bankruptcy. Like personal guarantees, signing for a student loan seems easy at first but can make life very difficult in the end. Think carefully about whether or not the student loan will increase your earning potential.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">12.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"> Avoid gambling and drugs – either one can lead to bankruptcy.<o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">13.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"> Cut Personal Expenses. </span></b><b><span style="font-family: "Arial","sans-serif"; font-size: 12pt;">If you really care about avoiding bankruptcy, you can sacrifice some luxuries, such as eating out, buying new clothes or getting premium cable or cell phone service, for a while. Also consider moving to a less expensive home or renting out a room in your home.<span style="color: black;"><o:p></o:p></span></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">14.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;">Before you decide to file bankruptcy, get expert free advice from an expert bankruptcy attorney to see if bankruptcy is<span style="mso-spacerun: yes;"> </span>your best option. You may be able to avoid bankruptcy by simply waiting to see what happens. If no one is suing you, you made decide to wait and see what happens next. Don’t Panic.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></b></div>
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<b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">15.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><b><span style="color: black; font-family: "Arial","sans-serif"; font-size: 12pt;"><span style="mso-spacerun: yes;"> </span>Last words:<span style="mso-spacerun: yes;"> </span>There is absolutely nothing to lose by getting a free consultation with a certified specialist in bankruptcy law to see if bankruptcy is right for you.<o:p></o:p></span></b></div>
Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-85381004410882989022013-05-10T10:06:00.002-07:002013-05-10T12:04:47.058-07:00Proposed California Class Action for Former Silver State Helicopters Students Shot DownOn April 11, 2013 the United States Court of Appeals for the Ninth Circuit published its Opinion in a proposed class action case against KeyBank National Association, Key Education Resources, and Great Lakes Education Loan Services, Inc. This case was heard by all judges of the court, rather than by a panel selected by them. The legal phrase for this is "en banc."<br />
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The court's decision included both a victory for the Plaintiffs -- 2 California resident former students of SSH (the reversal of the district court's dismissal of plaintiff's claims) -- and a victory for KeyBank -- the instructions to the district court to compel arbitration. The larger victory was won by KeyBank, which has now effectively killed any chance of a California class action against it based on the claims asserted in the Kilgore case. Plaintiffs' counsel have informed me that they will not try to appeal this ruling to the United States Supreme Court, so this ruling will be final.<br />
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Here is the link to the complete Opinion: <a href="http://www.gpo.gov/fdsys/pkg/USCOURTS-ca9-10-15934/pdf/USCOURTS-ca9-10-15934-2.pdf"><span style="color: blue; font-family: Calibri;">http://www.gpo.gov/fdsys/pkg/USCOURTS-ca9-10-15934/pdf/USCOURTS-ca9-10-15934-2.pdf</span></a> <a href="http://www.gpo.gov/fdsys/pkg/USCOURTS-ca9-10-15934/pdf/USCOURTS-ca9-10-15934-2.pdf"></a><br />
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The court's ruling orders the individual arbitration of the claims brought by the 2 Plaintiffs Matthew C. Kilgore and Willaim Bruce Fuller. The court rejects the Plaintiffs' claim that the Promissory Note's ban on class action arbitration is unconscionable under California Law and also rejects the Plaintiffs' claim that individual arbitrations would be too costly.<br />
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Here is a summary of the Court's opinion: <br />
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The en banc court reversed the district court’s dismissal of plaintiffs’ claims, reversed the denial of defendants’ motion to compel arbitration, and remanded with instructions to the district court to compel arbitration. In an appeal involving a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans and the loan servicer, the en banc court held that the district court should have compelled arbitration under California law. The en banc court held that the arbitration clause was neither substantively nor procedurally unconscionable under California law. The en banc court held also that this case does not fall under the narrow “public injunction” exception to the Federal Arbitration Act that was recognized in Davis v. O’Melveny & Myers, 485 F.3d 1066, 1082-84 (9th Cir. 2007).<br />
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Judge Pregerson dissented. Judge Pregerson would hold that the arbitration clause was unconscionable, and thus unenforceable. Judge Pregerson's dissent makes great reading for any former SSH Student. With headings like "Hustled by the school; hustled by the bank" and "Ignored by the Court," Judge Pregerson makes a strong case that the arbitration agreements enforced by the Court are both "Procedurally Unconscionable" and "Substantively Unconscionable." Here is a sample from Judge Pregerson's dissent:<br />
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"Silver State Helicopter School did not do a good job training helicopter pilots, placing them in jobs, or managing its own finances. But it did make a convincing sales pitch. Silver State promised its students that they would get the training required to get good paying jobs as commercial helicopter pilots.At flashy career fairs around California, Silver State worked hard to sign up prospective students for its helicopter pilot training program. Former Silver State student, Mathew Kilgore, declared under penalty of perjury: <br />
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The seminar was very impressive and glitzy. There were numerous helicopters onsite and the school appeared to be very professional. [Silver State’s CEO, Jerry Airola] was very convincing and portrayed Silver State as a top flight school. The presentation made clear that Silver State was very selective about which students would be chosen to attend the school . . . Mr. Airola emphasized that all of the tuition to fund the entire Silver State education could be obtained through Silver State’s partner lender, KeyBank. Mr. Airola also emphasized that . . . the loans would only cost the students about [a] hundred dollars a week at 4% interest.<br />
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Airola’s claims were not true. Silver State accepted almost all applicants who could get their loans approved. Silver State lacked sufficient equipment or instructors to properly train its students. The variable rate interest on the loans would rise far above four percent. Matthew Kilgore, William Fuller, and the other 120 putative class members believed what Airola told them and signed up. They took out $55,950 loans, which KeyBank promptly forked over to Silver State before students took a single class. But Silver State knew it was headed for a crash landing. By 2008, Silver State had racked up ten million dollars in debt against fifty thousand dollars in assets. Moreover, despite Silver State’s alluring promises, there was no significant demand for helicopter pilots with a Silver State degree. And it wasn’t just the school that knew it. Defendant KeyBank knew it, too.<br />
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KeyBank, an Ohio-based lending giant, participated in the fraud that Silver State perpetrated on unwitting students. From 2003 to 2005 KeyBank financed ninety-five percent of the tuition students paid to Silver State. KeyBank printed up lengthy loan papers that lacked the Federal Trade Commission’s Holder Rule Notice. 16 C.F.R. § 433.2 The Holder Rule required the loan contracts to notify students that KeyBank was subject to the same claims and defenses as Silver State. Id. The Holder Rule protects borrowers, such as the students, from being legally obligated to pay a creditor like KeyBank “despite breach of warranty, misrepresentation, or even fraud on the part of the seller.” 40 Fed. Reg. 53,506, 53,507 (Nov. 18, 1975). By omitting that notice from its printed loan contracts, KeyBank may have sought to insulate itself from liability for Silver State’s misleading promises. Silver State then presented those faulty loan contracts to prospective students and “pressure[d] the students to sign the [master promissory notes] as soon as possible,” according to an affidavit of Silver State’s former student finance manager Jody Pidruzny. And sign up they did.Once a student signed the promissory note, KeyBank immediately transferred the full amount of the loans to Silver State. KeyBank then turned a profit by selling the students' loans on the securities market to investors. Defendant Great Lakes Educational Loan Services, Inc. continues to service those loans by collecting payments from students, and notifying credit reporting agencies when students fail to pay. KeyBank loaned students tuition money to attend Silver State knowing that Silver State was financially volatile. See Editorial, Student Debt and the Economy, N.Y. Times, March 10, 2<br />
2013, at SR 10 (“Because private loans offer little flexibility, borrowers in bad straits have few options except default, which makes it difficult for them to get jobs or credit, or even to rent apartments.”) 2004 email between KeyBank Vice Presidents Paul McDermott and Rodney Landrum predicted that Silver State “could be the next ‘big one’ to go under.” Nevertheless, KeyBank made more than ten million dollars in loans to Silver State students over the following two years. In 2008, Silver State filed for bankruptcy and closed its doors. Students could not recoup the amount of their unused tuition because Silver State sought protection under Chapter 7 bankruptcy proceedings. Kilgore, Fuller, and their classmates were left holding the bag with no degree, no helicopter piloting career, and no opportunity to train. The students’ failed attempts to launch flight careers saddled them with huge private loans that are collecting interest and weighing them down. The private loans students incurred to pay for Silver State helicopter pilot training were not subsidized or insured by the federal government. Private student loans are generally more expensive than federal loans, especially for students with lower credit scores or limited credit histories. Students could borrow larger amounts because there are no loan limits for private loans. Moreover, students who hold private loans are not eligible for federal programs that allow them to reduce their monthly payments based on their income, or have their loans forgiven after working for ten years in public service jobs.<br />
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Unlike federally guaranteed loans, private student loans are not discharged should the school go out of business. The students themselves cannot discharge these loans in bankruptcy proceedings unless they can prove that “excepting such [student] debt from discharge . . . would impose an undue hardship.” 11 U.S.C. § 523(a)(8).<br />
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WHAT NEXT?<br />
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There are 2 different schools of thought as to what former SSH students with KeyBank loans should do next. One school, led by Andrew August and Kevin Rooney of Pinnacle Law Group, is that the students should file individual arbitration proceedings against KeyBank. Although the costs of these arbitration proceedings is estimated by Andrew at between $10,000 - $15,000.00 arbitration costs + legal fees, Andrew believes that he may be able to compel KeyBank to pay these arbitration costs. The prevailing party can be awarded legal fees under the terms of the promissory notes that former SSH students would be litigating about. If you are a former SSH student, a California resident, have an unresolved KeyBank loan, want to take action now to seek a final resolution with KeyBank as opposed to doing nothing, feel that an arbitration now is in your best interest, and are willing to assume the cost of litigating and the risk that you may not prevail, I recommend that you contact Andy and Kevin at the following special email address: keybanklitigation@gmail.com <br />
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The other school of thought, led by me, Michael Jay Berger, is to do nothing. That may sound funny but here is my reasoning: In the more than 5 years that I have been representing former students of Silver State Helicopters, KeyBank has never sued any of my clients and never filed an arbitration proceeding against any of my clients. Why is that? I presume that KeyBank always does what it thinks is in its best interests. Therefore, for the last 5 years, KeyBank must have felt that filing a lawsuit or an arbitration proceeding against any of one my clients is not in its best interests. Based on KeyBank's efforts to enforce the arbitration provision in its agreement with former SSH students, it seems unlikely that it will reverse course and now claim that it is free to file lawsuits against former SSH students instead of complying with the arbitration provisions that it put in the student loan agreements. Private arbitration is expensive and KeyBank would have to pay the costs to initiate each and every arbitration proceeding that it wants to start. Between the initial costs and the costs for retired Judge's time, Andrew August's estimate for the cost of these private arbitration proceedings is $10,000 - $15,000.00 per student. Many of these students don't have the money and will not be able to pay even if an arbitration award is entered against them. <br />
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Students who initiate arbitration proceedings against KeyBank need to be prepared for the possibility that they will lose. In that case, KeyBank is likely to move to confirm any arbitration action and turn the awards into fully enforceable state court judgments. This could lead to all of the usual judgment enforcement collection actions, including, but not limited to, bank account levies, wage garnishments, the filing of abstracts of judgment to create liens on any real property owned by the debtors and examinations of judgment debtors. I like finality when it is good, but prefer delay if the finality will be bad.<br />
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It is interesting to note that Citibank, which forgave 100% of my client's SSH Student Loan Debt, and SLX, which settled with the vast majority of my SSH Loan clients, also never filed a lawsuit or arbitration proceeding against any of my clients. Seen in this light, it seems possible that KeyBank will continue to make negative reports on nonpaying borrowers' credit reports, continue to send collection letters, and continue to make collection calls, but not actually sue or institute arbitration proceedings against former SSH student borrowers. For the students that I represent, there is an additional level of deterrence, as KeyBank and its counsel are aware that these students are represented by competent counsel.<br />
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In the 5+ years that I have been representing former SSH students, I have settled the vast majority of their student loans at a large discount. In each case, I charged the former student a flat fee of $800.00. This is something that I am proud of, as the law on student loans favors the banks and is not good for the students. For the remaining former SSH students with loans from KeyBank that I have not been able to settle, there is now a choice to be made. <br />
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<br />Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-22059264961387761562013-04-11T16:20:00.000-07:002013-04-11T16:20:25.253-07:00Student Loan Xpress Loans Sold Several of my clients that obtained loans from Student Loan Xpress to attend Silver State Helicopters School and were not part of the class action settlement have received notices informing them that Student Loan Xpress has sold their loan(s) to FCBD PSL & NPSL, effective March 28, 2013 and that "AES will continue to service the loan(s). Under the heading, "What This Means To You," the letters state that "The transfer in ownership of your loan(s) will not result in any inconvenience to you. You can continue to send your payments and correspondence to the usual addresses." My clients typically borrowed $69,900.00 to attend SSH and if they have not already settled their debts at a large discount with my help, they now have loan balances in excess of $100,000.00. These clients are generally not able to make the payments that are being demanded by AES.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-60026830108245472122012-09-22T02:42:00.000-07:002012-09-22T02:42:31.963-07:00KeyBank UpdateOf the 3 major lenders that made tuition loans to students to attend Silver State Helicopters Flight Schools, KeyBank has been the most difficult to deal with. On the plus side, I have settled some claims for individual former SSH students with low flight hours at a large discount and none of my KeyBank loan clients have been sued or forced into arbitration by KeyBank to date. On the minus side, many former students with KeyBank loans are in collection, being dunned with calls and letters. Up until now, KeyBank has prevailed in its efforts to throw out all claims for relief brought against it on behalf of former SSH Students. Then, on September 21, 2012, something good happened.<br />
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In the California proposed class action lawsuit against KeyBank entitled Matthew Kilgore, et al. v. KeyBank National Association, et al, Case No 09-16703 the United States Court of Appeal for the Ninth Circuit issued an order stating that "Upon the vote of a majority of unrecused active judges, it is ordered that this case be reheard en banc pursuant to Federal Rule of Appellate Procedure 35(a) and Ninth Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to any court of the Ninth Circuit" This means that an 11 judge Appellate Court panel is going to rehear the case and may reconsider and change the court's ruling in favor of KeyBank. This order was issued by the famous Chief Judge of the United States Court of Appeals for the Ninth District, Alex Kozinski. <br />
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If you are a former student of SSH and you are having problems with your lender trying to collect from you, please call me for a free consultation. My office telephone number is 310 271-6223. For a flat fee of $800.00/student, I have helped many former SSH students save up to $70,000.00. <br />
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Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-42951803519276636452012-01-30T16:03:00.000-08:002012-01-30T16:03:35.589-08:002011 1099-C Cancellation of Debt Forms Sent By American Education Services to Former Student Loan Xpress Borrowers Who Attended Silver State Helicopters Flight SchoolsAmerican Education Services ("AES"), the loan servicing agent for Student Loan Xpress, has sent out 1099-C Cancellation of Debt forms to many of my clients who obtained loans from Student Loan Xpress to attend Silver State Helicopters flight schools. Here is information that can help you deal with this 1099-C issue, and perhaps avoid liability for debt settlement income. Please understand that I am not a tax attorney, and that I cannot guarantee how the IRS will treat any 1099-C that you received from AES.<br />
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First, here is information from class action counsel Kevin Rooney and Andrew August of Pinnacle Law Group: <br />
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"We are aware the SLX recently sent out 1099s to the Class Members. We cannot give you tax advice. However, the following is an excerpt from the Court's order approving the settlement regarding the issue of whether the debt forgiveness constitutes “taxable income” as follows: <br />
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9. The debt forgiveness provided by the amended settlement agreement (Doc. 157-1) should not qualify as taxable income, because: <br />
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a. In the third amended class action complaint, the plaintiffs allege that SLX colluded in Silver State’s fraudulent scheme. The plaintiffs assert against SLX statutory claims under the Ohio Retail and Installment Sales Act and claims for negligent misrepresentation and aiding and abetting fraud;<br />
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b. The plaintiffs dispute the amount of loan debt and also allege that, as a result of the alleged illegal and improper conduct of Silver State and the alleged improper conduct of SLX, the loans are invalid and unenforceable, because each loan was improperly procured and fails to reflect the true value of the benefit received by the students while enrolled at Silver State before Silver State’s bankruptcy petition and closure; <br />
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c. SLX asserts that each loan is valid and enforceable; and <br />
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d. In light of paragraphs 9(a)-(c) above:<br />
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i. The settlement resolves a bona fide, good faith dispute over the amount due under each loan, the method of procurement of each loan, and the validity and enforcement of each loan; <br />
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and <br />
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ii. The settlement constitutes a negotiated compromise of each disputed loan on a sub-class-by-sub-class (and not an<br />
<br />
individual) basis, and the basis for the compromise is independent of, and excludes any recognition of, an individual class member’s insolvency or inability to pay a disputed loan. <br />
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A copy of the order can be found here:<br />
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https://docs.google.com/open?id=0Bzu1BbJQPb81Y2M4MTEzMjUtMmIyZS00NGEzLTk4NDUtYzVlM2RiNDQwMGQw&authkey=CLKFwfsB <br />
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If you have any questions about the tax issue or the 1099 issued to you, you should consult an accountant or tax lawyer."<br />
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Second, here is information that I got from my own CPA (and girlfriend) Jennifer Liu and my analysis of the information that she provided me with:<br />
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On May 13, 2010, Michael J. Montemuuro, Chief, Branch 4, Office of Associate Chief Counsel (Income Tax and Accounting) from the Department of the Treasury, Internal Revenue Service in Washington, D.C. 20224 responded to a letter from United States Senator Bill Nelson regarding possible tax treatment for students for certain student loan restructurings and debt forgiveness. While the published letter whites out the name of the school and certain other information, the facts discussed exactly describe the Silver State Helicopters loans and loan settlement under the class action agreement. Also, Senator Nelson of Florida is known to have tried to help former SSH students. The letter from Mr. Montemuuro appears to describe how the IRS would treat the cancellation of indebtedness issue for the students that attended Silver State Helicopters school. This IRS response has the number L Info 2010-0141 and a Release Date of 6/25/10.<br />
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The IRS letter cites Revenue Ruling 92-99 and says that student loan restructurings and debt forgiveness may qualify under Code Sec. 108(e)(5) (footnote 24 et seq) in the following situation: A private vocational school made private student loans and then sold the loans to a third party loan service. The school abruptly closed, the students and cosigners filed various lawsuits (based on fraud and other claims) that sought, among other things, to rescind the contracts and prohibit enforcement of or collection on the loans. In a settlement agreement, in exchange for releasing the claims, students and cosigners got loan restructuring or debt forgiveness. According to the IRS, the restructuring and debt forgiveness were not necessarily cancellation of debt income. Instead, they could represent a compromise of litigation claims, and so could be viewed as a purchase price adjustment based on an infirmity that relates back to the agreement to purchase educational services. Any discharge of indebtedness income would then be excludable from gross income under Code Section 108(e) (5). <br />
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Here are several direct quotes from Mr. Montemurro's letter: <br />
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"In the present situation, the loan restructurings and debt forgiveness may represent a compromise of numerous claims against several defendants, including fraud, aiding and abetting fraud, negligent misrepresentations, and violations of stated and federal consumer protection. Therefore, the debt restructurings and debt forgiveness could be viewed as a purchase price adjustment based on an infirmity that relates back to the agreement to purchase educational services, and any discharge of indebtedness income could be excludable from gross income under section 108(e)(5) of the Code. . . Not every cancellation of indebtedness results in gross income under section 61(a)(12) of the Code . . . The IRS has concluded that the amount owed by the taxpayer under a contract that is forgiven by the seller, in return for a release of a contract counterclaim, is not income from the discharge of indebtedness."<br />
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"This letter has called your attention to certain general principles of the law for informational purposes only. It does not constitute a ruling."<br />
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In conclusion, I believe that my former SSH student clients should not have to pay income tax based on the 1099-C Cancellation of Debt forms that were issued to them by AES. This is my opinion, based on the information set forth hereinabove. It is not a guarantee of how the IRS will treat any individual. Every former SSH student that received a 1099-C from American Education Services should consult his or her own tax advisor. This would normally be an accountant or tax lawyer. If you need a referral to an accountant, please contact me. Feel free to share this blog post with your tax advisor, and with anyone else who may be interested in it.<br />
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.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-6901549663944869302011-11-04T20:35:00.000-07:002011-11-04T20:40:31.596-07:00No Money Down Chapter 13Today I decided to become the first and only certified specialist bankruptcy lawyer in Los Angeles County to offer a no money down Chapter 13 plan for qualified wage earners. Up until today, I typically charged my Chapter 13 clients $2,000.00 down. Now, with my new no money down plan, any regular wage earner in need can afford to hire us to save his or her home, stop a wage garnishment, stop an eviction before trial, or stop a repossession. Our Clients still need to pay the Bankruptcy Court Chapter 13 filing fee of $281.00. <br />
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I typically charge $4,000.00 for a Chapter 13 bankruptcy case for debtors who work for a company, and $4,500.00 for debtors who are self-employed, though complicated cases may involve additional fees. These fees will now all be paid through the Chapter 13 plan of reorganization at the expense of my clients' creditors.<br />
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My firm and I have an extraordinarily high success rate confirming Chapter 13 plans. This and my concern for the average person who is faced with losing his or home and simply does not have thousands of dollars to pay to his or her lawyer up front are the reasons that I have decided to start this new program. To my knowledge, I am the only attorney in Los Angeles County, Orange County, Riverside County, San Bernardino County, Ventura County and Santa Barbara County to offer this no money down Chapter 13 plan. To schedule a free consultation, call me or Sofya Davtyan at 310 271-6223. Sofya is the head of my Chapter 13 department. My 11 lawyer 7 paralegal firm now has 3 offices and is ready to serve you. For more information about me and my firm, see my website www.bankruptcypower.comMichael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-56298557009777957692011-08-24T17:11:00.000-07:002011-08-24T17:11:42.736-07:00SSH Student Update<b>Students with loans with Student Loan Express<br />
</b><br />
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I have been receiving many phones calls, emails and letters inquiring about the letters that former SSH students that have Student Loan Xpress loans been receiving from AES regarding final settlement. These letters are confusing because they contradict prior letters from AES. The operative letter is the letter that references the “Holman Settlement” dated August 11, 2011. This letter is the correct letter that has each individual student’s settlement. The amount that each individual student must pay was based on the number of certificates received while attending SSH. The payment amount is made up of the following: 1. Loan amount, 2. Interest from the date the loan was funded through February 4, 2008 and 3. loan origination fee. For example, if your loan was $69,900.00 and you received zero certificates, 75 percent was deducted from the total of your loan amount plus interest through February 4, 2008 and the loan origination fee. If you are my client and you have any question regarding the settlement of your Student Loan Xpress loan, please e-mail my Senior Associate Attorney Georgeann Nicol. Her e-mail is georgeann.nicol@bankruptcypower.com. Georgeann is also the attorney handling the settlement of SLX loans for former students that are not part of the class action case.<br />
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<br />
<b>Students with loans with KeyBank<br />
</b><br />
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KeyBank is still insisting on a settlement scheme based solely on flight hours. This scheme is far less favorable to the majority of our clients than the class action settlement approved in the Holman case for former SSH students with Student Loan Xpress loans. 4 of our former SSH students with low flight hours and with loans from KeyBank have settled their loans using KeyBank's formula. The rest of our KeyBank clients are at a standoff with KeyBank, waiting for a better settlement offer or a favorable court ruling to come along. We are still waiting for an Appellate Court ruling on the dismissal of the Pinnacle Law Group's proposed California class action case . We do not know when the Court will rule on the Appeal, but as soon as we know the results on the ruling, we will post it on the blog. <br />
Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-7692460600815253562011-04-20T18:55:00.000-07:002011-04-20T18:55:35.127-07:00What Is New for Former Students of Silver State Helicopters?Our office received numerous phone calls and e-mails regarding an "Order Scheduling Settlement Conference" for May 10, 2011 in the Silver State Helicopters, LLC bankruptcy case that was mailed out by the Court to creditors. This Order does not apply to former SSH students and it does not affect them. It relates to a dispute between the SSH and its major secured creditor Orix. <br />
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We are waiting for Student Loan Xpress ("SLX") to send new bills to former SSH students who were covered by the class action settlement agreement with SLX. These bills will reflect the reduced principal and interest amounts set forth in the class action settlement agreement approved by the Judge Merryday. The attorneys for SLX continue to tell me that they do not know when the new bills will be mailed out.<br />
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Senior Associate Attorney Georgeann Nicol and I have begun settlement discussions with counsel for SLX regarding clients of ours who were former SSH students who obtained loans from SLX to attend SSH but were not members of the class action. This includes former SSH students who were not enrolled at the time of the filing of the SSH Bankruptcy. At the request of counsel for SLX, these discussions were postponed until after the class action settlement was approved by the Court.<br />
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KeyBank continues to be the most difficult bank for us to deal with in connection with the loans that it made to former SSH students. <br />
KeyBank's offer to our clients was based on the number of flight hours that the student had at SSH, not on the flight certifications obtained. This is generally less favorable to our clients than the number of flight certifications standard that was agreed to by SLX in the class action. To date, only four of our clients with KeyBank loans accepted KeyBank’s settlement offer.<br />
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The remainder of our former SSH students with KeyBank loans are still waiting for a better offer and / or a favorable ruling from the Ninth Circuit Court of Appeal with regards to the District Court's dismissal of the proposed California class action suit against KeyBank brought by Andrew August and his firm Pinnacle Law Group, LLP.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-27124318444014984202011-01-31T10:30:00.000-08:002011-01-31T10:39:55.614-08:00Comments on the Dischargeability of Student Loans in Bankruptcy1. <b>Overview</b><br />
The Bankruptcy Code provides that student loans are not discharged in any bankruptcy proceeding unless “excepting such debt from discharge would impose an undue hardship on the debtor.” Section 523(a)(8). <br />
The test – undue hardship – is very difficult to meet. It is the debtor’s burden to prove the undue hardship at trial. Undue hardship means an inability to maintain a “minimal standard of living,” essentially forever. <br />
2. <b>The Procedure</b><br />
To obtain a discharge of student loans, a person must: <br />
a. File a bankruptcy proceeding, chapter 7, 11 or 13, and, <br />
b. During the pending bankruptcy proceeding, file a Complaint against the student loan lender (or lenders) asking the court to “declare” that repayment of the student loan will be an undue hardship on the debtor.<br />
Filing the Complaint begins an adversary proceeding. This is the same thing as litigation outside of bankruptcy. The lender is the “defendant” in the proceeding. The lender will file an “Answer” or other response to the Complaint. The Court will set a status conference and eventually set a trial date. During the interim between the filing of the Complaint and trial will be a “discovery period.” The lender defendant will take the deposition of the debtor and possibly the debtor’s other witnesses. The lender will request documents from the debtor including income and expense records and employment records. The lender may file various motions such as Motion for Summary Judgment. <br />
The time between the filing of the Complaint and trial varies but can be generally estimated to be six months to a year. Trial generally will take a few days. After hearing the debtor’s witnesses and other evidence and the lender’s response and its evidence, the Bankruptcy Court will rule and “declare” whether any or all of the student loans represent an undue hardship to the debtor. <br />
3. <b>Determining Whether There is Undue Hardship</b><br />
The Bankruptcy Courts use a three prong test called the Brunner Test to determine whether or not there is undue hardship. The Brunner Test (831 F.2d at 396) requires that the debtor prove all of the following: <br />
a. that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loans; <br />
b. that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and <br />
c. that the debtor has made good faith efforts to repay the loans.<br />
3.1 <b>The First Brunner Prong – Inability to Pay Now</b><br />
The first prong is the easiest to meet. The debtor must offer evidence at trial that repayment of the loan is not possible “based on current income and expenses.” This is established usually by the debtor’s own testimony and personal records. The debtor’s testimony is that he has a job (or does not), makes x amount of money, and that amount is not enough to allow him to maintain a minimal standard of living.<br />
The lender will often argue that the debtor can get a better job, or work more hours, or cut back on expenses, get a less expensive place to live, and thereby pay some of the loans and still maintain a minimal standard of living. A minimal standard of living does not include private schools for children, putting money away for retirement, or supporting other family members or unrelated persons. <br />
3.2 <b>The Second Brunner Prong – Inability to Pay in the Future</b><br />
To meet the second prong, the debtor must prove at trial that “this state of affairs,” i.e., his current financial condition, will continue forever essentially. The debtor will need evidence at trial that he will not make significantly more in the future than he is making now. The debtor can certainly get on the stand and say that his position is as high as he will ever get however that will generally carry little weight with the judge. This usually requires an expert in the particular industry. This prong obviously involves a lot of speculation but the burden belongs to the debtor. He must prove to the Bankruptcy Court with evidence at trial that things are never going to improve. <br />
The lender will certainly retain an expert who will likely testify that in this particular industry the debtor can be expected to make considerably more in the future.<br />
3.3 <b>The Third Brunner Prong – Good Faith Efforts to Repay the Loan</b><br />
The debtor must establish at trial that he has made a good faith attempt to repay the loans. The most basic part of this requirement is that the debtor show the court that he has attempted to reach some sort of arrangement with the lender which will permit reduced payments or a period of no payments. <br />
The United States Department of Education, William D. Ford Federal Direct Loan Program offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan. <br />
Systems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive, and to permit him to have a fresh start in business or commercial life, freed from the obligation and responsibilities which may have resulted from business misfortunes. Essentially, once a student loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. Direct Loan provides a handy calculator for approximating ICR plan payments. The calculator is located at www.ed.gov/offices/OSFAP/DirectLoan/calc.html. The maximum repayment period under an ICR plan is twenty-five years. If a debtor makes payments under an ICR plan for twenty-five years, and there are still amounts left owing, those unpaid amounts are forgiven. More information on ICR plans and other Direct Loan repayment options can be found at www.ed.gov/DirectLoan or by calling 1-800-848-0979.<br />
It is pretty clear that failure to use the Ford Program Options will, by itself, prevent any portion of the student loan from being discharged. <br />
The Ford Program does not apply to many loans. The debtor must attempt to settle or otherwise resolve the issue with the other lenders before seeking a discharge. The debtor will need evidence of these efforts at trial. A statement by the debtor on the witness stand that “I tried” will be given little weight. The debtor needs names and dates and rejection letters are even better. <br />
Some courts have ruled that failure to make payments before filing the bankruptcy case is a factor against the debtor. <br />
4. <b>The “Partial Discharge”</b><br />
A relatively new development in the discharge of student loans is the “partial discharge.” The Bankruptcy Court is permitted to determine that some portion of the total student loan debt is discharged. This occurs usually when the amount owed is huge, for example a few hundred thousand dollars or more. Applying interest to that amount means that the payments will be several thousand dollars per months for many years. The Bankruptcy Court may decide that x amount of the total is to be repaid and the rest discharged. Remember that the burden is on the debtor to show the court at trial what portion cannot be repaid. <br />
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This article was prepared by By: M. Jonathan Hayes and is<br />
Reprinted from the CDCBAA February, 2010 NewsletterMichael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-58681228485047349982011-01-12T19:40:00.000-08:002011-01-12T19:41:55.593-08:00Kilgore v. KeyBank Appeal Briefing CompleteAll of the briefing is complete in the 9th Circuit Court of Appeals in the California proposed class action case on behalf of California residents who attended Silver State Helicopters, obtained student loans from KeyBank to do so, and were still enrolled at SSH at the time that it filed bankruptcy. KeyBank has cited the dismissal of this case in the District Court when threatening its borrowers with collection action. A hearing date is anticipated in March. The ruling in this case, while only binding on California residents, is expected to have influence on KeyBank with respect to its dealings with all of its former SSH student borrowers. For now, KeyBank continues to place collection calls and write collection letters to former SSH students, without suing or seeking arbitration against any of them. If you are my client and you receive a collection call or letter from KeyBank, respond by telling the collector that I represent you and ask the collector to call me at my office: 310 271-6223.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-5264968426101229682011-01-12T19:24:00.000-08:002011-01-13T18:45:01.418-08:00Student Loan Xpress Proposed Class Action Settlement ApprovedJudge Merryday has issued his order granting final approval of the proposed class action settlement agreement for students that attended Silver State Helicopters School ("SSH") and obtained student loans from Student Loan Xpress ("SLX") and were still enrolled at SSH at the time that SSH filed bankruptcy. Judge Merryday has not yet entered a final judgment on that order. Class counsel has filed a joint motion with SLX to have Judge Merryday enter judgment ASAP. Class members can expect to receive updated loan information from SLX, including the new reduced amount of their loan balance and their loan payments, in the next 30-60 days. Any questions about this should be addressed to Andrew August: settlementquestions@gmail.comMichael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-16053354457896923782010-12-04T21:04:00.000-08:002010-12-04T21:04:00.601-08:00No DifferenceMany of my clients with loans from Student Loan Xpress recently received a recently informing them that the loan servicer on their loan has been changed from Xpress Loan Servicing (XLS) to American Education Services (AES). This change does not make any meaningful difference to any of my clients. It does not change the owner of the loans. It does not change the terms of the loans. It does not have any affect on the proposed settlement of the class action lawsuit which we are all waiting to have finally approved by Judge Merryday.<br />
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The letter that I am referring to begins, "This is to inform you that Xpress Loan Servicing (XLS) will no longer be servicing the following private student loans" and goes on to say that "The new servicer of these loan(s), American Education Services (AES) will be contacting you within the next 30 days."<br />
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If you received this letter, don't worry. No action on your part is needed now. If the proposed class action settlement agreement is approved by the court and if and when you begin making payments under that agreement, you will simply send your payment to a different collector.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-85475676655595440632010-11-12T00:57:00.000-08:002010-11-12T02:32:33.684-08:00Settling with Jerry Airola and Thomas PickettJames F. Lisowski, Sr., the Chapter 7 Trustee in the Silver State Helicopters, LLC Bankruptcy Case, wants to settle with Jerry Airola and Thomas Pickett and 2 of their companies. Jerry Airola was the founder and CEO of Silver State Helicopters, LLC ("SSH"). Thomas Pickett was the Chief Financial Officer of SSH. On November 3, 2010, Lisowski filed a Motion to Approve Compromise and Settlement Between Trustee and Jerry Airola, Steve Pickett, First American Equity, LLC and Stars and Stripes Heliplex, LLC. The Hearing on the Trustee's Motion is Set for December 8, 2010 at 9:30 am. Former students who attended SSH and who hold Jerry Airola personally reponsible for tens of thousands of dollars in student loans that they are still obligated to repay will be disappointed in the proposed settlement. Those of us waiting for criminal prosecution of Airola and jail time for Airola will not find any comfort in the proposed settlement agreement. <br /><br />Here are the key terms of the proposed settlement agreement:<br /><br />1. Commercial property located at 800 South 3110 West Provo, Utah 84601 that is owned by SSH but allegedly subject to a $1,587,049.75 - $1,703,805.48 deed of trust in favor of Jerry Airola will be sold and the proceeds split with 2/3 going to the bankruptcy estate of SSH and 1/3 going to Airola. Several commercial office buildings and hangars are located on the property. The estimated value of the property is approximately $1,500,000.00. The Trustee describes the financial benefit of this and other consideration to be received by the bankruptcy estate as "close to one million dollars." This other consideration to be received by the Trustee includes a $10,000.00 earnest money deposit forfeited by a proposed buyer of the West Provo property and an unsecured, non-priority proof of claim with a face amount of $714,000.00 but no clear value in the bankruptcy of a company called Stars and Stripes, LLC. $1,000,000.00 seems to be a paltry sum compared to the harm done by Airola. Moreover, little or none of this money is likely to go to former students of SSH. The Trustee says in this moving papers that <strong>"the likelihood of paying a dividend to unsecured creditors, particularly unsecured creditors, is nonexistent." </strong>Former students of SSH who included a priority claim in their proofs of claim, as I did for all of my SSH clients, may or may not fare slightly better.<br /><br />2. While the Trustee focuses on the close to one million dollars that SSH will receive from the sale of the West Provo property, Airola will personally receive 1/3 of the proceeds from the West Provo property, or approximately $500,000.00. In addition, Airola will be allowed to keep two custom motorcycles manufactured by Orange County Choppers which were the subject of a separate adversary proceeding filed by the Trustee against Airola and Airola will be allowed to keep certain proofs of claim in the SSH bankruptcy.<br /><br />3. Upon approval of his settlement Motion, the Trustee will dismiss both of his adversary proceedings against Airola.<br /><br />4. The Settlement agreement provides for a mutual general release of all claims between the Defendants, the Debtor, The Trustee and the Estate. Former SSH CFO Thomas Pickett gets a free ride. He pays nothing to the bankruptcy estate of SSH, but gets a complete release of all claims from the Trustee.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-48808033933285287832010-10-12T15:57:00.000-07:002010-11-12T00:56:25.020-08:00Student Loan Xpress Class Action Settlement UpdateFormer SSH Students with loans from Student Loan Xpress have been waiting a long time for Judge Merryday to approve or reject the proposed class action settlement. During this time, a lot of work was being done behind the scenes to try to improve the proposed settlement for the students and to address two concerns that were raised by Judge Merryday. These efforts have now born fruit, and a revised, improved, proposed settlement agreement has been filed with the Court. <br /> <br /><br />Under the terms of the original proposed settlement agreement, 10% of the debt forgiveness level was unconditional immediately upon final approval of the settlement with the remaining 90% being forgiven upon full payment by the student of the remaining amount. Under the new, revised settlement agreement, the unconditional debt forgiveness portion of the settlement has been increased from 10% to 50%. This benefits each and every class member and is of special benefit to class members that may not be able to complete all of the payments called for in the settlement agreement.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-53020942059005014872010-09-17T11:25:00.000-07:002010-09-17T13:38:50.948-07:00Silver State Helicopters, Student Loan Xpress and KeyBank UpdateHere is all of the latest news for clients of mine who attended Silver State Helicopters and have student loans either with Student Loan Xpress or KeyBank<br /><br /><strong>Student Loan Xpress</strong><br /><br />The long delayed class action settlement pending approval before United States District Court Judge Steven D. Merryday is now once again (in my opinion) moving forward towards approval. The revised settlement agreement will include a change that is favorable to all class members. I am prohibited by written confidentiality agreements from saying anything more specific about this change until the appropriate papers are filed in Court. <br /><br />Pending before the court now is a Motion to add three additional subclass 3 representatives (former students that received 2 certifications while attending SSH) to resolve a conflict with the existing subclass 3 Representative that has held up the proposed settlement agreement.<br /><br /><br /><strong>KeyBank Litigation</strong><br /><br />For the latest information regarding the lawsuit filed by Pinnacle Law Group against KeyBank, as well as live links to briefs filed in the appeal in that case, click here: http://www.pinnaclelawgroup.com/news/silver_state_litigation.php<br /><br />Here is a copy of the September 10, 2010 update posted on the Pinnacle Law Group website:<br /><br />"Kilgore v. KeyBank<br />September 10, 2010 Update<br /><br />On August 30, 2010 Pinnacle Law Group LLP filed the Opening Brief in the United States Court of Appeals for the Ninth Circuit seeking reversal of the District Court's Order dismissing the suit against KeyBank. A copy of the Opening Brief can be found here. On September 3, 2010 the Attorney General of the State of Montana filed an amicus brief ("friend of the court" brief) in support of our appeal. Since then, the Attorney Generals from the States of Idaho, Illinois, Nevada, Oklahoma and Oregon joined in Montana's brief. The Montana brief can be found here. On September 8, 2010 the National Consumer Law Center, the National Association of Consumer Advocates and the National Consumers League also filed an amicus brief in support of our Appeal which can be found here. We are very grateful for this support and believe it speaks volumes about the merit of our Appeal.<br /><br />KeyBank will file an opposition to our Opening Brief and we will then file a reply brief to their opposition. Thereafter, the Ninth Circuit will set a hearing date on the Appeal (which likely will not happen until 2011). We will continually update this site as events warrant. As mentioned in the "July 2010 Update" (link below), if you have any questions, please contact us at keybanklitigation@gmail.com. However, because we are counsel for the proposed class, we are unable at this time to give you individual advice but we do want to give you an update on the status of the case so you and your lawyer can assess your individual situation. Thank you for your support."<br /><br />Here is more information and advice from the Pinnacle Group web site (it's July 10, 2010 update) regarding the KeyBank litigation:<br /><br />"<strong>Status of Action Against KeyBank</strong><br />We are aware that many of you have been receiving letters from KeyBank(either directly or through your personal lawyers) threatening to put you back into collection and/or offering a settlement based on the number of flight hours you had<br />while enrolled at the school. Because we are counsel for the proposed class, we are unable at this time to give you individual advice as to how to respond to these letters but we do want to give you an update on the status of the case so you and<br />your lawyer can assess your individual situation. As most of you know, in April the action filed by our office against KeyBank on behalf of all California Silver State Helicopter students whose loans were funded by KeyBank and who were enrolled as of the date of school’s bankruptcy was dismissed by a California federal district court judge. In the settlement letter from KeyBank, its lawyers refer to the 23 page order from the court dismissing the case. What KeyBank fails to tell you, however,is that the court spent the first 15 pages of its opinion explaining how and why we properly<br />and adequately alleged that KeyBank aided and abetted SSH in violating federal consumer protection regulations and thereby violated California’s consumer protection law. The judge dismissed the case not because KeyBank is innocent of wrongdoing (actually, he concluded the exact opposite based on allegations which<br />KeyBank cannot refute) but because he believes federal banking law prevents you (as<br />opposed to the federal government) from suing a national bank. In evaluating your options this is a critical distinction (which presumably is why KeyBank did not disclose it in its letters). We are working on our Opening Brief for the Ninth Circuit Court of Appeal which will be filed on July 30, 2010. As part of the drafting process, we have been consulting with several legal experts on the issue the court relied on to dismiss the case – legally referred to as “federal peemption”. These experts are uniformly confounded by the judge’s ruling which is internally inconsistent and not well reasoned (which is very unusual for this judge who is a very well respected jurist). They believe that he dismissed the case not because he believes we have no case but because he knew this case presents unprecedented threshold legal issues that would almost certainly have been decided in the Ninth Circuit Court of Appeals no matter who prevailed at trial. By ruling the way he did at this point in the case,both the students and KeyBank will now get a final determination on these issues much sooner and with less expense than had we gone to trial and then faced an appeal. Their opinion – which we share – is supported by the fact that the Ninth Circuit is generally considered the most consumer protection oriented circuit court in the federal system and the district court judge has long been viewed a champion of individual rights. Shortly after we file our Opening Brief, several national consumer protection organizations and, hopefully several state attorneys general, will file what are referred to as “friend of the court” briefs (amicus curiae) arguing to the Court of Appeal why the district court judge was wrong and how his ruling, if upheld, will be detrimental for all consumers who borrow money from national banks. While of course we cannot predict how the Court of Appeals will rule, we and the appellate lawyers we are working with are optimistic about obtaining a reversal of the district court’s dismissal. With respect to KeyBank’s settlement proposal, the Bank is approaching settlement from the perspective that what you borrowed is money for flight hours rather than FAA certifications or job opportunities. Based on the information we have reviewed, this approach will result in the large majority of the students having to repay in excess of 80% of their principal loan balance plus most of the accrued interest. Moreover, KeyBank has not offered to reduce the interest rate going forward. By point of reference, the proposed SLX settlement that is before the court provides for between 30% - 75% loan forgiveness (depending on the number of FAA certifications received) and an across the board 3% interest rate reduction as well as a waiver of all interest accrued after SSH filed bankruptcy. If you choose to enter into a settlement with KeyBank, you will likely be forced to give up any right you may have to participate in our class action (this applies only to California students) or in any action that may be brought in any other state in the future if the Court of Appeal rules in our favor on the California action. Also, you will likely be forced to give up any defenses you may now have in the event you are unable to comply with the terms of your settlement agreement and KeyBank has to sue you for breaching the settlement agreement. Given KeyBank’s likely demand that you give up all of your rights, coupled with the miniscule amount of offered forgiveness (for most borrowers), we do not support such a settlement while the appeal is pending. However, before making any decision whether to settle, you should consult with your personal lawyer so that you fully understand your options. Finally, with respect to KeyBank’s letter threatening to end its “voluntary forbearance” and begin reporting your debt to the credit reporting agencies, because the case is still pending, you should have your individual lawyer inform the credit agencies in writing that this is a disputed debt and refer them to the court of appeal case. Also, because KeyBank continues to attempt to force this dispute into binding arbitration, it is very unlikely KeyBank will file a lawsuit against you in court (if they do, we will argue it has waived its arbitration argument). Based on the Master Promissory Notes we have reviewed, KeyBank will have to initiate arbitration against each of you individually with JAMS in each of your respective jurisdictions. KeyBank will have to initiate the arbitration and front 100% of expense of doing so. So be sure you advise your lawyer that you have been served with the arbitration papers. Also, please be sure to contact us immediately so we can provide you and your lawyer with whatever assistance we are able to. If you have any questions, please contact us at keybanklitigation@gmail.com. Again, however, we cannot give advice on an individual basis and even as to the class claims, at this time we represent only California students. Regardless of whether you are a California resident or a resident of another state, we strongly encourage you to contact your state’s Attorney General’s office (usually the department of consumer protection) and urge the AG to take action against KeyBank and support our efforts before the Ninth Circuit."Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-55185594427059391652010-07-04T15:58:00.000-07:002010-07-04T16:18:36.048-07:00Status of California KeyBank Litigation and KeyBank SettlementsHere is the latest word from our friends Andrew August and Kevin Rooney at Pinnacle Law Group regarding the status of the proposed class action case that they filed in California against KeyBank:<br /><br /><br />"As we mentioned last week, the District Court granted KeyBank's Motion to Dismiss. While this was extremely disappointing, the District Court went out of its way to spend two-thirds of its written opinion holding that we adequately alleged KeyBank engaged in unlawful and unfair acts and practices under California’s Unfair Competition Law by aiding and abetting Silver State’s violation of the Holder Rule, a federal consumer protection regulation. However, the Judge felt constrained to dismiss the entire case on the ground of federal conflict preemption.<br /><br />On April 21, 2010 we filed a Notice of Appeal to the Ninth Circuit Court of Appeal of the District Court's ruling granting KeyBank's Motion to Dismiss. We and several amicus curiae ("friends of the court") with whom we will be working are confident this part of the decision will be reversed and KeyBank will be held to answer at minimum for its aiding and abetting Silver State's unlawful conduct."<br /><br /><br />For my former SSH student clients with KeyBank loans, I continue to work client by client to settle the cases of clients with relatively low flight hours who have received reasonable offers to settle, or who I can get reasonable offers for. For those clients that have 175 flight hours or more and are currently being offered nothing off the principal of their loans and 50% off the interest from the loan start date to the date of settlement, I continue to fight on and hope that a better offer or a better litigation result will come.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-27725956926602229122010-06-22T21:30:00.000-07:002010-07-04T10:50:18.372-07:00New Letter From KeyBankAll former Silver State Helicopters students with outstanding loans from KeyBank can expect to receive a letter from KeyBank, typically dated June 15, 2010, based on the following template:<br /><br />KeyBank<br />4910 Tiedeman Road<br />Brooklyn, OH 44144<br /><br />Name<br />Address<br /><br />Student Loan Acct#<br /><br />Dear __________________:<br /><br />KeyBank is corresponding with you regarding the loans that you obtained to attend Silver State Helicopters. In connection with certain legal proceedings brought in California against KeyBank and other student lenders concerning the closure of Silver State, KeyBank voluntarily suspended collection and reporting activity on your account. The California law suit against KeyBank has been dismissed. A federal judge has determined that KeyBank has no liability to student borrowers for any failures of Silver State to deliver the educational program.<br /><br /><strong>This letter is to advise you that your account will be removed from forbearance and applicable collection activity will resume, including credit bureau reporting. If your account is delinquent, payment arrangements should me made as soon as possible, but not later than July 15, 2010 if you wish to avoid collection activity. </strong><br /><br />KeyBank understands the difficulty that Silver State's closure caused to many students, particularly those enrolled at the time of closure. KeyBank stopped making loans to Silver State students nearly three years before the school closed. Many KeyBank loan borrowers obtained all or substantial portions of the training contemplated as the SSH program was 18 months long in duration. KeyBank expects students to accept financial responsibility for his/her individual decision to attend SSH and the training they actually received.<br /><br />If you received less than the flight hours contained in the student agreement, KeyBank may entertain a reduction in your total debt. <strong>If you would like KeyBank to entertain a reduction to your debt or you need to discuss payment arrangements, you must contact us at 1-877-593-6608.</strong> <br /><br />Key Education Resources<br /><br />I have discussed this letter with many of my clients. I have also discussed it with Scott O'Connell of Nixon Peabody, counsel for KeyBank. Here are a few points for all of my KeyBank clients to note regarding the June 15, KeyBank letter:<br /><br />1. I have informed counsel for KeyBank that all settlement negotiations for my clients are to go through me. Counsel for KeyBank understands this and has so instructed his client. If I represent you on the SSH matter, you do not need to call the 1-877-593-6608 Key Educational Risk Management telephone number. If I do not represent you on the SSH matter, you may hire other counsel to negotiate with KeyBank or you may proceed on your own.<br /><br />2. It is true that the proposed class action filed in Northern California by Pinnacle Law Group has been dismissed by a federal judge. This dismissal, however, is on appeal. Andy August of Pinnacle Law Group has told me that he believes that he will prevail on the appeal. I expect to publish another blog update about this appeal in the near future. Please note that this proposed class action is for California residents only. I am not aware of any pending action against KeyBank on behalf of former students of SSH who do not reside in California.<br /><br />3. Please note that the letter states that "collection activity will resume, including credit bureau reporting," but it does not state that the borrower will be sued, not does it state that arbitration proceedings will be started against the borrower. <br /><br />4. Unlike Student Loan Xpress, which focused on the number of flight certifications that former student borrowers received from Silver State Helicopters ("SSH"), KeyBank has focused on the number of flight hours that its former SSH student borrowers received while attending SSH. SSH contracts typically provided for (amongst other things) 175 flight hours. This is the context for the statement in the June 15 KeyBank letter, "If you received less than the flight hours contained in the student agreement, KeyBank may entertain a reduction in your total debt."<br />This focus on flight hours is generally less favorable for my clients than a focus on flight certifications achieved, but there are exceptions.<br /><br />5. While the written confidentiality agreement between myself and counsel for KeyBank regarding settlement negotiations is still in effect, I can now reveal the 2 part formerly <strong>secret formula </strong>by which KeyBank has based its offers to my California clients and by which KeyBank apparently now intends to base offers to all former SSH students with KeyBank loans throughout the country: <br /><br />Part a: The # of your flight hours @ SSH/175 x your principal loan balance = the proposed reduced amount of the principal part of your loan balance if the # of your flight hours is less than 175. If the number of your flight hours is 175 or more, there is no offer of a principal reduction.<br /><br />Part b: Interest on the promissory note is cut in half from the start of accrual of interest to the date of acceptance of the KeyBank offer.<br /><br />This revelation is made after my discussion with opposing counsel, after receipt of 42 proposed settlement letters, and after KeyBank's disclosures as set forth in the Jne 15, 2010 letters. There is no guarantee that KeyBank will continue to use this formula in the future, but I believe that it will.<br /><br />One thing that is NOT part of the KeyBank settelement formula for now is financial hardship. Nevertheless, I am collecting financial hardship information from my KeyBank clients in anticipation that this may change at some time in the future. In my opinion, KeyBank's current unwillingness to consider the financial hardship of the borrower and the resulting difficulty that KeyBank would have to collect on its debt is both unfair and unwise.<br /><br /><br />If you are one of my KeyBank clients and you are interested in receiving a settlement offer from KeyBank based on the number of your flight hours @ SSH, please e-mail me with your flight hours and a copy of your flight log. If you are suffering from financial hardship, please write to me about this as well. I will follow up for you.<br /><br />If you are one of my clients that do not want to accept any such offer, this will leave you with the choice of paying as KeyBank demands or having KeyBank place you in collection. No one can guarantee that you will get better results later. Personally, I would not accept any settlement that did not give me a substantial principal reduction.<br /><br />Whatever choice you make, I will continue to use my best efforts on your behalf.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-74433312907401738842010-06-07T16:10:00.000-07:002010-06-07T16:13:53.998-07:00Status On Proposed Class Action Settlement With Student Loan XpressJudge Merryday still has not ruled on the proposed class action settlement agreement submitted for his approval on March 22, 2010.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-13188168583212996452010-06-07T15:00:00.000-07:002010-06-07T16:09:52.715-07:00KeyBank Settlement Offers Go Out to 42 ClientsOn Friday, June 4, 2010 I e-mailed individual settlement offers from KeyBank, National Association and Great Lakes Educational Loan Services (collectively "KeyBank") to 42 of my clients who obtained loans from KeyBank to attend Silver State Helicopters School. I anticipate e-mailing individual settlement offers to additional clients of mine with KeyBank loans as soon as I receive these offers from KeyBank's counsel Nixon Peabody, LLP. These offers and the negotiations leading up to them are covered by a written confidentiality agreement. If you received one of these offers, you should call me @ 310 271-6223 to receive my advice regarding the settlement offer.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-72315878005549316722010-04-22T19:19:00.000-07:002010-04-22T19:21:58.373-07:00HOUSE PANEL CONSIDERS BILL TO DISCHARGE PRIVATE STUDENT LOANS IN BANKRUPTCYThe House Judiciary Subcommittee on Commercial and Administrative Law today weighed a bill to amend the Bankruptcy Code to allow private student loans to be discharged. Witnesses at the hearing today on H.R. 5043, the "Private Student Loan Bankruptcy Fairness Act of 2010," included Deanne Loonin of the National Consumer Law Center, John A. Hupalo of the investment firm Samuel A. Ramirez & Co., Inc., consumer Valisha Cooks and Adrian M. Lapas representing the National Association of Consumer Bankruptcy Attorneys. This proposed change in the law, if enacted by Congress, would make the private student loans that my clients obtained from Student Loan Xpress and KeyBank to attend SSH dischargeable in bankruptcy.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.comtag:blogger.com,1999:blog-22573601.post-90931479432648268152010-04-12T21:29:00.000-07:002010-04-13T00:37:24.584-07:00Bad NewsUnited States District Court Judge Thelton E Henderson signed a 23 page Order today Granting KeyBank's Motion to Dismiss Third Amended Complaint in the Northern District of California case entitled Matthew C. Kilgore et al. v KeyBank National Association, et al., Case No. C08-2958 TEH today. The judge dismissed the case with prejudice. This means that the case is lost, unless an appeal later reverses the judge. This is the same lawsuit in which Pinnacle Law Group sued Student Loan Xpress and AES and then later dismissed SLX after entering into the proposed class action settlement that is now awaiting approval or rejection by Judge Merryday in Florida.<br /><br />Plaintiffs and their counsel sought to stop KeyBank and its loan services provider Great Lakes Educational Loan Services ("Great Lakes") from collecting the loans or reporting the loan balances to credit reporting agencies. Plaintiffs had 6 claims for relief, all of which were thrown out by Judge Henderson. <br /><br />A full explanation of the judge's ruling will be posted later. For now, I quote the judge's conclusion: "Defendants' motion to dismiss is GRANTED. Plaintiffs first, second and sixth causes of action are dismissed for failure to state a claim, and their third, fourth and fifth claims are dismissed on federal preemption. The TAC (third amended complaint) is DISMISSED without leave to amend. The clerk shall enter judgment and close the file. IT IS SO ORDERED."<br /><br />I spoke to Andy August of Pinnacle Law Group about this loss tonight and he described this loss as "the greatest disappointment" of his career. <br /><br />For my clients throughout the country with KeyBank loans, this is not the end. I will continue my efforts on your behalf. For my clients with SLX loans, this loss for students with KeyBank loans underlines one of the reasons for the proposed settlement with SLX: the fact that when you do not settle, you risk a total loss in court.Michael Jay Bergerhttp://www.blogger.com/profile/06328621868081943963noreply@blogger.com