ITT Tech was once a well-respected technical training school that orignated in 1969. The headquaters was in Carmel, Indiana. By the 1980’s and 1990’s, ITT Technical Institute was synonomous with high-quality, no-nonsense education. Both young students right out of high school and older adult students would flock to ITT tech to learn the “skills of tomorrow” today (or at least according to it’s former exciting commericials).
Countless graduates of ITT Tech of older generations have successfully enjoyed entire careers based on their educational start at ITT Tech. The question immediately comes – what happened? How did this “for-profit” training school decline into a lawsuit-ridden mess that eventually closed all of its operations?
STUDENT LOAN COLLAPSE
ITT Tech found itself in the midst of the student loan system collapse. Many “for-profit” schools are now falling into this mess. Apparanetly, “for-profit” schools were once a feasible, even admirable pursuit. Then, student loan federal funding came. Once student loan and federal funding became the “norm,” many for-profit schools descended into a frenzy of bad business and recruitment activities. They had to deal with this new reality of “for-profit” schooling. It all became about student loan salesmanship.
How did the school decline? How did the school generate numerous worthless education programs that would never actually benefit the students? Part of this answer was marketing and salesmanship. The school was not marketing any more to student who would actually pay for their education. They instead marketed to students who did not understand the magnitude of student loans or federal aid that they were getting from the government. You get more creative (to say it nicely) in your marketing and program focus when you are selling something with “funny money” instead of cold, hard cash.
TIME IS SHORT: REMOVE STUDENT LOAN SPECIAL STATUS IN BANKRUPTCY
Many public schools have also followed suit. The damage to public higher educational institutions cannot be measured. Now is a crucial time because many public institutions have long followed the same road as the for-profit schools. Although many politicians are calling for elaborate fixes to the student loans system, the best option would be simple. The solution is to treat student loans the same as all other loans in bankruptcy. Currently student loans cannot be discharged in bankruptcy. Allowing student loans to be discharged in bankruptcy will “pull the plug” on the funny money of student loans. It will protect future generations from a bad educational system that saddles them with lifetime debt. It will also prevent a magnitude of previously respectable schools like ITT Tech from being brought into ruin.
As you may have heard, USA gymnastics has filed for Chapter 11 bankruptcy relief in the Indiana Southern District for bankruptcy. This filing which occurred in early December 2018 is certainly high-profile Indianapolis bankruptcy news. Recently a deadline of April 26, 2019 has been solidified so far for filing claims in the case.
USA Gymnastics: Why File Bankruptcy?
USA Gymnastics has filed for Chapter 11 relief in an attempt to properly address the large magnitude of the civil claims related to the victims of Dr. Larry Nasser. USA gymnastics filed in Indianapolis for relief under bankruptcy due to it being the proper geographical jurisdiction.
A large magnitude of the settlement money will likely be required to properly address the claims. The claims potentially far exceed the value of USA gymnastic’s total assets. Therefore, the entity opted for Chapter 11 protection, which will also cause additional third party and governmental oversight to be brought into this delicate situation.
What is the End-Game?
USA Gymnastics is likely hoping to reach a court-approved settlement of the claims through a plan of reorganization or other settlement method during the case. The settlement will likely ultimately include a contribution from USA Gymnastics’ insurance providers and possibly from the assets of the entity itself. Whatever the outcome, having the court supervision and open-style nature of a Chapter 11 could potentially afford a higher level of capacity for justice and full disclosure, at least from certain estimations. Even if the situation transitions into a total liquidation, the court will still provide a venue for allocation of funds to settle claims.
The Local Scoop
Respected local Judge Robin Lynn Moberly has been assigned to the bankruptcy case. The United States Trustee’s Office, a branch of the Department of Justice, will provide direct oversight in the situation. Media coverage has also been on the scene for the filings.
Since there are new tax laws, many people will find themselves receiving a smaller tax refund this year. Due to the new tax law change, people will receive an average of a 15% drop in their total tax refund. This may sound confusing because in actuality the total amount of tax that most people must pay is actually less.
You Pay Less But Get Less Back
How is this possible? How can you pay less but then somehow get less of a refund? The reason why is because the new tax laws have made over-withholding more difficult as you pay your taxes throughout the year. Essentially, you are getting to use more of your money throughout the year instead of receiving it all at one time in your tax refund. This can be a surprise to some who believed they were over-withholding the same as last year. They can be surprised when they receive a smaller tax refund.
New Tax Laws – Simplifying the System
One intent of the tax law change was to simplify the system. However, this simplification has also caused tax refunds on average to decrease. Certain provisions such as earned income credit and other required reporting on the forms are now designed also to not create excessive amounts for refunds. To further simplify, the government also wanted to put a stop to high over-withholding amounts. The simplification of the system has caused some people to not be eligible for certain provisions under the tax code that would have otherwise elevated their refund in the past.
What Does the Future Hold?
What does the future hold for high tax refunds? In all likelihood, tax refunds could very well even decrease further in the future as the government streamlines the tax system. With simplicity in the system, the government approach to completing tax forms and processing tax refunds would likely result in a more simple system all around. In such a modernized system, you would be forced to accurately pay your tax throughout the year. Then, basic returns may be simplified to the point in which they are nearly automated through an online, government interface. This system could take a huge burden off of what government funds are required to operate the IRS. However, it would likely further decrease the amount of the average tax refund.
Car loan defaults are rising and are now higher than ever. The numbers are staggering. They even exceed the peak of car default that occurred before the 2008 financial crisis. What is causing this new rate of default and what can we expect in the future?
Bad Car Loans Create Default
Nothing is worse at creating car loan default than horrible loan agreements. Statistics show that loan agreements entered at high-interest rates have a higher rate of default. This is due to two things. First, the higher-interest-rate loans usually require a higher monthly payment. This increases the total cost of the vehicle, regardless of the vehicle’s age or quality. Secondly, higher-interest-rate loans are usually given to “poor credit” borrowers who already have a more likely default potential.
A Strong Economy Does Not Guarantee Bill Payment
Even though more jobs are available in the current economy, this does not guarantee that monthly bill payments will be made. With the limited availability of real estate, most rental are mortgage payments are sharply increasing. Being employed does not guarantee that you can make payment for all of your bills. What it does virtually guarantee, however, is the availability of a car loan! Strong economies create greater availability of credit. Bad credit deals create increased defaults.
Epic Collapse is Possible But Unlikely
With record-breaking default on auto loans, some may expect an epic collapse of the economy to occur similar to 2008. However, it is very likely that much more expansion of the economy through credit must occur before this will happen. Before the previous crisis, the real estate market was elevated for some time. This created the expansion of housing through never-ending new housing projects. Although the increasing default of car loans is a bad sign, the debt-based, credit economy will likely need to expand quite a bit before it once again collapses.
Expect housing projects, free and open credit, and expansion of the economy to continue before any epic-style collapse once again occurs. In fact, default on loans may only be a sign that the open expansion of the economy is occurring once again. The inevitable collapse will likely only happen once it reaches this current expansion’s maximum.
Anson Indiana Bankruptcy Cases: New Development Not Spared
Being an attorney near the Anson Indiana development, I have observed that the area has not been spared from the need to file bankruptcy. Anson Indiana was one of the largest and boldest planned-unit developments in the United States. It has survived the recession and continues to grow. However, many of the local debt-ridden residents are facing the pains of insolvency and bankruptcy. A couple factors found within the Anson development may be contributing to Anson’s continued need for personal bankruptcy filings
Bankruptcy caused by Anson’s Housing not Matching the Job Opportunities
Anson is a higher-end housing development with various new luxury apartments, houses, and condominiums to choose among. These high-end housing units come with high-end monthly costs that have pushed many residents into tight budgets. Most of the employers in the area also do not provide high-end positions, the most of these positions being warehousing jobs. This can create situations where residents are using too much of their income for housing instead of other expenses. Excessive housing expenses create impossible budgets where eventually credit is used in order to just service monthly bills. This cycle results in the lack of savings and creditors building up until the resident needs to file for bankruptcy.
Bankruptcy caused by Sub-Division Homes being Bought with High Mortgages
Anson bankruptcy is also common due to the prevalence of mortgages being used to purchase homes within the tight subdivision developments. Traditionally, sub-division homes are sold by large builders through a mortgage brokerage system. These type of homes are more likely to have poor mortgage deals than traditional rural or urban settings. These developments are frequently like a mortgage factory, producing as many housing units and accompanying high-cost mortgages as possible. These excessive mortgages create a highly-leveraged community that is not usually focused on savings and investment. The result is a continuous trickle of bankruptcy as accompanying consumer debt rises.
Conclusion: Bankruptcy is Anson is Common and Very Much Needed
If you have found yourself in a similar situation as described above, you are not alone. These developments build wonderful infrastructure and housing. They do also, however, create massive of amounts of debt. If you need to get relief from your debts, do not wait until the situation gets out of control. Contact our Anson Bankruptcy office and we will help you get the recovery you need.
