Archive for December 2016

Receiver for payday lenders sued by CFPB files malpractice lawsuit

The court-appointed receiver for a group of interrelated companies sued by the CFPB in September 2014 for engaging in allegedly unlawful online payday lending activities has filed a malpractice lawsuit against the law firm that assisted in drafting the loan documents used by the companies.

The companies sued by the CFPB included entities that were directly involved in either making payday loans to consumers or providing loan servicing and processing for those loans. The CFPB alleged that the defendants engaged in deceptive and unfair acts or practices in violation of the Consumer Financial Protection Act as well as violations of the Truth in Lending Act and the Electronic Fund Transfer Act. According to the CFPBs complaint, the defendants unlawful actions included providing TILA disclosures that did not reflect the automatic renewal feature and conditioning the loans on the consumers repayment through preauthorized electronic funds transfers.

According to the receivers complaint, the companies payday lending was initially done through entities incorporated in Nevis and subsequently done through entities incorporated in New Zealand. The companies loan servicing and processing (including customer service) was done through two entities that were incorporated in Missouri and maintained offices, employees, and mailing addresses in Missouri.

The receiver alleges that the law firm assisted in drafting the loan documents which, on their face, violated the TILA, EFTA and CFPA. He claims that the law firm committed attorney malpractice and breached its fiduciary obligations to the companies by failing to advise them that because of the US locations of the servicing and processing entities, the loan documents used by the companies had to comply with the TILA and EFTA, and that once the CFPA went into effect, the servicing and processing entities could also be liable for such violations as covered persons under the CFPA.

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Growing Home Loans Lender Fundraising for Fallen Police Officers and Families

Service First Mortgage plans to raise $25,000 through a new philanthropic campaign.

McKinney, TX (PRWEB) November 23, 2016

Service First Mortgage Company and employees are fundraising for Concerns of Police Survivors (COPS), an organization which provides resources to assist in rebuilding the lives of surviving families and affected coworkers of law enforcement officers who have died in the line of duty. As part of Service Firsts annual Fall Cause, the company has created a website to solicit donations;

Since the tragedy that resulted in the loss of five fallen Dallas police officers on July 7, Service First Mortgage has hosted multiple police officer appreciation luncheons to show their support of law enforcement across the nation.

As a company, we are immensely proud to demonstrate our overwhelming support for the COPS organization, said Shawn Broussard, CEO. Supporting the families and coworkers of police officers who have lost their lives keeping us safe in the communities we serve as well as those we will soon expand into is a very worthwhile and honorable cause.

COPS was organized in 1984 and today has a membership of over 37,000 survivors, including spouses, children, parents, siblings, significant others, and affected co-workers of officers who have died in the line of duty according to Federal government criteria. COPS programs for survivors include the National Police Survivors Conference, scholarships, peer-support at the national, state, and local levels, COPS Kids counseling reimbursement program, the COPS Kids Summer Camp, COPS Teens Outward Bound experience for young adults and other programming for the effected families. Donations collected by Service First Mortgage employees will be used to support these programs and services.

The six-week fundraiser will run from Nov. 2 through Dec. 16, 2016. As part of their fundraising efforts, the company has launched a fundraising website,, to collect donations. Employees are also joining in on the fundraising via their own social networks and donations.


About Service First Mortgage:

Service First Mortgage was established in 1997 and is headquartered in McKinney, Texas. Our mission is to deliver a better home financing experience by being an innovative, principle-based company of highly trained professionals.

After becoming a top lender in our home state of Texas, and with branches in Arizona and Florida, we have begun an aggressive expansion with plans to build on our established reputation and high service levels. Together, we continue to support the real estate community through our well trained, top performing loan officers. Visit to learn more about Service First Mortgage.

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CFPB: Consider the Future Post-Obama

The election of Donald Trump and the new administration means a changed political reality for the Consumer Financial Protection Bureau (CFPB). The President-elect is expected to replace Director Richard Cordray as head of the CFPB soon after taking office. Looking further ahead, the Republican majority in Congress will likely revive legislation aimed at changing the CFPBs structure to a bipartisan commission and subjecting its budget to the congressional appropriations process.

The agency, however, will probably survive. Despite Trumps promises to replace Dodd-Frank, an attempt at wholesale repeal is unlikely. Repealing legislation likely would not survive a Senate filibuster, and redistribution of the rulemaking, supervisory and enforcement authorities now concentrated in the CFPB would involve significant frictional costs.

The impact of the election results on the CFPBs current regulatory agenda is less clear. Trumps election, and the overwhelming reelection of congressional Republicans, can be interpreted as public support for a more limited government and general dissatisfaction with the growth of the administrative state. As the CFPB reviews its current rulemakings, the payday lending rule, initially proposed on June 2, merits particular concern. As currently drafted, the proposed rule is broadly preemptive of existing consumer lending laws in 36 states.

The proposed rule, which covers payday loans, title loans and certain installment loans, contains a detailed set of borrower suitability requirements, presumptions and restrictions on loan frequency. The primary focus is on preventing extended periods of indebtedness on covered loans. The CFPB has posited that payday borrowers often roll over or renew their loans multiple times because lenders do not underwrite based on an ability to repay and typically require repayment in a single pay cycle. The proposed rule offers lenders two options for making account-secured, short-term loans: (1) confirm that the borrower can repay the loan in full and on time and still meet basic living expenses and major financial obligations; or (2) cap the loan amount at $500 and limit the borrower to two rollovers with a mandatory one-third principal payoff on each rollover.1 The second option is available only with respect to borrowers who do not have an outstanding short-term covered loan and have not been in debt on short-term loans for more than 90 days in the previous 12 months.

State financial regulators have expressed concern that the proposed rule will upend the regulatory regimes they administer. The CFPB has downplayed these concerns, describing the relationship between the proposed payday lending rule and existing state law as an unremarkable example of conflict preemptiona federal floor above which the states are free to regulate.2 That structure has long been accepted with respect to securities and environmental regulation, but there is a discontinuity between traditional conflict preemption and what the CFPB is currently proposing. The highly prescriptive CFPB rule will, upon implementation, encounter 36 complex and varied state financial regulatory regimes, most of which were developed over decades and informed by continuing state-specific, on-site supervision of consumer lenders. State laws that offer consumers greater protection than the CFPB rule will survive, but the CFPB has offered only one example of such a law: a usury cap that effectively bans payday loans. It is not at all clear how any state regulatory system that allows regulated payday lending will remain intact post-implementation.

This uncertainty has been a pressure point for the Bureau and the subject of legislation, called the Accounting for Consumer Credit and Encouraging State Solutions (ACCESS) Act3, introduced in the House by Colorado Representative Scott Tipton. The ACCESS Act would allow any state or sovereign tribe to petition for a waiver from the CFPB rule. The bill was referred to the House Financial Services Committee, where it has remained. It could, however, inform reinvigorated Republican legislative efforts to curb the CFPB.

There are also questions of statutory authorization for the Bureau to consider. The Bureaus proposed payday lending rule is an attempt at preemption by administrative regulation rather than by statute. Dodd-Frank does not grant the Bureau express authority to issue rules preempting state law on a national basis; the Bureau has inferred this authority from congressional silence. It is questionable whether Congress, post-Obama, will approve that inference, however. Dodd-Frank is an essentially anti-preemption statute.

Where Congress did address regulatory preemption in the text of Dodd-Frank, it acted to limit, not expand. The statute explicitly curbs the Office of the Comptroller of the Currencys (OCC) issuance of nationally preemptive rules. The OCC may now issue such rules only on a case-by-case and state-by-state basis and subject to heightened judicial scrutiny.4 If Congress intended, in the same legislation, to empower the CFPB, acting through a single individual, its Director, to override the consumer lending laws of 36 states, it would be expected to do so in the statutory text. In the absence of text, an agency interpreting the silence as authorization should be expected to explain itselfsomething the CFPB has not done.

Regulatory preemption of state law raises federalism concerns that have been the focus of bipartisan executive directives dating back to the Reagan Administration. Of those directives, the most detailed is President Clintons Executive Order 13,132, which was based on, and superseded, a similar Order by President Reagan.5 Executive Order 13,132 requires federal executive agencies considering preemptive regulations to obtain input from state officials in accordance with a formal, accountable process and document the results of that process in the Federal Register publication of each covered rule.6 Additionally, Executive Order 13,132 requires agencies to restrict preemption to the minimum level necessary to achieve regulatory objectives.7

Although independent agencies are expressly urged to comply with Executive Order 13,1328, they are technically exempt. By its terms, the Order applies only to executive agencies. Traditionally, federal agencies have been classified as either independent or executive based, in part, on whether their directors were removable by the President at will or only for cause. The CFPB, in addition to being expressly included in the definition of independent regulatory agency for purposes of Executive Order 13,1329, was set up with a for cause removal provision.10

The CFPB was thus entitled to exemption from the Order and has chosen not to comply. The Bureau has established no formal process for engaging state officials on rulemakings, though it has such processes in place for supervisory and enforcement matters. In the Federal Register publication of the proposed rule, the Bureau describes its interaction with state officials as a series of calls and meetings, but the only discussion topic mentioned is a narrow onethe operation of state-wide payday lending databases adopted in some states.

The October 11 decision of the US Court of Appeals for the DC Circuit in PHH Corporation v. CFPB11 complicates the CFPBs decision to ignore Executive Order 13,132. In a three-judge decision, which may be reviewed en banc by the full Circuit Court, the court struck the for cause removal provision from Dodd-Frank, making Director Cordray removable at the will of the President. The decision does not otherwise change the organization or operation of the Bureau, nor does it make the payday rulemaking subject to any new statutory requirements. The decision does, however, make the CFPBs non-compliance with Executive Order 13,132 more difficult to defend on any principled basis. By making the CFPBs director removable at the will of the President, the DC Circuit placed the CFPB on a similar footing with executive agencies that are expressly subject to the Order, and the payday lending rule as currently proposed would be broadly preemptive in an area where states have long regulated.

If called upon to defend its sweeping regulatory preemption of state consumer lending law, the CFPB will not be able to cite a detailed, state-by-state analysis of existing regulatory regimes. The CFPB is not proposing to preempt on a case-by-case basis, as Congress required the OCC to do in Dodd-Frank, but to displace state regulatory regimes wholesale and remake the payday consumer lending market. In supplemental findings published contemporaneously with the proposed payday lending rule12, the CFPB examined the percentage of borrowers in 22 states who reborrowed their loans within 7, 14, 30 and 60 days after payoff. In most of those states, 60-day reborrowing rates ranged from 80% to 92%. Some states, however, had markedly lower rates. For example, 60 days post-payoff, only 56% of Illinois borrowers and 68% of Virginia borrowers had reborrowed.

The CFPB concluded that, in all of the 22 states it studied, reborrowing rates were unacceptably high. The CFPB did not, in reaching this conclusion, examine whether the reduced borrowing frequency in Illinois and Virginia was worthy of further study, explain why the reborrowing rates in those states were still too high, or specify what level of reborrowing would be acceptable. Perhaps most importantly, the Bureau did not explain how the proposed payday lending rule would improve the situation of consumers in states that have reformed their consumer financial laws, sometimes through extended trial and error, in an effort to balance consumer protection with access to credit.

The CFPB is almost certainly reevaluating its regulatory agenda in light of the election results, which promise a less favorable environment for large-scale regulatory preemption of the kind represented by the payday loan rulemaking. The CFPBs approach to the rulemaking may make the resulting rule more vulnerable to challenge as regulatory overreach. The CFPBs authority to preempt nationally using its UDAAP authority is inferred from textual silence in a statute that is overtly focused on preserving state law from federal encroachment. The Circuit Courts decision in PHH Corporation removes any principled basis for the Bureaus exemption from the requirement to consult with state officials set out in Executive Order 13,132. Perhaps most significantly, the CFPB has not, to date, devoted serious time and study to understanding the existing state regulatory approaches it would preempt.

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How will a late or skipped payment affect your mortgage?

Once you purchase a home, you get into the familiar habit of writing out a check for the mortgage each month. This can be a comforting ritual, as each payment to the lender gives you more ownership of the property. But there can be times when you dread the payments approaching due date.

Perhaps it has been a tough month for your bank account and you need to wait until your next paycheck arrives in the middle of the month. Maybe you have suffered a job loss and are unable or unwilling to cut such a large check each month while seeking employment. It could be that the payment simply slipped your mind and you sent it out later than expected.

Thankfully, lenders are often forgiving if your payment comes in later than expected. And if your budget is strained enough that you are having trouble paying your mortgage, there are several options for relief available.

Paying late

Mortgage payments are due on the first of the month, and homeowners are encouraged to have the check ready for this date. But lenders are typically more flexible about what they consider an on-time payment.

For example, a payment mailed out on the first of the month will likely not be considered late if it arrives a few days later. Kevin Graham, writing for the retail mortgage lender Quicken Loans, says lenders often extend this grace period through the first 15 days of the month. Your loan paperwork will stipulate the acceptable range for payments.

If your payment arrives outside the grace period, youll have to expect a penalty. MC Postins, writing for SFGate, says the lender often charges a late fee of 5 to 10 percent of the principal and interest portion of the mortgage. Youll need to include this fee on the next mortgage check in order to stay current on your payments.

On the bright side, a late fee wont have any effect on your credit standing. The National Association of Realtors says that while lenders will report a missed payment to the credit bureaus, theyll stay mum on late payments.

Check with your lender to see what method they use to determine a late payment. Some may decide that a payment is on time if the postmark shows that it was sent within the grace period, but others will decide that it is late if it arrives outside this timeframe.

Missing a payment

There are more worrying consequences if you are late on your payment by more than 30 days. At this point, the lender considers that you have skipped a payment.

Some homeowners in a financial crunch have deliberately withheld mortgage payments to get a lenders attention. Marcie Geffner, writing for the financial site Bankrate, says this action is intended to convince the lender to modify their loan. However, the negative effects are sure to outweigh any benefits from a revised mortgage.

While a lender may be willing to work with you to make your monthly payments more affordable, youll still have to pay the skipped payment along with any penalties. This added expense can put a greater burden on your budget in the upcoming months, increasing the risk that youll be late on a payment or miss it entirely.

Graham says lenders will report a missed payment to the credit bureaus, which will lower your credit score. If you previously had a good credit record, a missed payment can knock your score down by 100 points or more. A single late payment can be quickly forgiven if you resume a schedule of on-time payments, but will stay on your credit record for seven years.

A reduction in credit score can affect you in many ways. Geffner says youll have more trouble qualifying for a credit card, vehicle purchase, or mortgage refinance. You may also be required to make cash deposits before starting a utility, cable TV, or other service.

Depending on your contract, a late payment can establish more punitive conditions. The National Association of Realtors says some lenders may increase your interest rate or limit the line of credit you can take out against the homes equity.

A lender is unlikely to start foreclosure proceedings against you if you miss one payment. However, they will likely start this process if three months pass and they have not received any payments.


If you know you are going to be having trouble making your next mortgage payment, contacting the lender is often the best course of action. Elizabeth Weiss, writing for the real estate site Zillow, says informing the lender of your difficulties in writing is a good first step toward resolving the situation. Send this letter in advance instead of waiting until your payment is overdue.

You may be able to negotiate an agreement with the lender. If you expect that your financial troubles will be temporary, the Federal Trade Commission says you can offer to make up the late payment with penalties by a certain date. You might also work out a plan to add a missed payment in installments to your future checks.

Some buyers will qualify for forbearance, a modified payment schedule to help them through a temporary rough patch. In this situation, the lender will reduce or suspend the payments for a certain number of months. After that point, the buyer will have to resume regular payments and make up the missed contributions with a lump sum or regular additions to the mortgage check.

Lenders may agree to a loan modification for homeowners who are anticipating a longer financial hardship. The lender may give you more time to pay off the loan or lower your interest rate. They may also forgive some of your debt or even lower the amount of principal left on the property.

The National Association of Realtors says buyers may want to consider missing a payment on a separate bill instead of forgoing a mortgage payment. While this option will still hurt your credit score, the impact may not be as bad as a skipped mortgage payment.

You can also consider getting a home equity line of credit to reduce your debt in other areas, such as car payments or credit card bills. This strategy will make it easier for you to meet your monthly payments, although you may have to work to limit your spending to keep a stable budget.

If you are looking to move out of your home, you might consider selling it to move to a more affordable property. The Federal Trade Commission says you may have to settle for a short sale or deed in lieu of foreclosure; you wont see any profit in these transactions, but you wont be saddled with a mortgage debt you are unable to pay.

Declaring personal bankruptcy may allow you to set up a more affordable repayment plan or cancel your debt, but it should also be considered a last resort. This action can severely affect your credit score, and will remain on your record for 10 years.

Homeowners who are facing difficulty with their mortgage can also attend free or low cost counseling to help with their situation. This service is offered by the Department of Housing and Urban Development and nonprofit organizations such as the Homeownership Preservation Foundation.

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Unified GOP to target Obama payday, retirement advice rules

A top House Republican said Wednesday he is aiming to work with President-elect Trump to undo President Obamas pending rules on retirement advice and payday lending.

Rep. Jeb Hensarling, the chairman of the House Financial Services Committee, outlined his priorities for the next Congress during a speech in downtown Washington and said he would aim to shutter Fannie Mae and Freddie Mac.

Reform of the Federal Reserve also remains a top priority, Hensarling said.

The Texas Republican is the author of a sweeping financial reform bill, the Financial CHOICE Act, that would replace Obamas 2010 reform bill. While Trump has not endorsed Hensarlings bill, he has expressed support for the goal of replacing the existing Dodd-Frank law. Hensarling said Wednesday that he was working on version 2.0 of the plan.

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Youth sports registration day approaching in Harwood Heights

The board approved a $1,220 payment to Elk Grove Village-based Ziebell Water Service Products Inc. for equipment for the villages water department.

The village paid $530 for village employees George Assimakopoulos and David Koch to attend the 85th annual Illinois Potable Water Supply Operators Association Conference, Sept. 14-16 in Springfield. The organization offers municipal employees updated information on health and safety issues for drinking water and potable water production, current laws and regulations and the operation of drinking water facilities.

Also, $30 was paid to Chicago accounting firm Azavar Audit Solutions.

Village issues general obligation bonds for future retail center

The board approved an ordinance issuing $2.5 million in general obligation bonds for development costs associated with the commercial project breaking ground next month on Harlem and Lawrence avenues. The bonds are being issued as part of an economic incentive agreement with Chicago-based developer Bradford Real Estate Co., the firm building a retail center including a Portillos and an Art Van Furniture on the empty 8-acre lot.

The terms of the distribution of the bonds show the annual interest rate capped at 7 percent, according to an ordinance approved by the village Aug. 11.

Handicapped parking sign to be taken down

The Public Works Department was directed to remove a handicapped parking sign on the 4500 block of North Sayre Avenue.

Zoning variance granted

The board approved a request from a resident on the 4500 block of North Nagle Avenue for a zoning variance that was needed to build a fence in the front yard.

Village to contract with Chicago financial planning firm

The village entered into an agreement with Austin-Meade Financial Ltd. of Chicago for municipal financial advising services.

Next meeting scheduled

The next board meeting will be held at 7:30 pm Aug. 25 at village hall, 7300 W. Wilson Ave., Harwood Heights.

Natalie Hayes is a freelance reporter for Pioneer Press.

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Politics: How The Election Educated Voters on Business Economics

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The Impact of the Growing National Debt

It is undeniable that if its left unchecked, the rising Federal debt will have a negative impact on corporate America. Just like the situation when youre dealing with your household finances, you cannot outspend your income indefinitely without it having negative consequences on you personally, as well as others that you interact with.

In an extreme example, if your household spending were left unchecked, you might have to file personal bankruptcy. Obviously, that negatively affects you and your family, but it also affects a variety of people and businesses that you deal with. That could include a bank where you have to negotiate a debt restructuring or forgiveness. You may forgo vacations for several years, purchase fewer discretionary goods, donate less to charities, and so on.

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Dream deferred: Despite incomes, black families still denied access to home loans

By Charlene Crowell (NNPA Newswire Columnist)

In recent weeks, a spate of news coverage has referred to America’s “inner cities.” Some may even interpret it as a new code word for minorities, usually referring to African Americans and Latinos.

Yet today, according to Richard Rothstein, a research associate with the Economic Policy Institute, the inner city experience does not encompass all of Black America. More blacks now live in the suburbs than in urban ghettos, and approximately one-third of black Americans have incomes higher than that of the respective median earnings.

So, why is access to homeownership still so out of reach for consumers of color? Why do so many African Americans and Latinos continue to suffer disproportionate denials for mortgage loans?

A recent analysis of the 2015 Home Mortgage Disclosure Act (HMDA) data by the Center for Responsible Lending (CRL) sheds further light on the fact that even years after a national recovery from the housing collapse, the American Dream remains elusive for much of Black America.

“The HMDA data has shown a persistent difference in denial rates by race and ethnicity and this year is no exception,” wrote CRL. “20.8 percent of African American applicants were denied a loan in 2015 compared to 16.1 percent of Hispanic applicants and 10 percent of non-Hispanic white applicants.”

Last year, more than six million home purchase mortgages were made, but only 51,202 or 2.7 percent were conventional loans to Black home buyers. By comparison, non-Hispanic Whites received 1,361,564 conventional loans, and Latinos received 96,975 of these loans. Conventional loans are the most widely available and often the most cost-effective and sustainable mortgages available.

The vast majority of loans to black consumers in 2015 continued a trend that has grown stronger year to year since the housing meltdown: government-backed loans like FHA or VA account for the overwhelming majority of loans made to black consumers – 120,618, more than double that for conventional loans. Latino consumers received more with 162,317 loans, but far less compared to 765,880 for whites. Government-secured mortgage loans are an important source of credit and also tend to be more costly than other home loans.

Now contrast those dismal numbers with those from the Census Bureau that found black Americans are more than 13 percent of the nation’s population, and 1.8 million blacks, ages 25 and older, hold advanced degrees.

So, how is it that when black college graduation rates are growing and many are living in the suburbs with higher earnings, why are conventional mortgage loans so rare for black borrowers?

One reason could be that the average credit score needed to get a loan has risen substantially. In 2015 the average credit score for all new loan originations neared 750, a near 50-point increase from the average used in 2001.

Historically, federal housing policies also gave advantages to whites that were not available to blacks. As a result, many whites were able to build up significant wealth that contributes to stronger credit profiles. At the same time, unequal mortgage lending policies made it harder for blacks to own homes and thereby denied many wealth-building opportunities that could be shared from one generation to another.

“Although the nation’s banks have largely recovered from the financial crisis,” continued CRL, “the 2015 HMDA data illustrate that they are not using their rebuilt capital to create homeownership opportunities, particularly not for borrowers of color and low-income families.”

“Before the Great Recession,” added Rothstein, “half of all African Americans owned their own homes. By 2013, it had fallen to 44 percent. Before the Great Recession, the net worth of African American homeowners averaged $144,000. By 2013, it had fallen to $80,000. This was not a natural calamity that befell the black middle class but one precipitated in part by unlawful banking and governmental practices.”

When it comes to homeownership, the facts are clear. The real question for Black America is, ‘what do we intend to do about it?’ Economic inclusion–not exclusion – would offer a real chance to build more black economic security.

Charlene Crowell is a communications deputy director with the Center for Responsible Lending. She can be reached at

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Get those creditors off your back! Call Richard P. Busse Attorney at Law and see how bankruptcy might help!

If you are facing difficulty meeting your personal obligations, filing for protection under Chapter 7 or Chapter 13 of the federal bankruptcy laws may be all you need to get a fresh start.

A personal bankruptcy petition will immediately put a stop to threatening calls, letters or other actions.

You want an attorney who can carefully examine your situation to determine whether bankruptcy is the right solution for you.

At the office of Richard P. Busse, Attorney at Law, in Valparaiso, I work with clients throughout Northwest Indiana who are considering filing for bankruptcy.

I dont run a bankruptcy mill. I take the time to learn as much as I can about your situation so that I can give you an honest assessment of whether bankruptcy is in your best interests.

I emphasize personal service and attention, working directly with you throughout the process, from the initial filing to the final disposition of your bankruptcy.

Richard P. Busse Attorney At Law

7 Napoleon St.

Valparaiso, IN 46383


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