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Chapter 7

Student Loans and Bankruptcy

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Student Loan / By

When someone considers the option of going bankrupt, they are definitely in the most difficult situation and they cannot pay off their debts. However, when it comes to student loans, we have often heard that it cannot be discharged through this process. Well, it is high time that we start understanding student loans and bankruptcy in combination so that one can analyze if it is an option that they should go with or not.

Student loans can be discharged through a bankruptcy case by proving ‘Undue Hardship’ and this is one of the reasons why people get confused because the process itself is not that clear. While you know that this is what you need to prove in court, there is no set of rules which every court and judge has to abide by. Hence, most people are unaware when the question arises that ‘how to prove undue hardship for student loans?’

As stated, there is no set of rules, but we do know that if not all, at least most of the judges do follow a specific test, i.e. the Brunner test to determine whether someone is applicable for student loans and bankruptcy or not. We will now look at the 3 major things that the borrower needs to prove to pass the Brunner test on which the decision of the judge relies.

Minimum Standard of Living

The first and foremost thing that you need to prove in a court is that if you were to repay the loan amount, you will not be able to maintain the bare minimum standard of living for yourself and those dependent on you. Now, it is not necessary that only people who fall under the poverty line would qualify for this. However, it depends on the judge who is handling your case and what they think about your current living conditions.

Additional Circumstances

There can be additional living conditions for you or people that are dependent on you that can add on to the fact that you cannot earn more and pay your student loan. This can include any mental or physical illness, poor quality of education, and the fact that you have reached the highest-earning that you can make and are still incapable of generating enough money.

Good Faith

The last point which is also very significant is that the judge should know that you have tried your best until now and that bankruptcy is the only option left. For example, you can ask for a repayment plan with less interest rate before you apply for bankruptcy to show the legitimacy of your intentions.

While the Brunner test is followed by most courts, it is not a set standard and so you need to consult a lawyer in your area beforehand to have enough knowledge about this and other things such as the need of filing the adversary proceeding, knowing which option is better for you, i.e. bankruptcy chapter 7 or 13, and to have an estimate of how much will the bankruptcy itself will cost you!

For more information, speak with an experienced bankruptcy attorney - schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

The What, When, Why - Chapter 7 and Chapter 13 Bankruptcy

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Means Test / By

Chapter 7 and Chapter 13 are two common bankruptcy programs available to individuals to discharge their debts. If you ever got confused between the two, here is a quick what, when, and why to help you learn their differences.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy. Your non-exempt assets are sold by the court trustee to repay your creditors.

When is Chapter 7 Bankruptcy Needed?

When your debt becomes completely unmanageable, and you want a quick discharge to restart your financial life.

Why is Chapter 7 Bankruptcy Important?

It helps eliminate the risk of debt trap that, otherwise, individuals could fall into if they can’t keep up with the repayments.

What is Chapter 13 Bankruptcy?

Chapter 7 bankruptcy is a reorganization bankruptcy. Rather than a discharge, your repayment schedule is reorganized based on what you can actually pay.

When is Chapter 13 Bankruptcy Needed?

When you are struggling to repay your debt but don’t want to risk losing any of your assets.

Why is Chapter 13 Bankruptcy Important?

It allows you to prevent foreclosure or selling off of your assets by creditors by making repayment more manageable.

#bankruptcy #US #legal #Chapter13 #Chapter7

4 Quick Tips to Regaining Your Financial Health After Bankruptcy

Bankruptcy, Chapter 13, Chapter 7, Credit Repair / By

A bankruptcy discharge can definitely hurt your credit score, but nonetheless, without the burden of your past debts, you can find it much easier to regain your financial health.

1. Plan a Budget

Budget planning is central to effective money management. On a spreadsheet or with the use of an online app, make a note of all your expenses, categorizing them on whether they are ‘essential’ or ‘non-essential.’

If the sum of your monthly income and expenses just break even or is in the negative, consider cutting on non-essential expenses until you can generate some savings.

2. Use Cash

Prioritizing cash spending can help you save money by limiting the amount you can spend at any time. With credit, it can be easy to indulge in excess spending, but while using cash, there is only so much you can buy before it runs out.

3. Set an Auto-Payment System

Regaining a good credit score means never missing the deadline on many repayments. However, with so much going on in our lives, it can be actually much harder than it seems. Fortunately, most financial agencies allow you to set up an auto-pay system to avoid any unintentionally missed payments.

4. Add Positive Accounts to Your Credit History

Provided they qualify, consider adding positive accounts to your credit history, such as your utility and phone bills, to improve your credit report. This can be especially helpful for those with little or no credit score.

#bankrutcy #finance #Chapter7 #tips

Payday Loans and Bankruptcy

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Credit Repair / By

Payday loans, also commonly known as cash advances, check advances, or paycheck advances, may seem like an appealing option to those falling behind on their bills. However, when people start to rely heavily on payday loans, they can get stuck in a pattern and end up filing for bankruptcy.

What is a Payday Loan?

A payday loan described as a short-term, high-cost loan that is generally for $500 or less. These act as a cushion to your immediate cash needs and need to be paid back within two weeks or close to your payday.

Since payday loans charge triple-digit annual percentage rates (APRs), they can be a burden to repay. In fact, if you’re not mindful, you may end up going overboard, and these negligent payday loans may end up costing you a lot more.

Can Payday Loans Be Discharged When Filing for Bankruptcy?

Payday loans are known as “unsecured debt.” This is because they do not entail any property as collateral in case of failure to pay. Unsecured debt is eligible to be discharged when someone files for Chapter 7 bankruptcy. It can also be added in the court structured repayment plan if filed for Chapter 13 bankruptcy. Through this, the debtor is allowed to repay the loan over time at his/her convenience.

Hardship provision is an option given when filing for bankruptcy. This means that the debtor can remove all or a portion of these debts, according to his personal situation. This can be decided and determined by the bankruptcy attorney based on being unable to complete the repayment plan.

Sometimes, lenders will subtly include a disclaimer in your paperwork, which states that the debt cannot be foregone despite bankruptcy. However, you don’t need to worry; these disclaimers have no place in the court of law. Along with unsecured loans, cash advances and payday loans can be fully discharged in a bankruptcy proceeding.

Loans That Cannot Be Discharged in Bankruptcy Proceedings

The point of declaring bankruptcy is to achieve a fresh start rather than skirting creditors with the intention of never repaying their money. To ensure this, bankruptcy courts state that any debt or loan taken within 60-90 days before filing for bankruptcy cannot be discharged.

Things to Pay Attention To

It is usual for some payday loans to be renewed automatically every month till full payment is received. Lenders might try to twist this in the bankruptcy court to show that the loan is newer than 60 days. However, in such cases, your bankruptcy attorney can make the court aware of the loan’s initial date. This will help the court refer to the date you obtained the loan and rule in your favor.

In case a lender has a post-dated check for an amount that is out of your current budget, make a quick trip to the bank, pay a small fee, and get payment stopped on that check. This will relieve you of additional stress in bankruptcy court.

For more information, speak with an experienced bankruptcy attorney - schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

5 Biggest Mistakes to Avoid with Chapter 7 Bankruptcy

Bankruptcy, Chapter 7, Consumer bankruptcy, Means Test / By

Photo by Daniela Holzer on Unsplash

If you are struggling with a mountain of debt, a Chapter 7 bankruptcy allows you to resolve yourself of the burden and start your financial life on a fresh slate. However, there are a few pitfalls that one should take care to not fall into when filing for a Chapter 7 Bankruptcy if they want their expected case outcome not to be jeopardized. Here are the 5 biggest mistakes to avoid with Chapter 7 bankruptcy.

1. Filing Too Early or Too Late

Before filing for a Chapter 7 bankruptcy, it is often recommended to take into consideration all options on the table. Filing for bankruptcy is an important decision and carries with it serious consequences. It should only be taken once you are fully sure that there is no better alternative choice.

With that said, delaying the decision to file for bankruptcy when you clearly need it can also be harmful. If you are unable to manage your mounting debt, it is better to declare bankruptcy rather than continue suffering from poor financial health.

If you are unsure about when is the right time to file for your bankruptcy, consider consulting an experienced bankruptcy attorney.

2. Not Making a List of Your Debts

If you have multiple debts, it is a best practice to list them and includes in it their outstanding amount. Neglecting to do so before filing for bankruptcy could prevent you from realizing the outcome you were hoping for.

3. Selecting the Wrong Bankruptcy

Quite many debtors make the mistake of filling for Chapter 7 bankruptcy when a Chapter 13 could likely have been the better choice. For instance, one could be struggling to repay their mortgage but can still potentially avoid foreclosure if their repayment plan is readjusted through Chapter 13.

For more information on which bankruptcy to file for which occasion, click here.

4. Missing the Required Documents

This is a very common mistake that typically occurs when one is filing for bankruptcy without a lawyer. A lot of different documents may need to be submitted along with your bankruptcy petition. If a critical piece of documentation is found missing, it can delay your bankruptcy case or influence a more negative outcome. You can even be charged with bankruptcy fraud if the court mistakenly assumes your intent to have been malicious.

5. Not Hiring an Attorney

While virtually all debtors who file for Chapter 7 bankruptcy obtain a discharge, how much the outcome had been ruled in their favor is another question. If you are concerned about the cost of professional help, consider how much more you could lose in terms of property and assets if you approach the bankruptcy process alone.

The Law Offices of Sean T. Flynn provides personalized legal service and consultation to clients filing for bankruptcy under Chapter code 7 and 13. To schedule an appointment or for any queries, call 512.640.3340 or schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

Have You Ever Wondered Who Pays for Bankruptcies?

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Credit Repair / By

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If you are a debtor who is out of options and is now thinking of going bankrupt, it might be the right way to go for you. However, if you are an investor, a personal creditor, either secured or unsecured, the situation for you will be very different if one of your debtors goes bankrupt. This is why it is significant to understand how bankruptcies work no matter which boat you are in.

When you start understanding the legal procedures, the first thing that may come to your mind would be as to who really pays for bankruptcies? This question is completely valid. However, the answer is much trickier and complex than you might think. The rationale behind it is that bankruptcy is not a simple process with just one situation that can occur. There are different processes, involving different kinds of bankruptcies, which eventually results in different solutions to cover the costs of different loans that you have.

The basic difference in payment methods results from two different types of bankruptcies, i.e. chapter 7 and 13 bankruptcies. Chapter 7 is applicable when it can be proved that you cannot pay any of your loan at all and so all your assets are taken away to pay back your debts. This type is also called straight bankruptcy, although, there are still several complications in this as well.

Chapter 13, which is also referred to as reorganization, is a plan where the court revisits your payment plan and make changes according to your monthly income. This way, you get at least 3-5 years to pay off some part of your debt and see if there still exists a need of going completely bankrupt. One thing that you need to keep in mind is that both of these are still types of bankruptcies and so if you opt for them, you will have it on your credit for 10 years!

What if All Your Assets are not Enough to Pay Off Your Debts?

This is often the case when big companies go bankrupt. This is why corporate bankruptcy is the most harmful one. However, there is a process through which the court divides the amount recovered. This is done under section 507 of the code which states the hierarchy through which the amount is divided and who is given priority. The priority is always given to secured creditors, after which unsecured creditors are in line, which may include employees and lastly if there is still some recovered amount left, stockholders are entertained. Although, reaching that stage is a rare thing and so unless everyone else is covered, stockholders get nothing!

Even apart from companies, when we are talking about personal bankruptcy when the cost cannot be completely recovered and the money is not paid completely to the creditors, they have to find different, more indirect ways of retrieving that amount. Some personal investors increase their interest rates, while sellers have to increase the profit amount so that they can cover at least some of their losses!

Whether you are a debtor or a creditor, it is always necessary to get legal advice beforehand, to understand these critical processes in an easier way!

For more information, speak with an experienced bankruptcy attorney - schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

Planning for Chapter 7 Bankruptcy - 5 Quick & Helpful Tips

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Credit Repair / By

1. Any debt incurred after the bankruptcy filing date does not qualify as part of your discharge. Therefore, it is best to file when one is sure that they are reasonably sure that they won’t be incurring any further unmanageable expenses while during and after the bankruptcy process.

2. Include all qualifiable debts that you believe you won’t manage in your bankruptcy. Once a discharge is given, most debtors have to wait 8 years before qualifying for another debt discharge.

3. If you are moving to another state, time your bankruptcy filing accordingly. Depending on which state you are in and to which you are moving, it may be more advantageous to file while residing in the one with more generous exemption laws.

4. Be mindful of making large payments to preferred creditors, selling assets, or transferring them out of your name shortly before bankruptcy. It can raise suspicion of bankruptcy fraud, and the court trustee assigned to your case can get the money or property back using a clawback provision.

5. Don’t make the mistake of incurring any further debt shortly before filing for bankruptcy. The fact that you purchased items on credit knowing that you won’t pay the creditor back can make you subject to fraud allegations. Even if it does not result in a criminal investigation, the outcome could still be an objection to your discharge.

#chapter7 #bankruptcy #legaltips #bankruptcyadvice #bankrutcyUS #TX #helpfultips #USLaw

—-Your Common #Bankruptcy Questions Quickly Answered—-

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy, Credit Repair, Means Test / By

—-Your Common #Bankruptcy Questions Quickly Answered—-

1. Will I lose my house in Chapter 7 Bankruptcy?

In most cases, your house will most likely be exempted from being sold off in a Chapter 7 Bankruptcy case.

2. Can Bankruptcy take my social security?

As per Federal Law, your social security funds are exempt and thus protected in bankruptcy.

3. I am currently unemployed. Can I still file for bankruptcy?

Yes, your employment status does not bar you from filing for bankruptcy. It will, however, impact the chances of a successful outcome in a Chapter 13 bankruptcy.

4. Can my student loans be eligible for a bankruptcy discharge?

In most cases, your student loans are not eligible for a discharge under either Chapter 7 or Chapter 13 bankruptcy. However, it can be wiped out if you can prove that it is causing you undue hardship.

5. I make a lot of money. Do I still qualify for Chapter 7 Bankruptcy?

If your household income exceeds that of your state median, you may still qualify depending on how much are your monthly deductible expenses (e.g., childcare, taxes, debt repayments, utility, and food).

6. Do married couples both have to file for Bankruptcy?

Both you and your partner can file for bankruptcy individually or jointly. Depending on your debt situation and the state you reside in, either of the options could be more beneficial.

7. Will Bankruptcy affect my employment?

No employer will lay you off solely because of your bankruptcy, nor does it, in most cases, impact your employment prospects.

#bankruptcy #US #FAQs #Chapter7 #Chapter13

Debts That Cannot Be Discharged in Bankruptcy

Bankruptcy, Chapter 13, Chapter 7, Consumer bankruptcy / By

While filing for Chapter 7 or Chapter 13 bankruptcy can release you of debt and give you a fresh start, this is not true for all types of debt.

You don’t have to worry about consumer debt, like most medical and credit card bills, as these fall under the category of dischargeable bills. However, certain debts, based on Congress’s decision, cannot be wiped out through declaration of bankruptcy.

There are three basic categories of debt that won’t be discharged even if you declare bankruptcy. These include:

  • Non-dischargeable debts
  • Debts that won’t be discharged unless you prove your case in court
  • Debts that will only be discharged if your creditor doesn’t object

Non-Dischargeable Debts

It is important to keep in mind that some debts that are non-dischargeable. You will have to pay them off after your Chapter 7 bankruptcy case ends, or you’ll have to pay them in full in your Chapter 13 retirement plan. Basically, there’s no escaping from these debts:

  • Alimony and child support
  • Fines and penalties you owe the state for breaking the law
  • Some tax debts
  • Debts you owe as a result of someone’s death or injury due to your intoxicated driving.

Filing for bankruptcy under Chapter 7 means that you will continue to owe condo, coop, and home association fee (HOA). You will also be liable to repay loans from your retirement plan, including additional debts not discharged under a previous bankruptcy.

Debts That Won’t Be Discharged Unless You Prove Your Case in Court

To get certain debts discharged, you will have to convince the court of your inability to pay them. You will also have to meet legal requirements without which you will be forced to pay back the debt. For example:

  • Student loans
  • Income taxes

Debts That Will Only Be Discharged if Your Creditor Doesn’t Object

There are some debts where you will be at the mercy of your creditor. If your creditor objects or convinces the court that you must pay certain debts at all costs, then you will be obligated to clear your dues. These debts include:

  • Debts that arose from fraud
  • Debts as a result of luxuries worth more than $725 that were purchased within 90 days of the bankruptcy filing
  • Debts as a result of cash advances of more than $1,000 that were withdrawn within 70 days of the bankruptcy filing
  • Debts that arose from intentional and malicious practices
  • Debts that arose as a result of embezzlement, theft, gambling, or breach of fiduciary duty
  • Debts or creditors not mentioned on your bankruptcy papers

Special Cases

The bankruptcy court holds the authority to deny the discharge of a debt, even if it was previously dischargeable. This arises when:

  • Perjury is committed
  • Failure to account for lost or missing assets
  • Destruction of records
  • Intentionally hiding property to defraud creditors
  • Filing for bankruptcy too soon within a given time frame

—-Chapter 7 Bankruptcy – 7 Essential Things to Know—-

Bankruptcy, Chapter 7, Consumer bankruptcy / By

—-Chapter 7 Bankruptcy – 7 Essential Things to Know—-

Thinking of getting a discharge by filing for a chapter 7 bankruptcy? The information here might be useful.

1. The Means Test

To qualify for filing a Chapter 7 bankruptcy case, you have to first pass the Means Test. This test takes note of your debt, income, expenses, and other factors to determine your edibility.

2. Not all your assets are at risk

Not all your assets will get sold off when you get a discharge. A lot of your personal property can be exempted. Depending on your local state laws, it can even be your car or primary residence.

3. Your location matters

Laws regarding exemption, as well as your overall eligibility for a discharge under chapter 7 bankruptcy, will vary widely by state. And, so would the attorney and filing fees.

4. Not all debts qualify for a discharge

Certain debts such as from your student loans, back taxes, alimony, and child support are not eligible for a discharge under Chapter 7 bankruptcy.

5. Chapter 7 Bankruptcy is not cheap

Depending on your state, costs (including attorney fees) of filing for a Chapter 7 bankruptcy can run anywhere between $1200 to $2500.

6. It might not make your credit worse

While it certainly goes on your credit history, it might not actually make it worse. Creditors are more willing to lend to a person free of debt than to one struggling with a mountain of it.

7. Hiring a professional attorney really helps

While you can file without an attorney, hiring one can help you more easily navigate through the process and stir the bankruptcy outcome more in your favor. You don’t just want a discharge; you want to keep your house and your car.

#chapter7 #bankrutcy #Tips #FYI

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