Articles Posted in Bankruptcy

The first question that I want to answer is that filing for bankruptcy will not stop you from being able to get federal student loans in the future. If somehow(although unlikely) your federal student loans got discharged in a previous bankruptcy then you might have to reaffirm those loans in order to get new loans. What is more important is how you have handled credit after your bankruptcy. As long as your student loans that you currently have(if any) are not in default, then getting federal loans should not be an issue at all. Private loans are different. Its hard to say how easy it will be to get private loans after a bankruptcy because there are many different types of bankruptcy which makes it a complex issue. If you have filed bankruptcy and need private loans for school you might need to find a cosigner. If you filed a chapter 13 and fulfilled your payment plan even if not 100% then you will most likely be a better candidate and qualify for private student loans. A chapter 7 where you liquidated and didn’t pay any unsecured creditors will obviously make it harder to get a private student loan without a cosigner.

Transferring non-exempt property to exempt property is one way to protect value in your estate prior to filing for bankruptcy. There are rules in regarding whether you did so with the intent to hinder, delay or commit fraud on creditors, but these can be overcome. There must be some evidence in the facts or circumstances which are extrinsic to the mere facts of conversion of non-exempt assets into exempt and which are indicative of such fraudulent purpose. It is permissible under the threat of being sued to convert non-exempt assets into exempt assets. Typically this involves paying your mortgage down, but it can also be selling a cheap car and buying a car closer to the exemption value in order to protect cash in the bank. Things you want to stay away from are taking large sums of cash and putting them into IRA accounts on the eve of bankruptcy if you don’t have a history of putting too much money on a regular basis into that protected account. If you put money into another IRA on the eve of bankruptcy the court will most likely find you did so with the intent to hinder, delay or defraud. Things like Section 529 accounts unfortunately are considered to be part of bankruptcy estates even though they are for the benefit of your children.

Medical Debt can be disguised as credit card debt so its hard to get a true hold on whether clients are facing insurmountable credit card debt or medical debt when they file for bankruptcy.
Even in my personal situation I can vogue for this fact. I have three children and my wife lost her job at the end of 2007. We elected not to take COBRA coverage because it was too expensive. Two months later before she was employed again, she got pregnant and we therefore become non-insurable until after we had the baby. This put us in debt close to 20,000 dollars. I put a good portion of this on credit cards as it was easier to negotiate a reduced payment to the hospital if they were paid before check out. If we were put in the position of having to file bankruptcy, the schedules would show that we have credit card debt when in actuality its medical debt.
Fortunately both are unsecured so it wouldn’t be as bad as taking out a second mortgage on the house(who can do that anymore anyways), but nonetheless tracing what is medical debt and what is credit card debt can become hard when credit cards can mask what payments were made on.

Don’t let a false negative stigma of bankruptcy keep you from reaching financial stability and a fresh start.

I believe that the negative stigma of bankruptcy is starting to change.

Maybe it’s the 1.4 million people that have found relief in 2009 through filing bankruptcy.

Consumers these days cannot help but be tempted by companies that are constantly advertising that they can save you 50% on the dollar for the debts that you have.

Debt settlement companies have multiplied like ants over the past few years and although some can get good results for their clients, many are just offering false promises. Some things that they might not tell you or you’ll find in the small print.

Your credit card balances won’t necessarily settle at 50% of what you owe currently. You will continue to get finance charges, late payments, potentially over the credit limit charges etc while you are falling behind on your monthly bills and waiting for a settlement. These charges can add up quickly.

Debt Settlement vs. Bankruptcy

There are a lot of factors to consider when trying to determine whether settling your debts would be more advantageous than filing bankruptcy.

As a Bankruptcy Attorney my first inclination is to say that bankruptcy is usually the better route although it does depend. There are quite a few clients that I have helped and have been successful in negotiating principal on their outstanding debts. The things that I look for in a potential debt settlement client is the ability to pay the debt at a somewhat expedited pace. This is why most people who are broke are not great candidates for debt settlement. If you had trouble meeting your minimum payments, unless you are seeing a fast recovery bankruptcy is probably a better solution. I have seen great success in candidates who have a family member, friend, business colleague etc who will loan them money within 180 days of being behind on there debts.

DEBTS ARISING OUT OF DRUNK DRIVING CASES ARE NOT DISCHARGEABLE UNDER THE BANKRUPTCY CODE

If you have been sued for operating a motor vehicle while under the influence of drugs or alcohol, or another substance as a result of injuring another person, then your debts for this obligation will survive the bankruptcy and not be discharged. Section 523(a)9 of the bankruptcy code excepts from discharge debts from personal injury cases where the debtor was under the influence.
Any kind of willful or malicous conduct by the debtor to another person will not be discharged. Another one that comes up criminal restitution fines, child support orders. These are debts that you will live with after your bankruptcy is discharged, so if these are your reasons for filing, I would advise against it.

1.4 Million People have found their fresh start in 2009 by filing for Bankruptcy. Would you like to experience this peace of mind?

It’s true. Over the last year 1.4 million Americans have sought shelter in the bankruptcy code to renew their fresh start and experience life free from debt collectors, overdue bills, revolving balance transfers, and the stress that comes from living in this cycle of debt.

They’ve made the right decisions for themselves and their families. If you are already behind on bills and have dings against your credit, your credit score has been affected negatively and you are unlikely to get new loans and lines of credit in this economy. You are not alone. More than 10% of credit card holders are far behind on their monthly bills.