Bankruptcy Blog - Debts

Even though most student loans cannot be discharged (written-off) in bankruptcy, there are often sensible ways to deal with student loans while filing a bankruptcy for the rest of your debts.  There are many possible options, including “deferments” and “forbearances,” “consolidations,” “statutory discharges” and “cancellations,” “reasonable and affordable payment plans,” and “income-contingent” and “income-sensitive repayment plans.” What are all these and how can they improve my life after bankruptcy?

If you owe more business debt than consumer debt, then you could avoid having to qualify under the “means test” to be able to file a Chapter 7 bankruptcy case. This can make a huge difference. Because if you have too much income and do not qualify under the “means test,” that usually means not being allowed to file a Chapter 7 case. So instead of writing off your debts in a matter of about three months, you could be required to pay as much as you could on those debts for up to five years in a Chapter 13 case. If you have lots of business debt, you may be able to file a Chapter 7 when your income would otherwise not allow you to do so.

The protection you get from most creditors through the homestead exemption does not apply to some categories of creditors. We listed the most important of these categories in recent blog called The Homestead Exemption in Action. We said there that even though these special creditors can defeat the homestead exemption, they can still often be handled in a favorable way through certain bankruptcy procedures. That’s what we talk about here. Plus how sometimes owing money to these special creditors can even be turned to your advantage.

Last month we wrote a blog called "I Need a Divorce and a Bankruptcy: Which Comes First?" In it we addressed that question by looking at some scenarios that our clients have faced. Now in this blog we assume that you are definitely getting a divorce but your spouse has threatened to get out of the divorce obligations to you by filing a bankruptcy right afterwards. Can you protect the rights in your divorce degree and prevent them from being hurt by bankruptcy?

If you cannot pay your bills, dealing with your creditors can be overwhelming. As much as you want to pay them, the collection agents don't seem to care, and debts quickly turn into garnishments of your wages and bank accounts. Bankruptcy gives you immediate relief from all this through a federal court order called the "automatic stay."

Even if you have filed for bankruptcy, unscrupulous collection agencies may still illegally attempt to collect on your discharged debts.