Your Bankruptcy Questions

In most cases, student loans cannot be forgiven by a bankruptcy. Almost all student loans are federal debts. The only way to have a federal student loan forgiven is if you are permanently disabled. Otherwise, the loan must be repaid.

In almost all cases, you have to fill out the FAFSA or Free Application for Federal Student Aid. A federal student loan cannot be included in a chapter 7 or a chapter 13 bankruptcy. If you are making payments toward your federal student loans and you are filing chapter 13 bankruptcy, the amount that you are repaying is taken into consideration in figuring your payment that you will make to the trustee.

If you are permanently disabled and getting Social Security Disability, you can ask the lender for the paperwork to complete to have your student loans forgiven. This means, because you are disabled, you do not have to repay your loans. The paperwork must be completed and approved by the lender.

It is often the case that your student loans can be placed in deferment so that you do not have to make your payments while you are having financial difficulty. You can also request forbearance due to financial hardship. Ask your lender which you may qualify for. If you are eligible for a forbearance or deferment, the lender can send you the paperwork to sign.

Your bankruptcy attorney should be informed that you have student loans, despite not being able to include them in the bankruptcy. They are a part of your financial situation and your attorney may need to report them during the bankruptcy process. The court does look at your entire financial scenario when they are approving your case.

If you are filing for a chapter 13 bankruptcy, you will be repaying part of your debt to the trustee of the court. The amount that you pay monthly is determined by your income, your secured debts and your financial obligations. If you have a delinquent student loan, you will need to work out payment arrangements with the lender before your bankruptcy is filed so that you can report the payments to your attorney. Otherwise, you may end up paying a higher amount than if it were calculated at the time that your trustee payment is determined.

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Whether or not you will lose your home in a bankruptcy depends on the type of bankruptcy you file. In most cases, you will choose whether or not you wish to keep your home. If your home is about to be foreclosed, a bankruptcy can stop the foreclosure and you will not lose your home. You must, however, file chapter 13 in order to keep your home.

You can file an emergency chapter 13 case on the night before your home is set to be sold in foreclosure and you will not lose your home. You will be able to complete the chapter 13 case and you will be allowed to work out an arrangement with your mortgage company. The filing of a chapter 13 case stops a foreclosure on a home.

Once the case is filed with the court, you will have to work out an arrangement with your mortgage company. Your bankruptcy attorney will handle this for you. The amount that is delinquent on your home will be put in your bankruptcy and that portion of the payment will be paid by the bankruptcy trustee.

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Everyone who files bankruptcy must go to court. It is mandatory that each person filing bankruptcy appear before the Judge on their court date. It is mainly a formality but there are times when your case could be dismissed if everything is not in order. Your bankruptcy attorney will appear in court with you.

If you are filing Chapter 7, you will have a meeting of creditors in which any of your creditors may appear in court. If you fail to appear in court, your case will be dismissed. If everything is order and all of the required paperwork has been submitted to the court prior to your court date, you will likely be in court only one time. Your case will be conditionally approved and you will later receive a discharge of debts by the court.

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If you owe personal taxes, you need to report all years owed to your bankruptcy attorney at the time you file your case. You may be able to include part of the tax debt in your bankruptcy. This is determined by the type of bankruptcy that you qualify for, the amount of taxes owed and other factors. It is important to bring any documentation pertaining to tax debts with you to your attorney at the time that you file your case.

In a chapter 13 bankruptcy, the taxes will be calculated in the trustee payment. You will pay on your bankruptcy for the time specified by the court. This is normally five years. At the end of the bankruptcy, you will no longer owe on the debt. Therefore, if you have taxes owed for several years and you file bankruptcy, you will no longer owe the taxes once your case is discharged.

In some cases, you may be able to have your tax debt reduced. You would need to talk with a tax consultant in order to do this. Check first with your bankruptcy attorney to find out what you will need to do. Your attorney may tell you who to contact at the local tax office.

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Attorney Robert Semrad offers some great tips for you if you are contemplating filing bankruptcy or just letting your over due bills go into collections.

What’s better? Going into collections or filing for bankruptcy?
Neither option is great for your credit. Depending on the type of debt and how much, going into collections would stay on your credit report for years. Filing for bankruptcy stays on your credit report for 10 years.

Don’t buy into the free services that provide credit scores. These services are not free; they are intended as a paid service for credit monitoring. They claim to give you a free credit score, but only by signing up for their service.

There is really only a need to check your credit report for any inaccuracies that would need to be addressed. Once a year our government provides a free credit report from the 3 different agencies.

Our society has an over obsession with credit scores. There is nothing that can be accomplished or solved by checking your credit score every single week. In fact, there is no need to really check your score more than once a year unless you are making a major purchase like a house or car.

You can read more at: Robert Semrad on the WGN-TV Midday News – WGN

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Tracy Read of the News-Herald in northern Ohio writes a great article showing that bankruptcy hits everyone including well meaning and hard working Americans in the middle class.

Melissa Ritts had a $60,000-a-year job as a computer programmer, a credit score in the mid-700s, a savings account and money set aside for her retirement.

But in 2002, the Euclid resident, now 36, lost her job during the MCI WorldCom scandal while living in Colorado Springs, Colo.

Shortly after that, her future husband, a mortgage broker, lost his job.

Out of work for a year, Ritts’ severance package ran out and she began using credit cards to pay for groceries, gas and rental space.

“My house was on the verge of foreclosure and I had gone through all of my savings to include my retirement money,” she says. “I couldn’t find another job in computer programming, so I got my insurance licenses and ended up paying for office space and not making any money.

You can read the entire article here: The face of bankruptcy – The News-Herald News

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There is no question that filing for bankruptcy does not make a positive impact on your credit record. More over this negative image on the credit report lasts for 10 years. This surely is a long time for anyone who wants to change things in life. The facts are that bankruptcy can make it more difficult for anyone to obtain credit to buy a home, automobile or any other type of financing. But this does not mean it is impossible to get credit, just a little bit difficult. Moreover, your interest rates may be a lot higher than someone who have never filed chapter 13. All consumers should understand that banks and creditors do understand that this is a new phase in your life and are willing to help you out. Credit is available but the sums may be small and the interests may be higher. The onus is onto the consumer to prove that he/she will make the payments on time and hopefully this will remedy the negative image on credit ratings.

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Many people agonize about bankruptcies. For most people a bankruptcy is the fear of unknown and filled with myths of gigantic proportions. Sure, bankruptcy filing is not a pleasant experience but consumers should look at it as a chance to redeem life. Being depressed, anxious and sad are natural experiences when filing for a bankruptcy. For most people, this event means failure in life, or that their dreams have crashed and that the future is a dark tunnel with no end in sight.

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Popularity: 7%