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Will Bankruptcy Wipe Out All of My Personal Debts?

December 15th, 2020 at 1:25 pm

debtThe United States is a notoriously consumeristic society. Having good credit is a necessity to buy a home and a reliable vehicle. Credit must be built, often through the usage of credit cards and the ability to repay the credit card debt. Sometimes, however, we accumulate debt and get in too far over our heads. Other times, a major unforeseen life event occurs—one which we are unprepared to handle financially. When this happens, filing for bankruptcy may help struggling individuals and families. When considering bankruptcy, the first question on many minds is, “Will it get rid of all of my personal debts”?

Understanding Bankruptcy

Bankruptcy is a federally approved process through which an individual or a company can reduce their debt. Those who are authorized for the process may have debts written off or repaid under a new agreement. The method used depends directly on the type of bankruptcy approved. The most typical forms of the process are Chapter 11 for businesses or Chapter 7 or Chapter 13 for private consumers, although others are available under appropriate circumstances. These chapters refer to the specific section of the United States Bankruptcy Code that will apply in a given case. Meanwhile, while the process is underway, all collection activities related to your debts—including lawsuits and foreclosure proceedings must stop.

Will All Debts Be Cleared?

If you are wondering whether bankruptcy resets your credit, enabling you to begin as though the debt never occurred, the answer is “no.” Filing for bankruptcy allows those who meet eligibility requirements to rid themselves of some but not all debt. Financial obligations that do not typically qualify to be wiped clean are child support, alimony, taxes, student loans, and secured debt. Although they may not be totally discharged, some may be eligible for a restructured payment plan. Some of the most common discharged liabilities include:

  • Unsecured debt
  • Credit card balances
  • Income tax debt
  • Medical bills

Why Might You Choose Not to File Bankruptcy?

What prevents consumers from racking up unrepayable amounts on credit cards, filing for bankruptcy, and doing it again? It is illegal for employers to discriminate against those filing for bankruptcy, and many things, such as your house, could be exempt from being seized as you progress. However, possible disadvantages do exist, which may give cause you to look for bankruptcy alternatives. These potential drawbacks include:

  • Not all debts are eligible for discharge through bankruptcy.
  • Your circumstances will determine if your home or car must be sold to pay off your debts.
  • Depending on the type of bankruptcy, it can remain on your credit reports for up to ten years, preventing you from obtaining loans and causing increased interest rates.

A Texas Bankruptcy Attorney Can Help

You may know a relative or a friend who told you that filing for bankruptcy wiped away all of their stress and was the best decision they ever made. That is excellent news. However, it is not the right solution for every case. Your financial situation is as unique as your thumbprint, and it requires the assistance of a trained professional to analyze each detail and weigh the options. If you would like help determining if bankruptcy is the best solution for you and your family, contact an experienced San Antonio bankruptcy lawyer at the Law Offices of Chance M. McGhee. Call 210-342-6400 for a free consultation.

 

Source:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics

What Are the Laws for Filing Multiple Bankruptcies?

October 17th, 2019 at 3:27 pm

TX bankrutpcy lawyer, TX chapter 7 attorney, Texas bankrutpcy lawyer, Most Americans have some sort of debt, with one of the most common forms of debt being credit card debt. Most of the time, debt is manageable if you are able to budget your money, but sometimes life happens and debt can become overwhelming. In cases such as those, bankruptcy is often your best option. Filing for bankruptcy can allow you to manage your debt in affordable payments or even discharge your debt, allowing you to wipe your slate clean.

Unfortunately, sometimes your first bankruptcy is not your last bankruptcy. If you find yourself drowning in unmanageable debt again, you may wonder if it is possible to file for bankruptcy again. Technically, the answer is yes, but there are a few stipulations you should know about.

Filing for Bankruptcy More Than Once

You can file for bankruptcy as many times as you want to file. There are no rules about how many times you can file for bankruptcy, but there are rules as to how often you can receive a discharge of your debs. The time between discharges is based on the type of bankruptcy you filed before, whether or not you received a discharge in that bankruptcy and the type of bankruptcy you are trying to file. The waiting periods between bankruptcy discharges are as follows:

  • Chapter 7 to Chapter 7: You can receive a discharge after eight years.
  • Chapter 7 to Chapter 13: You can receive a discharge after four years.
  • Chapter 13 to Chapter 13: You can receive a discharge after two years.
  • Chapter 13 to Chapter 7: You can receive a discharge after six years.

It is worth it to note that if you previously filed for a Chapter 13 bankruptcy and are currently trying to file for a Chapter 7 bankruptcy, you may be able to obtain a discharge sooner if you paid back your debtors in full or you paid at least 70 percent of your debt back and your new bankruptcy filing is in good faith.

Do You Have Questions About Bankruptcy? A San Antonio, TX Bankruptcy Attorney Can Help

Nobody files for bankruptcy with the intention of filing for bankruptcy more than once in their lifetime, but sometimes life happens and you have no other choice. If you have previously filed for bankruptcy and you think you might want to file again, you should talk with a knowledgeable New Braunfels, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we understand that sometimes the only option for debt relief is a bankruptcy, even if you have filed for bankruptcy before. Let us help you determine if filing for bankruptcy is your best option. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

https://upsolve.org/learn/how-often-can-you-file-bankruptcy/

https://www.thebalance.com/if-i-filed-bankruptcy-before-how-soon-can-i-file-again-316173

Bankruptcy Can Write Off a Student Loan, IF it Causes Undue Hardship

March 18th, 2019 at 7:00 am

Writing off student loans is not easy. You must convincingly show that paying the loan causes you undue hardship, a tough condition to prove. 

 

 

Criminal fines and restitution and child and spousal support are types of debts that bankruptcy essentially never discharges. Income taxes can be discharged but only after meeting certain conditions. We’ve covered these in our last few blog posts. Today we cover student loans.

Student loans are more like income taxes than criminal or support debts in that they CAN get discharged in bankruptcy. Like an income tax, a student loan just needs to meet certain conditions.

But unlike an income tax debt, the conditions for discharge of a student loan are much vaguer. Most of the income tax conditions are clear. These conditions require a precise understanding of the law and a thorough knowledge of the facts of your case. But if you and your bankruptcy lawyer are careful, you should know before you file your bankruptcy whether you can discharge a tax debt.

Discharging student loans, in contrast, require meeting an ambiguous condition called “undue hardship.” Its ambiguity means that it’s much harder to predict whether or not a student loan will be discharged in bankruptcy.

Furthermore, because of this vague condition it’s possible to get a partial discharge. You may continue to owe some but not all of a particular student loan debt. Or if you have multiple student loans you may discharge some but not all of them.

“Undue Hardship”

Bankruptcy law states that an educational loan or benefit overpayment is not discharged in bankruptcy unless it “would impose an undue hardship on [you or your] dependents.” Section 523(a)(8) of the U.S. Bankruptcy Code.

Can you show the bankruptcy court that paying a student loan causes you “undue hardship”? If so bankruptcy can forever discharge that debt.

A More Precise Meaning of “Undue Hardship”

How does your bankruptcy court decide whether or not a student loan causes you a hardship?  

How bad does a hardship need to be to qualify as an undue hardship?

In most parts of the country “undue hardship” requires you to establish all three of the following:

1. You currently cannot maintain even a minimal standard of living (for yourself and any dependents) if you pay the student loan.

2. This present financial situation is realistically anticipated to continue through the loan’s term of repayment.

3. You have acted responsibly in the past regarding the student loan, by making a serious effort to pay it and/or to attempt to qualify for any of the available programs to reduce or manage the loan.  

The Student Loan Survives Unless You Establish “Undue Hardship”

It can be difficult to meet all three of these. If you don’t, you continue to owe the student loan.

Furthermore, the student loan creditor does not have to take any action itself. You and your lawyer have to raise the issue yourself. It’s up to you to start the ball rolling.

Generally you do so by filing an “adversary proceeding” during your bankruptcy case. This is a legal proceeding focusing exclusively on whether you qualify for a “hardship discharge” of the student loan.

If you believe you qualify, you could file a Chapter 7 “straight bankruptcy” case. Then your lawyer would file an adversary proceeding during the 3-4 months a basic Chapter 7 case usually lasts.  The student loan creditor would most likely object. There would then be a trial with evidence on whether you meet the necessary factors to show undue hardship. There’s no jury—the bankruptcy judge decides.

You can do the same thing within a Chapter 13 “adjustment of debts.” Because this kind of bankruptcy usually lasts 3 to 5 years, it gives you more timing options. Chapter 13 would usually allow you to avoid making student loan payments at least temporarily. Then once you think you qualify for undue hardship your lawyer would file the adversary proceeding. This could be especially helpful if you have a deteriorating medical condition or an anticipated reduction in income.

Summary

Student loans are dischargeable in bankruptcy, but undue hardship is an ambiguous and often tough condition to prove. The law of undue hardship as interpreted by the courts is constantly adjusting, and can be slightly different in different bankruptcy courts. So it’s crucial to get highly competent legal advice about what’s best for you.

 

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210-342-3400

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