Jan 22, · But when it comes to trying to get their student debt forgiven, "more than 99% of the student loan debtors in bankruptcy just give up without even trying," Iuliano says. Each chapter of the bankruptcy code has its own rules for gaining a discharge. For instance, in Chapter 7, the debtor has to file complete and accurate schedules, attend a Section meeting of creditors, attend a financial management course, turnover nonexempt property, and a litany of other karacto.xyz a Chapter 13 repayment plan case, debtors have even more obligations. Bankruptcy alternatives. To decide, you need to know what the alternatives are. Can you avoid bankruptcy on your own: To explore non bankruptcy alternatives, create a budget for your realistic, monthly expenditures for current living. Include mortgage and car payments, but exclude all other existing debt .
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If the debtor cannot attend for some reason, the session can sometimes be moved to another date. Should the debtor have a challenge attending the meeting due to issues such as illness, traveling out of the country, or incarceration and cannot attend in person. Courts have adapted to those issues by using the telephone or video conferencing when it is not practical for the meeting to be continued until the debtor is available.
After the case is filed, each debtor has to complete a financial management course before the case can be discharged. This course is available in person, by phone, or online, and is offered by several providers.
If the debtor fails to take the financial management course or fails to file a certificate of completion after they complete the course, the case will be dismissed. Hence, it will be necessary for the debtor to file a motion with the court requesting that the case be reopened to file the certificate and the discharge order. In most cases, the court and the debtor's attorney will charge a new filing fee. A Chapter 7 case consists of two distinct tracks.
The first one concerns whether the debtor will get a discharge of debt. On the other track, the trustee administers property that can be sold to satisfy creditors.
Whether there is property that can be sold depends on if the debtor has any nonexempt property. The debtor is allowed to keep a certain amount of property that the trustee and the creditors cannot touch. This is the definition of exempt property.
In contrast, any other property that does not qualify for the exempt status is considered nonexempt property. The trustee can take the nonexempt property, liquidate sell it, and distribute the proceeds to creditors who have valid claims. The debtor would lose the property and still not get the benefits of discharged bankruptcy.
Chapter 13 cases are more complicated than Chapter 7 cases. They require that a payment plan be filed and approved by the court. Often the debtor will file a plan with estimates for the claims of creditors, and the plan will have to be adjusted after the creditors file their claims.
It is only after the claims are filed that the debtor will know how much she will be required to pay back with her plan payments. If the plan is not feasible, approval will be denied. Without a viable plan, the case will be dismissed. In a Chapter 13 case, the debtor is required to make payments under the payment plan to a trustee, who will then distribute those payments to creditors holding proper claims.
But, the debtor is also expected to keep current on her house payments, property taxes, income taxes, and domestic support obligations like alimony and child support. If the debtor fails to keep any of those payments current, the court will dismiss the case. When a Chapter 13 case is dismissed, it is not unusual for the debtor to start the process again by filing a new Chapter 13 case. This often happens when the debtor has an interruption in income and cannot get caught up on the required payments.
When the debtor files a second case within a year of the dismissal of the first case, the automatic stay is only valid for the first 30 days. If the debtor wants an automatic stay to continue, she must file a motion to extend the stay with the court.
This usually requires that the debtor gives a testimony at a hearing to explain why the first case was dismissed, and why the second case will succeed. If the debtor has had two cases pending during the prior year, the automatic stay never goes into effect. With the money you have available each month after paying your current living expenses, can you pay off your debts other than car and house at the current interest rates in 3 years? These assets are generally protected by law from collection actions by creditors.
Your good intentions to repay creditors may just end up substituting Uncle Sam as a tax creditor in place of your existing creditors. Creditors generally cease collection actions against those participating in CCC plans. Sounds great. Plays into the universal desire to pay off your debts consistent with your resources. The only problem is that it seldom works. There is no magic formula that tells you whether bankruptcy is the best choice for you.
An experienced bankruptcy lawyer is a great resource. How to pick a bankruptcy lawyer. Chapter 7 explained. What does it take to file bankruptcy. Bankruptcy myths. Image courtesy of Mrs. Bankruptcy Basics. Should You File For Bankruptcy?