Alabama Consumer Law BlogA Chapter 7 Bankruptcy is where we pull all of our debts together to be erased.
This is also known as a straight bankruptcy.
Articles Posted in Bankruptcy
Definition: Chapter 13 Bankruptcy
Today we’re continuing our series on legal terms, and we’re going to talk about bankruptcy.
A Chapter 13 bankruptcy is where we pull all of our debts together, and we pay them off over a 3 or 5 year period.
Definition: Bankruptcy
What is the definition of bankruptcy?
Bankruptcy is a term that is thrown around when we’re dealing with debt.
2015-08-21 Q&A Consumer Protection Webinar With John Watts
Welcome to our Q&A on consumer protection issues. The entire video is above, and the transcript is below.
I hope you enjoy!
5 Options When Sued By A Debt Collector: File Bankruptcy Option
To review, your five options when sued include the option of bankruptcy to wipe the debt out.
You can:
Important Bankruptcy Decision Allowing Discharge of Student Loan
Adam Minsky, student loan attorney in Boston, has an important post about a recent 7th Circuit Court of Appeals decision that allows the discharge of a federal student loan.
Adam writes:
A new decision issued by the 7th Circuit Court of Appeals could potentially change this. In Krieger v. Educational Credit Management Corporation, the court upheld a bankruptcy judge’s decision to allow a borrower to discharge $25,000 of federal student loans in bankruptcy. The court concluded that the borrower, a 53 year-old paralegal, had made reasonable good-faith attempts to repay the loan. The court also noted that she was destitute, lived in a rural area and had difficulty finding suitable employment, was a caregiver for her elderly mother, and lacked the resources to look for suitable work elsewhere (no internet, unreliable transportation). The court concluded that the bankruptcy judge had discretion to determine whether the borrower met the “undue hardship” standard, and that this standard should not serve as a blanket prohibition on discharging student loans in bankruptcy.
Two New Articles on Bankruptcy: Student Loans and Not Being Able to File Bankruptcy Anymore?
On Alabama Consumer, our main consumer website, we have two new articles that you might enjoy reading.
First, “Does chapter 7 bankruptcy make my student loans go away?” This article discusses a common misunderstanding that simply filing a chapter 7 bankruptcy, and getting a discharge order, somehow discharges our student loans (federal or private). There is more to it than this — it is possible to discharge student loans but it is difficult.
Second, we often see collectors telling Alabama consumers “You can’t file bankruptcy anymore!” This is untrue. When collectors decide to cross the line into becoming abusive collectors, then the solution is normally to sue them under the Fair Debt Collection Practices Act (FDCPA).
Student Loans — Example of Abusive Collection Related to Bankruptcy Discharge
Student loan collection agencies must follow the law — especially the Fair Debt Collection Practices Act (FDCPA) — when dealing with student loan borrowers. We have repeatedly sued student loan debt collectors who lie to borrowers.
Often the lie relates to garnishing wages when the collection agency has not obtained the right to garnish wages.
Check out this link to find out about an interesting lie by a collection agency that told a borrower it could not file for bankruptcy and receive a discharge. It IS possible to receive a discharge, although it is difficult.
Good Advice: Don’t File Chapter 13 If You Need A Chapter 7 Bankruptcy
Jonathan Ginsberg is a friend of mine who is a bankruptcy lawyer in Atlanta, Georgia, and he wrote a very interesting blog post on how some consumers are steered into a chapter 13 bankruptcy instead of a chapter 7.
Definitely read the whole post here entitled “If you need to file chapter 7, don’t file 13.”
The point of this article is to make sure you go into the right chapter of bankruptcy and Jonathan also discusses the challenge to bankruptcy lawyers whose clients need a chapter 7 (straight bankruptcy) but can only afford a chapter 13 (debtor’s court) to stop, for example, a wage garnishment.
Myths About Bankruptcy, Foreclosure and Loan Modifications
Douglas Jacobs has an interesting article about seven myths that he sees as a California bankruptcy attorney. Specifically myths about modifications — bankruptcies — and foreclosures.
I agree, from an Alabama perspective on foreclosures, that doing a modification will not stop a foreclosure unless the mortgage company tells you. But then they often lie and we end up suing them after the foreclosure.
And modifications are not something that you are entitled to — more common to be denied than accepted.