Two ways a Chapter 13 ends: dismissal or discharge
There are two main ways that a Chapter 13 bankruptcy ends:
As the first part of this order implies, this is normal (or automatic) document that’s filed in Alabama bankruptcy court. It basically tells all of your creditors to freeze.
My name is John Watts, and I’m an Alabama consumer protection attorney. Even though we don’t really do bankruptcy, it’s a topic that we are asked about fairly often.
A Chapter 7 Bankruptcy is where we pull all of our debts together to be erased.
This is also known as a straight 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.
What is the definition of bankruptcy?
Bankruptcy is a term that is thrown around when we’re dealing with debt.
Welcome to our Q&A on consumer protection issues. The entire video is above, and the transcript is below.
I hope you enjoy!
To review, your five options when sued include the option of bankruptcy to wipe the debt out.
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.
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.
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).