As I write this article I’m attending a workshop for members of the National Association of Consumer Bankruptcy Attorneys (NACBA). It’s the first time we’ve met for a long time (we’re all vaccinated against COVID and wearing masks now). But being around other consumer bankruptcy attorneys reminds me why I love helping people file bankruptcy. We’re all committed to helping clients move beyond the burdens that debt places on people. When potential clients contact me they often ask whether filingRead more
Selling Property Before Filing Bankruptcy
People thinking about filing bankruptcy are understandably concerned they may lose some of their property. They claim to have heard stories or read something on the Internet about people losing property after filing bankruptcy. In fact, people filing bankruptcy almost never lose any property because it’s exempt under state or federal law. But the concern still causes people to ask whether they should sell or transfer property before filing. In some cases they do it without first asking a bankruptcyRead more
Paying Student Loans in Chapter 13 Bankruptcy
In the past, debtors filing Chapter 13 bankruptcy were hindered by unimaginative and unwieldy federal rules and policies towards the payment of federal student loans. When a Chapter 13 was filed, the Department of Education would kick debtors out of any income driven repayment plan they’d been on prior to filing bankruptcy. Debtors would lose 3-5 years of repayment of their federal loans, delaying the possible discharge of their loans after a certain number of years, depending on the termsRead more
Private Student Loans Discharged in Bankruptcy
Recent decisions from courts around the country confirm that some private student loans can be discharged in bankruptcy. The most recent decision from the Second Circuit U.S. Court of Appeals agreed with a New York bankruptcy court’s ruling that two Sallie Mae Tuition Answer Loans could be discharged in the borrower’s bankruptcy because they exceeded the cost to attend college. The bankruptcy code prohibits three kinds of educational debt from being discharged. First, loans and benefit overpayments made or guaranteedRead more
Avoid Foreclosure Relief Scams
With pandemic-related moratoriums on home foreclosures ending soon, scam foreclosure relief companies will also start taking advantage of desperate homeowners again. Both federal and state law limit what companies can do for people struggling to pay their mortgage. “Foreclosure consultants” are regulated by state law and federal regulations apply to companies claiming to offer mortgage assistance relief services. Here are some of the rules applying to these companies: Foreclosure relief companies must provide detailed notices explaining a homeowner’s rights, includingRead more
Debt in Iowa
A new 2021 report from the Urban Institute looks at debt on a national and state level, including differences between communities of color and majority white communities. The report is based on data from the Census Bureau and a credit bureau. In all categories, people from communities of color had a higher percentage of debt in collections. The report provides a look at how Iowans compare nationally on the amount and types of debt in collection. For example, nationally, nearlyRead more
Mortgage Payment Defaults in Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often used to “cure” mortgage defaults. Debtors can spread the amount of the default over five years to get caught up on mortgage payments and avoid foreclosure. It’s a better approach than the typical loan modification offered by mortgage lenders that attach the default balance to the end of the loan. Those modifications result in interest being paid on interest and a loss of home equity. Sometimes though, and especially during the recent pandemic and economicRead more
Stimulus Payments Safe in Bankruptcy
A common concern of people already in bankruptcy and people thinking of filing bankruptcy is the status of the stimulus payments resulting from Congress’ passage of the 2020 CARES Act and the more recent American Rescue Plan Act (ARPA). People are concerned the money will be taken by the bankruptcy trustee to pay creditors. Fortunately, Congress anticipated that concern and inserted language in the laws preventing stimulus payments from being taken by a trustee. The laws specifically say stimulus paymentsRead more
Discharging Criminal Debts in Chapter 7 Bankruptcy
Many people are under the mistaken impression that debts incurred from criminal cases can not be discharged in bankruptcy. While that’s true of some criminal debts, it’s not true of several types of debt often assessed against people who have committed or are alleged to have committed a misdemeanor or felony. State and local governments use a multitude of court fees and costs to pay for services. In some jurisdictions, court debt accounts for a large percentage of theirRead more
Attorney Fees and Support Obligations
In a Chapter 13 bankruptcy, debts given “priority” status by the bankruptcy code must be paid in full during the plan (usually 3-5 years). Priority debts include “domestic support obligations,” such as delinquent child support and alimony. What qualifies as child support and alimony is usually obvious, but what about attorney fees often ordered to be paid in a divorce decree? Are attorney fees also considered domestic support obligations? A recent decision from the 8th Circuit Court of Appeals BankruptcyRead more
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