One of the most important powers a Chapter 7 bankruptcy trustee has is the ability to set aside or void certain transfers of property or payments of money. The trustee uses this power to recover money that can be distributed to all the debtor’s unsecured creditors. The two general situations where a trustee can set aside a transfer or payment are where the debtor sells or gives away property for less than its fair market value or where the debtorRead more
Credit Counseling in Bankruptcy
One of the requirements for filing Chapter 7 and Chapter 13 bankruptcy is the need to take a credit counseling course before and after filing. The credit counseling requirement was added in 2005 and is a silly and generally useless expenditure of time, but it’s not something to be feared. It can be done on a computer or over the phone and usually takes no more than 2-3 hours of time total for both courses. The cost for both coursesRead more
What Are Bankruptcy Trustees?
After someone files bankruptcy, their first (and probably last) event will be a meeting with the bankruptcy trustee assigned to their case. In Iowa these trustees are attorneys appointed to oversee and administer the case for the benefit of creditors. The trustee’s role differs somewhat depending on whether it’s a Chapter 7 or a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy the trustee reviews all the court documents (called “schedules”) filed by debtors, along with tax returns and bankRead more
“Meeting of Creditors” in Bankruptcy
After a Chapter 7 or Chapter 13 bankruptcy case is filed, the first event that takes place is something called a “First Meeting of Creditors.” It’s also usually the last event that takes place in the bankruptcy. The meeting is sometimes called the “341 hearing” because it’s required by Section 341 of the Bankruptcy Code. The meeting name is misleading because no creditors usually attend. It’s just a meeting where the Chapter 7 or Chapter 13 bankruptcy trustee asks debtorsRead more
Debt Collection Complaints in Iowa
Using data from the Federal Trade Commission (FTC), the National Consumer Law Center (NCLC) has compiled an analysis of the complaints made by Iowans about debt collection agencies. According to the data, 813 Iowans filed complaints with the FTC in 2017. Most of the complaints claimed that the debt collection agencies called repeatedly or called after getting a notice from the debtor to stop calling. Other complaints were that the debt collectors made false representations about the debt, threatened toRead more
Collection of Medical Debt
One of the best places to get good information about debt collection and other consumer issues is the website of the National Consumer Law Center. Found at https://www.nclc.org, the website contains links to a variety of articles about financial and legal problems faced by consumers. NCLC recently published an article on how consumers should deal with medical debt. Some of the highlights of the advice offered by NCLC include: Medical debt should usually be the lowest priority in repaying. UnlikeRead more
A History of Discharging Student Loans in Bankruptcy
With $1.5 billion in student loan debt, many observers believe the economy would get a boost if at least some of that debt could be discharged in bankruptcy, like almost all other consumer debt. The excuses used for treating federal and private student loans differently in bankruptcy start to crumble when you look at how other debt is treated, even loans owed to other government agencies. A borrower can easily discharge in bankruptcy an unsecured loan to the Small BusinessRead more
Bankruptcy’s Impact on Credit Scores
One of the questions I get most often is how filing bankruptcy will impact someone’s credit score. I generally think making decisions based on how your credit score will be affected is a bad idea. But I understand concerns about the issue. Two studies from the Federal Reserve Bank of New York tries to shed some light on the question. A 2015 study found that while people who file bankruptcy generally start with lower credit scores than people who don’t,Read more
Is It Possible To Discharge Private Student Loans in Bankruptcy?
Did you know that in 2005 Congress added a new subsection to the Bankruptcy Code? It expanded the nondischargeability of student loans to include “any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.” What does this new subsection mean? This expanded the nondischargeability of student loans to private student loans. However, by limiting the exclusion to “qualified education loans,”Read more
Discharging Federal Student Loans Outside Bankruptcy
Federal student loan borrowers may have their loans discharged outside of bankruptcy under several different programs: Total and Permanent Disability Borrowers who can show a TPD may have their loans discharged. Regulations allow a borrower to request a discharge of loans with a doctor’s certification that they are unable to earn an income due to disability. Borrowers can also use a Social Security Disability award letter in lieu of the doctor’s certification. Veterans who the VA deem to be unemployableRead more
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