People who call me inquiring about filing bankruptcy often believe there’s some rule or generally accepted answer to the question of “Should I file bankruptcy?”. I have to tell them there’s no such rule. There’s nothing but anyone’s own personal philosophy about when it’s best to file. I share my own philosophy that life is far too short to spend more than 2-4 years outside bankruptcy trying to pay off debt. There are more important places to spend our money.Read more
Chapter 13 Bankruptcy 101
Chapter 13 bankruptcy allows individuals with regular income to develop a plan to repay all or part of their debts over a period of three to five years. Chapter 13 bankruptcy is often used when an individual is not eligible to file a Chapter 7 because their income is too high, they have nonexempt property they want to keep from liquidation or they need to cure a mortgage default. In all cases, Chapter 13 bankruptcy is likely a better optionRead more
Chapter 13 Bankruptcy Can Be The Better Choice
Many people say they would pay their debts if they could, but when given the chance to do that through a Chapter 13 bankruptcy plan they sometimes balk. But if you don’t qualify for a Chapter 7 bankruptcy you can still achieve the same discharge of debt after a payment of at least some of the debt over time. Unfortunately, those who choose to not file Chapter 13 bankruptcy sometimes turn to the debt consolidation programs seen on late-night television.Read more
Honesty in Bankruptcy Is The Best Policy
The vast majority of people who file bankruptcy are completely honest and forthright in providing accurate and complete information. Even if important information does turn out to be missing or inaccurate it’s most often a result of an honest error. But it’s still important to remember that filing for bankruptcy is a serious legal process that requires complete and thorough disclosure of all financial information. Bankruptcy laws mandate that debtors fully disclose all their assets, liabilities, income, expenses, and recentRead more
The Automatic Stay of Debt Collection in Bankruptcy
The automatic stay is a fundamental provision in U.S. bankruptcy law, designed to provide immediate relief to debtors and preserve their assets while the bankruptcy case is processed. The automatic stay is an injunction that automatically halts actions by creditors to collect debts from a debtor who has declared bankruptcy. This stay comes into effect the moment a bankruptcy petition is filed with the bankruptcy court. Immediate Effect: As soon as the bankruptcy petition is filed, the automatic stay takesRead more
Federal Lawsuit Alleges Student Loan Servicer Illegally Collects Loans Discharged in Bankruptcy
The Consumer Financial Protection Bureau (CFPB) has sued the student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA), which does business as American Education Services (AES), for illegally collecting on student loans that have been discharged in bankruptcy and sending false information about consumers to credit reporting companies. The CFPB’s lawsuit asks the court to order PHEAA to stop its illegal conduct, provide redress to borrowers, and pay a civil penalty.As of December 2023, PHEAA serviced a portfolio of studentRead more
Young Adults Struggle with Credit Card Debt
New research from the Federal Reserve Bank of New York finds that young adults born between 1995 and 2011 are especially struggling with credit card debt. The report shows that more than 15% of young credit card borrowers have maxed out their credit cards. This compares with only 5% of baby boomers and only 10% of Gen X and Millennial borrowers who have reached their credit card limits. The Reserve Bank also said that severe credit card delinquency (delinquency inRead more
Bankruptcy and Medical Debt
Some research has shown that medical debt is the primary reason people need to file bankruptcy. A widely cited study published in the American Journal of Public Health in 2019 estimated that about 66.5% of bankruptcies were tied to medical issues, including both medical bills and the loss of income due to illness. Other studies have reported lower percentages, but medical debt consistently ranks among the leading causes of bankruptcy filings in the U.S. The lack of universal health insuranceRead more
Technology Helps Bankruptcy Practice
Technology, including video conferencing, artificial intelligence and document retention tools, has become vitally important to the Nancy L. Thompson Law Office bankruptcy practice. When the covid pandemic started in 2020 we had to find ways to continue serving clients and filing bankruptcy cases. Court and trustee hearings stopped being held in person and in-person client meetings were problematic because of health risks to staff and clients. Remote work with technology tools became the norm rather than the exception. Now, fourRead more
Useless But Mandatory Counseling in Bankruptcy
People needing to file bankruptcy are required to complete two credit counseling courses as part of the process. This counseling is supposed to provide debtors with information and resources to help them make informed decisions about their financial situation. While there may have been some good intentions for Congress imposing this requirement on debtors in 2005, it was most likely intended by many members of Congress as a way to make the bankruptcy process harder. It has resulted in slightlyRead more
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