Few issues cause more conflict in bankruptcy then a previous divorce with conflict between the spouses. Contentious divorces cause contentious bankruptcies. Some issues are clear. For example, alimony and child support can’t be discharged in any kind of bankruptcy. A property settlement obligation can’t be discharged in any kind of bankruptcy EXCEPT Chapter 13. But what about debts resulting from divorce that aren’t clearly identified as either alimony, child support or a property settlement? For instance, an award of attorneyRead more
Why Are You Waiting to File Bankruptcy?
Making the decision to file bankruptcy is not easy. I understand that as well as anyone. People are worried about what others will think. They’re worried about their future access to credit. They’re worried about whether they will lose any property. But the consequences of delaying the decision to file bankruptcy is so severe that debtors should ask themselves “What am I waiting for?” More and more, people are waiting until judgments have already been issued for delinquent debt orRead more
Post-Bankruptcy Requirements
Although most attention is paid to what someone filing bankruptcy needs to do before filing, there are some things debtors must do after a bankruptcy is filed. Documents have to be produced, counseling has to be taken and a required “meeting of creditors” occurs about one month after filing. After a bankruptcy is filed, debtors (through their attorney) must provide the trustee administering their case certain documents. These include the most recent tax returns, statements showing the balances in anyRead more
When Filing Bankruptcy is the Right Choice
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
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
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
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
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
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
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