Student Loan

Colorado Couple Sees $200,000 in Student Loans Forgiven

Colorado Couple Sees $200,000 in Student Loans Forgiven

It is not often that you see student loans being discharged when a person files for bankruptcy. In fact, it so rarely happens that a lot of people have come to mistakenly believe that it is an unforgivable debt. This, of course, makes the new ruling by the U.S. Court of Appeals for the Tenth Circuit in favor of a Colorado couple all the more newsworthy. Rejecting the claims made by the student loan giant, Navient, that the couple’s debt was non-dischargeable under bankruptcy law, the court wrote an amount of $200,000 off of their student loans.

“This has been a huge part of my life for so many years now … It affects your whole life. It affects your relationship with your kids, your marriage — everything”, Paige McDaniel (wife) told the news. In another interview, she also told that the loan company had threatened to garnish her wages to recoup the debt before the couple filed for bankruptcy.

The ruling sets a precedent, a loosening of the student loan discharge law that erstwhile have been very rigid its interpretation. It also months after a separate ruling was made in favor of another student loan borrower, Kevin Rosenberg, who saw more than $200,000 of student loan debt discharged under Chapter 7 bankruptcy.

As of current, there are some 45 million Americans saddled with student loan debts, representing a combined amount of more than $1.6 trillion.

#Chapter7 #bankrutpcyNews #StudentLoans #USNews #USlaws #BankruptcyLaws #LegalNews #Newsoftheday

How to Manage Your Student Loan Debts Using Chapter 13 Bankruptcy

Across the United States, an increasing amount of young people are graduating from universities heavily indebted with student loans. The total student debt in the country right now stands at an astonishing $1.5 trillion and the figure continues to rise rapidly. The current bankruptcy laws make it extremely difficult, if not impossible, to discharge your student loan debt.

However, that doesn’t mean filing for bankruptcy still won’t be worthwhile if you are struggling with repayments. Here is how to manage your student loan debts using Chapter 13 bankruptcy.

Benefit of Chapter 13

When you filed for bankruptcy, the court will immediately grant an automatic stay period that extends until the completion of the bankruptcy process. During the automatic stay period, all debt collection activity, including that of your student loan debt is prohibited, meaning you will not be harassed by your lenders to make regular repayments on your outstanding debt.

Instead, the court will create a new repayment plan for the duration of the bankruptcy (usually 3 to 5 years) based on your ability to afford. Since student loans are considered non-priority unsecured debts, you will not be required to repay the debt in full by the end of the duration.

Depending on your circumstances, the actual amount you would need to pay monthly could be significantly lesser. If the court determines that you have little or no disposable income than you probably won’t be required to pay any amount towards your student loan debts throughout the stay period.

A Word of Caution

Keep in mind that interest will still continue to accumulate on your student loans during the duration of the bankruptcy. In some cases, this could translate to a considerable amount you’ll have to pay back once the automatic stay period expires.

Another thing to be aware of is that the court’s meaning of “what you can afford” may differ from your own. It is not unheard of for filers to be given a plan which may heavily compromise their lifestyle. The aid of a seasoned attorney is vital to make sure the outcome is more in your favor.

Concluding Note

If you fail to repay your creditors on your student loan debts, the consequences could be terrible. It could severely hurt your credit score, you could be subject to a lawsuit, or have your wage garnished. Filing for Chapter 13 Bankruptcy can make repayments on your student loan debts much more manageable and help you avoid such predicaments.

More information on how the Federal Reserve’s recently lowered rates impact preexisting debt and refinancing options.

5 Things You Should Know Before Declaring Bankruptcy on Student Loans

Declaring Bankruptcy on Student Loans

Student loan debt is on the rise across the country as students take in more and more loans to finance their rising tuition fees. In fact, Americans collectively own more than $1.5 trillion in student debt, and the figure is still rising. If you are struggling with managing your student debt, you may wish to file for bankruptcy. However, there are some things you should know before declaring bankruptcy on student loans.

1. Qualifying for Chapter 7 Is Difficult

To file for chapter 7 bankruptcy, you must first make sure you are eligible for it by passing the means test. The income requirements often disqualify many bankruptcy filers from filing under this Chapter.

2. Filing for Bankruptcy Won’t Guarantee a Debt Discharge

Even if you qualify for Chapter 7, you would still have to prove to the court that you are not in the position to pay your student loan debt. You will have to convince the judge that the debt is inflicting extreme hardship on your well-being and that your financial situation is unlikely to change in the near future. As one would expect, cases that win out are quite rare. Filing under Chapter 13 is easier, but it would only reorganize your repayment plans based on your judged ability to pay back the loan.

3. Filing Bankruptcy Is a Stressful Process

It should be stressed that filing for bankruptcy is a lengthy process. Debt discharge can take up to 4 to 6 months under Chapter 7 – that is if you win at court. During the process, you will have to manage finances for the legal fees involved, as well as go through a lengthy list of paperwork. Therefore, seeking the advice of an experienced attorney can help ensure your case is successful. Don’t be discouraged though. While your student loans may not be discharged and the process may be stressful – you may still be able to get some relief. Bankruptcy can eliminate your other debts freeing you up to tackle your student loans or allow you to put them in a reorganization plan.  For some loans, there may even be an income-driven repayment program you can avail yourself of in conjunction with your bankruptcy case.


4. You Can’t Hack Your Way out with a Credit Card

Some clever-mind students may think that they can cheat the system by putting all their student debt on their credit card and then file for its bankruptcy. However, such an attempt would be categorized as fraud. If the court thinks that the attempt was deliberate, expect some negative consequences.

5. It Will Impact Your Financial Health

A completed bankruptcy can linger on your credit report for up to 10 years, impacting your financial health. This may sound discouraging, but not filing for bankruptcy and allowing your debt issue to worsen would also negatively impact your credit score. Discharging your debt allows you to start anew with a clean slate, and many are able to rebuild their financial well-being even before the bankruptcy gets dropped off their report.


Get Legal Help

If you fail to plan, you plan to fail. As mentioned before, filing for bankruptcy is a tiresome process and the court case will not always result in your favor. Therefore, a qualified legal attorney is essential for helping you navigate successfully through the figurative legal labyrinth.

At the Law Offices of Sean T. Flynn, PLLC in Austin, TX, I offer personalized legal assistance for filing under Chapter 7 and Chapter 13 the bankruptcy code. With over 8 years of experience in the profession, you can be sure to obtain a satisfactory resolution in a bankruptcy case. Call + 512-640-3340 or contact me online to schedule an appointment.

Get A Fresh Start

Schedule a time to speak with an expereinced Bankruptcy Attorney today!