Page Law Firm

Free consultation for consumer bankruptcy clients

Call Us214-618-2101

Proudly serving Frisco, Texas and surrounding areas
Facebook Twitter LinkedIn

Discharging Student Debt Through Bankruptcy Is Difficult, But Not ImpossibleThere is a common misconception that filing for bankruptcy will not allow you to discharge your student loan debts. Discharge is not impossible, but it is very difficult. You must file a separate action, called an adversary proceeding, in which you argue that continuing to pay for your student loans would cause you undue hardship. If your case is successful, the court may partially or fully discharge your student debt. However, some courts have stricter definitions of undue hardship than others.

Brunner Test

Most federal courts use the Brunner test to determine undue hardship. The court may decide that your student loan debt qualifies for discharge if:

...

Important Differences Between Secured, Unsecured Creditors during BankruptcyOne way to categorize creditors when filing for bankruptcy is as secured or unsecured. The distinction between them can be important for both your creditors and yourself:

  • Secured creditors have a lien on your property that they can use as collateral if you are unable to repay your loan. Common examples include home loans, car loans, and tax liens;
  • Unsecured creditors do not have a lien that they can claim on your property. Credit card debt, payday loans, and medical bills are often categorized as unsecured debts; and
  • Some unsecured debts are priority debts that must be paid in full, regardless of bankruptcy protections. Child support, spousal support, student loans and some tax debts are common examples.

Secured creditors generally receive priority in being compensated during bankruptcy proceedings. How creditors are compensated depends on whether you are filing for Chapter 7 or Chapter 13 bankruptcy.

Secured Creditors in Chapter 7

...

Passing the Chapter 7 Bankruptcy Means TestBefore you file for Chapter 7 bankruptcy, you should first determine whether you will qualify by using the means test. People often think of passing a test as a huge obstacle to achieving their goals. However, a bankruptcy means test is unlikely to prevent you from filing for Chapter 7 bankruptcy if you need the advantages that come with this form of bankruptcy. You may be at greater risk of not qualifying for Chapter 7 bankruptcy because you were not thorough enough in documenting your income and expenses. An experienced bankruptcy attorney will conduct the means test for you and tell you whether the results suggest that you will qualify for Chapter 7 bankruptcy.

Meaning of the Test

The means test was created to prevent people from using Chapter 7 bankruptcy when they have sufficient disposable income, based on certain allowable expenses, to make a meaningful payment on their unsecured debts. Chapter 7 bankruptcy is advantageous in some situations because:

...

Second Bankruptcy and Five Steps to Prevent the Need for ItFederal bankruptcy law includes waiting periods that determine how soon a person can file for bankruptcy again after the initial filing. The length of the waiting period depends on the type of bankruptcy that was previously filed and what type of bankruptcy is being sought:

  • After filing for Chapter 7 bankruptcy, you are required to wait eight years before filing for Chapter 7 again, if you want a discharge in bankruptcy;
  • You can immediately file for Chapter 13 bankruptcy again after your first Chapter 13 bankruptcy case is completed, but you must wait two years before being able to discharge your debt again;
  • You must wait four years after filing for Chapter 7 bankruptcy to file for Chapter 13 bankruptcy; and
  • You must wait six years after discharging your debt under Chapter 13 bankruptcy to file for Chapter 7 bankruptcy unless you repaid at least 70 percent of the claims.

While some situations allow you to immediately file for a second bankruptcy, you may need to ask the court to extend the automatic stay protections. You may want to take steps to mitigate your chances of needing a second bankruptcy. There are several ways you can increase your financial security after bankruptcy:

  1. Adhering to a Budget: Closely examine your monthly income compared to your necessary expenses. You should live within the means of your budget and keep any borrowing to a minimum.
  2. Cautious with Credit: If you need to pay for something with a credit card, keep the expense to a level that you can repay that month. That way, you can rebuild your credit score with less risk.
  3. Creating Additional Income: A new job, second job or promotion within your current job can all increase your monthly income, which in turn will increase your financial flexibility.
  4. Selling Assets: We all have stuff. You should explore how valuable your stuff would be if sold. The additional money could be used for a savings account or to pay off debts.
  5. Building an Emergency Fund: Unexpected expenses can cause financial hardship. Find a portion of your monthly income than you can contribute towards an emergency fund. By having savings, you may not need to borrow money when unexpected expenses occur.

Second Bankruptcy

...

Posted on in Bankruptcy

Your Rights Against Creditor HarassmentFacing overdue debts is stressful enough without harassing behavior by creditors and the debt collection agencies they employ. Both Texas and federal law protect consumers from debt collection harassment. Unfortunately, debt collectors still use aggressive practices that cross legal boundaries. Taking financial action, such as filing for bankruptcy, can stop contact from debt collectors. However, you can also hold creditors accountable for their harassment.

Illegal Behavior

Creditors and debt collection agencies use harassing and abusive methods because they know people are too intimidated to stand up for themselves. Debt collectors do not have the right to harass or defraud you. The Texas Debt Collection Act defines illegal practices by debt collectors as including:

...
National Association of Consumer Bancruptcy Attorneys State Bar of Texas
Back to Top