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1 month 1 week ago

By Jillian Berman

A recent court ruling may offer hope for thousands of struggling borrowers looking to escape education-related debts.

A Texas bankruptcy judge denied a request by student loan company, Navient, last month to dismiss a class-action lawsuit accusing the firm of illegally collecting on loans that were discharged in bankruptcy. Navient is appealing.

Patricia Christel, a spokeswoman for the Navient, declined to comment on pending litigation, but noted in an email that the company supports reform “that would allow federal and private student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay their student loans over a five-to-seven year period and who still experience financial difficulty.”

The decision last month means the case can move forward and it also offers the opportunity for an appellate court to weigh in on whether loans historically viewed as exempt from bankruptcy discharge can actually be wiped away in the process.

“This is one to watch for potential,” said John Rao, an attorney at the National Consumer Law Center and expert on consumer bankruptcies.

The ruling comes as lawyers across the country are increasingly looking to challenge the conventional wisdom that any type of student loan isn’t dischargeable in bankruptcy. It also comes as the Department of Education is reviewing the high standard student loan borrowers must meet in order to have their debts discharged in bankruptcy.

This case centers around a very specific type of debt — and a small share of Navient’s private loan portfolio — money loaned to borrowers to pay for unaccredited programs, such as bar exam study courses and K-12 educational expenses. The lawyers representing the class estimate that about 16,000 borrowers fall into this category, according to Austin Smith, one of those attorneys.

But if the appellate court rules in favor of the plaintiffs that could indicate that borrowers with similar loans from other companies could also be entitled to relief. “If I were advising other companies who have these loans and have taken similar positions as Navient — I would be worried,” said Dalié Jiménez, a professor of law at the University of California-Irvine’s School of Law.
 
Reasons for student loans to be exempt from discharge in bankruptcy

To discharge a loan in bankruptcy, they must fall into one of four categories:
1. A federal student loan.
2. A student loan made by a qualified nonprofit (say, by a school).
3. A qualified education loan, which could be made by a for-profit company, but would need to be made for qualified educational expenses; in other words, those incurred at an accredited program for the cost of attendance.
4. Funds received as an “educational benefit.”

Traditionally, bankruptcy courts have determined that the types of loans in question in this case can’t be discharged because they were received as an “educational benefit.” But recently, lawyers and judges have started to question whether loans to help borrowers study for the bar and other similar debts truly fit into that category.

“It does definitely reflect a trend of this kind of decision,” Rao said of the recent ruling.

In his order, the judge argues that the phrase “educational benefit,” likely refers to something different from simply a loan used for educational expenses. And, instead, refers to arrangements like money fronted by an employer for a worker to attend college that would need to be repaid if that employee leaves their job.

“By its use throughout [the provision], Congress was certainly aware of the term “loan” and is presumed to have made a conscious decision of when to use it and when to choose something different,” the order reads.
 The legislative history of funds with ‘educational benefit’  That rationale appears to be in line with the legislative history of the educational benefit term, according to a recent paper by Jason Iuliano, a fellow at the University of Pennsylvania School of Law. The paper argues that — by viewing funds received for educational benefit to mean loans — judges have been interpreting the educational benefit language too broadly. Iuliano notes that during congressional hearings around the time the language was added, an expert explained to members of Congress that it was meant to only exempt conditional grants from being discharged in bankruptcy. “It was an effort to stop this very, very narrow category of exceptions,” Iuliano said. “It just ballooned up to cover pretty much anything you can make a case that advances one’s education.”Judges have been using this broader interpretation in part because it’s been so rarely challenged historically, Iuliano said. Because of the popular narrative that student debt is impossible to discharge in bankruptcy, it’s extremely rare for debtors to actually attempt to do so. What’s more, lawyers have also historically shied away from representing student loan borrowers trying to discharge their debt in bankruptcy, Iuliano said.

Now that’s starting to change, said Rao. As more lawyers are beginning to challenge whether these debts are dischargeable in bankruptcy, judges are now hearing and carefully considering both arguments, he said. “Judges are not just going to automatically assume that the loan is entitled to this protection from discharge,” Rao said.

Of course, the case is far from over. And Iuliano notes that even if the judge rules in a way that’s the most favorably possible to the debtors, the ruling would still only cover a fraction of borrowers or those with these very specific types of loans from this company. Still, he said there’s reason to believe these borrowers tend to be worse off than others with student loans and so it would help those who are struggling the most.

“There’s probably a large swath of people that this applies to that they could get some fairly immediate relief,” Jiménez said.

Copyright © 2018 MarketWatch, Inc. All rights reserved.


4 weeks 1 day ago

When deciding to file bankruptcy, Portland residents should consider several factors, including which type of bankruptcy petition to file, when to file it for maximum protection from creditors and how much of your property you can keep. Finding the appropriate Portland Bankruptcy Attorney can make the difference of having a smooth filing or the opposite.
 
Portland bankruptcy attorneys can be an invaluable resource in helping you work through these and other important issues. Although you are not required to use a lawyer to file bankruptcy, the Oregon Bankruptcy Court notes that it would be very difficult for someone without an experienced Portland bankruptcy lawyer to succeed in bankruptcy court.
 
Your Portland bankruptcy lawyer can explain your legal options, guide you through the bankruptcy process and advocate on your behalf when meeting with creditors and the bankruptcy trustee. This article will explain how an Portland bankruptcy lawyer can assist with your bankruptcy filing.
 
Which Form of Oregon Bankruptcy Is Right for You?
The first thing your Portland bankruptcy lawyer will help you to determine is whether to file a Chapter 7 or a Chapter 13 type of bankruptcy. These names refer to the United States Bankruptcy Code, and each type of bankruptcy has different rules.
 
In general, if you qualify under a means test that looks at your income and compares it to the amount you owe, you may be able to file Chapter 7 bankruptcy, which wipes out all of your debts. If you do not qualify under the means test, you will likely file a Chapter 13 bankruptcy, which requires you to pay back a portion of your debt over a period of several years. Your attorney can help you decide which type of bankruptcy you should file.
 
Understanding Oregon Bankruptcy Forms
There are many bankruptcy forms to be completed in filing an Oregon bankruptcy. Because Portland bankruptcy attorneys deal with these forms every day, they are in the best position to help you complete them. The courts are very tough about the information that must be provided, and incomplete or incorrect forms may cause your bankruptcy case to be dismissed or thrown out of court.
 
Your bankruptcy lawyer will ensure that the proper forms are filed with the court, that all necessary information is included and that you’ve supplied the appropriate supporting documents. If any filed forms need to be amended or modified, your lawyer can handle that as well.
 
Meeting With the Bankruptcy Trustee & Working With Creditors
Your Portland bankruptcy lawyer can help you prepare for your first meeting with the bankruptcy trustee and tell you what to expect there. He can then also go with you to the meeting, help you to make your best case and achieve the outcome you’re hoping for.
 
Your Portland bankruptcy attorney is also your best buffer if creditors illegally continue to try to collect money from you once your bankruptcy has been filed. Your attorney can handle notifying these creditors that they are in violation of the law and can ask the court to make the creditors stop contacting you.
 
Schedule a Free Consultation with Your Portland Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Portland, Oregon.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
Give us a call at (503) 912-8809 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
 
The post How Can an Portland Bankruptcy Attorney Help You? appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


1 month 1 week ago

When deciding to file bankruptcy, Portland residents should consider several factors, including which type of bankruptcy petition to file, when to file it for maximum protection from creditors and how much of your property you can keep. Finding the appropriate Portland Bankruptcy Attorney can make the difference of having a smooth filing or the opposite.
 
Portland bankruptcy attorneys can be an invaluable resource in helping you work through these and other important issues. Although you are not required to use a lawyer to file bankruptcy, the Oregon Bankruptcy Court notes that it would be very difficult for someone without an experienced Portland bankruptcy lawyer to succeed in bankruptcy court.
 
Your Portland bankruptcy lawyer can explain your legal options, guide you through the bankruptcy process and advocate on your behalf when meeting with creditors and the bankruptcy trustee. This article will explain how an Portland bankruptcy lawyer can assist with your bankruptcy filing.
 
Which Form of Oregon Bankruptcy Is Right for You?
The first thing your Portland bankruptcy lawyer will help you to determine is whether to file a Chapter 7 or a Chapter 13 type of bankruptcy. These names refer to the United States Bankruptcy Code, and each type of bankruptcy has different rules.
 
In general, if you qualify under a means test that looks at your income and compares it to the amount you owe, you may be able to file Chapter 7 bankruptcy, which wipes out all of your debts. If you do not qualify under the means test, you will likely file a Chapter 13 bankruptcy, which requires you to pay back a portion of your debt over a period of several years. Your attorney can help you decide which type of bankruptcy you should file.
 
Understanding Oregon Bankruptcy Forms
There are many bankruptcy forms to be completed in filing an Oregon bankruptcy. Because Portland bankruptcy attorneys deal with these forms every day, they are in the best position to help you complete them. The courts are very tough about the information that must be provided, and incomplete or incorrect forms may cause your bankruptcy case to be dismissed or thrown out of court.
 
Your bankruptcy lawyer will ensure that the proper forms are filed with the court, that all necessary information is included and that you’ve supplied the appropriate supporting documents. If any filed forms need to be amended or modified, your lawyer can handle that as well.
 
Meeting With the Bankruptcy Trustee & Working With Creditors
Your Portland bankruptcy lawyer can help you prepare for your first meeting with the bankruptcy trustee and tell you what to expect there. He can then also go with you to the meeting, help you to make your best case and achieve the outcome you’re hoping for.
 
Your Portland bankruptcy attorney is also your best buffer if creditors illegally continue to try to collect money from you once your bankruptcy has been filed. Your attorney can handle notifying these creditors that they are in violation of the law and can ask the court to make the creditors stop contacting you.
 
Schedule a Free Consultation with Your Portland Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Portland, Oregon.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
Give us a call at (503) 912-8809 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
 
The post How Can an Portland Bankruptcy Attorney Help You? appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


1 month 1 week ago

What can happen if you default on a federal student loan?
You are “in default” on your federal student loan if you have not paid in 270 days (approximately nine months).  Your wages can be garnished or your tax refunds seized.
How do you stop seizure of your tax refunds?
student loanTax refund seized
You can request an offset refund, but there are limitations.  Here are a few examples:

  • You filed for bankruptcy and the case is still open, or the student loan was discharged in bankruptcy.
  • You repaid the loan.
  • The student loan is not yours – the Social Security number attached is incorrect.
  • You are in a repayment agreement with the Department of Education and have started making payments as required.
  • You are totally and permanently disabled.
  • The loan isn’t enforceable.

If you fit the bill, you’ll need to complete a student loan tax offset hardship refund form and provide proof of your hardship. You also can contact the Treasury Offset Program at 800-304-3107 for more information.

Share this entry

About the Author:
Diane L. DrainDiane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. As a teacher and retired law professor, Diane believes in offering everyone, not just her clients, advice about the Arizona bankruptcy and foreclosure laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*Important Note from Diane: Everything on this web site is available for educational purposes only, is not intended to provide legal advice nor create an attorney client relationship between you, me, or the author of any article.  Any information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*

The post What Happens if You Default on a Federal Student Loan? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


1 month 1 week ago

What can happen if you default on a federal student loan?
You are “in default” on your federal student loan if you have not paid in 270 days (approximately nine months).  Your wages can be garnished or your tax refunds seized.
How do you stop seizure of your tax refunds?
You can request an offset refund, but there are limitations.  Here are a few examples:

  • You filed for bankruptcy and the case is still open, or the student loan was discharged in bankruptcy.
  • You repaid the loan.
  • The student loan is not yours – the Social Security number attached is incorrect.
  • You are in a repayment agreement with the Department of Education and have started making payments as required.
  • You are totally and permanently disabled.
  • The loan isn’t enforceable.

If you fit the bill, you’ll need to complete a student loan tax offset hardship refund form and provide proof of your hardship. You also can contact the Treasury Offset Program at 800-304-3107 for more information.
What can happen if you default on a federal student loan?
You are “in default” on your federal student loan if you have not paid in 270 days (approximately nine months).  Your wages can be garnished or your tax refunds seized.
How do you stop seizure of your tax refunds?
student loanTax refund seized
You can request an offset refund, but there are limitations.  Here are a few examples:

  • You filed for bankruptcy and the case is still open, or the student loan was discharged in bankruptcy.
  • You repaid the loan.
  • The student loan is not yours – the Social Security number attached is incorrect.
  • You are in a repayment agreement with the Department of Education and have started making payments as required.
  • You are totally and permanently disabled.
  • The loan isn’t enforceable.

If you fit the bill, you’ll need to complete a student loan tax offset hardship refund form and provide proof of your hardship. You also can contact the Treasury Offset Program at 800-304-3107 for more information.

Share this entry

About the Author:
Diane L. DrainDiane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. As a teacher and retired law professor, Diane believes in offering everyone, not just her clients, advice about the Arizona bankruptcy and foreclosure laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*Important Note from Diane: Everything on this web site is available for educational purposes only, is not intended to provide legal advice nor create an attorney client relationship between you, me, or the author of any article.  Any information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*

The post In Bankruptcy, but Tax Refunds Seized? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


1 month 1 week ago

By Sarah O'Brien

For people facing crushing debt, the weight of carrying it can seem unbearable. As bills go unpaid and debt collectors start calling, one nagging question might loom large: Would bankruptcy fix this?

Depending on the type of debt you face and the rest of your financial picture, the answer could be yes.

"Many people who file for bankruptcy probably never thought they would," said Harvey Bezozi, a certified financial planner and certified public accountant at The Tax Wizard in Boca Raton, Florida.

"It's freeing, but it definitely can be traumatic to do it."

An estimated 733,000 businesses and individuals are expected to wipe out or reduce their debt through bankruptcy in fiscal year 2018, according to the U.S. Trustees Program. That's far below the peak of 1.5 million filings in 2010, yet up from an estimated 685,000 in 2017.

Meanwhile, overall household debt stood at more than $13 trillion at the end of 2017, according to the Federal Reserve. That includes $8.8 trillion in mortgages, $1.4 trillion in student loans, $1.2 trillion in car loans and more than $1 trillion in credit card debt.

While student loan debt currently is difficult to discharge in bankruptcy — you must prove undue hardship — most other consumer debt is fair game for either eliminating or negotiating a lower payback amount, depending on the specifics of your case.

Of course, getting to the point of actually filing the paperwork with the bankruptcy court means overcoming the emotions that accompany the decision.

"When people finally get to the point of coming to talk to me, it usually takes another six months for it to sink in that they have to file," said Cara O'Neill, a legal editor with Nolo who also is a bankruptcy and litigation attorney in Roseville, California.

She said there often is a triggering event — such as a lawsuit filed by a creditor — that makes people realize how much trouble they're in.

"People really don't want to have to go the bankruptcy route," O'Neill said. "They usually do everything they can to avoid it."

In fact, some end up tapping their retirement savings to stave off bankruptcy. Experts say this is a big no-no and often just delays the inevitable.

For starters, retirement assets — including 401(k) plans and individual retirement accounts that you own and contributed to — generally are protected in bankruptcy. (Inherited IRAs do not get the same protection.)

An exception to this broad rule applies to IRAs, both traditional and Roth: Up to a set amount per person — currently about $1.28 million — is safe from creditors. Any excess could go to pay off creditors. Additionally, if you already receive retirement income, that money is not necessarily protected in bankruptcy.

Meanwhile, if you are younger than 59½ and turn to your retirement assets to pare down debt, you will pay an early-withdrawal penalty of 10 percent unless you meet one of a few exceptions. That's on top of paying ordinary income taxes on the distribution.

"The most significant thing to avoid is using retirement funds to pay back debt," O'Neill said. "If you can come out of bankruptcy without debt but with your retirement savings still intact, you'll be in a [more] stable financial place."
Filing options There are several ways to file for bankruptcy. Most individuals typically choose between Chapter 7 and Chapter 13. Each has filing fees of a few hundred dollars, and enlisting an attorney can add $1,200 to about $3,500, depending on where you live and the complexity of your case.

"Most filers will stop paying the debts that are getting discharged and instead use that money to pay the costs of filing," O'Neill said.

It's also worth noting that while federal law governs bankruptcy, there are some differences among states regarding what property cannot be sold to pay off creditors. For instance, in some states, wedding rings up to a certain value are protected.

Both Chapter 7 and 13 stop collection activity like calls from creditors or debt collectors, wage garnishments and, potentially, lawsuits from creditors. (Court judgments already in place are trickier to get rid of in bankruptcy.)

However, there are differences in who qualifies and how debt is treated in each option. Chapter 7 generally is for people who lack enough income to repay their debt and have little in the way of assets. It also is the most common way to file individual bankruptcy.

This approach quickly erases certain forms of debt, including from credit cards, medical bills and personal loans. It does not, however, necessarily stop your car from being repossessed or prevent home foreclosure, O'Neill said.

Chapter 13 generally gives you three to five years to pay back certain debt and keep the asset (i.e., house or car). It also prevents creditors from garnishing your wages or putting a levy on your bank account. For this filing option, you must have income, and your debt must be below a certain amount (about $1.5 million total).

For individuals with debt above that threshold, Chapter 11 — which is largely similar to Chapter 13 — might be the best choice. This is the least commonly used option for individuals.
Credit impact The biggest downside of bankruptcy is the hit your credit report takes.

"You exchange not having that debt for having a bankruptcy on your report," said Ike Shulman, co-chair of the National Association of Consumer Bankruptcy Attorneys' legislative committee.

However, he said, many people who file for bankruptcy already have tarnished credit due to delinquent loans.

The filing remains on a credit report for seven to 10 years, although the impact decreases over time and your score will tick upward. In fact, most Chapter 7 filers can qualify for a mortgage loan four years later, O'Neill said.

Regardless of which bankruptcy approach you take, you should be prepared to provide detailed information on your financial life to the court. That includes tax returns, bank statements, pay stubs and the like.

Keep in mind, too, that having an initial consult with a bankruptcy attorney often is free. They also might have suggestions for handling your debt that does not involve bankruptcy.

"No one wants to acknowledge they can't handle their bills," Shulman said. "People don't file bankruptcy because it's an easy decision to come to. It's because they don't have other choices."

© 2018 CNBC LLC. All Rights Reserved. A Division of NBCUniversal.


4 weeks 1 day ago

While most consumers in Tacoma call our offices in the hopes of filing Chapter 7 bankruptcy, many of them are surprised to find out that under some circumstances Chapter 13 Bankruptcy in Washington will save them a whole lot more money. Why is that?
 
Chapter 7 is thought of as a quick opportunity for a fresh start. This is usually true, well, at least with respect to your unsecured creditors. Chapter 13 bankruptcy, on the other hand,  is thought of as a repayment plan where you pay everyone back. This is rarely true.
 
When it come to filing Chapter 13 bankruptcy in Tacoma, the thought is why in the world would I want a repayment plan if I can eliminate everything quickly and just get a fresh start? The answer in short is that you probably aren’t going to pay much, if anything, back to your unsecured creditors and you might do considerably better with your secured creditors, like car and home lenders, and your priority creditors, like the IRS, in Chapter 13.
 
In a recent blog post, I went over the some of the advantages that Chapter 13 Bankruptcy offers to Tacoma consumers with respect to past due or ongoing debts that can’t be eliminated in a Chapter 7. These benefits include having a mechanism to pay back tax, child support and mortgage arrears interest free and without penalty over a long period of time, reducing the principal and interest on car loans and the like. But there are other advantages that I wanted to mention as well.
 
First, from a practical standpoint Chapter 13 is just simpler and often more affordable to get filed. Our firm charges only $500 to get your case filed and that includes the filing fee for the court and the cost of a credit report to download your creditors. After the case is filed, the remainder of your attorney and trustee fees are simply deducted from your plan payment. No need to worry about coming up with a ton of money to get a case filed or make arrangements to pay money afterwards. Financing the filing of a Chapter 13 bankruptcy is simply cheaper and simpler than trying to file a Chapter 7.
 
Second, if you have lost your drivers license due to unpaid run-of-the-mill tickets, Chapter 13 bankruptcy will often able you to get it back very quickly after your case is filed. Many of our clients file Chapter 13 bankruptcy in Tacoma and walk into a Pierce County DMV the same week to get their license back. No more trying to dig yourself out of a big financial hole to get it back, just bring your filing information to the DMV window and you are legally back on the road.
 
Third, let’s say your house is underwater such that you owe more on your first mortgage than the house is worth. If that’s the case, we can eliminate the second mortgage, just slice it off your home.
 
Fourth, Chapter 13 is a much more flexible tool for dealing with debt. You can only file Chapter 7 every eight years. So what if you file Chapter 7 bankruptcy now and then two years from now through no fault of your own, you rack up more medical debt than you can handle, or you get laid off or divorced? The debt starts to add up.
 
The problem is that if that happens you won’t be able to afford a Chapter 13 Plan Payment and you won’t be eligible to file Chapter 7. No one ever thinks this will happen to them, but we see it happen all the time. Here’s the advantage of Chapter 13. When you are in a Chapter 13 and you rack up more debt and you can no longer afford to be in it, you can convert your case into a Chapter 7 and include all the debt that has arisen since the date of the Chapter 13 filing. In other words you file Chapter 13 Bankruptcy in 2015, rack up additional debt in 2018 and add it to the same bankruptcy once it is converted to Chapter 7.Now that’s safety.
 
Finally, Chapter 13 Bankruptcy in Washington is simply a smoother process than Chapter 7. The Chapter 13 Trustee doesn’t sell off your house if there is too much equity in it, the Chapter 7 Trustees can and will sell it off. The fact is that Chapter 13 Bankruptcy is a gentler smoother process than Chapter 7 Bankruptcy.
 
The Chapter 7 Trustees in Tacoma are extremely professional, but they are in a very real sense your adversaries. If they can sell off your home or your wedding ring within the boundaries of the bankruptcy code, they will. In contrast, the Chapter 13 Trustee knows that if your plan doesn’t work for you, you will just  dismiss it two months after filing and that doesn’t work for anyone. The process requires the Trustee to take a more collaborative approach rather than an adversarial one.
 
Again, Chapter 7 is well worth considering but it is not always the be-all-end-all solution for debt relief. If you have any questions at all about the relative merits of Chapter 7 and Chapter 13 Bankruptcy in Washington, please contact our Tacoma office at xxx-xxx-xxxx to set up an appointment with one of our attorneys. We would be happy to help.
 
In this article, I am going to discuss some other advantages of filing Chapter 13 bankruptcy rather than Chapter 7
 
Because Chapter 7 bankruptcy normally provides a total discharge of unsecured debt, it is definitely fair to ask how is it possible that a Tacoma bankruptcy filer could possibly end up doing better in a Chapter 13 bankruptcy than in a Chapter 7 Bankruptcy.
 
The reality is that Chapter 13 Bankruptcy in Washington is often misunderstood as a repayment plan that requires repayment of all your debt over a period of time. The reality is that in many Tacoma chapter 13 plans, the only creditors that get paid back are the car and home lenders. This is where the Chapter 13 advantages come in.
 
If your house is in default or in foreclosure, Chapter 13 Bankruptcy in Washington gives you a way to catch up interest free over a long period of time. Chapter 7 doesn’t give you time to catch up or give you time to refinance. In fact if you are behind and you want to keep your house, an aggressive Tacoma Chapter 7 Trustee might still pressure you to do a short sale.
 
If your car meets certain criteria, Chapter 13 may allow you to actually reduce the amount that you have to repay to the amount the vehicle is worth. No more repaying $20,000 for a $10,000 car. If your interest rate is over 5% you can get it reduced to that amount.
 
Maybe the most important thing is you are no longer locked into the loan. In Chapter 7 bankruptcy, you will likely have to sign a reaffirmation agreement to keep the car that locks you in the loan until the day is paid off. In contrast, Chapter 13 bankruptcy allows you to keep the car until you decide that it no longer works for you. Much safer and much better.
 
Finally, if you are behind on your child support or your taxes, Chapter 13 gives you a way to catch up on those debts.
 
Chapter 13 Bankruptcy in Washington many offers many other advantages to the Tacoma bankruptcy filer that I will address in another article. This is not to say that there is anything wrong with Chapter 7 bankruptcy at all, just that we should not assume that it is always the best option.
Flexibility: you can dismiss the case at any time with notice or even convert it to a Chapter 7. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.
A Chapter 13 Bankruptcy in Washington will save a house from foreclosure as long as you can make the payments.
You can strip a wholly unsecured second mortgage; or value a car if you’ve had it more than 910 days.
You can challenge the costs added to your mortgage by the lender.
Trustees want the plan to succeed and will work with you to get it confirmed.
Your attorney’s fees can be spread out rather than all due before filing.
You can avoid having to reaffirm a car in order to keep it.
You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
You can stretch out your payments for a car or other secured debt and propose a reduction in the interest rate.
You won’t lose non-exempt property.
Depending upon your income a Chapter 7 case can be challenged by the US Trustee, but not a Chapter 13.
Schedule a Free Consultation with Your Tacoma Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Washington State.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
 
Give us a call at (253) 780-8008 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
The post How Chapter 13 Bankruptcy in Washington Can Be More Beneficial Than Filing for A Chapter 7 Bankruptcy appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


1 month 2 weeks ago

While most consumers in Tacoma call our offices in the hopes of filing Chapter 7 bankruptcy, many of them are surprised to find out that under some circumstances Chapter 13 Bankruptcy in Washington will save them a whole lot more money. Why is that?
 
Chapter 7 is thought of as a quick opportunity for a fresh start. This is usually true, well, at least with respect to your unsecured creditors. Chapter 13 bankruptcy, on the other hand,  is thought of as a repayment plan where you pay everyone back. This is rarely true.
 
When it come to filing Chapter 13 bankruptcy in Tacoma, the thought is why in the world would I want a repayment plan if I can eliminate everything quickly and just get a fresh start? The answer in short is that you probably aren’t going to pay much, if anything, back to your unsecured creditors and you might do considerably better with your secured creditors, like car and home lenders, and your priority creditors, like the IRS, in Chapter 13.
 
In a recent blog post, I went over the some of the advantages that Chapter 13 Bankruptcy offers to Tacoma consumers with respect to past due or ongoing debts that can’t be eliminated in a Chapter 7. These benefits include having a mechanism to pay back tax, child support and mortgage arrears interest free and without penalty over a long period of time, reducing the principal and interest on car loans and the like. But there are other advantages that I wanted to mention as well.
 
First, from a practical standpoint Chapter 13 is just simpler and often more affordable to get filed. Our firm charges only $500 to get your case filed and that includes the filing fee for the court and the cost of a credit report to download your creditors. After the case is filed, the remainder of your attorney and trustee fees are simply deducted from your plan payment. No need to worry about coming up with a ton of money to get a case filed or make arrangements to pay money afterwards. Financing the filing of a Chapter 13 bankruptcy is simply cheaper and simpler than trying to file a Chapter 7.
 
Second, if you have lost your drivers license due to unpaid run-of-the-mill tickets, Chapter 13 bankruptcy will often able you to get it back very quickly after your case is filed. Many of our clients file Chapter 13 bankruptcy in Tacoma and walk into a Pierce County DMV the same week to get their license back. No more trying to dig yourself out of a big financial hole to get it back, just bring your filing information to the DMV window and you are legally back on the road.
 
Third, let’s say your house is underwater such that you owe more on your first mortgage than the house is worth. If that’s the case, we can eliminate the second mortgage, just slice it off your home.
 
Fourth, Chapter 13 is a much more flexible tool for dealing with debt. You can only file Chapter 7 every eight years. So what if you file Chapter 7 bankruptcy now and then two years from now through no fault of your own, you rack up more medical debt than you can handle, or you get laid off or divorced? The debt starts to add up.
 
The problem is that if that happens you won’t be able to afford a Chapter 13 Plan Payment and you won’t be eligible to file Chapter 7. No one ever thinks this will happen to them, but we see it happen all the time. Here’s the advantage of Chapter 13. When you are in a Chapter 13 and you rack up more debt and you can no longer afford to be in it, you can convert your case into a Chapter 7 and include all the debt that has arisen since the date of the Chapter 13 filing. In other words you file Chapter 13 Bankruptcy in 2015, rack up additional debt in 2018 and add it to the same bankruptcy once it is converted to Chapter 7.Now that’s safety.
 
Finally, Chapter 13 Bankruptcy in Washington is simply a smoother process than Chapter 7. The Chapter 13 Trustee doesn’t sell off your house if there is too much equity in it, the Chapter 7 Trustees can and will sell it off. The fact is that Chapter 13 Bankruptcy is a gentler smoother process than Chapter 7 Bankruptcy.
 
The Chapter 7 Trustees in Tacoma are extremely professional, but they are in a very real sense your adversaries. If they can sell off your home or your wedding ring within the boundaries of the bankruptcy code, they will. In contrast, the Chapter 13 Trustee knows that if your plan doesn’t work for you, you will just  dismiss it two months after filing and that doesn’t work for anyone. The process requires the Trustee to take a more collaborative approach rather than an adversarial one.
 
Again, Chapter 7 is well worth considering but it is not always the be-all-end-all solution for debt relief. If you have any questions at all about the relative merits of Chapter 7 and Chapter 13 Bankruptcy in Washington, please contact our Tacoma office at xxx-xxx-xxxx to set up an appointment with one of our attorneys. We would be happy to help.
 
In this article, I am going to discuss some other advantages of filing Chapter 13 bankruptcy rather than Chapter 7
 
Because Chapter 7 bankruptcy normally provides a total discharge of unsecured debt, it is definitely fair to ask how is it possible that a Tacoma bankruptcy filer could possibly end up doing better in a Chapter 13 bankruptcy than in a Chapter 7 Bankruptcy.
 
The reality is that Chapter 13 Bankruptcy in Washington is often misunderstood as a repayment plan that requires repayment of all your debt over a period of time. The reality is that in many Tacoma chapter 13 plans, the only creditors that get paid back are the car and home lenders. This is where the Chapter 13 advantages come in.
 
If your house is in default or in foreclosure, Chapter 13 Bankruptcy in Washington gives you a way to catch up interest free over a long period of time. Chapter 7 doesn’t give you time to catch up or give you time to refinance. In fact if you are behind and you want to keep your house, an aggressive Tacoma Chapter 7 Trustee might still pressure you to do a short sale.
 
If your car meets certain criteria, Chapter 13 may allow you to actually reduce the amount that you have to repay to the amount the vehicle is worth. No more repaying $20,000 for a $10,000 car. If your interest rate is over 5% you can get it reduced to that amount.
 
Maybe the most important thing is you are no longer locked into the loan. In Chapter 7 bankruptcy, you will likely have to sign a reaffirmation agreement to keep the car that locks you in the loan until the day is paid off. In contrast, Chapter 13 bankruptcy allows you to keep the car until you decide that it no longer works for you. Much safer and much better.
 
Finally, if you are behind on your child support or your taxes, Chapter 13 gives you a way to catch up on those debts.
 
Chapter 13 Bankruptcy in Washington many offers many other advantages to the Tacoma bankruptcy filer that I will address in another article. This is not to say that there is anything wrong with Chapter 7 bankruptcy at all, just that we should not assume that it is always the best option.
Flexibility: you can dismiss the case at any time with notice or even convert it to a Chapter 7. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.
A Chapter 13 Bankruptcy in Washington will save a house from foreclosure as long as you can make the payments.
You can strip a wholly unsecured second mortgage; or value a car if you’ve had it more than 910 days.
You can challenge the costs added to your mortgage by the lender.
Trustees want the plan to succeed and will work with you to get it confirmed.
Your attorney’s fees can be spread out rather than all due before filing.
You can avoid having to reaffirm a car in order to keep it.
You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
You can stretch out your payments for a car or other secured debt and propose a reduction in the interest rate.
You won’t lose non-exempt property.
Depending upon your income a Chapter 7 case can be challenged by the US Trustee, but not a Chapter 13.
Schedule a Free Consultation with Your Tacoma Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Washington State.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
 
Give us a call at (253) 780-8008 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
The post How Chapter 13 Bankruptcy in Washington Can Be More Beneficial Than Filing for A Chapter 7 Bankruptcy appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


4 weeks 1 day ago

Bankruptcy may make sense if you are unable to repay debts as you cover obligations such as retirement, food and shelter. With so many websites offering free financial tools, it can be hard to know whom to trust. At Northwest Debt Relief Law Firm, we thoroughly research financial products and companies, and adhere to strict standards of editorial integrity to find you the best Bankruptcy Lawyer.
Bankruptcy stops collection calls, lawsuits and wage garnishments. It erases debt. And despite what you’ve heard, bankruptcy may help your credit scores.
Credit bureaus and scoring experts often say bankruptcy is the single worst thing you can do to your scores. Foreclosures, repossessions, charge-offs, collections — nothing else can drive your scores down as fast and far as a bankruptcy. Most people have credit already battered by the time they file for bankruptcy. And once they do, their scores typically rise, not fall.
But that’s not the whole story. Most people struggle so long with their debt that their credit is already battered by the time they file for bankruptcy. And once they do, their scores typically rise, not fall. If the debt is erased — which is known in bankruptcy court as a “discharge” — scores go up even more.
 
How much and how soon credit scores can rise
Using data from Equifax credit bureau, researchers at the Federal Reserve Bank of Philadelphia found that filers’ Equifax credit scores plunged in the 18 months before filing bankruptcy and rose steadily afterward.
 
Among the findings:
The average credit score for someone who filed Chapter 7, the most common type of bankruptcy, in 2010 was 538.2 on Equifax’s 280 to 850 range. (Scores in the low 600s and below are generally considered poor.) By the time the filers’ cases were discharged, usually within six months, their average score was 620.3.
The other type of bankruptcy, Chapter 13, requires a three- to five-year repayment plan, which most people don’t complete. (Half of Chapter 13s filed between 2007 and 2013 were dismissed, and an additional 12 percent were converted to Chapter 7s or other types of bankruptcy, according to an American Bankruptcy Institute analysis of Justice Department figures.) Those who did and got a discharge, though, saw their scores rise from 535.2 to 610.8, the Philadelphia Fed researchers found.
A recent study by FICO, the company that created the leading credit score, found much smaller gains. Median credit scores for people who filed for bankruptcy between October 2009 and October 2010 rose from the 550s before they filed to the 560s afterward, says Ethan Dornhelm, senior director for FICO’s scores and analytics group. (Most FICO scores are on a scale of 300 to 850.)
 
After two years, 28% of bankruptcy filers had scores of 620 and above. After four years, 48% had scores of 620 or above, and only 1% scored 700 or above.
But the FICO study didn’t distinguish between Chapter 7 and Chapter 13, or between people who got a discharge and those who didn’t. Those with undischarged debt could be skewing the results. In other words, people with completed bankruptcies could have seen bigger gains than what’s reflected in the median figures, Dornhelm says.
 
Saving your credit score is only one reason
Credit scores aren’t the only factor to consider, of course. Some of the others:
An end to collection hell: Nosal’s study found that once people fell seriously behind on their debt — with at least one account 120 days overdue, for example — their financial troubles tended to get worse. Balances in collections and the percentage of people with court judgments grew.
By contrast, people who file for bankruptcy benefit from its “automatic stay,” which halts almost all collection efforts, including lawsuits and wage garnishment. If the underlying debt is erased, the lawsuits and garnishment end.
Freedom from certain debts: Chapter 7 bankruptcy wipes out many kinds of debt, including:
Credit card debt.
Medical bills.
Personal loans.
Civil judgments (except for fraud).
Past-due rent.
Past-due utility bills.
Business debts.
Some older tax debts.
Some debts, including child support and recent tax debt, can’t be erased in bankruptcy. Student loan debt can be, but it’s very rare. But if your most troublesome debt can’t be discharged, erasing other debts could give you the room you need to repay what remains.
Your credit limits after bankruptcy are likely to be low, however, and your access to credit — like your credit scores — won’t recover completely until a Chapter 7 bankruptcy drops off your credit reports after 10 years. That’s a long time in the penalty box. But let’s dispense with the idea that people facing bankruptcy are choosing between paying their bills and not paying their bills.
 
 
When to stop digging a hole you can’t escape
Most of us feel we have a moral obligation to pay what we owe — if we can. But typically that ship has sailed by the time people realize they need to consider bankruptcy. They can continue trying to chip away at debts they may never be able to repay, prolonging the damage to their credit scores and diverting money they could use to support themselves in retirement. Or they can recognize an impossible situation, deal with it and move on.
Most of us feel we have a moral obligation to pay what we owe — if we can. But typically that ship has sailed by the time people realize they need to consider bankruptcy.
If you can pay your bills, obviously you should. If you’re struggling, check out your options for debt relief. But bankruptcy may be the best option if your consumer debt — the kinds listed above that can be erased — equals more than half your income, or if it would take you five or more years to pay off that debt even with extreme austerity measures.
 
Here’s what you need to know:
You need a bankruptcy attorney: It’s easy to make a mistake in the complicated paperwork, and an error could cause your case to be dismissed. If that happens, you end up with no relief — but still have credit scores tanked by the bankruptcy filing.
If you’re still paying your credit cards and other consumer debt, you could stop and redirect the money to pay for an attorney. Another option is to borrow from friends and family. Don’t open new credit accounts to borrow the money, though, since that could be considered fraud. Discuss your options with an attorney.
Don’t wait too long: There’s a misconception that people file bankruptcy at the drop of a hat or when they still have other options. The reality for most is quite different. Some drain assets, such as their retirement accounts, that could have been protected from creditors in bankruptcy. People throw good money after bad until they have no money left to seek relief.
Schedule a Free Consultation with Your Portland Bankruptcy Lawyer
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney who will be able to guide you through the process as cleanly as possible. Northwest Debt Relief Law Firm, we can help you with filing for Chapter 7, Chapter 11, and Chapter 13 bankruptcy in Portland, Oregon.  We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
Give us a call at (503) 912-8809 to schedule a free consultation with one of our bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.
The post When Bankruptcy Is the Best Option and Finding the Right Bankruptcy Lawyer appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


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