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If you’re in over your head with student loans, chances are you’re getting desperate.
You’ve seen the ads claiming that there are ways to get your student loans forgiven, and that new programs exist to help you. But when you make a phone call, you find out that it’s the same old bait-and-switch maneuver that won’t get you anywhere.
You know it’s an uphill battle to wipe out student loans in bankruptcy, but maybe … just maybe … your claim of undue hardship will prevail. Tell the judge your story, beg for mercy, and maybe it will work.
But then you talk with a student loan lawyer and are told in no uncertain terms that an undue hardship claim will cost a small fortune and chances of success are slim at best. We’ve talked about the cold, hard reality in the past.
Collectors are coming at you, demanding payment. You’re waiting for the lawsuits, wage garnishment, and tax refund offset.
But wait – maybe there’s something you can do.
Is Bankruptcy May Be The Hidden Solution
Even if you can’t wipe out the student loan debt in bankruptcy, there’s a lot that the process may be able to do for you.
Take, for example, those credit card debts. Bankruptcy may be able to wipe those out for you. Same with medical and dental bills, personal loans, and some tax debts.
Remove those obligations and suddenly you’ve got a few bucks left over to pay down the student loan debts. It won’t make the problem go away immediately, but at least bankruptcy will give you some breathing room so you can work with the student loan creditors.
Using Bankruptcy To Force A Student Loan Repayment Plan
Even if you don’t have other debts to wipe out, you may decide to use bankruptcy as a way to structure a repayment plan for your student loans.
The repayment plan will run up to 60 months and won’t result in the balance of the student loan debt being wiped out (in fact, the balance may rise if your repayment plan doesn’t cover the accrued interest). It will, however, give you room to breath more freely.
When the repayment plan is done, maybe your income will be high enough to resume regular payments. If not, you can go back to bankruptcy court.
A Tool For Debt Relief
All too often, we look at the bankruptcy process as a way to get out of debt immediately. If bankruptcy won’t help with one specific debt right away then it doesn’t seem worth it.
But dig a little more and you’ll see that bankruptcy may be able to help with student loan problems even without a discharge.
The goal is to get into a better financial position, and that means a review of the big picture. Looking at things on a debt-by-debt basis will only serve to make things worse.

If you are in Chapter 13, the vehicle operating budget you are allowed will be too small. That’s (almost) a mathematical certainty.   Here’s why. The census bureau shows–no surprise–that people who are working spend on average double on transportation gasoline and maintenance than people who aren’t.    (For more, see this from the American […]The post Chapter 13: Your vehicle operating budget is too small. by Robert Weed appeared first on Robert Weed.

Bankruptcy Relief Recently, I met with a man who was running a small business out of a storefront. Well it turned out that he was unable to survive at that current location. The problem was that he had a lease that expired five years into the future. So here he was with a business that+ Read More
The post Not Everyone Qualifies For Chapter 7 Bankruptcy Relief appeared first on David M. Siegel.

Yesterday, June 18, 2014, the 11th Circuit Court of Appeals issued its decision in the case of Wells Fargo Bank, N.A. vs. Scantling (In re: Scantling) on an issue where there has been a split of authority in the courts for many years.  The Court held that a chapter 13 debtor (a "chapter 20" debtor) who was not entitled to a chapter 13 discharge (due to prior chapter 7 case within 4 years) could avoid wholly-unsecured (wholly "underwater") junior mortgages.  By this decision, the 11th Circuit Court of Appeals upheld the Bankruptcy Court of the Middle District of Florida's decision.

The 11th Circuit Court of Appeals reviewed the following in making its decision:

1. Pre-BAPCA practice in "chapter 20" cases - lien avoidance was allowed
2.  In re Tanner (2000) - 11th Circuit Court of Appeals
3. 11 U.S.C. §§ 506, 1322(b), 1325 (a)(5)
4. Dewsnup v. Timm (1992) - U.S. Supreme Court 
5. Nobelman v. American Savings Bank (1993)  - U.S. Supreme Court
6. Changes made by BAPCPA (2005) - a chapter 13 debtor not entitled to a discharge if filed within 4 years of a chapter 7 case 
7. Reviewed the split of authority on the issue - the majority and minority views 
8. Adopted the majority view
9. Noted its unpublished opinion in In re Malone (2014) - chapter 7 debtor able to avoid wholly unsecured mortgage lien (Court held it was bound by its prior published decision) 

Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055