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Finding out that your student loans are suing you can scare the living daylights out of you. Many people do nothing in the hopes that it will just disappear if they ignore the lawsuit. But that’s the most dangerous reaction to being sued for student loans.
If you ignore the lawsuit and do nothing, the student loan company will get a judgment against you. This judgment gives the lender the ability to take additional actions such as wage garnishment, bank account freezes, and placing liens on your property.
The judgment can last for ten years – more if the student loan creditor gets court approval to extend the effect of the judgment. During that time, interest continues to accumulate on the debt.
That’s why it’s important to act quickly in response to any student loan lawsuit – failure to do so will limit your options in the future.
Do You Owe The Debt?
You’ve got to review the court papers to ensure that the amount due is correct, and the creditor (the people who are suing you, listed as Plaintiff on the court papers) is correct.
If you’re 100% sure that BOTH of those things are correct, do two things:
go to the courthouse and file an Answer. It doesn’t need to be complicated, just something that prevents the student loan company from taking a default judgment against you; and
make a phone call to the lawyers representing the student loan company.
When you talk with the lawyers on the other side, find out if there’s a payment plan or one-time settlement amount that they’re willing to accept to resolve the matter. Before accepting any offer, sit down with a lawyer or accountant to talk about tax implications and other potential financial fallout.
Get all offers in writing, as well as any final settlement agreement. Otherwise, the student loan lender may change the terms and you won’t have any proof of what was agreed upon.
Consider Bankruptcy
If the amount is correct but you can’t get it settled, consider filing for bankruptcy.
No, not because bankruptcy will wipe out your student loans. But because bankruptcy may ease the burden of paying your other debts, putting you in a better position to pay the student loans.
You can also look into filing a repayment bankruptcy that will allow you to make monthly payments for a 3-5 year period of time in the hopes that your finances improve before the end of the repayment plan.
If Things Don’t Add Up
Let’s say you go through the lawsuit papers and don’t recognize the name of the student loan company suing you. Or the amount they claim that you owe isn’t quite what you remember it to be.
You may be tempted to pick up the phone and call the lawyers working for the student loan lender. Or you may sit down and write an angry letter.
Neither of these will protect you from a default judgment.
In order to protect your rights – and to prevent a judgment from being filed against you – you’re going to need to file and serve an Answer in court.
Doing so will not only protect you, but will also force the student loan company and their lawyers to prove every element of the case. That include the amount due and a host of other things.
In addition, it also provides you with the opportunity to counterclaim if you believe that your rights have been violated under federal and state collection harassment laws.
- How Long Can You Be Sued On A Private Student Loan In California?
- Should You Hire A Student Loan Lawyer, Counselor, Or Go It Alone?
- Private Student Loans – Possible FDCPA and FCRA Defenses
- 12 Steps To Beating Private Student Loan Companies At Their Own Game
Remember that you’ve only got a limited amount of time to act before a default is taken against you, so don’t waste any time.
Nobody wants to be sued for a student loan, but working to resolve the issue quickly and effectively is in your best interests.
Most people are under the misconceptions that if they file for bankruptcy, then they will lose all of their property. This is simply not the case. Most people who file for Chapter 7 bankruptcy retain all of their personal property. That is because the state of Illinois provides exemptions as it related to personal property.+ Read MoreThe post You Can Keep Property When Filing Chapter 7 Bankruptcy appeared first on David M. Siegel.
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Miami Bankruptcy Attorney Jordan E. Bublick may be reached at (305) 891-4055 or at [email protected] to schedule a free initial consultation to review your financial and legal situation and your options for bankruptcy relief. North Dade Office:
20801 Biscayne Blvd., Suite 403Aventura, FloridaTelephone: (305) 891-4055
South Dade Office:
9100 S. Dadeland Blvd., Suite 1500Datran CenterMiami, Florida 33156Telephone: (305) 420-5599
Brickell Office:
1221 Brickell Avenue, 9th Floor
Miami, FL 33131Telephone: (305) 891-4055
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
Click to Book Free Initial ConsultationNorth Dade Office:20801 Biscayne Blvd., Suite 403
Aventura, Florida 33180
Telephone: (305) 891-4055
South Dade Office:
9100 S. Dadeland Blvd., Suite 1500
Datran CenterMiami, Florida 33156Telephone: (305) 420-5599
Brickell Office:
1221 Brickell Avenue, 9th Floor
Miami, FL 33131Telephone: (305) 891-4055
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
When you file for bankruptcy, you need to pay a filing fee to the court.
That’s different from any legal fees you may have to pay to a lawyer, or fees you may pay to someone to get the bankruptcy papers typed up neatly.
The filing fee goes directly to the court system.
Here’s what you need to know.
Bankruptcy Court Filing Fees As Of June 1, 2014
The follow are the filing fees payable to the bankruptcy court when a case is filed:
- Chapter 7: $335 [$245 filing fee + $75 administrative fee + $15 trustee surcharge]
- Chapter 9: $1,717 [$1167 filing fee + $550 administrative fee]
- Chapter 11: $1,717 [$1167 filing fee + $550 administrative fee]
- Chapter 12: $275 [$200 filing fee + $75 administrative fee]
- Chapter 13: $310 [$235 filing fee + $75 administrative fee]
- Chapter 15: $1,717 [$1167 filing fee + $550 administrative fee]
Your lawyer can pay the filing fee using a check, money order, cash or credit card. If you’re filing for bankruptcy on your own, you can pay in cash or money order only.
If You Need An Installment Plan For Your Filing Fees
If you can’t afford to pay the full fee at the time of filing your bankruptcy case, you may apply to pay the fee in installments.
In order to do so, you must complete a form and submit it when you file your case. Your application must include the dates you intend to pay, and the amounts of, each installment.
You’ll have to appear at a hearing in front of the bankruptcy judge, at which time it will either be approved or denied. If approved, you can generally pay your filing fee over a 4-6 month period of time. If you don’t make your payments on time, your bankruptcy case may be dismissed.
Be prepared, however, for the possibility that the application to pay the filing fee in installments is denied. If that happens, you’ll need to pay the full filing fee immediately or risk having your case kicked out of court.
Click here for the official form to pay the filing fee in installments.
Waivers Of Bankruptcy Court Filing Fees
If your finances are so tight that you can’t afford to pay the filing fees even in installments, you may request a waiver of the filing fee. You must complete the form requesting the waiver and file it when you file your bankruptcy case.
By law, the bankruptcy court judge may waive the fee only if your income is less than 150 percent of the official poverty line applicable to your family size and you are unable to pay the fee in installments. You may obtain information about the poverty guidelines by clicking this link.
For a family of 4 people, you can make $35,775 and potentially get the filing fee waiver.
Click here for the official form for waiver of the Chapter 7 bankruptcy filing fee.
The Courthouse Doors Remain Open
As you can see, the bankruptcy court system is serious about your access to the system.
No matter your financial situation, there’s a way to get you in the courthouse door.
All you need to do is take the step inside.
Filing for Chapter 7 bankruptcy won’t get rid of a judgment that’s already on your record. Depending on your situation, you may not care.
When you file for Chapter 7 bankruptcy, you are looking to wipe out your personal liability for repayment of certain debts.
If a creditor sued you and got a judgment before the bankruptcy case is filed, then you may be able to wipe out that liability.
But the judgment is a separate matter. It is a record of an official result of a lawsuit in court. Even if you wipe out your liability for the debt, the record of your judgment remains in place.
What If You Do Nothing?
Assuming the underlying debt is wiped out in your Chapter 7 bankruptcy case, the judgment remains nothing more than an empty shell.
The creditor cannot freeze your bank account, seize your wages, or take any further action against you.
However, the judgment may remain on record as a valid lien against any property you owned at the time your Chapter 7 bankruptcy was filed. The creditor can’t do anything with the lien, but it will need to be paid off in the event that you try to sell the property while the judgment is in place.
Under California law, a judgment becomes a lien on land, a house or other building you own only if the judgment creditor files an Abstract of Judgment. In other states such as New York, however, the judgment is automatically a lien against property.
Why A Judgment Lien May Not Be Troubling
A judgment does not last forever. In the event that the judgment is considered a lien against your property, you may not be concerned if you don’t intend to sell the property before the judgment expires.
Judgments expire in 10 years under both California and New York laws. In both states, however, the creditor can apply for an extension of the judgment to get 10 more years to collect the debt.
In addition, if you’re in New York you have the option of going back to state court to seek a discharge of the judgment after a certain amount of time has passed since your bankruptcy discharge. Learn more about that here.
If you go through Chapter 7 bankruptcy and have a judgment but don’t expect to need to sell your property within the time that’s left for enforcement, you may decide to do nothing. It’s a decision you need to make with your bankruptcy lawyer.
How To Get Rid Of The Judgment Lien In Bankruptcy
Let’s say you don’t feel comfortable with the lien remaining in place.
If that’s the case, you’ll need to file a motion to avoid the judgment lien in bankruptcy court.
To do so, you’ll need to prove that the lien is impairing an exemption to which you are entitled under the bankruptcy laws. You should expect to provide to your lawyer at least all of the following:
- valuation of the property;
- balance due on all mortgages, home equity loans, and other liens; and
- copy of the judgment (and, if applicable, Abstract of Judgment) from the state court.
Is It Included In Your Chapter 7 Bankruptcy Fees?
Depending on when the judgment is issued, taking care of the motion in bankruptcy court may or may not be made a part of your retainer agreement. You want to make sure your lawyer knows about all pending lawsuits and outstanding judgments so that he or she can properly assess your situation.
Read the retainer agreement carefully and ask questions. Without full information about what’s covered and what isn’t, there’s no way for you to plan your post-bankruptcy future.
In the past, if you were behind on your mortgage payments and did not want to keep your home, you had the ability to surrender it without much concern. Everything changed however at the start of 2014. The mortgage debt forgiveness relief act was not extended into 2014. This means that if you surrender your+ Read MoreThe post If You Are Behind On Your Mortgage Payments, Now May Be The Time To Save Your Home. appeared first on David M. Siegel.
Personal Bankruptcy Is Technically Public The fact is that filing a personal bankruptcy case is public record. However, the fact you filed is not something that is easy to obtain by the general public. There is a public access system known as PACER which contains information regarding bankruptcy filings throughout the country. To gain access to+ Read MoreThe post Is Filing Personal Bankruptcy Public? appeared first on David M. Siegel.
Chapter 7 bankruptcy is known as liquidation bankruptcy. However, in most cases, there is nothing to liquidate. The debtor gets to keep a large portion of personal property while going through the process. The Illinois law that allows the debtor to keep property while filing for bankruptcy is known as exemptions. They apply to homes,+ Read MoreThe post Chapter 7 Bankruptcy – Liquidation appeared first on David M. Siegel.
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Adam Brown is a bankruptcy attorney for Dexter & Dexter, a debt relief agency helping people file for bankruptcy.
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