Bankruptcy Information
Chapter 7 bankruptcy and Chapter 13 bankruptcy offer different forms of protection. If you’re facing a financial crisis, a local bankruptcy attorney can help you determine whether Chapter 7 bankruptcy or Chapter 13 bankruptcy might be the right answer for you.
Generally speaking, Chapter 7 bankruptcy is intended to wipe the slate clean by discharging unsecured debt—debts like credit card debt, medical bills, and unsecured loans. Chapter 13 bankruptcy, on the other hand, is intended to give a debtor time to catch up past due payments over a period of 3-5 years, while keeping secured property like houses and cars.
Just complete this form & let Bankruptcy.me connect you with a bankruptcy attorney near you.At the end of a Chapter 7 bankruptcy, when all the requirements have been successfully completed, most remaining debts will be discharged by the bankruptcy trustee handling the case. However, a number of debts are not eligible for automatic discharge under Chapter 7. Educational loans are one of those debts. Bankruptcy lawyers from Everett can advise you on other debts that may not be dischargeable.
Educational or student loans are subject to closer analysis by the bankruptcy court before they may be discharged in entirety. The trustee assigned to your case will decide if exempting these loans from the bankruptcy will cause “undue hardship” on the debtor and his or her dependents, along with input from Everett bankruptcy lawyers. He will put these debts to three tests:
1. Will exempting these debts from discharge create an “undue hardship” on the debtor’s income? In other words, will exempting these debts from discharge cause the debtor to be unable to provide food and shelter for his or her family to a minimum standard?
2. Is it reasonable to assume that the income of the debtor is likely to remain at a level that makes statement 1 true for the majority of the repayment period of the loan? In other words, is the debtor’s income likely to soar in say, a year or so, making future repayment of the loan more than possible?
3. Has the debtor made a good faith effort in the past to repay these loans? Did the debtor at least try to pay down his or her student loans in a timely manner in the past? Is the inability to pay a recent event?
At the time the bankruptcy petition is filed by Everett bankruptcy lawyers, the debtor must demonstrate that he or she cannot make the loan payments and will not be able to in the future. The Bankruptcy Code does not establish firm guidelines for determining the dischargeablity of educational loans and the assessments may vary from court to court. Additionally, the costs associated with filing for hardship discharges are usually not included in the standard fee for filing a bankruptcy petition and must be arranged for separately.
