Parents of College Students Face Financial Struggles; May Consider Bankruptcy

Posted on March 31, 2012 by Staff Writer

According to a Tucson Citizen article, parents of college students are among those more frequently filing for bankruptcy. In fact, the increase in the number of students and parents seeking help with debt has risen, based on the results of a survey of bankruptcy attorneys. And the National Association of Consumer Bankruptcy attorneys has stated that college student loans could be the next financial crisis for the United States.

There are many reasons for this increase. First, the cost of attending college is rapidly rising – not only tuition, but room and board. Many parents may have counted on scholarships or an increase in family income, but with the unsteady economy, they more often faced a job loss, tanked investments, or another decrease in incoming money. On top of these factors, students aren’t finding jobs as easily or quickly as in the past, upon graduating from college – making it harder for them to pay back their student loans (for which parents are often a co-signer) themselves.

Some parents have even resorted to using credit cards to fund a portion of their child’s college education. A Sallie Mae survey showed that 3 percent of parents did this, with the average amount charged being nearly $5,000. While running up credit card debt is rarely a good thing, there is one potentially beneficial aspect of using a credit card to pay for college: student loans are nearly-always exempt from being discharged due to a bankruptcy filing – while credit card debt is generally wiped clean by filing for bankruptcy.

Filing for bankruptcy no longer holds the stigma that it once may have. For many who are struggling with overwhelming debt, bankruptcy is the best available option. If you’re considering filing for bankruptcy in Arizona, contact a top Mesa, Arizona bankruptcy attorney for advice.

Proposed Legislation Would Allow Some Student Loan Debt to be Discharged Through Bankruptcy

Posted on March 31, 2012 by Staff Writer

Under current bankruptcy laws, student loans cannot be discharged through filing for bankruptcy. Federally-funded student loans have long been excluded from discharge, but private student loans were deemed ineligible per a 2005 provision. Some lawmakers are seeking to change bankruptcy laws to allow privately-funded student loans to be relieved through a bankruptcy filing.

On March 20, a subcommittee of the United States Senate heard testimony regarding this issue. Sen. Dick Durbin (D-Ill.) says that private student loan debt shouldn’t be treated differently than other types of private debt in terms of eligibility for discharge through bankruptcy. His legislation, introduced in 2011, would allow for private student loan debt to be able to be discharged through bankruptcy proceedings. He also says that the 2005 bankruptcy law is somewhat of a mystery, as it’s not clearly known who introduced it.

An attorney for the National Consumer Law Center testified that the provision was passed to attempt to prevent abuse by student loan borrowers. Yet the attorney, Deanne Loonin, says that it’s not right to treat student loan debt the same as other exempt debt such as child support and alimony payments.

Opponents of the legislation feel that it’s not fair to discharge student loan debt, since a person’s education can’t be repossessed in the way that, say, a car can. Proponents argue that student loans operate in a much different way than other types of private debt.

If you have concerns about what debt can be discharged in your Arizona bankruptcy, contact a qualified Phoenix bankruptcy lawyer. An Arizona bankruptcy attorney is an invaluable asset to have at your side throughout the entire bankruptcy process.

Debtor Receives 38 Calls from Creditor After Filing for Bankruptcy

Posted on March 30, 2012 by Staff Writer

As explained in a previous post, when someone files for bankruptcy in Arizona, the bankruptcy court issues an automatic stay, which prevents most creditors from attempting to collect payments from them. When creditors violate this automatic stay, they can face stiff punishment, as evidenced by a recent case involving the Bank of America.

According to the Huffington Post, Bank of America contacted one particular Florida debtor (who had recently filed for bankruptcy) 38 times after the court issued an injunction preventing debt-collectors from contacting the debtor. As a result of the debt-collector harassment, the court ordered Bank of America to pay the debtor over $12,000 for attorneys fees and emotional distress related to their illegal attempts to collect from the debtor. The article also states that Bank of America has previously provided debtor information to outside credit collecting agencies even after the debtor has filed for bankruptcy, and that BOA may not be the only creditor partaking in these unethical actions.

Making the decision to file for bankruptcy should be the beginning of the end of financial stress, those who make this decision deserve to have their debt-collection calls end. It’s best to retain the services of a qualified Tucson bankruptcy lawyer before filing for bankruptcy in Arizona, but even if you’re mid-way through the process, being represented by a skilled Arizona bankruptcy attorney can help ensure that your rights aren’t being violated and that your bankruptcy proceedings are going as they should be.

Can I Get My Bankruptcy Off My Credit Report?

Posted on March 29, 2012 by Staff Writer

When people make the decision to file for bankruptcy in Arizona, they often wonder what impact their bankruptcy will have on their credit report. This is a valid concern, however, the effect of a bankruptcy on your credit rating may not be much worse than the consequences of doing nothing and trying to avoid debt-collection calls for debts that you cannot afford to pay.

Your credit is recorded by various consumer reporting agencies, all of which have their own method for calculating your credit score. These private agencies use information from public sources, such as bankruptcy court records, as well as information regarding delinquent debts that is provided by creditors.

While filing for bankruptcy will impact your credit rating, the Fair Credit Reporting Act prohibits these consumer credit agencies from including a bankruptcy that is more than 10 years old on a person’s credit report. Additionally, in most cases, any potentially negative credit information due to a bankruptcy is removed after 8 years.

The Arizona bankruptcy court does not have the power to order that a bankruptcy not be reflected on your credit report, or to request that it be removed at any point earlier than 10 years after you filed for bankruptcy.

There are also things you can do to improve your credit score following a bankruptcy. If you can, obtain a credit card or loan with a small limit, make a purchase, and immediately pay it off. You can slowly rebuild a good credit score with careful spending practices.

A qualified Phoenix bankruptcy lawyer can carefully explain the interaction between your credit score and filing for bankruptcy. Contact a top Phoenix, Arizona bankruptcy attorney to get all of your bankruptcy questions answered.

Automatic Stay Can Stop Debt Collection in Arizona Bankruptcies

Posted on March 27, 2012 by Staff Writer

If you decide to claim bankruptcy in Arizona, the first step is to file a bankruptcy petition with the Arizona Bankruptcy Court, which is part of the U.S. District Court system. Once this petition for bankruptcy is filed, the court issues an injunction that halts any foreclosures, garnishments, lawsuits, and debt collection activities related to your debts. This “automatic stay” comes as a welcome relief to those who are experiencing financial difficulties and are also dealing with stress of constant creditor harassment and debt-collection activities.

However, it is possible for some creditors to get an exception to this automatic stay, which is done by filing a “Motion for Relief from the Automatic Stay” (and submitting additional documentation) with the court that is handling your Arizona bankruptcy case. You will be notified if any Motion for Relief is filed, and will have a chance to respond to the motion before the court decides whether or not to grant it. If you object to the Motion for Relief, the court may hold a hearing on the matter. If the court decides to grant the Motion for Relief, they will issue an order stating such, of which you’ll receive a copy.

The Arizona Bankruptcy Court advises against proceeding with filing for bankruptcy without the help of a qualified Arizona bankruptcy attorney. If a Motion for Relief from Automatic Stay has been filed in your Arizona bankruptcy claim, it’s even more important to retain the services of a qualified Casa Grande, Arizona bankruptcy lawyer.

(Image courtesy of renjith krishnan)

Could you discharge all your consumer debts via personal bankruptcy?

Posted on March 23, 2012 by Staff Writer

Could you discharge all your consumer debts via personal bankruptcy?

In this current era of economic downturn, debt problems are quite common. Federal Reserve report says, consumer debt in the U.S. went up by over $6 billion, which is the seventh straight month in which U.S. consumer debt rose high. If you are knee deep in debt and your funds are scarce, you must consider debt settlement to come out of your debt maze. Despite the negative stigma, you can consider bankruptcy as a viable solution to your debt problems. Though it has adverse effect on your credit, but it can give you a financial fresh start and provides you complete relief from your consumer debt. Consumer debts like credit card debt, car loans and home mortgages could be discharged through the bankruptcy courts. Read on to know how consumer debt could be liberated through personal bankruptcy like chapter 7 and chapter 13.

Chapter 7 bankruptcy

Chapter 7 Bankruptcy or better known as straight bankruptcy is the most common choice of average consumers struggling with unsecured debt. Under a chapter 7 bankruptcy all your non exempt assets are liquidated to pay off your debt amount. However, that does not mean it’s mandatory to liquidate all your assets. Each state protects its residents from liquidating a certain amount of property. Under chapter 7bankruptcy you can not eliminate your secured debts like a mortgage or automobile loan, but it does allow you to return the collateral and remove all deficiency balance. It usually takes six months to accomplish a chapter 7 plan and usually requires one visit to the courthouse. Once you file a bankruptcy petition explaining the debtor’s background, property and finances, it will automatically put a stop to all collection activities. The creditors will be barred from taking any action like wage garnishment, foreclosure, or any other action against you. Its known as the automatic stay. During this time debtors usually settle the secured loans like mortgages and automobile loans and decide whether he likes to sacrifice the secured property. Chapter 7 bankruptcy discharges all your unsecured debts and holds you responsible to pay for only priority debts and secured loans. However if you fail to make the payments on secured loans after bankruptcy, the creditor has every legal right to seize the secured property.

Chapter 13

However if you like to keep your non-exempt property in tact, chapter 13 bankruptcy can be a more suitable option for you. Under chapter 13 bankruptcy, consumers follow a court approved repayment plan and pay off the debts more conveniently without facing any liquidation. Chapter13 is usually for those with a steady income flow. Under chapter 13 the payment schedule varies between 36 months to 60 months. During chapter13 you work under the strict supervision of a court-appointed trustee. You make the payment to the trustee every month, who further disburse the payments among the creditors. The best part here is there is no property exemptions involved in a Chapter 13 bankruptcy, as all of your assets are automatically protected. After the successful accomplishment of chapter 13 all your debts are automatically discharged.

Last but not the least; keep in mind a number of debts are there, which couldn’t be discharged through bankruptcy. For example, State and federal taxes borrowed within the last two years prior to filing bankruptcy, alimony or child support, money, property, services, or credit obtained via fraud or misrepresentation, property taxes, penalties charges to local, state, or federal government and so on.

This is a guest post by Christina Jones, a writer & editor associated with Oak View Law Group ( http://www.ovlg.com/debt-reduction.html ). She has also been contributing to many personal finance blogs as a guest columnist.

Bankruptcy and College Financial Aid

Posted on March 20, 2012 by Staff Writer

Studies have shown that college enrollment is at an all-time high, which means that those seeking federal and private financial aid will face increased competition. Parents who have filed for bankruptcy, or who are considering filing for bankruptcy may also wonder – how will bankruptcy affect our ability to obtain financial aid funding for our child? Hopefully, it won’t.

There are two types of student aid funding: federal and private. Federal funds can help pay for higher education through grants and loans. Grants range in the amount given and stipulations for receipt, but the recipient is not required to pay back the amount. Federal loans are given when the recipient meets specifications as stipulated by the type of loan. Usually, the federal government provides low-interest loans and pays the interest while the student is enrolled full-time in an academic program at an approved institution. On the other hand, private loans are given based on a recipient’s or third-party’s credit history. These loans offer market-rate interest rates with various stipulations. Bankruptcy affects each type of student aid in different ways.

How bankruptcy impacts funding for college is not a cut-and-dry issue; each family’s case varies, and bankruptcy laws are complex. Generally speaking, a family’s bankruptcy status will have little to no affect on obtaining federal financial aid. Some types of aid are federally mandated to exclude bankruptcy status when considering a recipient’s eligibility, including Title IV grants and Perkins loans.

However, the effect of a parent’s bankruptcy in regards to private funding can be more complex. In most cases, a parent’s past bankruptcy will have no impact on a student’s eligibility for private funding. In this situation, it’s very beneficial to have an experienced Avondale bankruptcy lawyer handle negotiations with lenders.

Don’t let your bankruptcy impact your family’s education: be informed. For detailed information on how to navigate bankruptcy issues when applying for financial aid, consult a top Avondale, Arizona bankruptcy attorney today.

How Bankruptcy Filings Affects Utility Services

Posted on March 20, 2012 by Staff Writer

Filing a bankruptcy can help people who are behind in their utility payments.

Section 366 of the United States Bankruptcy Code covers utility service and the continuation or discontinuation of utility services

If you have utilty bills that are passed due at the time of filing your bankruptcy they will be eliminated and the utility company will be prohibited from shutting off your utiltiy.

You will only be responsible for future utility bills after the filing of your bankruptcy petition.

The utility company can ask for a security deposit or adequate assurance (they don’t often do this) if the utility company believes that you may have difficulty keeping current on your future payments.

If your utility service has been terminated before you file your bankruptcy, and you have the ability to make a down payment, the utility will have to reinstate your service.

If your utility has not been terminated, as a practical matter, when you file a bankruptcy all your pre-petition utility bills will be eliminated and you will only be responsible for future payments. If you have questions contact an Phoenix Bankruptcy Attorney today.

The Credit Counseling Requirement in Bankruptcy

Posted on March 20, 2012 by Staff Writer

Under the new Bankruptcy Law of 2005, which became effective in October of 2005, it is now necessary for all persons filing a Chapter 7 or Chapter 13 Bankruptcy Petition to obtain what are called “Counseling Certificates”.

The specifics of the requirement are that everyone filing a Chapter 7 or Chapter 13 Bankruptcy Petition must obtain one Counseling Certificate before and one Counseling Certificate after the Bankruptcy Petition is filed.

The reason for the new law pertaining to the Counseling Certificates is to help people learn how to better budget their finances and learn more about options other than bankruptcy.

The Counseling Certificates must be obtained from an accredited counseling organization.

It usually takes about 45-90 minutes to complete the first Counseling Certificate which can be done in person, by phone, or onlne.

Normally a fee is charged for the Certificates unless the person cannot afford the cost. If a person cannot afford the cost, a waiver can be obtained.

Remember, once the approved Counseling Certificate is obtained, it is valid for 180 days. If a person fails to file a petition within the 180 of obtaining the Certificate then the Certificate will expire and a new one will have to be obtained.

It is also necessary to obtain a second Counseling Certificate within 45 days of having the creditors’s hearing or what is called the “341 Hearing”.

The 341 Hearing normally takes place about 30 days after filing the Bankruptcy Petition.

The second or Post-Petition Filing Certificate provides the person with supplemental information that was learned from the Pre-Petition Filing Certificate and takes a little more time to complete compared to the Pre-Petition Filing Certificate.

From what clients have told me, I have learned that what is learned through the Counseling courses is valuable, usable and practical information. If you have questions contact an Arizona Bankruptcy Attorney today.

Receiving Unemployment and Filing for Bankruptcy

Posted on March 16, 2012 by Staff Writer

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act established a “means test” as a way to determine which debtors are eligible for filing Chapter 7 bankruptcy. This basic formula is used to calculate if the person filing for bankruptcy has the ability to make minimal monthly payments. If the results of the means test show that the debtor should have money left over each month to pay towards their debts, in most cases they will then only be eligible for a Chapter 13 bankruptcy – instead of the liquidation process of a Chapter 7 bankruptcy.

The United States Bankruptcy Code establishes all rules and regulations related to filing for bankruptcy in Arizona and across the nation. Per this code, money received “under the Social Security Act” isn’t included when calculating a debtor’s “current monthly income” for the means test. However, bankruptcy courts have had differing rulings as to what income is considered to be received “under the Social Security Act” – including whether or not unemployment benefits fall into this category.

In a recent study conducted by the American Bankruptcy Institute, 58% of respondents felt that money received as unemployment benefits should be exempt from inclusion in the debtor’s “current monthly income” when filing for bankruptcy. Thirty-seven percent said that unemployment benefits should count as monthly income, while 2% “did not know or had no opinion.”

Passing the “means test” is critical if you’re filing for Chapter 7 bankruptcy in Arizona. A top Mesa Arizona bankruptcy lawyer can provide invaluable advice and guidance throughout all stages of your Arizona bankruptcy proceedings.