Filing Bankruptcy: Attorneys, Student Loan, Bankruptcy Ch.13

Filing Bankruptcy: Attorneys, Student Loan, Bankruptcy Ch.13

Posted 11.28.2011 in Articles by Jessica

In these economically challenging times, there is no reason anyone should feel ashamed to admit they are drowning in a sea of debt. For people who have suffered financial hardship due to job loss or medical issues, bankruptcy may well be worth consideration. A bankruptcy attorney is the resource to turn to in such difficult times. An attorney will spend time getting familiar with their client's history before advising on the next step to take. Chapter 7, Chapter 13 and credit counseling plans are available based upon an individual's amount of debt, amount of assets, income level and the type of debt incurred.

Alternatives to Bankruptcy

For those people who think they should file bankruptcy but have a relatively low amount of debt may be well advised of an alternative to filing bankruptcy. But again, only an attorney with no vested interest in your finances must write you this prescription. Do not take the advice of friends and your credit card companies. They are not the ones who are stuck with this debt, you are. It may be wiser for you to get on a low interest debt repayment plan due to your relatively low debt, your high income or the liquid assets you don't want to risk losing. When you file Chapter 7 bankruptcy, there is a limited financial-asset amount you can retain.

 

Filing Bankruptcy

The different types of filings available in bankruptcy courts are Chapter 7, Chapter 13 and debt repayment plans that are structured for specific cases. The attorney must choose which is appropriate for your situation because the reason for bankruptcy is to clear your debt, not add unnecessary complications to your life.

 

Chapter 7 and Chapter 13 Bankruptcy

For most individuals swimming in credit card debt, personal injury related debt or other common situations, Chapter 7 bankruptcy protection is usually recommended. This means all debt is wiped out completely and a person can start cleanly on the road to rebuilding their credit. The bankruptcy mark will drop off a credit report in 6 to 7 years. However, creditors will be eager to get you as a customer again because they will know you will not be able to file bankruptcy again for another 7 years.

 

Chapter 13 bankruptcy protection is appropriate for people with a very steady income and significantly larger debt problems than credit cards. People who in danger of losing their home may seek relief under Chapter 13 by setting up a payment plan. In fact, the main difference between Chapter 7 and Chapter 13 is that the former cleans away all debt but the latter sets up a payment plan structured upon a persons income. A person must own less than $360,475 in unsecured debt and less than $1,081,400 in secured debt.

Bankruptcy and Student Loans

1 in every 3 Americans struggle with Student Loan debt. Most student debt comes from Federal Stafford Loans which are taken out during a student's college years without regard to credit rating and these loans cannot be deleted with bankruptcy protection. Only the Student Loans that were taken out based on the borrower's credit score can be filed against, and even those are subject to some protections by the credit borough. A bankruptcy attorney must have the final word on how to handle or possibly eliminate these debts. In most cases, an attorney can set up a consolidated Student Loan debt repayment plan for you.

 

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