The post What debts can’t be discharged in bankruptcy? appeared first on Dezlaw.
]]>Even though you may be reluctant, filing for bankruptcy may be your only option. However, it’s first important to know which debts can’t be discharged in bankruptcy.
In most cases, student loans are not dischargeable in bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it difficult to discharge these debts unless you can demonstrate “undue hardship,” which is a challenging standard to meet.
Some exceptions exist, such as a student loan from a private lender.
Certain tax debts usually can’t be discharged. If the tax debt is less than three years old or if you committed tax fraud or evasion, you will still owe these debts after bankruptcy. However, older tax debts might be dischargeable under specific circumstances.
The courts consider child and spousal support obligations a priority, and filing for bankruptcy will not absolve you of them.
If you acquired any debts from false pretenses, false representations, or actual fraud, they can’t be discharged by bankruptcy. The government believes these types of debts are due to moral turpitude or criminal conduct. Therefore, the debtor should be held accountable for them.
These are just some examples of the types of debts that can’t be discharged through bankruptcy. Working with someone who can help you understand your options is crucial. Bankruptcy is a complex process, so it’s essential to make informed decisions.
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]]>The post 3 things to know about automatic stay in bankruptcy appeared first on Dezlaw.
]]>The automatic stay is a fundamental aspect of bankruptcy law that pauses most creditors’ actions against you. Every bankruptcy filer should understand three key aspects of automatic stay.
As soon as your bankruptcy petition is filed, the automatic stay goes into effect. This means that creditors must immediately stop all collection efforts, including phone calls, letters, wage garnishments and lawsuits related to debt collection. This provides immediate relief from the constant pressure of creditors and collection agencies.
The automatic stay also temporarily stops foreclosure actions on your home so you have additional time to catch up on missed payments or seek alternatives like a loan modification. In terms of eviction, the impact of the automatic stay can be a bit more complicated. It may not stop an eviction that was already ordered, but there are instances in which it can temporarily halt a nonpayment eviction.
While the automatic stay is a powerful tool, it doesn’t apply to all debts and legal actions. It doesn’t stop certain types of legal proceedings, including specific family law matters like child support and alimony, criminal proceedings and some IRS processes. It’s crucial to understand these exceptions to fully grasp the scope and limitations of the protection offered by the automatic stay.
The automatic stay also keeps the bankruptcy process fair because it removes the ability of creditors to circumvent the hierarchy of payments by collecting outside of the filing. Working with someone familiar with the process is beneficial.
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]]>The post How to minimize holiday credit card debt: 4 tips appeared first on Dezlaw.
]]>Excess debt can be stressful. If you’re already struggling with your finances, how can you get through the holiday shopping season without adding to your debt burden? Here are some tips:
List all the expenses you anticipate for the holiday season, from decorations and cards to wrapping paper and food for your feasts. Then, be realistic about what you can afford and start paring things down. Sticking to the final budget may be hard, but it can also keep your debts from growing.
It really is the thought that counts, so instead of buying your mom another gift basket, consider budget-friendly alternatives, like a scarf you’ve knitted or a framed photo of the two of you together. Those are more likely to be cherished for their sentiment and can convey your feelings better than something bought in a store.
There really are some good sales and promotions happening right now, so look for deals, use coupons and be strategic with your shopping. If you can tolerate the stress of last-minute shopping, the markdowns can be remarkable.
If you have a hard time with impulse buying, stay away from the internet and do all your shopping in person – in cash. Leave your credit cards at home. There’s a delayed “pain point” when you shop with credit, but actually watching the cash leave their wallet tends to make most people very conscious of their spending.
Sometimes, debts will pile up no matter how conservative you try to be with your finances. If you find yourself mulling over your financial situation this holiday season and you realize that your debts have become unmanageable, it may be time to consider other options, including bankruptcy.
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]]>The post What is the automatic stay in bankruptcy? appeared first on Dezlaw.
]]>One thing that can make the situation a lot worse is a constant barrage of emails, letters, calls and even knocks on the door from creditors or those they employ to collect their debts. It’s another stressor that those with debt problems do not need.
The moment you file for bankruptcy is the moment the creditors need to stop chasing you. They may be able to resume their efforts later depending on what happens, but for now, the matter is in the hands of the court, and the court expects silence from them. If a creditor has something to say or a request to make, they should make it directly to the bankruptcy court, not you.
Not only does this buy you some much-needed peace, but it ends the situation where “he who shouts loudest” gains an advantage. If you owe several creditors, the chances are high that you would pay the one who makes more noise or is more aggressive toward you first, before any others. This leaves more respectful creditors at a disadvantage. Once the court takes control of the process, it leaves all the creditors on a level playing field.
Learning more about your legal rights during bankruptcy can help you call out any creditors who fail to abide by the law.
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]]>The post Am I required to take a credit counseling course? appeared first on Dezlaw.
]]>Typically, all individuals filing for bankruptcy must finish credit counseling and debtor education courses from an approved organization or institution. Credit counseling often goes first before filing for bankruptcy. Then, you can enter a debtor education course later after filing. Both programs should provide completion certificates, which could be a requirement later when you seek to discharge specific types of debt.
These courses often have standard procedures in the country, but Alabama has a different process when approving program providers. Instead of the usual approval process with the country’s trustee program, Alabama has state bankruptcy administrators who help decide which organizations can officially offer these courses to individual filers.
Alabama’s approval process could also have variations, depending on the local district’s practices. Before entering a program, it is ideal to check on the list of approved providers allowed to offer these courses.
Despite having differences, bankruptcy in Alabama works similarly to other states, allowing you to relieve overwhelming debts and pay off creditors. Still, it is vital to know what to do and prepare before and after filing in compliance with the state procedures. Meeting these requirements cannot guarantee any outcomes, but it can help you go through the process more smoothly and address issues as they arise.
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]]>The post Who creates a filer’s repayment plan during Chapter 13 bankruptcy? appeared first on Dezlaw.
]]>People typically make between three and five years of payments on a monthly basis and are required to commit most of their disposable income to those payments. There is a lot of discretion related to how much a filer is required to pay and how much each creditor receives. Who puts together the repayment plan for a Chapter 13 bankruptcy filing?
The individual filing for bankruptcy or the attorney representing them will put together the initial repayment plan proposal. They will need to disclose all of their income and the debts that they intend to include in the repayment plan. There will then be a meeting that includes not only the person filing and the court-appointed trustee but also representatives from different creditors.
The trustee and those representatives will have an opportunity to ask questions and to challenge the details included in the plan. Creditors will receive a portion of the monthly payments based on their priority and the amount of the debt. In some cases, it may be necessary to make adjustments in order to obtain approval for the plan. It is of the utmost importance that people are honest when disclosing their income and also that they comply with the repayment plan to the best of their ability. If their financial circumstances change, they will likely need to send formal notice to the courts and update the plan to reflect their new situation.
Knowing what to expect during a Chapter 13 bankruptcy may help people feel more empowered about taking control of their financial situation by seeking debt relief in this way. Seeking legal guidance can provide helpful clarity in this regard.
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]]>The post Avoid these mistakes when filing for Chapter 7 bankruptcy appeared first on Dezlaw.
]]>Having made that commitment, you need to avoid doing anything that could jeopardize your chance of achieving a clean break.
You must be totally honest when you declare your finances. If a court discovers that you have passed money or assets to someone else just before you file, a judge could punish you. While it is natural to want to put some money aside somewhere safe, it’s not allowed.
Perhaps you still have something left on your credit card limit, so decide you may as well use it to get something you always wanted but knew you could never afford. If you are counting on being allowed to keep it for free when bankruptcy wipes your debts, think again. Lenders and courts are wise to this and will be looking for any extravagant purchases you’ve made before filing.
Lenders often continue to offer new or expanded lines of credit to people who they can see are already struggling to make repayments. That does not mean you can take them up on their offer, grab an extra few thousand and assume the bankruptcy will write that off, too. A court may rule that you took it without having any intention of paying it off and insist you pay it back.
Both being thoughtful about your approach to money at this time and seeking legal help early can prevent you from making mistakes that could harm your bankruptcy filing.
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]]>The post Can you rebuild your credit after bankruptcy? appeared first on Dezlaw.
]]>Here is how to rebuild credit after bankruptcy:
Although getting a loan after declaring bankruptcy sounds contradictory, it’s necessary for rebuilding credit. But be careful about the line of credit you choose.
Secured credit cards are easier to qualify for with a lower credit score. Your payment history will be reported to the major credit bureaus. If you make consistent payments, your score will improve over time. Confirm that your chosen secured credit card reports to the credit bureaus beforehand, as some don’t.
A credit-builder loan is another option. Unlike traditional loans, with credit-builder loans, the lender holds the money while you make payments. When you pay the principal and interest on the loan, the lender will release the loan to you. Your payments will be reported to the credit bureaus.
You can cover some of your expenses after filing for bankruptcy with a personal loan. And simultaneously improve your credit score.
Since most lenders will decline to give you a loan, you may need a co-signer. The lender will consider the co-signer’s credit score. If they are creditworthy, you will receive the loan. Repaying the loan on time will benefit you significantly.
After declaring bankruptcy, you should examine your credit reports frequently for errors, such as your credit score not improving as expected. If you notice any issues, report to the respective agency immediately.
With legal guidance, you should make informed decisions when declaring bankruptcy to avoid moves that can negatively impact your ability to rebuild credit.
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]]>The post What constitutes debt collector harassment/abuse? appeared first on Dezlaw.
]]>This guide discusses what constitutes debt collector harassment or abuse:
A debt collector can call to remind you to pay your debt or follow up on an agreement you probably had with them the previous time they called you. But the phone calls should not be repetitive with the intention to annoy, harass or abuse you.
Calling at unreasonable hours, if you haven’t permitted them to do so, may also be harassment. Generally, debt collectors are prohibited from calling before 8 a.m. and after 9 p.m.
The court can use the frequency, pattern and hours of phone calls and voicemails from a debt collector to assess if harassment occurred.
A debt collector should be respectful when speaking with you. The use of obscene or profane language may be harassment or abuse.
If a debt collector uses or threatens to use violence or other criminal ways to harm you, your reputation or your property, they may have harassed you.
A debt collector can report the information of debtors to a credit reporting company. But it may be unlawful for them to publish a list of people who have allegedly refused to pay debts.
Some debt collectors lie about the amount of a debt or threaten to take actions that can’t legally be taken if the debtor refuses to pay. Some even lie about a debt being affiliated with the United States government or the state. This can be considered harassment or abuse.
You should get legal help to determine if you have experienced creditor harassment and know how to stop it.
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]]>The post Can bankruptcy help me clear my back taxes? appeared first on Dezlaw.
]]>Bankruptcy is a legal process that gives individuals or businesses that are having difficulty repaying their debts a chance to start over financially. Depending on the type of bankruptcy filed, it can help debtors discharge or restructure their debts while protecting them from creditors.
However, not all debts, such as certain tax debts, are dischargeable in bankruptcy.
Generally, certain types of tax debts are not dischargeable in bankruptcy, such as those that are not income tax and are recent. However, if the taxpayer satisfies the requirements of bankruptcy, they may be able to eliminate or reduce a portion of their back taxes.
Chapter 7 bankruptcy
Chapter 7, also known as liquidation bankruptcy, helps debtors pay off creditors through the sale of their nonexempt assets. After the trustee liquidates the debtor’s assets, they distribute the profits to creditors. Any remaining debt is discharged.
Tax debts are dischargeable under Chapter 7 bankruptcy only if they are:
Furthermore, to discharge back taxes, a taxpayer must have filed a tax return for it at least two years before filing for bankruptcy. It’s also important that the IRS has officially assessed the amount the taxpayer owes at least 240 days before the bankruptcy filing.
Chapter 13 bankruptcy
Chapter 13 bankruptcy, also known as the wage earner’s plan, allows debtors with a regular income stream to repay debts through a repayment plan. It is the preferred option for many as it allows a debtor to keep their assets and gradually repay debts over a period of three to five years.
The repayment plan also allows taxpayers to include and repay a portion of their back taxes. Additionally, there are certain types of tax debts that Chapter 13 may discharge that Chapter 7 cannot, such as:
Owing a significant amount of back taxes can be overwhelming for anyone. Though bankruptcy can discharge certain debts, it does not automatically free an individual from their tax obligations. The type of back taxes owed can influence whether clearing it through bankruptcy is possible.
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