Interesting and thought-provoking blog post from Russ Demott, a Charleston, South Carolina bankruptcy attorney, regarding the tendency of people to delay for forego filing for bankruptcy because of the administrative and expense burdens.
When you meet with your bankruptcy lawyer, you’ll be given a lot of information. You’ll also be given many tasks to complete before you file your bankruptcy case.
Our new bankruptcy law, BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act), created a tremendous amount of busy work for debtors. You must complete a credit counseling session prior to filing your case, you must provide the trustee with the last tax return you filed, and you must give your bankruptcy lawyer six months’ worth of pay stubs, just to get started. There’s lots of work to be done.
Debtors are already stressed out when they come to their lawyer’s office. The law is often confusing. There are many new terms thrown around: CMI, DMI, discharge, First Meeting of Creditors, 341, 362, median income, means test, trustee, and on and on. Even if they have a lawyer who explains things well, there’s a large amount of new information to absorb.
On top of all this, they must provide their lawyer with numerous documents. Some of these are easily accessible; some are not.
In my Charleston, South Carolina bankruptcy practice, I have noticed that many clients seem worn down by this process. We regularly check on open files to notify the clients of the information we need to file their cases. Sometimes they respond, but sometimes they don’t. It’s as if they believe that if they ignore the financial mess they are in, the problems will magically disappear. They won’t, of course. In fact, they’ll continue to get worse.
I call this financial repression. Like any other repression, it delays a resolution. Whatever the problem is, it doesn’t get solved.
I know financial problems are stressful. And I also know clients feel overwhelmed and beaten down. To be honest, I hate asking my clients for many of the documents I have to request. Much of the information is, as my high school history teacher would say, merely academic. I need the information to fill in a spot on a form, even though it’s really not relevant to their financial situation.
But I didn’t make these rules. And your bankruptcy lawyer didn’t, either. Think of the process as just a bunch of hoops you must jump through. The Credit Industrial Complex, as one of my colleagues calls it, wrote much of our bankruptcy law. The goal of the new law—or at least one of its primary consequences— was to make the process expensive and miserably labor-intensive. But if you allow yourself to repress your financial problems, you will be letting your creditors win.
Roll up your sleeves, start digging for those documents, and give your lawyer what he or she asks for. The sooner you do that, the closer you are to getting the fresh start you need and deserve.
About Russ Demott: Russell A. DeMott is a bankruptcy lawyer representing clients in Chapter 7 and Chapter 13 bankruptcy cases. He practices in Charleston, South Carolina.
Showing posts with label Chapter 7. Show all posts
Showing posts with label Chapter 7. Show all posts
Tuesday, December 15, 2009
Saturday, December 12, 2009
Discharging Student Loans
This is a good article about discharging student loans in a bankruptcy preceding by Christine Wilton from the Los Angeles Bankruptcy Law Monitor:
I am excited to share with you, a new resource for information regarding student loans, as published by the National Consumer Law Center. The Student Loan Borrower Assistance portal offers answers and and solutions to student loan borrowers, however, they do not provide legal advice. This issue has also attracted the attention of Congress, who recently held an oversight hearing on the matter.
Student Loans, in general, are not dischargeable in bankruptcy, absent undue hardship. 11 U.S.C. Section 523 (a)(8) provides that the debtor must show that the payment of the student loan debt will "impose an undue hardship on the debtor and the debtor's dependents." Courts have interpreted this standard very restrictively, which makes it very difficult for even the most vulnerable to receive a discharge. A recent case, Booth v. U.S. Department of Education, et al., 10 CBN 1093 (Bankr. E.D. Wash. 2009) held that debtors can prove undue hardship even if their Income Contingent Repayment Loan Program (ICRP) payments are zero. The Ninth Circuit Court asked, in Craig v. Educational Credit Management Corp., 19 CBN 1039 (9th Cir. 2009), how the bankruptcy court thought the debtor could pay their student loan.
The Court will apply a three-part test, known as the Brunner test, to determine whether excepting all or part of a student loan debt from discharge will impose an "undue hardship" under § 523(a)(8); Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987). Under the Brunner test, a debtor must demonstrate:
(1) that she cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans;
(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
(3) that the debtor has made good faith efforts to repay the loans.
Further, the procedural difficulty level is a general deterrent for most attorneys since the debtor must affirmatively seek this determination in bankruptcy and prove her case. For more information on this subject, check out Student Loans In Bankruptcy. Bankruptcy practitioners can purchase Discharging Student Loans in Bankruptcy as a resource.
I am excited to share with you, a new resource for information regarding student loans, as published by the National Consumer Law Center. The Student Loan Borrower Assistance portal offers answers and and solutions to student loan borrowers, however, they do not provide legal advice. This issue has also attracted the attention of Congress, who recently held an oversight hearing on the matter.
Student Loans, in general, are not dischargeable in bankruptcy, absent undue hardship. 11 U.S.C. Section 523 (a)(8) provides that the debtor must show that the payment of the student loan debt will "impose an undue hardship on the debtor and the debtor's dependents." Courts have interpreted this standard very restrictively, which makes it very difficult for even the most vulnerable to receive a discharge. A recent case, Booth v. U.S. Department of Education, et al., 10 CBN 1093 (Bankr. E.D. Wash. 2009) held that debtors can prove undue hardship even if their Income Contingent Repayment Loan Program (ICRP) payments are zero. The Ninth Circuit Court asked, in Craig v. Educational Credit Management Corp., 19 CBN 1039 (9th Cir. 2009), how the bankruptcy court thought the debtor could pay their student loan.
The Court will apply a three-part test, known as the Brunner test, to determine whether excepting all or part of a student loan debt from discharge will impose an "undue hardship" under § 523(a)(8); Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987). Under the Brunner test, a debtor must demonstrate:
(1) that she cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans;
(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
(3) that the debtor has made good faith efforts to repay the loans.
Further, the procedural difficulty level is a general deterrent for most attorneys since the debtor must affirmatively seek this determination in bankruptcy and prove her case. For more information on this subject, check out Student Loans In Bankruptcy. Bankruptcy practitioners can purchase Discharging Student Loans in Bankruptcy as a resource.
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