Discharge of Debt Tag

11 May Discharge of Spouse Protects Community Property

The usual rule in bankruptcy is that an individual's discharge only relieves the debtor of liability for a debt. Anyone else liable on the debt with the debtor remains liable. The rule is markedly different in a community property state. As a recent decision in California illustrates, in a community property state, a community creditor cannot reach the post bankruptcy wages of either spouse, as those wages are protected by the one spouse's discharge. When one spouse files bankruptcy, all of the community property acquired during the marriage comes into the bankruptcy estate. All of the claims enforceable against the community property are allowable in that bankruptcy case. Thus, it's only fair that , having gotten their bite out of the (community) apple, any community property that is acquired during the marriage, is free of the pre bankruptcy claims.  
Read More

18 Apr Will all debts that were incurred before I filed bankruptcy be discharged in a Chapter 7?

Not necessarily. There are a number of types of debts that are excepted from the discharge received in Chapter 7. Among the most common debts that will survive after the bankruptcy are debts for child support and alimony; student loans (unless it would be an undue hardship for...

Read More

16 Apr “What happened to my check?!”: The Recoupment Trap

When you file bankruptcy, some debts are discharged completely. And some are discharged but not really, as far as some special kinds of debts are concerned. I'm not talking about unique types of debt, like child support or criminal fines, which the Bankruptcy Code does not allow you to discharge. I mean debts you can discharge. But they can sneak up to bite you later on, when you most need the protection and you won't get it. And there's nothing illegal about it at all.
Read More

12 Apr Why Are Student Loans So Difficult to Discharge in Bankruptcy?

In light of the recent news that Sallie Mae, America's largest student loan provider, fraudulently provides monetary incentives to schools pushing their student loans, it makes one wonder why loans from this company, and other student loan companies are (a) guaranteed by the U.S. Government, (b) given extraordinary collection powers and (c) are virtually non-dischargeable in bankruptcy. Nowhere have I found a decent explanation.

Read More

02 Apr How Do I Know If I Have Been Caught Up in Mortgage Fraud?

If you have followed the news recently, you may have read articles about mortgage fraud. Several "sub-prime" lenders are going out of business - in part due to mortgage fraud. More troubling, I have met with several potential bankruptcy clients recently who have gotten themselves caught up in some of these mortgage fraud transactions. In most of these cases, the potential client loses money, but in more and more cases, the potential client may find himself with possible criminal liability. Here's how one version of a classic mortgage fraud scheme works:
Read More