Discharge of Debt Tag

22 Sep Should Your Company File Chapter 7 Bankruptcy?

IMG_3419Most of the time, there is no reason to file a Chapter 7 bankruptcy for a corporation or limited liability company. (We'll call them both "companies" in this post). However, there are some instances where filing Chapter 7 for the company makes good sense. Normally, bankruptcy is about one thing: the bankruptcy discharge order. The order states, with some exceptions (such as some taxes, student loans, domestic support obligations), that the debtor's debts are terminated. The debtor then has the benefit of a "fresh start" to rebuild his life. But what if the debtor is the owner of a corporation or limited liability company? If the debtor files bankruptcy, should the company file bankruptcy as well? Usually not. The company does not get a discharge in Chapter 7 because it's not an individual. When the Bankruptcy Code says "individual," it means a human being. In most instances, the only thing the company gets by filing a Chapter 7 bankruptcy is a decent burial.
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21 Sep Student Loan Forgiveness, Fact or Fantasy

The College Cost Reduction & Access Act went into effect July 1, 2009. This legislation provides for forgiveness of federally-guaranteed student loans for individuals in certain public service occupations provided they meet certain conditions. Eligible borrowers must consolidate the loans into an Income Contingent Repayment Plan (ICRP) or Income Based Repayment Plan (IBRP), make scheduled payments for ten years, and must be employed full-time in an eligible public service capacity for each of the 120 months in which a payment is made. If these requirements are satisfied, the remainder of the loan debt is forgiven.
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15 Sep Can My Ex-Spouse Use Bankruptcy to Discharge Debts Arising from a Divorce Order?

From time to time I receive emails from men or women who have gone through a divorce and whose ex-spouse has filed a bankruptcy.  They usually want to know if their ex-spouse's bankruptcy can eliminate obligations set out in a divorce order. In general, Bankruptcy Code Section 523(a)(5) and 523(a)(15) except from discharge debts arising from a divorce or support order.    In other words, a non-custodial father' s child support obligation cannot be eliminated or modified in bankruptcy. I have, however, been involved in cases where a non-custodial parent's past due child support obligations have been repaid - in full - as part of a Chapter 13.   I suspect, however, that if the custodial parent objected to getting paid this way, he/she would have a strong argument to object to the confirmation of the non-custodial parent's Chapter 13 plan.
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05 Sep Nasty Surprise in Credit Union Car Loan Documents

Do you think you could owe twice as much as you thought on your car loan? It could be true, if your car loan is owed to a credit union, you owe a large credit card balance to the credit union, and if the dreaded "cross collateral clause" is lurking in the fine print of the car loan agreement. A cross collateral clause is a provision which states that the item of security (usually your car) secures any other debts you ever come to owe the credit union. Cross collateral clauses usually appear in the fine print on the second or third page of the car loan agreement, placed where it is unlikely anyone will ever see it. These tiny land mines are planted only by credit unions, never by banks. The credit union will virtually never point out the presence of a cross collateral clause, until much later, after someone steps on this land mine by failing to pay on the other loan obligation. Here's how this nefarious little device works:
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