Discharge of Debt Tag

28 Dec Private Student Loans

Private student loans are awful. Terrible. Heinous. Am I clear on this? We think of student loans as regulated by government and inherently fair to the student. This is not true for private student loans. Let's not be confused, and let's not underestimate the opportunity to be misled. A private student loan is, well, almost the same as a regular loan. They are not Direct Loans, from the government to the student. They are not guaranteed or insured loans, where the government is in the picture somewhere and making sure that the interest rate is appropriate. Nope. A private student loan has no government involvement and can charge whatever interest rate it can get away with. The only difference is that they enjoy the same nondischargeability protections of bankruptcy law as "regular" student loans, even though there is no government oversight.
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06 Dec The trick to discharging credit card debt-Part Two

Credit card debt is dischargeable in bankruptcy unless the debt was incurred by fraud, as I explained in an earlier article on credit cards in bankruptcy. Fraud, in this context, is incurring the charge without the intention to repay. In some circuits, incurring a debt you know you can't repay is within the definition of fraud. So, how does the card issuer conclude that credit card charges were incurred by fraud? Card issuers generally look at activity on the card in the months before the bankruptcy filing. These things, alone or in combination, suggest fraud to the creditor:
  • Larger than usual charges
  • Increase in activity closer to filing
  • Large cash advances
  • Discretionary purchases or travel
  • Going over limit
Of course, at a distance, the card issuer has no idea of the back story behind any purchase or cash advance. They take a scatter gun approach:if I've been hurt at a time when the debtor "must have known" they were going to file bankruptcy, then it must have been fraud.
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31 Oct Student Loans: How to Pay Them in a Chapter 13 Bankruptcy

Unless the bankruptcy debtor can satisfy the daunting legal standard of "undue hardship," student loans are not dischargeable in a bankruptcy case. However, the mere fact that student loans will not be discharged does not mean you should give up on the bankruptcy process. For a chapter 13 debtor, the question might be, how should the chapter 13 payment plan propose to treat the student loan debt? There is an easy way to distribute more of the debtor's income to student loan debts than to other debts: simply insert a provision into the chapter 13 plan which says that the debtor will continue to pay the student loan out of his or her own pocket, rather than have the chapter 13 trustee pay toward the student loan. This has the important advantage of paying more (usually) toward the student loan than would be paid if the trustee made the payments from the plan.
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