Bankruptcy Eligibility
Bankruptcy Eligibility
Does filing for bankruptcy affect student loan eligibility?
I’ve hit a rather rough patch financially, and am considering filing for bankruptcy. Nowhere near actually doing it yet, just considering all options.
Does filing for Personal Bankruptcy prevent me from getting student loans for grad school in the future?
Depending upon the type of bankruptcy that is filed and approved by the court (either Chapter 7 or Chapter 13 for individuals) depends on your answer. If you file Chapter 7 and it is approved, then after the dismissal hearing, then you are free of your debts. Under Chapter 13, this is where you pay back an agreed upon amount with the courts approval over a 5 year period, You will want to reaffirm with the debts you want, (ex house, car, etc).. this way they can still be yours depending on the ratio of amount left on the loans. However, in Chapter 13, you are not permitted at all to borrow any funds for anything while you are in bankruptcy for the 5 years, unless it is necessity and it has to go in front of the judge again and they have to approve your request at that time (ex: say your basement caves in on your house due to minor floods, etc), this means under Chapter 13, you are not permitted to even borrow student loans, you have to wait until you are out of bankruptcy… No matter which one you file and is approved, your student loan debt will never go away, you will always be responsible for this debt (means you can not include it in your bankruptcy.. the court does not permit it).. Good luck, I hope I didn’t totally confuse you, if so, let me know and I will try to help you more…
Debt Settlement or Bankruptcy?
Overview
Today’s economic downturn is creating financial hardships for many consumers and their families as they navigate through lay off(s), downsizing and looming foreclosures. Knowing how to manage this critical set of decisions is very difficult, and causes enormous stress for most consumers.
Two of the more popular options are Debt Settlement or Bankruptcy. In Debt Settlement, the creditor and the consumer agree to a reduction in the balance due in exchange for a lump sum payment. This is often managed by a professional company or Debt Settlement Company. The balance is often reduced by 30-60%. The length of the settlement should not exceed 36 months.
Bankruptcy is a protection process offered by the federal government, to allow consumers to start with a clean slate when they have been overwhelmed by debts. Bankruptcy can also negotiate the process of determining which creditors will be paid and to what extent. Bankruptcy can stop the collection process and can also stop the foreclosure of a home.
The Benefits to Debt Settlement
Debt settlement works with creditors on an individual basis to reduce the total due, close the account and remove the open status from credit reporting agency records.
Debt Settlement Companies work directly with the creditor on behalf of the consumer eliminating the need for them to deal with the settling haggling. The Debt Settlement Company will collect monthly payments until a lump sum can be made.
The Benefits to Bankruptcy
Bankruptcy can liquidate all but exempted assets. Exempted assets may include cars, work related tools or equipment and basic household furnishing. Some property or assets may need to be sold by court appointed officials and proceeds used to pay creditors.
It will stop foreclosures, repossessions, garnishments, utility shut offs and collection activity.
The Downside to Debt Settlement
Debt settlement companies charge substantial fees for their services. The reputability and ethics of debt settlement companies varies widely and should be researched by checking with local Better Business Bureaus and the appropriate Attorney General’s office.
If there is no written statement from the creditor or collection agency the negative history may not be removed from the credit record of the consumer and the debt may be sold to another collection agency.
The savings over $600 must be reported to the IRS as taxable income.
The Downside to Bankruptcy
There were significant changes made in the US to bankruptcy law in 2005 which include requirements of attending classes before and after filing and allowing for determination of bankruptcy eligibility by the courts.
Bankruptcy stays on credit histories for 7-10 years. Many credit applications will ask if bankruptcy has ever been filed. Bankruptcy will not remove the obligations of child support or student loans.
Conclusion
In both cases the ramifications for the method are serious and must be carefully weighed.
About the Author
New Debt Rules is a group of Fathers who are sick and tired of the rat race and working countless hours only to find themselves deeper and deeper in debt. We are dedicated to seeking out and uncovering the best, newest ways for people to become debt free in all areas of their lives including Credit cards, Medical bills, Taxes, Student loans and mortgages. It is no secret that the rules of the game have changed and that we all need to learn the “New Debt Rules.” Grab your Fee Copy of “ Secrets of A Debt Insider CD” now to save thousands off of your credit cards starting today at http://www.NewDebtRulesBlog.com
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