Questions to Ask Your Lawyer About Bankruptcy

Considering Filing for Bankruptcy? Here Are the Questions to Ask Your Bankruptcy Lawyer

You’ve been working hard to get your financial life back in order, but still can’t see any light at the end of the tunnel. You’re thinking maybe it’s time to consider filing for bankruptcy, but you are uncertain what that means, now and in the future. Here are the key questions to ask a bankruptcy attorney.

  • What are your qualifications? Before you hire a bankruptcy lawyer, find out how much experience they have, what types of bankruptcy proceedings they have handled and how well they have worked with others.
  • What are my options in bankruptcy? There are different approaches to bankruptcy. Chapter 7 allows you to permanently discharge most debts. In a Chapter 13 proceeding you have to make monthly payments to a Chapter 13 trustee who will distribute that money to your creditors over a three to five year period. A Chapter 13 bankruptcy case can also be used to catch up on missed mortgage payments, stop a foreclosure, or get back a car that has been recently repossessed.
  • Do I qualify for Chapter 7 protection? Under the 2005 revisions to the bankruptcy laws, to qualify for Chapter 7, you must demonstrate to the bankruptcy court that you lack the means to pay off your debts over a three-to-five year period. Your attorney should be able to walk you through the means test, provided you supply accurate financial information. Most people who are considering filing a Chapter 7 bankruptcy are eligible for Chapter 7.
  • If I file Chapter 7, can I keep any assets? The federal bankruptcy laws allow certain exemptions when you file for protection under Chapter 7. Each state has its own set of exemptions. You can choose one or the other. As a practical matter, nearly 98% of all people who file a Chapter 7 bankruptcy are able to keep everything that they own, including their houses and their cars.
  • What debts can I discharge? Most debts can be discharged in bankruptcy. However, not all debts may be discharged in a Chapter 7; certain tax obligations, child support arrearages and student loans are typically not dischargeable.
  • What information do I need to provide? You will be required to make an accurate and complete disclosure of your assets and liabilities as well as your monthly income and expenses. Your lawyer can work with you to collect all the documents necessary for a bankruptcy filing.
  • What is the cost? The cost for filing a bankruptcy case varies based on the complexity of the case. Between court costs and attorney’s fees, a standard Chapter 7 case can cost between $1,500 and $2,000. This amount is usually only equal to a small fraction of the debt owed.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

What Can I Do with Student Loan Debt?

Are you struggling under a mountain of debt, including student loans? Have you contemplated seeking bankruptcy protection, but heard that student loan payments may not be discharged in a bankruptcy filing? There are strategies available that can help you get your debt under control. The law office of John Hargrave and Associates can help.

Student Loan Payments and Bankruptcy

As a general rule, a student loan payment cannot be discharged in a Chapter 7 bankruptcy proceeding. The limited exception is when you can show that paying them back would result in an undue hardship on you. The circumstances under which such relief is granted are extremely rare. Under the test typically applied, you must show that you cannot maintain a minimum standard of living for you and your dependents if you have to repay the loans, that your current financial situation is unlikely to change for a significant time, and that you have made a good faith attempt to repay your student loans. As a practical matter student loans simply cannot be discharged in bankruptcy.

Even though you may not be able to discharge student loan debt, bankruptcy can help you manage that debt. First, by discharging other debts in bankruptcy, you can reduce the other debts that you have to pay, which makes your student loan payments more affordable. In addition, you can put student loan payments in a Chapter 13, or debtor reorganization, bankruptcy.

For purposes of Chapter 13, student loans are considered non-priority unsecured debts, similar to credit card or medical bills. This means that you are not required to pay them in full through a Chapter 13 filing. It also means that your student loans will only get a pro rata share of any amount paid to unsecured creditors in a Chapter 13 plan. Accordingly, during the period of the bankruptcy, you can negotiate a reduced monthly payment on your student loans. If your income is negligible, you may not have to pay anything.

While the bankruptcy is in effect, you will have the protection of the automatic stay (creditors will not be able to call or write in an attempt to collect from you). Interest will accrue, though, during the period of the bankruptcy, and you will be required to repay your student loans in full when the Chapter 13 bankruptcy period is done.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

The Travesty and Tragedy of Student Loan Debt for Our Young People

Americans owe $800 billion in credit card debt and $700 billion in car loans. Higher still is student loan debt; it has now surged past more than $1 trillion.

Just how many graduates are beginning life in the “real-work-world” saddled with significant debt? In all, more than 37 million former students still owe money on their student loans. The most recent statistics available show that the student loan default rate as of 2009 has risen to 8.8 percent, up from 7 percent in 2008.

Most 18-year-olds have no comprehension of the level of debt they are signing on for when they sign those debt loans and are then embraced with open arms into the college of their choice.

How many universities, for-profit colleges, and other post-secondary education programs have truly made plain to the students just what it means to take on thousands of dollars in debt at the age of 18? Who has explained to these students how carrying upwards of $100,000 debt or more can impact their quality of life just at a time when they are meant to be spreading their wings? These are questions that must be addressed. Colleges must be transparent. And perhaps young people may begin to question: Is a college education really the single greatest indicator of financial success over a lifetime?

Public Radio recently did a story on student debt. One of those interviewed for the story, Ricky Evans, age 32, earns close to $70,000 yearly and works in finance. Yet, he still has more than $80,000 in student loans he is working to pay off. He says, “Back then, I barely understood the interest rates.”

Another young woman, 27-year-old Beth Hansen, works full time as a middle school teacher and also holds down two other part-time jobs. Yet she earned just $46,000 last year, and still owes more than $60,000 in student debt!

Says Hansen, “I was seventeen when I signed my first promissory note…[Was] I really going to read the said promissory note from beginning to end?”

The impact of the student loan debt is far-reaching. Young people saddled with debt are putting off major life decisions like having a family, purchasing a home, and more. They don’t even have confidence in their ability to earn enough to have a stable financial future.

Students would be well served to be counseled in financial literary BEFORE being allowed to sign a loan of any significant sum. These days, however, students see the carrot, and they get a wonderful tour of the college, but no one makes sure that these same students are financially literate enough to make wise choices about loan terms, interest rates, and payback options.

About Law School Debt

The average amount of debt a law school graduate incurs is astounding. In 2011, four law schools had graduates whose average debt was above $135,000. This year, 17 law schools had graduates whose debt exceeded $135,000.

(source: http://thirdtierreality.blogspot.com/2012/04/monstrous-law-student-debt-figures-for.html)

In spring 2012, Brian Tamanaha, professor at Washington University in St. Louis, wrote:

“What’s remarkable is that the majority of graduates from these law schools … do not obtain jobs with salaries sufficient to make the monthly loan payments due on the average debt. At some of these schools 90% or more of graduates with debt do not earn enough to make the loan payments on this level of debt (not all indebted students will carry the average debt).”

Student loan debt is not dischargeable. Meaning that some people could potentially be paying off debt for the rest of their lives.

Are you uncertain how to resolve your problems with debt?

Speak with an experienced debt-relief attorney at the law firm of John Hargrave and Associates. Call for a free initial consultation. 856-547-6500. You may also contact us online to schedule your appointment.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Located in Barrington, New Jersey John Hargrave & Associates have helped people towards a fresh financial future through bankruptcy for over thirty years. We serve South Jersey, Burlington County, Camden County, and Gloucester County along with Camden, Cherry Hill, Pennsauken, Maple Shade, Lindenwold, Cinnaminson, Collingswood, Haddonfield, Bellmawr, Gloucester City, Marlton, Pine Hill, Audubon, NJ and also Philadelphia, PA. Contact us today to learn more about your options under the current bankruptcy laws. We’re here to help.