Bankruptcy and Foreclosure Attorney Blog

As a practicing Florida bankruptcy attorney, this question comes up all the time. Generally student loans are not dischargeable. However, under certain circumstances, the federal government will cancel all or part of a student loan. This practice is called Loan Forgiveness. The federal government will cancel all or part of an educational loan. This practice is called Loan Forgiveness.

To qualify for Loan Forgiveness you must: (1) perform volunteer work; (2) perform military service; (3) teach or practice medicine in certain types of communities; or (3) meet other criteria specified by the forgiveness program.

It is also possible to have a portion or full amount of a student loan discharged (i.e., canceled) or reduced. However, this is only available under certain situations: (1) borrower dies or becomes totally and permanently disabled; (2) the borrower's school closed before borrower was able to complete program; (3) borrower works in certain designated public school service professions (including teaching in a low-income school); (4) borrower files for bankruptcy - note that this situation is rare and occurs ONLY if a bankruptcy courts rules that repayment of the student loan would cause undue hardship.

The biggest reason(s) student loans are not dischargeable in a bankruptcy are for public policy concerns. If bankruptcy absolved students from their student loans, the banks who lent the money would always be in a hole financially. This would cause hesitation by the banks to lend out money for student loans which in effect, will deprive a lot of students from pursuing an education. Less people would pursue graduate degrees and the country as a hole would suffer. This is a true domino effect. Now, that the federal government backs student loans, it will be even less likely that bankruptcy will be able to absolve student loan debt.

Bankruptcy is a difficult and stressful time in an individual's life. This is especially true if you are a student and have a significant amount of student debt to repay. It is wise to seek representation of a Bankruptcy Attorney if you are considering or have already filed for bankruptcy. Contact Wood, Atter & Wolf, P.A., to speak with a Bankruptcy Attorney.

Surpisingly, most debts are dischargeable in a bankruptcy. There are actually very few exceptions in the bankruptcy code to dischargeability. For example, recent IRS debt is not dischargeable. However, old tax debt maybe dischargeable if the IRS has not imposed a lien against the debtor.

Criminal restitution, fines, and costs are not dischargeable. Child support and alimony are obligations are not dischargeable. If there is a civil judgement against a debtor and it is related to driving under the influence that is also not dischargeable. If the accident was the result of an intentional tort, that too is also nondischargeable.

To find out more bankruptcy and dischargeability, please contact an experienced bankruptcy attorney.

Continue reading "Is a Civil Judgment from a DUI crash Dischargeable in Bankruptcy?" »

The answer depends on the facts. It depends on how long ago the advance or loan was issued in relation to when you filed. It depends on whether or not you have made payments towards the debt. In addition, the court or Trustee may want to know what the debtor's intent was when he or she took out the advance or loan.

If the debtor had no intentions of ever paying that back, the Trustee may assume the debtor acted fraudulently and could dismiss the entire bankruptcy case. The bankruptcy code does provide that if a debtor takes out more than $750 in cash advances within 70 days of filing the petition, that debt will be presumed nondischargeable.

Therefore, if a debtor has taken out a large advance recently, it may be in their best interest to wait to file for bankruptcy unless filing sooner is a must.

Many debtors are forced to file for bankruptcy because they have personal judgments or liens against them. The most common judgments are for car repossessions, credit cards, foreclosures, and domestic support obligations. Are these judgments discharged in a Chapter 7 bankruptcy?

Yes, except the child support judgments. More than likely, a debtor is going to be responsible for child support judgments even after the bankruptcy. In addition, tax liens, student loans, fraudulent acts, and intentional tort judgments are not dischargeable. An intentional tort is an act intentionally committed for the purpose of causing physical, mental, or financial harm to another.

Driving under the influence and causing injury to a person or property is considered an intentional tort and any judgments connected to the DUI will not be discharged. However, personal judgments for negligence can be discharged through a bankruptcy.

Continue reading "What happens to judgments against me in a Florida Bankruptcy?" »

A federal judge has reopened the bankruptcy case of George gubernatorial candidate Nathan Deal’s daughter and her husband following a government attorney’s assertion that Deal should have been listed as a co-debtor in the case.

Deal, the Republican candidate for governor of Georgia and a former Georgia congressman, provided a guarantee on a $2.3 million loan that his daughter and son-in-law – Carrie and Clint Wilder – took out for their sporting goods retail business, Wilder Outdoors. When that business failed, they filed bankruptcy.

In the court filing for the Wilder bankruptcy case, Deal was not mentioned as a partner or a guarantor of the business loan. The attorney who acted as trustee in the Wilders’ Chapter 7 liquidation said that Deal should have been listed in the filed as the guarantor for the loan, potentially making him liable for additional debts of the company.

Deal has said that he was merely an investor in Wilder Outdoors, but several bankruptcy attorneys commenting for an Associated Press article said that they believe Deal should have been listed as a co-debtor.

The case was ordered reopened after it was discovered that Clint Wilder had a November 2001 bankruptcy, making him ineligible to have new debt discharged through bankruptcy. The eight-year time limit between bankruptcy filings had not elapsed when the new bankruptcy case was filed in July 2009.

In 2004, Boca Raton accountant Jay Levin pleaded guilty to manslaughter for shooting and killing his 16-year-old neighbor, Mark Drewes, after Drewes rang Levin’s doorbell a number of times as a prank.

Levin was sentenced to 52 weekends in jail and 10 years of probation. In 2007, he was ordered to pay a $750,000 judgment to Drewes’ parents, Greg and Luciana Drewes, who sued Levin for shooting and killing their son.

In February, Levin filed Chapter 7 liquidation bankruptcy and sought to have the judgment discharged as part of his bankruptcy filing. On Sept. 9, a U.S. bankruptcy court ruled that Levin must still pay the judgment even though he declared bankruptcy.

According to a UPI story, U.S. Bankruptcy Court Judge Erik P. Kimball said in his opinion that, "The debtor is an adult. He owned a handgun. He took the time to retrieve the handgun and bring it to his front door. He opened the door and saw Mark Drewes. The debtor shot his handgun to repel Mark Drewes. It is inconceivable that the debtor did not realize Mark Drewes would be injured or killed."

Kimball called Levin's shooting "willful" and said that Levin must therefore be responsible for the consequences of the intentional act. Bankruptcy law does not allow the discharge of debt from “willful and malicious injury.”

If you have borrowed from your retirement account to fund a college education or purchase a home and are now facing bankruptcy, you may be wondering if that loan will be discharge in bankruptcy like many of your other debts.

And the answer is: it depends.

If you file Chapter 7 bankruptcy, a loan from a retirement plan is not subject to discharge. That means you will still have to pay it back. The reason for this is, Chapter 7 bankruptcy discharges debts you owe to others – not to debts you owe to yourself.

If you file Chapter 13 bankruptcy, a retirement plan loan becomes part of your repayment plan for the next three to five years, along with your other debts. You may only be required to pay back a portion, however, and the balance will be discharged at the end of your Chapter 13 bankruptcy.

You should also be aware that if you took out a loan from your retirement plan and are currently having payments automatically deducted from your paycheck, those payments will still continue to be withheld. Although the “automatic stay” that comes with a bankruptcy filing immediately stops collection efforts from creditors, it does not stop your collecting from yourself.

If you set up your business as a sole proprietorship or general partnership, that means you are personally liable for all of the debts of your business. That also means you can get them discharged in Chapter 7 personal bankruptcy.

If your business is a corporation or limited liability company (LLC) and you personally guaranteed some business debts, these are also dischargeable in Chapter 7 bankruptcy.
Using Chapter 7 personal bankruptcy, you can also wipe out the following business debts:

• Credit card debt
• Judgments awarded against the business via a lawsuit
• Medical debt
• Unsecured business debts (bills for professional services, supplier invoices, etc.)
• Lease and contract obligations
• Personal loans and/or promissory notes

If you have secured business debts, the lender can seize the property securing the loan for nonpayment. If you owe more on a secured debt than the collateral is worth, the difference can be discharged in bankruptcy.

As part of the bankruptcy process, the court may decide to close your business, either temporarily or permanently. However, chances are that if you can discharge your business debt through Chapter 7 bankruptcy, you can start a similar business if you wish when the bankruptcy process ends.

http://www.woodatter.com/lawyer-attorney-1529187.html

The "Discharge Order" is an order by the Bankruptcy Court that releases you from any obligation to pay all discharged debts. Discharge eliminates any personal liability for debts incurred before filing bankruptcy and forever prevents creditors from trying to collects on those discharged debts. The only exception, however, is debts that cannot be discharged.

NON-DISCHARGEABLE DEBTS:
- "Non-dischargeable debts" are debts that you are still obligated to pay even if you file for bankruptcy.
- Some debts are automatically non-dischargeable, meaning that the court does not have to make any determination on the issue of dischargeability, and others are declared non-dischargeable by the court after a creditor files an objection to the discharge.

Some examples of Automatically Non-dischargeable Debts:
1. Alimony, maintenance and child-support
2. Student Loans. See Bankruptcy and Student Loans.
3. Taxes are generally non-dischargeable. - Some taxes may be dischargeable. However, bankruptcy law regarding taxes is very complicated. If you owe taxes you will need legal representation by a Jacksonville Bankruptcy Attorney.
4. Fines & Penalties owed to governmental units. - For example, parking tickets and court ordered restitution.
5. Debts incurred through drunk driving.

Debts that MAY be Non-dischargeable:
1. Debts incurred through fraud or false financial statements. - For example, lying about your income on a loan application.
2. Debts for willful and malicious injury to another or to property.
3. Property settlements.

Continue reading "Jacksonville Bankruptcy Attorney Explains Dischargeable vs. Non-dischargeable Debts" »

If you are among the many Florida residents who have filed for Chapter 7 bankruptcy or Chapter 13 bankruptcy – or a Florida business that has filed for Chapter 11 reorganization -- you are no doubt aware that overdue taxes are not dischargeable in bankruptcy. You still need to pay any back taxes owed to the state, even if you are going through the Florida bankruptcy process.

Now for some good news: the state has just instituted a new amnesty program that will cut the interest and waive any penalties on past due state taxes. The amnesty program runs through September 30, 2010.

According to the Florida Department of Revenue, all taxes that it administers qualify for the amnesty program with the exception of overdue unemployment taxes.

The tax amnesty applies to both businesses and individuals, although it may be more beneficial to business since Florida does not have a state income tax. However, anyone who has overdue sales or use taxes can use the amnesty period to catch up without having to pay the full amount.

For past due taxes that the Department of Revenue has already billed you for, the interest rate will be reduced by 25 percent. For any taxes due that the Department does not know about, the interest rate will be reduced by 50 percent and any penalty will be waived.

For all the details on the Florida tax amnesty program, click here.

When an individual files for Chapter 13 bankruptcy, all debts must be disclosed and dealt with, including any loans owed to family members of friends.

Since most of these personal loans are unsecured, they are usually discharged in bankruptcy, which leaves the debtor free of the debt, but not free of any damage this may have done to family relationships.

Many debtors wonder if they can repay a discharged debt after their bankruptcy case is over.  The answer is yes – if you have filed for personal bankruptcy and had a debt discharged that you wish to repay for whatever reason, you may voluntarily repay that debt, even though you are under no legal obligation any more to do so.

However, a creditor for a discharged debt may not make an effort to collect.  If they try to do so, the debtor can file a motion with the court for a violation of the discharge.  A discharge is a legal injunction that prohibits creditors from taking any action designed to collect a discharged debt, punishable by a fine.

If you are considering filing a Florida bankruptcy and have questions about the discharge of unsecured debt, contact our Jacksonville, Florida bankruptcy law firm.

This is a question that many Florida residents have when filing bankruptcy or when faced with a former spouse that is filing bankruptcy. Generally the answer is no. According to the Bankruptcy Code 11 U.S.C. §523(a)(5), a discharge does not relieve the debtor of a domestic support obligation. This prevents former spouse debtors from discharging their obligations to pay things such as child support, alimony, and maintenance to the other spouse.

However, the debts that qualify under the definition of support for purposes of the bankruptcy code may not be easily identifiable. Under Florida law the courts require a divorcing couple to equitably distribute all of their assets and debts amongst each other. What happens when one spouse is ordered to pay a lump sum to the other spouse as part of an equitable distribution? Can a former spouse discharge their obligation to pay a divorce award to the other spouse?

The answer depends on nature of the obligation and the intent at the time of its creation according to the court in Cummings v. Cummings 244 F.3d 1263. In that case the court stated that a domestic obligation can be deemed “actually in the nature of support” even if it is not considered “support” under state law. The important thing to take away from this case is that a portion of an equitable distribution or all of it may be considered “in the nature of support” and non-dischargeable depending on the intention of the court at the time the award was made. On the other hand, you may be able to discharge a divorce award if it was not intended as support to the other spouse.

If you have questions about Bankruptcy call a Jacksonville Bankruptcy Attorney for guidance.

Four Midwest Democratic members of Congress are sponsoring the Private Student Loan Bankruptcy Fairness Act of 2010 that would allow for private student loans to be discharged in bankruptcy.

Currently, private student loans are protected under the changes made to the Bankruptcy Code in 2005.  According to an article in the Chicago Defender, Illinois Congressman Danny K. Davis, who is one of the sponsors of the bill, said, “Why should student loans be treated differently? Private education debt is no different than other consumer debt; it involves private profit and deserves no privileged treatment.  Medical students often take out private loans and the amount can be overwhelming and sometimes impossible to ever repay.”

Congress ended a $6 billion subsidy to private student loan lenders in early April, to allow students to borrow directly from the federal government.  Prior to that, lenders who were receiving interest-free federal money for student loans were able to charge higher interest rates than other government-issued student loans, leaving some borrowers with a mountain of debt upon graduation.

If you are struggling with student loan debt or any other type of consumer debt and are considering filing bankruptcy in Florida to get relief, contact our Jacksonville, Florida bankruptcy law firm.