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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

When Is it Time to Consider Filing for Bankruptcy?

Considering filing for bankruptcy is never easy, in fact, it will probably be one of the most difficult financial decisions that one will make. Nevertheless, once the decision is made and people begin to experience the relief that bankruptcy provides, they see what it’s like to have a financial fresh start and a stress free life. But, when should one begin to consider filing for bankruptcy? If you’re unsure, here are some signs that will help you decide on whether maybe it is time to consider filing for bankruptcy.

Leaving Your Co-Debtor as the Sole Debtor

It is important for every individual who is filing bankruptcy to consider whether they want to file their case individually or jointly, with a spouse.  Only spouses can file a bankruptcy petition together.  In order to make this determination, the potential client must determine whether there is anyone else responsible for their debts (known as a co-debtor).  A co-debtor is a co-signer for the debt and is equally responsible for the debt regardless of whom may be the primary account holder.  Often, debtors have a joint credit card with a spouse, a joint line of credit (or mortgage), or have co-signed on an automobile or student loan.  The bankruptcy filing can affect the non-filing co-debtor’s liability for the debt.  Therefore, it is imperative that co-debtors are properly listed in the bankruptcy case.

Bankruptcy Is An Option to Deal with Debt From a Vehicle Repossession

If you have recently had a vehicle repossessed, you are probably feeling overwhelmed at the prospect of a large debt hanging over your financial future.  Vehicle lenders tend to be aggressive in their collection techniques, so it is likely that harassing phone calls will commence soon after the repossession.  Often, the vehicle lender will commence litigation to try to recoup their losses against the borrower after the repossession.  If you are in this situation, then bankruptcy may be your solution.

Are Income Taxes Dischargeable in Bankruptcy?

One of the most common misconceptions in bankruptcy is that income taxes are never dischargeable. In fact, you can discharge some back federal and state income taxes in Chapter 7 and Chapter 13 bankruptcy matters. Likewise, the penalties and interest attached to those taxes are dischargeable. However, the dischargeability of income taxes is limited to a specific set of circumstances that was recently clarified by the Third Circuit Court of Appeals.

Thinking About Bankruptcy: Here’s What Not to do Before Filing for Bankruptcy

If you are considering bankruptcy, you probably find yourself in a difficult financial situation caused by a combination of loss of income and high debt. If you have concluded that bankruptcy is the only way to breathe some life back into your financial situation, it is important to avoid common mistakes that can be detrimental to your bankruptcy case. The bankruptcy process is not an easy process by any means, but avoiding these common mistakes can mean a smoother bankruptcy process for you.

Chapter 7 Bankruptcy and Its Effect on Owning A Home

When contemplating bankruptcy, one of the biggest trepidations that people often have is how it will affect their home.  Will the bankruptcy cause their home to be lost?  Will the mortgage lender commence foreclosure as a result of the bankruptcy filing?  What are the legal consequences of all those documents they signed when purchasing the home?  This blog will explore those topics and how a bankruptcy will affect their home ownership.

Will my 529 College Saving Plan Be Protected if I File for Bankruptcy?

A notable issue discussed in today’s news is the increasing costs of higher education in the United States. Congress has sought to help families pay for a child’s education by allowing them to pay into an entity frequently known as a Section 529 College Savings Plan. Parents can generally opt for one of two types of 529 Plans: a prepaid tuition plan that allows you to pay tuition at a particular university, or a tax-exempt savings account for a qualified beneficiary, generally a minor child or a grandchild.

Many parents and grandparents deposit large sums of monies into 529 Plans and understandably they are concerned whether a Chapter 7 Trustee will liquidate the child’s college education savings to pay creditors if they file for bankruptcy. Under Section 541(b)(6) of the Bankruptcy Code, assets in a 529 may or may not be protected from the reach of a Chapter 7 Trustee.

Child Support Obligations in Bankruptcy

Bankruptcy can help an individual get caught up on missed child support payments (often called “arrears”).  Child support is priority debt and is also generally non-dischargeable, meaning it gets paid before other types of debt if there are assets to distribute and the debt cannot be wiped out through bankruptcy.  The child support must be “in the nature of support” to be non-dischargeable.   The Bankruptcy Court cannot modify a family court order for support.  Modifications must be sought in the state court.  The bankruptcy automatic stay does not apply to actions in the family court to establish paternity or to modify child support obligations.    

Loan Modification vs. Bankruptcy Court’s Loss Mitigation Program

After the market crash of 2008, 2.6 million Americans lost their jobs, and 1.2 million properties were foreclosed in 2009 due to the recession. As a result, many of the mortgage lenders that accepted the government bail-out money were forced to offer loan modification assistance programs to help homeowners catch up on their mortgage arrears in an effort to avoid foreclosure.  

Mortgage lenders to the rescue, right? Unfortunately, oftentimes theories don’t work as well in practice. The influx of loan modification applications inundated the offices of ill-prepared and understaffed mortgage lenders, causing most applications to be denied or overlooked without even being properly reviewed. The failure of these loan modification programs, coupled with loan modification scams, only perpetuated the increasing foreclosure rates. But Why?

Why Debt Consolidation is a Bad Idea (or Worse, a Scam)

There is a huge stigma that goes along with filing for bankruptcy.  The word bankruptcy invokes a feeling of failure and immorality. People dread the thought that bankruptcy may be in their future.  But debt consolidation, debt resolution, credit management, debt relief, etc.; these terms invoke a completely different emotional response.  These concepts are marketed as an alternative to bankruptcy: a way out of financial hardship, but not shirking one’s responsibilities. 

Don’t be The Next Victim

Debt relief agencies are great at marketing, but are a poor choice in most circumstances.  Debt relief agencies promote that their services are an alternative to bankruptcy, but in truth they are praying on people’s emotions, spouting a false narrative, and creating false expectations.

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