What You Should Know About Helping Parents File Bankruptcy

Written by Peter Mullison, Colorado Bankruptcy Attorney

What You Should Know About Helping Parents File BankruptcyFrom time to time, I get calls from someone who is trying to find out if bankruptcy is a good option for their parents. Usually the parent is on a fixed income and the child has been providing financial assistance to help make ends meet. At some point the subject of how the parent is spending his or her money comes up, and the child discovers that the parent has much more credit card debt than he or she will ever be able to payback. Often the parent has stopped making payments, and the parent has become distressed by all of the phone calls the lenders are making to collect the money.

If you are doing research on whether or not bankruptcy is a good idea for a retired or senior parent, here are a few things you should know:

Creditors cannot take your parent’s Social Security benefits. Those benefits are protected. Typically, other retirement benefits such as pensions or proceeds from a 401(k) or IRA are also protected. If your parent owns any real estate, the creditor can attach a lien to the property, which will have to be paid before the property can be sold or refinanced. If your parent doesn’t own any real estate, the most a creditor can do, practically speaking, is harass him or her with constant phone calls. The only way to make a creditor stop those calls (without filing bankruptcy) is by writing the a letter asking them to stop.

If your parent decides bankruptcy is a good option, he or she will have to make an appearance before the trustee who will ask several conditions about your parent’s financial situation. You should discuss this with your parent to see if they are apprehensive about answering such questions and make sure they can follow them. If your parent struggles with  answering questions, the stress of the meeting could be more than they can bear. However, an experienced attorney should be able to relieve some of that stress by contacting the trustee beforehand and discussing your parent’s needs.

If you, or someone you know, is wondering if bankruptcy is the right option for them, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290

Young Adults Expect Paying Off Student Debt Will Take Decades

Written by Peter Mullison, Colorado Bankruptcy Attorney

Young Adults Expect It To Take Decades To Repay Student Loans

Young Adults Expect It To Take Decades To Repay Student Loans

National Public Radio aired a great interview this week with recent college graduates to talk about their student loan debt. Student loans are often categorized as “good debt” or an “investment”, but as some of the interviewees note, it’s hard to imagine an 18 year old fully knowing what they’re getting themselves into when they take out loans for tens of thousands of dollars. The interviewees have become resigned to the fact that they will be paying these loans off for years, if not decades, often at the expense of owning a home.

Whenever I get the chance to talk to someone who is considering college, I ask them how they’re going to pay for it. When they say student loans, I urge them to do their research and make sure they understand how much that loan will cost them if they take 30 years to pay it back.

If you’re struggling with your student loan debt, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy attorney to learn about what your bankruptcy and non-bankruptcy options are. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Colorado Bankruptcy Median Income As Of April 1, 2014

Written by Peter Mullison, Colorado Bankruptcy Attorney

Your Household Income Can Determine Whether You File Chapter 7 Or Chapter 13 Bankruptcy

Your Household Income Can Determine Whether You File Chapter 7 Or Chapter 13 Bankruptcy

The United States Census Department has issued new median income numbers for Colorado as of April 1, 2014, which are as follows:

Household size: 1 – $50,978

Household size: 2 – $66,663

Household size: 3 – $72,180

Household size: 4 – $84,551

*Add $8,100 for each individual in excess of 4.

Determining the household income for someone filing bankruptcy is the foundation of a Chapter 7 or Chapter 13 bankruptcy petition. Household income will determine whether or not someone can file Chapter 7 or can determine how much someone will have to repay their creditors during the course of the Chapter 13 bankruptcy.

If someone is over the median income, he or she may still be eligible for Chapter 7 bankruptcy. An experienced bankruptcy attorney will carefully go through that person’s expenses to see if there are eligible expenses (for example, medical insurance or having to pay child support or alimony) that can reduce income. Even if household income has been over the median income for the last six months, recent events, such as unemployment, may be sufficient to show a change of circumstances that would make someone eligible for Chapter 7.

If you have questions about whether bankruptcy may be a good option for you, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290

How Debt Settlement Can Come Back To Haunt You At Tax Time

Written by Peter Mullison, Colorado Bankruptcy Attorney

Debt Settlement Can Come Back To Haunt You

Talk To A Colorado Bankruptcy Attorney About The Consequences Of Debt Settlement

One of the things that I talk about during initial consultations with potential clients are alternatives to bankruptcy. The biggest one, of course, is debt settlement. Debt settlement is where the lender agrees to accept a smaller amount than what’s owed to satisfy a debt. For someone struggling to figure out how to take care of their debt, settling for less sounds like a great idea.

Unfortunately, there are hidden costs to debt settlement. A recent article in the New York Times highlights that cost. The article profiles a gentleman who suffered a series of setbacks, including the loss of his wife. Shortly after she passed away, he discovered he had kidney cancer which brought about other medical problems. Unsurprisingly, the amount of medical debt he racked up in a short time was too much to bear. He filed bankruptcy but was still left with $150,000 in student loans that he had taken out for his children.

The good news was that he qualified for a disability discharge and was able to get rid of the student loans. The bad news was that the student loan lender sent him a 1099-C, showing that the debt had been forgiven. Forgiven debt is considered income and can have serious tax consequences. He expected to pay $59,000 in taxes as a result of the loan forgiveness. You can imagine the gentleman’s surprise and disappointment.

Although the tax debt may be smaller than the debt that was forgiven, there are restrictions on when taxes can be eliminated in bankruptcy. That dischargeable credit card debt or medical bills has suddenly become a weight that may not go away and only pull you down further than before. There are no tax consequences when someone files bankruptcy.

Hopefully the gentleman will talk with an experienced accountant. In certain cases, the tax consequences of forgiven debt can be eliminated or reduced.

You can read the New York Times article here.

If you have questions about the differences between debt settlement and bankruptcy, including potential tax consequences, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can make an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

 

How Chapter 13 Bankruptcy Can Help You Manage Your Student Loans

Written by Peter Mullison, Colorado Bankruptcy Attorney

How Chapter 13 Bankruptcy Can Help With Student Loans

Chapter 13 Bankruptcy Can Help You Manage Your Student Loans

If you have been researching bankruptcy as an option to help you eliminate student loan debt, you know that the chances of that happening are almost zero. Student loans are virtually impossible for the typical debtor to eliminate. Even so, bankruptcy can sometimes be an option to help you manage student loan debt by eliminating other types of debt, such as credit cards and medical bills. If that isn’t enough to get your finances in control, Chapter 13 bankruptcy can be even more helpful in managing your student loans.

One way Chapter 13 bankruptcy can help with student loans is that the student, not the lender, determines the size of the student loan payment over the course of a three to five year repayment plan. In a Chapter 13 bankruptcy, the student’s income will determine how much will be paid to her unsecured creditors, which includes student loans. During the three to five years, no collection action, garnishment, or tax intercepts can be taken against the student. It’s important to remember that the student loan will most likely not be paid off during the Chapter 13 bankruptcy, and the student loans will still be there once the bankruptcy is closed

Another benefit is that if someone else has co-signed the student loans, and the lender is pursuing the co-signer, Chapter 13 will prevent the lender from taking any collection action against that person as long as the repayment plan provides for the payment of the student loans.

Finally, Chapter 13 may also help get student loans out of default so that the student can take advantage of other repayment options in the future, such as deferment, forbearance, or income based repayment.

If you are struggling with overwhelming student loan debt, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer to learn how bankruptcy may help. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

 

How Chapter 13 Bankruptcy Can Help After Your Divorce

Written by Peter Mullison, Colorado Bankruptcy Attorney

How Chapter 13 Bankruptcy Can Help After Divorce

Chapter 13 Bankruptcy May Be A Good Option After Divorce

Ask any bankruptcy attorney, and they’ll you that one of the top reasons people come to them is because they’ve recently gone through a divorce. Suddenly, their finances are in disarray. They turned to credit cards to help them make it through the process, paying for things like moving and living expenses and even fees for their divorce attorney. On top of this, they may have to pay child support and spousal maintenance (alimony). In some cases, they may be responsible for their ex-spouse’s debts and divorce attorney fees. The financial burden becomes too much.

When consulting with someone who has come to me after a divorce, it’s important to find out just what the terms of the divorce and separation agreement provide for. Chapter 7 bankruptcy is limited in the types of divorce related debts it will get rid of. In either Chapter 7 or Chapter 13 bankruptcy, you cannot eliminate an obligation to pay child support or spousal maintenance.

But only Chapter 13 can help when it comes to other divorce related debts, like your ex’s credit cards (or cards that were in both of your names) and his or her attorney’s fees. If you’re responsible for these kinds of debts and file Chapter 7 bankruptcy, the credit card companies and her attorney can’t sue you to collect what you owe, but your ex-spouse can ask the divorce court to find you in contempt for not paying those debts. You’ll end up paying them anyway. Chapter 13 eliminates those kinds of debts and also prevent your ex-spouse from coming after you in divorce court.

Whether or Chapter 13 makes sense in this situation depends on some other factors as well. For instance, if your ex-spouse has also filed bankruptcy, he or she is no longer liable for those debts so there is no reason to resort to the divorce court to ask you to pay them. Also, if those debts are minimal, you may decide to go ahead and pay them after you file Chapter 7 bankruptcy after you compare how much that would cost with how much you would pay in a Chapter 13 bankruptcy. (Chapter 13 bankruptcy requires you to pay all or some of your debts. It depends entirely on what your income and regular expenses are.)

If your divorce has caused you to struggle to make ends meet, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney to learn how bankruptcy may help. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected event find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Can I Get Rid Of Private Student Loans In Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Can I Get Rid Of Private Student Loans In Bankruptcy

Most Private Student Loans Can Not Be Discharged In Bankruptcy

It’s fairly common for someone to start a consultation with the phrase, “I read on the Internet…” When it comes to student loans, that phrase usually ends with, “that you can get rid of private student loans in bankruptcy.” Unfortunately, just like much other information floating around in the recesses of the World Wide Web, it just isn’t true. Part of the reason for this misconception is that over time the rules regarding getting rid of student loans in bankruptcy have changed.

The bottom line is that whether or not a student loan can be discharged is not dependent on whether or not it came from a federal or private source. Instead the analysis will depend on how the loan was used and where it was used. If the loan was taken out for “qualified higher education expenses” it will be considered to be nondischargeable, and in order to get the loan discharged (eliminated through bankruptcy), the student will have to show that it would be hardship to repay the debt. (Proving hardship to the court is the subject of another post.)

Qualified higher education expenses include a number of non-tuition expenses, such as room and board, supplies, books, and a computer. It’s important to remember that the loan must have been taken out to cover these expenses. It doesn’t matter if the loan was actually used for other expenses. On the other hand, if the loan was taken out for other reasons, such as a home equity loan that was used both to improve a home and pay education expenses, that loan should be dischargeable. Further, if the loan funds expenses beyond what the school determines to be the reasonable costs of attendance, that loan should be dischargeable.

Finally, in determining whether or not a private student loan is dischargeable, the loan must have been for attendance at a “eligible education institution”. Such an institution must be eligible to participate in a federal Title IV program. While most schools are eligible to participate in a Title IV program, unaccredited schools sometimes pop up that are not eligible. Loans taken out to go to such a school would be dischargeable.

Determining dischargeability of student loans involves a thorough analysis of the loan, the school, and the individual circumstances of the student (or whoever took out the loan for the student). Ultimately, the bankruptcy court will have to decide if the student has proved that the loan should be discharged.

If you are struggling with student loan debt, bankruptcy may provide some relief. By eliminating non-student loan debt, you can free up resources to allow you to repay your loans. Chapter 13 bankruptcy can also restructure your repayment for a period of three to five years. We hope you’ll come in for a free, no-obligation consultation to discuss your bankruptcy, and non-bankruptcy, options. You can make an appointment with an experienced Colorado bankruptcy attorney by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

8 Tips For Avoiding Credit Card Problems

Written by Peter Mullison, Colorado Bankruptcy Attorney

How To Avoid Credit Card ProblemsAfter medical debt, overwhelming credit card debt has to be the biggest reason our clients come to us for help. For a variety of reasons, like divorce, unemployment, and medical needs, they have had to resort to using credit cards to make ends meet. Credit card use can quickly spin out of control. Below are eight ways you can keep your credit card debt in check.

Don’t Use Credit Cards To Live Beyond Your Means

If you are using your credit cards without being able to pay them off every month, consider whether your budget plan is workable. If you need to use your credit cards to pay your expenses, you may have reduce or cut some of those costs.

Avoid Using Credit Cards During A Financial Crisis

Using your credit cards when you’re having cash flow problems, such as during unemployment, can quickly compound your problems. Consider instead reducing unnecessary expenses, such as cable, entertainment, and eating out. On the other hand, using credit cards during these times, as opposed to taking out a home equity line, is preferable.

Pay More Than The Monthly Minimum

Credit card lenders are happy when you make the monthly minimum payment. They know it means it will take you longer to pay your card off and that they’ll earn much more interest in the mean time. That $500 tablet can end up costing you much more than that. How much more? Take a careful look at your monthly statement which should include an estimate of how long it will take you to pay off your card if you make the minimum payment.

Be Wary Of “Teaser” Rates

Credit card lenders will often entice new customers with introductory, or temporary, low interest rates. Take a look at the fine print. Purchases made during the introductory interest rate will often be paid back at a much higher rate once the introductory period ends.

Pay Your Credit Cards On Time

Late fees and penalties can quickly add up and late payments can often result in a higher interest rate being automatically imposed.

Avoid The Special Services Credit Card Companies Offer

Credit card payment protection plans, credit report monitoring, travel clubs, and other offers ending up costing you more than they benefit you.

Handle Credit Limit Increases Carefully

Just because your credit card lender has increased you limit doesn’t mean you should take advantage of it or that it means that the lender thinks you can afford it. More likely, all it means is that the lender thinks you’re willing to take on, and pay for, more debt.

Don’t Max Out Your Cards

Maxing out your card can create two problems. First, it means that you’ll be paying much more in interest. Second, it can also reduce your credit score. Some credit card lenders will actually increase your interest rate on future purchases when your score drops.

If you are having trouble managing credit card bills, bankruptcy may help you get your debt under control. You can schedule a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Can I Get My Student Loan Forgiven Or Cancelled?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Can I Get My Student Loans Cancelled

Certain Federal Student Loans May Be Forgiven Or Cancelled

If you’re dealing with overwhelming student debt, you may be looking to repayment alternatives to help you manage it. Although bankruptcy will rarely eliminate student loans, there are other programs available that provide some relief.

Two of those programs are loan forgiveness and cancellation. Which, if any, of these programs you qualify will depend on what kind of loan you have and specific circumstances. The programs discussed here apply to Direct Loans, Federal Family Education Loan (FFEL) Program Loans, and Perkins Loans

Total And Permanent Disability Discharge

All three types of loans may be discharged if you have been totally and permanently disabled. You must show that you have been permanently disabled by providing evidence of receipt of veteran’s or social security disability benefits or certification from a doctor of such disability. You can find in-depth information here.

Closed School Discharge

If your school closes while you are enrolled and you do not complete your program because of the closure, your federal student loans could be discharged (cancelled). Your loans could also be discharged if the school closed within 90 days of withdrawing. Your loan may not be discharged if the school has closed but you are completing your program at another school. You can read more here.

Teacher Loan Forgiveness

If you are a teacher and a new borrower and have been teaching full-time in a low income elementary or secondary or educational service agency for five consecutive years, you may be eligible to have up to $17,500 of your federal student loans forgiven. You can read more details about this program here.

Public Service Loan Forgiveness

If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after October 1, 2007), the remaining balance that you owe may be forgiven. You must not be in default on your loans. You can find more information here.

Perkins Loan Cancellation and Discharge

Federal Perkins Loan Program loans may be forgiven for certain types of public service or employment. For each year of service or employment, a certain percentage of your loan can be forgiven. You can get more information here.

Although bankruptcy generally won’t get rid of your student loans, either Chapter 7 or Chapter 13 bankruptcy may help you manage your other debt and help you get your student loans under control. If you’d like to talk with an experienced Colorado bankruptcy attorney about what your options are to deal with your student loan debt, we hope you’ll come in for a free, no-obligation consultation. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their path to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290

 

Should I Consolidate My Student Loans?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Should I Consolidate My Student Loans

Consolidating Your Student Loans May Make It Easier For You To Repay Them

Many people who we help have one thing in common: they are struggling repaying their student loans. If you are scouring the Internet looking for solutions, the bottom line is this: it is nearly impossible to get rid of your student loans in bankruptcy. If you are young, able to work, and have only been repaying your loans for a relatively short period of time, bankruptcy will not get rid of your loans.

Nevertheless, we try to help people come up with solutions to their student loan problems. Although loan consolidation won’t reduce the amount you owe, it can simplify things by creating one bill for you to pay every month. It can also reduce your monthly payment as you can opt to repay the loan over 30 years. Of course, if you increase the repayment period, you’ll increase the amount you repay in interest.

Another thing to consider is consolidating may mean you’ll lose any benefits you might have gotten from the original lender, such as interest rate discounts, principal rebates, or loan cancellation.

Other options to consider to take care of short-term problems in repaying your student loans include deferment and forbearance, which will suspend payments temporarily.

If you are struggling to repay your student loans, bankruptcy can eliminate other debts, allowing you to focus on your student loans. If you have any questions, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can call 303.331.3403 to make an appointment or use our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their path to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290