Chapter 13 is a reorganization plan for consumers. In most cases, a student loan borrower will not be able to discharge their student loans in chapter 13. However, chapter 13 might still be an helpful option for some people. In chapter 13, the tables are turned on the student loan lender. Instead of trying to [...]
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not so fast… Most higher income individuals considering bankruptcy think that if you make less than the applicable means test figure then they are automatically eligible for chapter 7 relief. That’s not always true. The Bacardi case below was written by Judge Goldgar and released on January 6, 2010. In this case, even though the debtors [...] The real estate crash created a huge problem for second mortgage holders. If the value of a home falls so low that the house is worth less than the balance of the first mortgage, the second mortgage can be “stripped off” in a chapter 13 bankruptcy. In a chapter 13, a mortgage that is stripped off is no longer secured by the real estate. As good as this sounds for consumers, there are several pitfalls. First, the debtor must complete the chapter 13 plan. This means that the consumer must make payments to the chapter 13 trustee for at least 3 years (more often 5 years). If for some unforseen reason, the consumer is unable to complete the plan, then the lien strip fails and it regains its secured status. Second, a stripped lien losses its secured interest, but it the second mortgage lender must still be paid as an unsecured creditor. This means that the second mortgage will be paid a percentage of its balance over the life of the chapter 13 plan. Stripping a second mortgage in a chapter 7 is a much more powerful remedy in a chapter 7. In a chapter 7 bankruptcy, all unsecured liabilities are discharged upon completion of the case. The second mortgage would get nothing. If the consumer decided to sell the property down the road, they would not have to payoff the second mortgage to complete the [...] The default position is that student loans are not discharged in either chapter 7 or chapter 13 bankruptcy. The only exception to this rule is if the consumer suffers from an “undue hardship” due to the student loan liability. Unfortunately, bankruptcy courts take a very narrow view the “undue hardship” standard. Most courts follow the [...] In re Bacardi: In this case, Judge Goldgar ruled that these debtors could not get a Chapter 7 discharge because they failed the totality of the circumstances test contained in 707(b)(3). The Bacardi family earned a high income above $200,000 per year. They had three homes. Some of their expenses were too high in the [...] A Statute of Limitations defense is always waaaay more complicated than it seems on its face. It is no different in the medical billing context. Most medical bills are derived from unwritten, implied contracts. For example, if you get into a car accident and go to the emergency room, the hospital will provide service before you [...] In the 7th Circuit, YES. In the case below, the debtor, Stefanie Kuehn filed a chapter 7 bankruptcy after completing her studies at Cardinal Stritch University. Included in her bankruptcy were debts owed for tuition. After she received her discharge, Ms. Kuehn contacted the University for a copy of her transcript. The university refused to release [...] Case Synopsis: This opinion was issued by Judge Squires on April 22, 2009. In this case, the debtor filed a chapter 7 bankruptcy with the mistaken belief that her home was “exempt” and protected even though there was approximately $140,000 in equity. Once the trustee started the process to sell the house for the benefit of creditors, the [...] BERNIE KOSAR Former NFL quarterback Bernie Kosar was known for his intelligence on the football field. Unfortunately he did not display the same acumen for real estate investing. Kosar lead the Miami Hurricanes to a national championship in 1984. He later lead the Cleveland Browns to the AFC Championship game. Kosar retired after back-up roles for [...] |
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