Time and Time again, I see clients with an enormous amount of student loan debt. Many times the debt is in excess of 5 figures. Unfortunately, student loan debt is not dischargeable in bankruptcy, and it is not a priority unsecured debt like taxes or domestic support obligations. Yes, there is a hardship exception to discharge student loan debt, but the case law indicates that such a discharge applies in very limited circumstances. For instance, if the debtor has a permanent disability, then the student loan debt would be dischargable.
I think we, the American citizenry, ought to lobby Congress and change the law. When students borrowed all of this money, no one undertook to underwrite the student loans to determine whether they made economic sense. The situation is particularly acute in the current economy because many graduates are unemployed , underemployed or have not received the salaries they anticipated. And forbearing or deferring the student loans is not a solution since many loans have negative amortization features. Also student loan interest is tax deductible, and one cannot take the deduction if he/she is not paying the loan.
ONE SOLUTION: on an experimental basis, we are taking a few Chapter 13 cases in which we are characterizing the student loans as long-term debt. Some courts have allowed student loans characterized as long-term debt to be paid in the ordinary course while credit card debt and other unsecured debts are given a lower priority. When such plans are confirmed, the debtor is able to devote more of his/her income to pay-off the student loans sooner.
We'll keep you posted whether the local bankruptcy courts approve the characterization of student loans as long-term debt with a higher priority.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Tuesday, March 2, 2010
Wednesday, February 17, 2010
DIVORCE AND BANKRUPTCY
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Divorce is one of the leading causes of bankruptcy filings. In today’s economy, not only are courts dissolving marriages, they are dividing assets, distributing debts, and awarding support obligations between the divorcing couple. The orders that a court enters with regard to the distribution of assets and liabilities have a profound impact on the bankruptcies subsequently filed by divorced individuals.
For example, both parties may be jointly liable for a car loan. In the course of a divorce proceeding, the court may order that the husband be responsible for the entire car loan, or for a particular portion of that loan. How the court words its order can determine whether the husband subsequently filing for bankruptcy can actually discharge that loan or the deficiency resulting from repossession.
If the court orders the husband to pay the car payment to the wife as part of a domestic support obligation, the husband would not be able to discharge that debt in his subsequent bankruptcy because domestic support obligations are not dischargeable in bankruptcy. However, if the Court orders that the husband be solely liable to the automobile financing company for the loan, then the husband would be able to discharge that debt in a subsequent bankruptcy.
Consequently, divorcing couples need to retain divorce attorneys who have knowledge of bankruptcy law as it relates to the distribution of debts and to awards of domestic support obligations. At Pesner Kawamoto Conway, PLC our attorneys are experienced in both bankruptcy law and in domestic relations law; and we provide comprehensive advice and guidance to divorcing parties who may need to subsequently seek the protection of the bankruptcy court
Deborah Winstead
Divorce is one of the leading causes of bankruptcy filings. In today’s economy, not only are courts dissolving marriages, they are dividing assets, distributing debts, and awarding support obligations between the divorcing couple. The orders that a court enters with regard to the distribution of assets and liabilities have a profound impact on the bankruptcies subsequently filed by divorced individuals.
For example, both parties may be jointly liable for a car loan. In the course of a divorce proceeding, the court may order that the husband be responsible for the entire car loan, or for a particular portion of that loan. How the court words its order can determine whether the husband subsequently filing for bankruptcy can actually discharge that loan or the deficiency resulting from repossession.
If the court orders the husband to pay the car payment to the wife as part of a domestic support obligation, the husband would not be able to discharge that debt in his subsequent bankruptcy because domestic support obligations are not dischargeable in bankruptcy. However, if the Court orders that the husband be solely liable to the automobile financing company for the loan, then the husband would be able to discharge that debt in a subsequent bankruptcy.
Consequently, divorcing couples need to retain divorce attorneys who have knowledge of bankruptcy law as it relates to the distribution of debts and to awards of domestic support obligations. At Pesner Kawamoto Conway, PLC our attorneys are experienced in both bankruptcy law and in domestic relations law; and we provide comprehensive advice and guidance to divorcing parties who may need to subsequently seek the protection of the bankruptcy court
Deborah Winstead
Wednesday, February 10, 2010
BANKRUPTCY IS SANCTIONED BY THE OLD TESTAMENT---LEVITICUS, CH. 25
Infrequently, a client will consult with me in a mixed emotional state. On the one hand, the client has been humilitated by his creditors, being subject to numerous harassing phone calls, written demands and judgments. Yet at the same, the client suffers from extreme shame that he or she is about to file for bankruptcy and seek forgiveness of his/her debts. Many of these clients have stated that they feel bankruptcy is immoral.
Logically, insolvency frequently results from tragic life events that no one can foresee or which are foreseeable but extremely unlucky. Moreover, for those instances in which the insolvency results from reckless financial behavior one can rationalize the bankruptcy relief sought because insolvency generally results from a lender too willing to lend or too willing to exercise power over another and a borrower too nearsighted to contemplate the consequences. Although I personally tend to be persuaded by reason, I recognize that many are influenced by their religious upbringing. For the latter, I refer them to Leviticus, Chapter 25 in which the Bible states:
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Logically, insolvency frequently results from tragic life events that no one can foresee or which are foreseeable but extremely unlucky. Moreover, for those instances in which the insolvency results from reckless financial behavior one can rationalize the bankruptcy relief sought because insolvency generally results from a lender too willing to lend or too willing to exercise power over another and a borrower too nearsighted to contemplate the consequences. Although I personally tend to be persuaded by reason, I recognize that many are influenced by their religious upbringing. For the latter, I refer them to Leviticus, Chapter 25 in which the Bible states:
And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof; it shall be a jubilee unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family. . . . Ye shall not oppress one another . . . And if thy brother be waxen poor, and fallen in decay with thee; then thou shall relieve him: yea, though he be, a stranger, or a sojouner; that he may live with thee. Thou shalt not give him thy money upon usury, not lend him thy victuals for increase. . . . And if thy brother that dwelleth by thee be waxen poor, and be sold unto thee; thou shall not compel him to serve as bondservant. But as an hired servant, and as a sojourner he shall be with thee, and shall serve thee unto the year of jubilee; and then shall he depart from thee, both he and his children with him, and shall return unto his own family, and unto the possession of his fathers shall he return. For they are my servants, which I brought forth out of the land of Egypt: they shall not be sold as bondsmen. Thou shall not rule over him with rigour; but shalt fear thy God.Again, psychologically, I feel that many consulting with me have the shoe on the wrong foot. It is immoral to enslave or oppress. It is not immoral to flee oppression.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Tuesday, February 9, 2010
HOW BANKRUPTCY WILL AFFECT MY LIFE
It is among the most pressing question that clients have when they first consider filing for bankruptcy, and the fears often far exceed the realities. Bankruptcy carries with it a stigma that lingers even as the nation and the economy faces its most difficult struggles since the 1930's, but it has been and remains a legal and necessary part of a vital economy that has saved countless families and even some of the largest corporate organizations in the world.
Bankruptcy is not a decision to be made lightly, but understanding both how it can impact and improve your life should be a vital part of the decision. At the law offices of Pesner Kawamoto Conway, PLC, in McLean, Virginia, our attorneys have been helping individuals and businesses come to informed and personalized decisions about bankruptcy for decades.
An End and a New Beginning
For many clients the decision about whether to file a Chapter 7 or Chapter 13 bankruptcy comes down to a measure between what life is like now and what it will be like under the protection that bankruptcy affords. We hear clients describe their current situation in a lot of different ways, such as:
• Constant pressure from creditors and collections agents
• A fear of every phone call and every knock at the door
• Helplessness in the face of massive debt, out-of-control interest rates or foreclosure
• Sleepless nights spent thinking about money and harassment from creditors
• Fights with spouses about the weakening state of family finances
• A direct result of a divorce or other change in family status
Bankruptcy isn't a fix to all problems, but for many families it's the restart or opportunity to catch up that they most need. With a process that is far less complicated than many people expect, bankruptcy can have immediate impact, including:
• An immediate end to creditor harassment
• The opportunity to build a payment plan that matches your ability to pay
• Exemptions that may allow you to keep your home and key assets while eliminating other debt
• A sense of taking back control of your finances and life
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Bankruptcy is not a decision to be made lightly, but understanding both how it can impact and improve your life should be a vital part of the decision. At the law offices of Pesner Kawamoto Conway, PLC, in McLean, Virginia, our attorneys have been helping individuals and businesses come to informed and personalized decisions about bankruptcy for decades.
An End and a New Beginning
For many clients the decision about whether to file a Chapter 7 or Chapter 13 bankruptcy comes down to a measure between what life is like now and what it will be like under the protection that bankruptcy affords. We hear clients describe their current situation in a lot of different ways, such as:
• Constant pressure from creditors and collections agents
• A fear of every phone call and every knock at the door
• Helplessness in the face of massive debt, out-of-control interest rates or foreclosure
• Sleepless nights spent thinking about money and harassment from creditors
• Fights with spouses about the weakening state of family finances
• A direct result of a divorce or other change in family status
Bankruptcy isn't a fix to all problems, but for many families it's the restart or opportunity to catch up that they most need. With a process that is far less complicated than many people expect, bankruptcy can have immediate impact, including:
• An immediate end to creditor harassment
• The opportunity to build a payment plan that matches your ability to pay
• Exemptions that may allow you to keep your home and key assets while eliminating other debt
• A sense of taking back control of your finances and life
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
PROCESS OF BANKRUPTCY
Many of our clients imagine bankruptcy as a long and drawn out process full of judgments and embarrassing arguments with creditors. The reality is significantly different, and among the most common statements we hear from our former clients is: that was it?
We understand that the decision to file for bankruptcy is a serious one that can have both immediate relief and long term consequences. It is not something we ever recommend clients do because it is quick or easy, but because it is the right thing, but it is also important to realize that there is often a smooth process that we can put you on so that within only a few months you are back on the course toward a better financial future.
In Virginia and Maryland, contact the attorneys at the law office of Pesner Kawamoto Conway, PLC, for reliable, personalized and confidential bankruptcy counsel.
An Established and Reasonable Process
In very simple and general terms, here is the sort of process you can often expect when filing for Chapter 7 or Chapter 13 bankruptcy:
• 3 to 5 days after filing notice is sent out to creditors
• Creditors are no longer permitted to seek collections against debt — any harassment ends
• A trustee is appointed
• 45 days after the filing of the Petition there is a creditors meeting with the Trustee to verify your petition, which may last as little as 15 minutes
• Usually within 90 days of filing the petition, the bankruptcy court discharges your debt or in the case of a Chapter 13, approves your plan.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
We understand that the decision to file for bankruptcy is a serious one that can have both immediate relief and long term consequences. It is not something we ever recommend clients do because it is quick or easy, but because it is the right thing, but it is also important to realize that there is often a smooth process that we can put you on so that within only a few months you are back on the course toward a better financial future.
In Virginia and Maryland, contact the attorneys at the law office of Pesner Kawamoto Conway, PLC, for reliable, personalized and confidential bankruptcy counsel.
An Established and Reasonable Process
In very simple and general terms, here is the sort of process you can often expect when filing for Chapter 7 or Chapter 13 bankruptcy:
• 3 to 5 days after filing notice is sent out to creditors
• Creditors are no longer permitted to seek collections against debt — any harassment ends
• A trustee is appointed
• 45 days after the filing of the Petition there is a creditors meeting with the Trustee to verify your petition, which may last as little as 15 minutes
• Usually within 90 days of filing the petition, the bankruptcy court discharges your debt or in the case of a Chapter 13, approves your plan.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
BANKRUPTCY FOLLOWING DIVORCE
There are a lot of situations that can lead an individual to a financial decision involving bankruptcy: excessive debt, foreclosure, being laid-off from work or a major medical expense. One of the more common causes of serious financial stress which is not often talked about is a dramatic change in family status. For many clients an expensive and painful divorce is a major contributor to bankruptcy. At the law offices of Pesner Kawamoto Conway, PLC, our lawyers have significant experience working with Virginia and Maryland clients who are facing financial hardship because of a divorce. We can work with you to explore the options available and understand your rights, by putting decades of combined experience and a commitment to client service behind your case.
The Financial Strain of Separating a Household
A divorce may be unavoidable, but so too are the expenses and costs associated with ending a marriage. Particularly if you were part of a two income marriage, the financial strains that can follow as a result of a divorce can be significant, and if you are expected to contribute financially for support or take on the debts of your former spouse, then you may have to consider more dramatic financial remedies.
Our attorneys work with clients who are facing a range of financial challenges, including those who have separated from a former spouse. We offer experienced and client focused solutions designed to help you repair and rebuild.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
The Financial Strain of Separating a Household
A divorce may be unavoidable, but so too are the expenses and costs associated with ending a marriage. Particularly if you were part of a two income marriage, the financial strains that can follow as a result of a divorce can be significant, and if you are expected to contribute financially for support or take on the debts of your former spouse, then you may have to consider more dramatic financial remedies.
Our attorneys work with clients who are facing a range of financial challenges, including those who have separated from a former spouse. We offer experienced and client focused solutions designed to help you repair and rebuild.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
ENDING CREDITOR HARASSMENT
Collections agencies employ a range of tactics to collect on outstanding debts, not all of them ethical, not all of them legal. For many families and businesses facing difficult times, creditor harassment is a constant source of significant stress. The fact that some people have to make a choice between paying down a debt and buying groceries or fixing the car doesn't help to stem the tide of calls. It can get to the point that people feel frustrated and even helpless to stop a financial situation sliding out of control. At Working with clients in Virginia and Maryland, we are dedicated to providing experienced, effective and client focused solutions.
A Pathway to Rebuilding Your Financial Life
It can be embarrassing to have the phone ringing every night with one collector or another demanding money you don't have or leaving threatening messages. We see clients from all walks of life, of all professions and who all, for a variety of reasons, have come to be overwhelmed by unsecured debt, loans or bills.
If you do decide to pursue a bankruptcy, our lawyers can take immediate action to end collections calls and creditor harassment from:
• Credit card companies
• Collections agencies
• Hospitals
• Mortgage lenders
• Foreclosure attorneys
• Banks and personal loans
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
A Pathway to Rebuilding Your Financial Life
It can be embarrassing to have the phone ringing every night with one collector or another demanding money you don't have or leaving threatening messages. We see clients from all walks of life, of all professions and who all, for a variety of reasons, have come to be overwhelmed by unsecured debt, loans or bills.
If you do decide to pursue a bankruptcy, our lawyers can take immediate action to end collections calls and creditor harassment from:
• Credit card companies
• Collections agencies
• Hospitals
• Mortgage lenders
• Foreclosure attorneys
• Banks and personal loans
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
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