Non-dischargeable debts are those which are not ruled out when you file for bankruptcy proceedings. Often when a person files bankruptcy in court, many debts are discharged, and the person is no longer obligated to pay those debts. However, some debts need the creditor to challenge your discharge during bankruptcy to make it completely non-dischargeable.
The process usually includes the court making the decision after listening to both parties, i.e., the person filing for bankruptcy and the creditor. If the court disagrees with the creditor, your debt can be discharged.
There are many conditions under which your debts are non-dischargeable after filing for bankruptcy. This includes debts due to fraudulent acts, debts from marital settlement or divorce decrees, debts from embezzlement, a breach of fiduciary responsibility, larceny, or debts from willful or malicious acts to another person.
Most of the non-dischargeable debts arise from acts of fraud or unlawful practices. Other types of non-dischargeable debts include payment owed for personal injury to a person by the debtor.
Moreover, creditors have the right to object to the discharge of debts. If the court agrees with the creditor, the debts become non-dischargeable. These include purchases of luxury items made by the debtor that were acquired within 90 days of filing for bankruptcy. However, the debtor can discharge these debts by assuring the court that they will repay the creditor and that the purchases were not luxury items.
Other situations in which the debts become non-dischargeable are when the debtor does not have proof or record of their finances and property settlements to show to the creditor. The court declares the debts incurred from creditors non-dischargeable when you cannot account for your missing assets due to a lack of records.
Furthermore, debts can also become non-dischargeable if you file for bankruptcy too often. You cannot get discharges on debts if you file for bankruptcy within eight years after you filed your first bankruptcy case. Your previous bankruptcy filing can serve as grounds for your latest debts to be discharged or not. This depends on the type of bankruptcy and the settlements of your last bankruptcy.
If you are having trouble settling your debts or are unsure if negotiating a settlement is appropriate, you might be considering hiring a lawyer to help you negotiate with creditors. However, it is possible to arrange the debt settlement yourself rather than hiring someone to do it.
Negotiating your settlement may help you to save money and it also puts you in a position to maintain control over the process. Some creditors may be reluctant to settle if you hire someone to represent you in the process. However, debt settlement attorneys may be the best option because they will be able to work out a better settlement compared to if you approaching the creditors on your own.
The advantage of hiring a skilled lawyer is that they can provide you with legal advice after analyzing the situation and they can also represent you if the creditor chooses to file a lawsuit against you. They will go over all the possible options and help you to figure out the best option. A debt settlement attorney can negotiate with lenders to perhaps lower the amount that you owe them. Before hiring a debt settlement attorney, it is important to research what they can do for you.
If you have a huge debt and lack the necessary funds to cater for the debt, you might need to consult an attorney. Hiring a lawyer can be the best move for you because, a debt lawyer can not only offer advice but they can find a way to combine your debts into a single huge debt with beneficial terms of payment. A lawyer will be able to figure out the best strategy that will help you to minimize risk.
It is vital to note that when it comes to paying debt lawyers, they are paid on contingency. This means that you might not have to pay anything at first but your lawyer will be entitled to a part of the profit should you win the case. Pricing may vary depending on how much you owe, how much they win you or save you, and where you live.
When you file for bankruptcy, the court may decide to eliminate certain debts by discharging them. The debts that cannot be discharged by the court have to be paid. Filing for bankruptcy does not automatically discharge your student loans. If you wish to have your student loans discharged, you will have to file a separate motion with the bankruptcy courts.
Contrary to popular opinion, student loans can be discharged in bankruptcy. It may be difficult to discharge student loans but it is not impossible. In fact, the department of education has taken steps to ensure that this is possible.
It is true that when it comes to student loans it might be more difficult to discharge them than other types of secured debt. When it comes to student loans unless you can show that the payment of the loan poses an undue hardship on your family, your defendants, and you, it cannot be discharged.
It is difficult to meet the requirements for undue hardships and it rarely happens but it is possible. The courts use several methods to test if the person has faced undue hardship. They regularly use Brunner test to evaluate if your claim is valid. The other test that can be used is the totality of circumstance test.
When it comes to the totality of circumstance test, the court will consider your past, present, and future resources. They will also consider reasonably necessary living expenses and other relevant facts and circumstances.
For the Brunner test, you will have to file a separate motion with the bankruptcy courts. Thereafter you will have to appear in in front of a judge to explain your hardship. You must show that; you made efforts to repay the loans through past payments or arranging for payments, you are unable to maintain a minimal standard of living for yourself and your family, and that the circumstances that exist that are stopping you from repaying the loan, are unlikely to improve. However, it is up to the court to decide if you meet the undue hardship standard. If you are able to prove that you face undue hardships, your student loans will be discharged.
When filing a bankruptcy petition with the court, debtors are frequently not completely aware of the rights the bankruptcy code gives them. One of the most significant rights is the ability to be exempt from creditors’ collection efforts after the bankruptcy petition has been filed. An automatic stay is important because it stops creditors from continuing to try and collect a debt at the same time, the bankruptcy petition is being processed in the court system. It allows the debtor to carry less of the burden of accumulating debt.
It’ll keep your lights on. The automatic stay will stop the disconnection of your utilities for at least 20 days. Your utility company cannot threaten to cut off your water, electric, gas, or telephone service because you are late on a bill. Although the cost of a power payment alone rarely makes filing for bankruptcy a good idea, it might if you have other debt you can discharge. Be aware that the utility company can ask you for a deposit to guarantee future payments.
It’ll Keep You in Your Home. The automatic stay may be helpful if you are being evicted from your home, but it is typically only temporary. The automatic stay won’t impact these eviction proceedings if your landlord already has a judgment of possession against you at the time of filing; the landlord can carry on as usual. The automatic stay won’t help you much if the landlord claims that you have been harming the property or using illegal substances there. In other situations, the automatic stay may give you a few days or weeks to move out, but the landlord would likely ask the court to lift it and permit the eviction, and the court will probably grant his request.
It’ll Stop Garnishments. When you file for bankruptcy, most garnishments are immediately stopped. You can erase eligible debt through bankruptcy, such as credit card obligations and personal loans, and receive your total wage. Be careful that debts frequently garnished—like those for continuing alimony and child support—won’t be forgiven. Depending on the bankruptcy chapter filed, past-due child support and back taxes will vary.
Most people want to know if they may maintain their property while considering Chapter 7 or Chapter 13 bankruptcy. The short response is perhaps. There is a catch to Chapter 7 bankruptcy: if you own too much property, the bankruptcy trustee may sell some of it and distribute the proceeds to your creditors.
What kind of property may you keep, then? Exemptions—state rules that outline what you are permitted to protect in Chapter 7 and Chapter 13 bankruptcy—determine the answer.
Exemptions allow you to protect a specific amount of assets during bankruptcy, including a cheap automobile, business equipment, clothing, and a retirement account. If an asset is exempt, you won’t have to worry about it being taken or sold for the benefit of your creditors by the bankruptcy trustee assigned to your case.
Many exclusions cover particular types of property, such as a car or furniture, up to a certain dollar level. In some cases, an exemption safeguards the entire asset’s worth.
Anything that isn’t protected by bankruptcy law is regarded as non-exempt, and, in Chapter 7, the trustee may sell it to recoup the debt. How much the debtor in a Chapter 13 bankruptcy will have to pay creditors whose debt is not secured by collateral is based on the value of the non-exempt property.
Non-exempt assets can include:
● Secondary residential property such as a vacation house
● A second car
● Investments (not including retirement accounts)
● Recreational vehicles like boats or motorcycles
● Art
● Musical Instruments
● Fur coats
● Extra televisions
● Jewelry
● Coin collections
● Family heirlooms
There are numerous ways for a filer to prevent a non-exempt asset from being liquidated under Chapter 7 bankruptcy regulations. You can try to persuade the trustee to take an item of exempt property in its place if it’s important to you, or you can offer to repurchase the item from the trustee.
The trustee may determine that a piece of non-exempt property is too difficult to sell or isn’t valuable enough to warrant selling it to benefit the creditors. In that situation, the trustee will formally return the item to you by filing a Notice of Abandonment.
