How does bankruptcy work? What can you file under bankruptcy and what can you not? Can you do school loans or court fines, can it stop garnishments?
Your questions are pretty general. I don't think anyone would be able to give you the broad overview and do it justice here, but a few comments ...
You can have most but not all debts discharged in bankruptcy. While it's possible to have student loans discharged, it is very uncommon. In one of the few recent cases where it has happened the person who owed the money was of a rather advanced age, used her education to work in a low paying social work field, and lived in the study of her father's home.
You can probably stop a garnishment.
For more information see the two links that I'll include below. They're good places to get the broad overview that you're probably looking for.
The foregoing is commentary regarding a general legal question. It is not intended to be legal advice specific to the reader's individual situation nor does it create an attorney-client relationship between the author and any reader. You are encouraged to contact a qualified attorney to discuss your legal situation.
Although you must list all your debts when you file bankruptcy, and while your bankruptcy case is open you have protection from the creditor suing you, garnishing wages, or attaching your property, whether you can eliminate these debts in a bankruptcy would require more specific information.
Hope this perspective helps!
If you file for chapter 7 bankruptcy it will not discharge school loans or court fines. It will stop garnishments. If you file for chapter 13 it will defer payment on the school loans while you are in the plan and it will discharge any balance left owing on the fines once the chapter 13 plan is completed. The chapter 13 would also stop any garnishments.
The answer above is for general information purposes only. You should talk to an attorney to determine your specific legal rights.
When you file a Bankruptcy Petition, you must list all of your debts on the appropriate schedules. Court fine are generally listed as Priority Unsecured Debts and Student Loans as unsecured debt. Pursuant to Statute, it is almost impossible to have student load debt discharged in bankruptcy. There is a very narrow exception for extreme hardship cases but very few student loan borrowers can qualify for this. Court fines and other such penalties are also not generally dischargeable.
While the bankruptcy case is active, there is a stay that would prevent these creditors from seeking garnishments. Once the case is discharged, however, the student loan creditors and the court fine creditors will still be there.
There are also several different chapters of the bankruptcy code that relate to different types of bankruptcies. Your options as to secured creditors, priority unsecured creditors and unsecured creditors vary depending upon the chapter you file under. You should speak to a knowledgable bankruptcy attorney about your individual situation.
The following information should not be taken as legal advice but simply as information based upon general principles of law, which is intended to educate. As such, this information is not intended, nor should it be construed as creating any attorney/client relationship. If you need specific legal advice, please consult with a lawyer of your choosing.
Very common question people ask is what must be included or they say I don't want to include etc.. It comes down to definition of inclusion. You have to list "include" all debts owed, all assets owned, and disclose your income along with other financial affairs. Then the debt is handled differently depending on type and other factors. Typically, student loans are not dischargeable without going through an adversarial process (in addition to filing) but must warn that success rates are pretty bad, we're talking more like you are in a health situation and/or age where you have no earnings and aren't likely to have any EVER. Having low income is not enough. While filing bankruptcy stops wage garnishments, depending on what the garnishment is for (if for federal student loans) than in chapter 7 the garnishment can resume after the case closes in chapter 13 the payments would be handled through the chapter 13 plan payments, and depending on how your numbers come out that payment could be less or more than what you are obligated to pay now. Note that chapter 13 is not a long term solution because the student loans are still not dischargeable so you are only deferring the payments, after chapter 13 plan closes (3-5 years max) your obligation to pay resumes. Have you looked at Income Based Repayment and Income Contingent Repayment plans for federal loans? Also there may be, depends, consolidation possible to get loans out of default. Talk to your lender or visit Us Department of Education website for more information on that. Hope this helps.
In general terms, school loans and court fines are normally not dischargeable in a bankruptcy. Bankruptcy works differently depending on what chapter you file. Most debts like credit cards, medical bills, deficiences on repossessed vehicles, etc. are likely dischargeable. Depending on what the debt was for, a wage garnishment normally stops when the bankruptcy is filed.
The answers to these questions may be different depending on your individual circumstance and should not be considered as legal advice or the establishment of an attorney-client relationship.
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