Archive for November, 2017

Student Loans and Senior Citizens

Monday, November 27th, 2017

It is hard to imagine that a lot of seniors are concerned with student loan debt. However, surprisingly, there are three million people in that situation.

student loans

Thanks and refer, Bankruptcy Network. A recent PBS story, “More older Americans than ever are struggling with student debt,” highlights an issue that many bankruptcy attorneys have seen in recent years. As the article notes, ” The number of Americans age 60 and older with student loan debt quadrupled between 2005 and 2015 to nearly 3 million. And the average amount they owe has nearly doubled from 12-thousand dollars to almost 24-thousand.” That’s a lot of debt–my cheap calculator doesn’t have enough digits to display it, but it works out to about $72 billion dollars.

[Grand]Parent Plus loans, co-signing on private student loans, children and grandchildren who go into default on these loans, and even old, unpaid student loans they took out years ago are all resulting in collection efforts against seniors who just wanted to help a child or grandchild get a college education. And once a loan goes into default, the powers of the student loan collectors are massive. If a government loan, there is no statute of limitations, meaning that they can collect, quite literally, forever. I once had a client who was sued in 2014 for a student loan from 1976. Perfectly legal. (I was successful in getting the Court to throw the case out of court because of a doctrine called the “statute of repose,” meaning that because of the passage of time, my client could not have been reasonably have been expected to keep the records showing that he paid off the loan in the 1980s.) Government collectors can obtain an “administrative garnishment,” meaning that they can garnish wages and attach your bank accounts without having to sue and get a judgment. They can even garnish your Social Security! Private student loan collectors do have to deal with the statute of limitations, and do have to sue you before they can garnish or attach.

What are your options if you are faced with a student loan in default? One option that you may not have considered is a Chapter 13 bankruptcy.

“Aren’t student loans non-dischargeable?” most people ask. Not always, However, depending on circumstances, it nevertheless can be difficult and expensive to obtain the discharge in bankruptcy of student loans. But a discharge isn’t always necessary for a Chapter 13 to help.

When you file for Chapter 13, a provision of the Bankruptcy Code called the Automatic Stay goes into effect immediately. The Automatic Stay prohibits all creditors–including student loan creditors–from taking any action that could be considered an attempt to collect a debt from you or your assets. They cannot call you. They cannot send you nasty letters. They cannot send you bills. They cannot sue you, or continue with a pending lawsuit. They cannot attach, garnish, repossess, or foreclose on your assets. All proceedings immediately stop. The Automatic Stay remains during the entire course of your case, five years for a typical Chapter 13.

What do you need to do during that time? You have to make a monthly payment to a trustee, who takes that payment and distributes it to all of your creditors. How much will that payment be? It depends on your circumstances. But many of my senior clients in these circumstances have little more than Social Security and a small pension as income, so their payment is small–$25.00 a month. And as long as they make it, the Automatic Stay completely protects them from all collection efforts.

A Chapter 13 isn’t a long-term remedy–until Congress changes the law to allow for the discharge of student loans, it usually will not result in the discharge of the student loan. But it will stop the immediate problems, the calls, letters, garnishments and attachments. It will relieve a significant amount of stress, both emotional and financial. It will let you move forward instead of being dragged backwards. It will let you live your life free from the student loan collectors. It is something to seriously consider.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.

Things to Consider

Sunday, November 19th, 2017

Your bankruptcy petition could be denied. Here are some some things to consider to make yours is not denied.

bankruptcy court

1. The timing of your Chapter 7 bankruptcy petition matters

One of the ways that your Chapter 7 bankruptcy petition can be denied is if the timing of your filing is wrong. The general rule is that if you have filed Chapter 7 bankruptcy in the past and received a discharge, you must wait 8 years from the date of the earlier filing to file again. Similarly, if you have filed for Chapter 13 bankruptcy in the past and received a discharge, the waiting period is 6 years.

Having filed Chapter 7 bankruptcy in the past 8 years does not prevent you from filing other types of bankruptcy, however.

2. Chapter 7 bankruptcy income requirements

You may not have realized that in order to file Chapter 7 bankruptcy, you must meet the income requirements first. The income eligibility requirements are based on what the median income is for a family the same size; if your median income is less than that of the median household, you are eligible to file Chapter 7.

However, the court will also consider what your income is after certain expenses are deducted: someone above the median income might still qualify after deductions are made. To determine whether your household meets the income eligibility requirements, consult a qualified Chapter 7 bankruptcy attorney.

3. Omissions by mistake and fraudulent Chapter 7 bankruptcy filings

When filing for Chapter 7 bankruptcy, it’s important to make sure that you include all of your debt in your petition; only the debts listed in your petition will be discharged.

If you forget to list a debt on your petition, your paperwork can be amended to include the debt up to a certain point in the bankruptcy process. If, however, you purposely omit financial information (such as failing to disclose the income earned from a second job where you are paid in cash) or take steps to hide assets (such as hiding assets in an account in another person’s name), your bankruptcy discharge will be denied on the grounds of fraud.

To make sure that all of your debts are included in your petition and that you are not engaging in fraudulent activity when disclosing your financial information, seek the advice of a bankruptcy specialist.

4. The Chapter 7 may not discharge some of your debts

While generally bankruptcy petitions are approved, and discharges entered, there are circumstances where a specific debt may be excepted from discharge, while your other debts are discharged. The most common example of when this occurs is when the person filing bankruptcy excessively uses a line of credit in the three months before filing. Excessive use of credit right before filing bankruptcy can make it appear that you are taking advantage of the possibility of debt discharge. To prevent this, consult a bankruptcy specialist who is familiar with partial debt discharge.

5. The wrong bankruptcy attorney can cause your bankruptcy to be denied. Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.

Paying My Ex’s Debt

Monday, November 6th, 2017

Divorce is bad enough, but it can be particularly frustrating when they try to make you pay for debts that you feel belong to your ex. When going through a divorce, you can be left with different types of obligations. The most common is a domestic support obligation, such as child support or alimony. But you can also be made responsible for your spouse’s separate debts, usually as part of the property division.

couple arguing

For example, the wife gets to keep the dog and the house, and husband gets to keep the car. Wife, let’s say, then agrees (or is ordered by the court) to be responsible for all  of husband’s credit card debts. Then for whatever reason, the ex-wife doesn’t make the payment on the credit cards. The credit card companies then sue the ex-husband who tries to defend by saying that it is his ex-wife’s responsibility!

Does this work?  How can this happen?

The truth is that divorce court/family law agreements and judgments only affect the two spouses, not third party creditors like credit card companies. So in the above example, the failure of ex-wife to pay the credit cards as promised leaves her liable to her ex-husband, NOT to his credit card companies.

Can The Spouse’s Debt Be Discharged in Bankruptcy?

Sometimes the amounts involved can be quite substantial. In the above example, let’s say there were $100,000 in credit card debts that wife defaulted on. What can ex-hubby do?  He can, of course, file bankruptcy himself to deal with what always was his debt in the first place. But he can also pursue his ex-wife in family law court for failure to honor the agreement/judgment. This can result in altering any alimony/support payments being made, or being imposed.

But ex-wife potentially has a way out too. She cannot get rid of her obligation to her ex-husband in a Chapter 7 case.  But in a Chapter 13 case, she may. Chapter 13 of The Bankruptcy Code allows the discharge of debts incurred in connection with a divorce if they are not  part of a domestic support obligation (i.e. alimony, child support, etc.).

Thus, ex-wife can do a payment plan based on her budget and discharge the remainder of the debt owed to her ex-husband in a Chapter 13. It is possible though for the family law court to then order ex-wife to pay alimony to ex-husband, which would not be dischargeable in any bankruptcy chapter.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.