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Shouldn t you be able to discharge your student loans in a bankruptcy?
Many students today leave college and graduate schools with mounting bills before they ever commence their employment life. In many cases these student loans can amount to an excess of $200,000. The monthly payments new graduates face can be as significant as $1,200 per month. Couple that payment with the uncertainty of the US and world economy and the situation truly appears to be grim. Many of today s young professionals and working class amass large unsecured debt through credit card purchases just to get by. They do not earn even as much money as the median person in their state. Many have purchased homes with current fair market values worth many thousands of dollars less then their mortgages, and in many cases fall behind on their payments. What are their options negotiate with their creditors? If these debtors can not afford to commit to the massive payments, then negotiation is not an option. Their only true salvation is a chapter 7 bankruptcy. The debtors certainly can get some relief from filing for bankruptcy. If they have incurred massive credit card debt, medical bills, or even judgments for failure to pay debts, those all can be wiped out as unsecured debt. If they can not afford their home, they can always walk away from it. Even if the bank can not recoup their money and obtains a deficiency judgment against the debtor, that judgment is not secured as the mortgage was, it can also be stripped. However, many young debtors largest concern and most significant payment comes in the form of their student loan. What happens to that debt? Currently, a student loan is not secured in any collateral, but it is considered a priority debt, and can not be wiped out quite so easily. In order for a debt to be discharged, it first must be classified as a consumer debt. The debt must have been incurred for a personal, household or family purpose. For example, most courts have held that taxes are not consumer debts within the meaning of the Bankruptcy Code. Debts incurred in the production of income are generally not considered consumer debts. Compass Bank v. Meyer (In re Meyer), 296 B.R. 849 (2003). Other courts, including two courts of appeals, have adopted the ”profit motive” test. Baskin v. G. Fox and Co., 550 F. Supp. 64 (D. Conn. 1982). Under this test, a debt is not a consumer debt if it ”was incurred with an eye toward profit.” In re Booth, 858 F.2d 1051, 1055, (5th Cir. 1988). If a debt is incurred partly for business purposes and partly for personal, family or household purposes, the term ”primarily” in the definition suggests that whether the debt is a ”consumer debt” should depend upon which purpose predominates. Presumably, this determination would normally turn on the purpose for which most of the funds were obtained. In re Booth. Under this test, courts have concluded that student loans may or may not be consumer debts, depending in part on the motivation for obtaining them. In re Stewart, 175 F.3d 796 (B.A.P. 10th Cir. 1997). The court held a student loan classification depends on facts; in the case, classification of a portion of medical school loans as consumer debt was not erroneous. If a court determines that a student loan is a consumer debt, which in and of itself still will not provide grounds to discharge the loan. A court must find pursuant to Section 523(a)(8) of the US Bankruptcy Code, that the student loan qualifies as an undue hardship which allows the court to discharge an otherwise nondischargeable priority debt if excluding the debt from discharge will necessitate an undue hardship on the debtor or the debtor’s dependents. Such a judicial decision is discretionary with the bankruptcy judge in determining whether payment of the debt will cause undue hardship on the debtor, thus defeating the ”fresh start” concept of the bankruptcy laws. The most widely used test for evaluating the dischargeability of a student loan under section 523(a)(8) states that the debt is dischargeable if three conditions are met: 1. The debtor cannot maintain, based on current income and expenses, a ”minimal” standard of living if forced to repay the loans; 2. There are indications that the state of affairs is likely to persist for a significant portion of the repayment period; and 3. The debtor made good faith efforts to repay the loans. Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) The Supreme Court has stated that section 523(a)(8) is ‘’self-executing” and that ”[u]nless the debtor affirmatively secures a hardship determination, the discharge order will not include a student loan debt.” Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004). In other words, student loan debt remains due until there is a determination that the loan is dischargeable. Underwood v. United Student Aid Funds, Inc. (In re Underwood), 299 B.R. 471 (Bankr. S.D. Ohio 2003). To demonstrate the current criteria used by the Bankruptcy court to discharge a student loan, the district of Massachusetts has set a high bar. The debtor was a 32 year old unmarried woman who suffered from relapsing, recurring Multiple Sclerosis. The debtor’s currently monthly income totaled $ 1101. The court found that the debtor’s minimum expenses exceed her income. The debtor would have to give up her telephone and her gas money to become even marginally solvent. The court also found that the debtor had made Herculean efforts to both find work of a type she could perform and actually work despite facing daunting physical obstacles. Finally, the court found that the debtor’s current condition, which had worsened since she first became symptomatic, would continue to impair her ability to find employment that would improve her financial status. The court reasoned in part that it had been able to observe many of the debtor’s symptoms first-hand. Denittis v. Educ. Credit Mgmt. Corp. (In re Denittis), 362 B.R. 57 (First Circuit for the District of Massachusetts 2007). As a further example of how precarious a debtor s situation must be, the same court as above denied the debtor s motion to discharge her student loan. The court held the educational loans were not dischargeable under 11 U.S.C.S. 523(a)(8) because the debtor’s prospects for increasing income over time were promising and, by slightly cutting her expenses, she could make the minimal payments towards her student loan obligations under the Income Contingent Repayment Plan. Brunell v. Citibank (SD) N.A. (In re Brunell), 356 B.R. 567 (1st Circuit, 2006).The forgoing article on bankruptcy relief from student loans was drafted by Attorney Michael Goldstein, a <a href="http://www.goldsteinandclegglaw.com/bankruptcy_blog">Massachusetts Bankruptcy Attorney</a>.
Source: www.ArticlePros.com

Filing for Bankruptcy in California
There are many reasons to file bankruptcy — large medical bills, loss of a job, unsecured debt, etc. These debts can get very large, very quickly if not properly managed. Nationwide, courts are seeing sizable increases in the number of people filing for bankruptcy protection. And not surprisingly, bankruptcy filings have increase the most in states that have experienced foreclosures due to defaulted loans. Filing for bankruptcy is not something you should do on your own, as you likely are unaware of bankruptcy laws. It’s very important to find a lawyer who is experienced and has a track record of success. Save yourself the headache and let a skilled, experienced attorney help you. The Sexton Law Firm (http://www. jamessextonlaw.com), a California bankruptcy firm, has provided suggestions on how go about filing: A bankruptcy lawyer’s main job is to review your personal information and help you determine the best course of action to take. They will advise you on what kind of bankruptcy you can file and ensure you get the best possible outcome. When you meet with your bankruptcy lawyer, be sure you are prepared. 1. Ask what kind of bankruptcy you should file for. Chapter seven requires you to use non-exempt assets to pay off your creditors, this can be extremely detrimental. Chapter eleven and thirteen, do not require this, but are much harder to qualify for and more expensive to file for. 2. Ask how to go about filing for bankruptcy. There is a lot of paperwork to file, so be sure you have it checked by your attorney, as they will be able to direct you on everything you need to fill out. 3. Educate yourself on the fees you will have to pay for filing. They differ depending on the kind of bankruptcy you are filing for. Following these steps will help you achieve a thorough understanding of the process. The Sexton Law Firm offers free consultations and never charges to speak with an attorney. Get experience you can trust. Speak with an attorney at the Sexton Law Firm today about your bankruptcy case and get the information you need.The Sexton Law Firm proudly serves the San Diego area. Get your questions answered by an experienced and knowledgeable California attorney. To speak with a local attorney for free, contact The Sexton Law Firm to set up an appointment. Phone: 619-476-9436 Fax: 619-476-9258 http://www.jamessextonlaw.com
Source: www.ArticlePros.com

Bankruptcy For Business Will My Partnership Be Affected
If you own a business that is registered as a partnership, and you find yourself in the position of having to file for personal bankruptcy protection, what happens to your business? Does personal bankruptcy have to mean small business bankruptcy as well? . .Owning a partnership means that your personal and business finances are one and the same It also means the same for your partners Each partner is responsible for the entirety of the business’s debts . . .Since your personal debts and your business debts are the same, they cannot be separated when you file for bankruptcy protection This means that your personal assets and your business assets will both be listed in your bankruptcy paperwork . .Many of your personal assets will be considered exempt under a Chapter 7 bankruptcy - meaning that you will get to keep these assets even though you are wiping out your debt Unfortunately, this is usually not the case when it comes to business assets Most of these assets will become the property of the estate, and will be liquidated to pay your creditors for your debt .Unless your partners can replace these assets, this usually means that your partnership will have to shut down . .There are a couple of options that can save your business, though First, you can file for Chapter 13 bankruptcy protection instead of filing chapter 7 This gives you the ability to repay your debts over a period of time - usually 3 to 5 years Although Chapter 13 doesn’t erase your debts, it will allow you to keep your business assets so that you and your partners can continue operating the business . .The other option is to incorporate the business This will help separate your personal and business liability While the estate will become the owner of your share of the business when you file bankruptcy, you have the option of buying back your stock at fair market value Often, the fair market value will be less than the amount of debt you owe, so it can be a less expensive way of obtaining debt relief while still maintaining your business .
Source: www.rsstnx.com