How are Student Loans Treated in a Bankruptcy Case

Although higher education is available nationwide, not everyone can afford its inherent costs. Some families cannot afford to buy books and to pay for things like living costs, fees, tuition and other expenses. That’s why many families turn to student loans to provide the much needed financial aid. Student loans are easily available and have become an integral part of higher education in the US.

However, even though student loans are considered non-priority unsecured debt, they are not easily discharged when filing for bankruptcy. This is due to the fact that unlike many other loans, student loans are backed by the federal government. Additionally, the funds are obtained more easily than with other types of loans. Because of the laws limiting how federally supported student loans are discharged, it might be difficult to do so when filing for bankruptcy, especially without appropriate representation from a respectable bankruptcy attorney in Escondido.

Discharging Student Loans

The only way student loans can be discharged when filing for bankruptcy is if the person filing for bankruptcy can prove they suffered from an undue hardship. This was determined by the congress in order to avoid abuse from debtors who take a student loan and file for bankruptcy or other forms of bankruptcy frauds. This is what differentiates student loans from loans people take out to fund a car, house or another asset. These loans are much easier to deal with than student loans.

However, the problem arises from the fact that the term “undue hardship” is not clearly defined. In fact, each of the thirteen different federal appellate courts defines the term differently. There are two different tests developed by different appellate courts that help determine if the specific case falls under this category.

Undue Hardship Tests

The first test is also the one most courts across the US use, known as the Brenner test. According to this test, the person filing for bankruptcy must first prove that they cannot afford the minimum standard of living based on their family earnings. Furthermore, that person must also prove that the situation is not likely to change in the near future. Finally, they must prove that they are willing to pay their loans through past efforts.

The other test, used less frequently, determines if a person can have their student loan discharged according to three factors: their financial past, present and future, their living expenses and miscellaneous circumstances. If the debtor can prove all three factors amount to an undue hardship, their student loan might get discharged.

Work With the Best Bankruptcy Attorney in Escondido

Now you have a better understanding of what makes student loans so specific. Using either of these tests, the Supreme Court can determine if the person filing for bankruptcy is doing so because of an undue hardship and choose to discharge the loan. Additionally, the high court may use neither of these tests but a new one, more specific to the case. Either way, student loans are still an exception to the rule and are not treated the same as any other type of loan.

If you believe you have a strong case to get your student loan discharged, don’t let your case rejected due to bad representation. If you are looking for a respectable bankruptcy attorney in Escondido reach out to Bankruptcy Lawyers Chang & Diamond, APC for a free initial consultation at (619) 312-4900.

Five Bankruptcy Mistakes That Could Cost You Your Case

Filing for bankruptcy could help get you out of a tight financial situation and get you back on track after a major debt. But it could backfire just as easily. Similar to other legal cases, filing for bankruptcy means following specific procedures and meeting certain requirements before the court decides to discharge your debt.

One slope those filing for bankruptcy often overlook is that filing for bankruptcy is a complex process which could easily go sideways if you lack any fundamental knowledge of how the process works or if don’t hire an experienced San Diego bankruptcy attorney to represent you in front of the court. People with neither the expertise nor good representation tend to make mistakes. Sometimes these mistakes could simply delay a case, but other times some of these mistakes could cost you not just more money but your case being denied.

Here’s a list of some of the most common mistakes people make when filing for bankruptcy, how to avoid them and how it could impact your case.

Not Filing for the Right Type of Bankruptcy

If you decide that filing for bankruptcy is the best way out of an unpleasant situation, you have to decide which type of bankruptcy you want to file for. In most cases the choice comes down to Chapter 7 or Chapter 13 bankruptcy.

Knowing which type fits your case the most will cut your costs, allow you to retain valuable assets like your car and can help discharge most of your debt. There are several factors that can help determine whether one type is better for you than the other, including your average income, the amount of debt and the value of your assets.

Not Disclosing All Your Assets

Once you decided which type of bankruptcy you are filing for, you will have to prepare the documents needed for your bankruptcy case. During this process, the person filing has to disclose details about their assets, such as their house, cars, bank accounts and the likes.

If you forget to list some of your assets or – worse off – deliberately try to hide them, you could put your bankruptcy case in jeopardy. Sometimes not disclosing assets can result in the case being delayed, but it can also be viewed as trying to deceive the court. You could therefore be denied your request and even face criminal charges.

Not Taking Advantage of Bankruptcy Exemptions

If you file for Chapter 7 bankruptcy, many of your assets can be exempt from liquidation. These exemptions include assets such as motor vehicles, jewelry, personal belongings, home and furniture, insurance policies, tools used for work and many others. There are many factors that determine the maximum allowed bankruptcy exemption such as age or disability. Not making the most out of these exemptions will mean having to give up more of your assets.

Not Hiring the Right San Diego Bankruptcy Attorney

All of the above mistakes can be avoided if you hire an experienced bankruptcy attorney in San Diego. Someone who’s been in the business for more than 20 years will never make a rookie mistake of omitting an asset or not taking advantage of available bankruptcy exemptions. A good bankruptcy representative is not only well-versed in bankruptcy law but also has a deep understanding of finance. Not choosing a lawyer with these qualifications will likely result in inadequate representation and losing more money and assets.

Chang & Diamond, APC is the leading San Diego bankruptcy lawyer group with over 2 decades of experience and numerous successful bankruptcy cases. For a free initial consultation contact our offices at (619) 312 – 4900.

Self-Employed Individuals Can File For Bankruptcy Too!

Being your own boss can have numerous advantages. You can influence when you receive income, have a wider range of retirement saving options, you have more influence over expense deductions and more. But it can also be incredibly expensive. There are many aspects to consider, such as overhead costs, payrolls and marketing.

Self-employed individuals often find themselves spending more than they are earning. A couple of months of being unable to cover your expenses can result in a serious debt. If self-employment costs become absurd and unsustainable, maybe it’s time to consider looking for a good San Diego bankruptcy attorney.

Proving Your Monthly Income

Self-employed individuals are entitled to Chapter 7 or Chapter 13 bankruptcy much like any other consumer, but filing for bankruptcy might be a bit more complicated. A self-employed individual has to disclose their income. The bankruptcy court conducts a means test to determine whether they are eligible to file for bankruptcy or not, and which chapter they qualify for.

If a self-employed individual’s income is less than the family average for San Diego, a bankruptcy attorney can help them, as they are eligible to file without even taking the means test. The American Community Survey (ACS) has a list of median incomes for San Diego and all other states, which can be used use to determine where you fall when it comes to median income.

As a sole proprietor, if it turns out you have to take the means test, you will have to fill different forms according to which chapter you are filing for. The means test is very difficult for self-employed individuals. Company employees can disclose their paychecks, while self-employed individuals have to find other means to prove their income. For example, tax returns and bank deposits can help prove the income.

Sole Proprietors Bankruptcy

When you are a sole proprietor, personal and business debts are counted as one. This means that a sole proprietor has to present both personal and business debts and income. Chapter 7 bankruptcy could remove both types of debt provided the sole proprietor qualifies. Chapter 7 is also a good choice for individuals with a lot of nonexempt assets. This way they will not have to sell much of their property. However, having a lot of these assets might mean losing more of them because the trustee will have to liquidate them to cover the debt.

On the other hand, Chapter 13 bankruptcy is a great option as it won’t hinder the sole proprietor’s business. Not having to sell any assets means that a self-employed individual can keep their business going, earning monthly paychecks and still keep paying the debt off. But they will have to be able to cover both their expenses and the monthly repayment rates. If they fall behind on their bankruptcy payments, the court can dismiss their bankruptcy case and force them into the same difficult situation they were previously in.

Look for a Respectable San Diego Bankruptcy Attorney

If you are a self-employed individual facing this tough financial situation, look for an experienced bankruptcy attorney in San Diego at Chang & Diamond, APC. If your expenses top your earnings, bankruptcy might be your best solution. Contact us at (619) 312 – 4900 for a free initial consultation.

The information you obtain in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

What Are Secured and Unsecured Debts?

People filing for bankruptcy are put before a tough decision. Apart from the implications filing for bankruptcy will have on their life and their credit score, they are faced with a choice of filing for either Chapter 7 or Chapter 13 bankruptcy. Their choice ultimately depends on several factors, mainly which assets they want or don’t want to keep. It is not uncommon that people don’t take secured and unsecured loans into account because they don’t understand what constitutes either. They should ask for professional advice from a reputable San Diego bankruptcy attorney, and educate themselves on various options.

What is the Difference between Secured and Unsecured Debt?

There are three types of debts taken into consideration when a person is filing for bankruptcy. These types are:

Secured Debts: This type of debt is linked to a physical asset, for example, a mortgage or a car loan. If the client wants to keep their car or their home, they will need to cover any late payments. With Chapter 7 bankruptcy, clients need to pay any late amounts and keep current on their future payments or risk losing the asset in question. On the other hand, Chapter 13 allows you to cover late payments through an agreed-upon payment plan.

Priority Unsecured Debts: Unsecured debts were dubbed such because they aren’t linked to any physical assets. Regardless, they need to be paid off and in most cases do not get discharged after filing for bankruptcy. Some examples of priority unsecured debts include court fines, child support, and various taxes. In Chapter 7 bankruptcy, these debts are paid off by liquidating assets. Chapter 13 involves a payment plan that is supposed to cover your debt within the next three to five years.

Non-Priority Unsecured Debts: Debt such as medical bills, utility bills, and credit card debt are considered non-priority and are usually discharged after filing for bankruptcy.

Reaffirming Debts

Some clients can reaffirm their debt through chapter 7 bankruptcy, allowing them to keep an asset falling under the secured debt category. You can decide to keep your car but will have to cover all future payments on time. When the bankruptcy discharge is awarded, you can reaffirm the loan, which means you continue paying the agreed-upon rate from the original contract from that moment on. When you reaffirm such a debt after bankruptcy, your loan reverts to the original agreement, as if you never filed for bankruptcy. However, if you choose to reaffirm your debt, the lender retains the ability to repossess your assets if you don’t continue making payments.

Can Student Loans Be Discharged?

Student loans are a bit of an exception to the rules above. While they are considered non-priority debt, they usually don’t get discharged after filing for bankruptcy. In order to have them dismissed, you have to prove that both you and your dependents were unable to pay them off due to an undue hardship. This process can be extremely difficult and the chances of this debt being discharged are very slim.

Need Professional Advice? Seek Help From the Leading San Diego Bankruptcy Attorney!

If you are still unsure whether your assets constitute secured or unsecured debts, don’t hesitate to reach out to the Bankruptcy Lawyers Chang & Diamond, APC. Our company was founded in 1998, and has helped clients in numerous bankruptcy cases since, building a reputation as accessible and affordable bankruptcy attorneys in San Diego and surrounding areas. Reach out for a free initial consultation at (619) 312-4900.

Get Your Repossessed Car Back with the Help of a Leading San Diego Bankruptcy Attorney

Filing for bankruptcy does not always mean parting ways with everything you’ve ever owned, contrary to what you might have heard or read. In some cases, this might be true, though, for example in most Chapter 7 bankruptcy cases where you might find yourself forced to sell your assets to cover the primary as well as secured debts.

But in some cases, some assets are hard to part with – like your car. If you are late on your repayments and have had your car repossessed, there might still be a way to get it back, especially if you engage the services of a reliable San Diego bankruptcy attorney.

Getting Your Repossessed Car Back Through Chapter 13 Bankruptcy

What makes Chapter 13 different compared to Chapter 7 bankruptcy is that you are allowed to deal with your debt through a payment plan which allows you to repay your debts according to your income. While this might take longer, you will be allowed to keep some of your assets as well as receive additional benefits like reduced interest rates on the repayment plan. This repayment plan could also help you get your vehicle back, even if it had previously been repossessed.

Here’s how the process works:

Your repossessed car is sold so the lender can get some of the money owned back. On the other hand, the lender has to wait for a certain period of time before being able to sell your vehicle. If you file for Chapter 13 during this period, you will put all the debts on automatic stay. This will keep the lender from selling your vehicle without a special permission from the court. During this time you should devise a repayment plan you can present to the bankruptcy court.

While the lender will surely ask for permission to sell your vehicle, the court may side with you in several cases. The first is showing proof that you need the car. A good example would be that you need the car as it is your only means of transportation to your job. This way you may be allowed to keep your vehicle, as going to work is essential if you are to fulfill your Chapter 13 repayment plan. Another case that may sway the court in your favor is if you can prove to the court that you can meet your car payments as well as your bankruptcy repayment plan.

Be aware that getting your car back from repossession might have some consequences, such as fees associated with this and paying what you previously own. Likewise, you might be required to pay to protect the lender from losing money due to the deprecation of your car’s value. Such payments will be determined by your bankruptcy trustee before the repayment plan had been put into effect.

Additionally, if the lender feels that your payment plan will not cover their needs, they might refuse to return your vehicle. So in order to get your car back, you have to devise a plan your lender will be comfortable with.

Want Your Car Back? Seek Help from an Experienced San Diego Bankruptcy Attorney

If you want to claim your repossessed car back, acting quickly is key. We advise you to seek help from a trustworthy bankruptcy attorney in San Diego as soon as your vehicle is repossessed and talk through your options. This way an attorney can help you devise a payment plan good enough to convince the bankruptcy court and the lender to transfer the possession of the vehicle back to you. If you don’t, your car might get sold and you will lose it forever. Moving? you may want to consider this service.

The trustworthy team at Chang & Diamond, APC can help you with keeping your car and getting your life back on track. For a free initial consultation contact our offices through our online form or at (619) 312 – 4900 or (800) 718 – 8118.

How to Plan your Summer after Bankruptcy

Filing for bankruptcy can be a difficult period to cope with, especially if you do so during the summer. Your friends have been posting pictures of their lush vacations or expensive events all over their Snapchat and Instagram accounts while you have been feeling defeated and in a financial dead alley. And there’s still a month before it’s over, leaving you wondering what you can do.

Luckily, every experienced San Diego bankruptcy attorney can tell you that summer can be a great season to plan your finances and start working towards a better life. Disregard all the false myths about bankruptcy you may have heard. Learning how to save and cut unwanted expenses will go a long way in securing your financial future. Here are a few tips on how to use this summer to your advantage.

Saving for the Future

If you’ve recently filed for bankruptcy, you will likely lack the funds to afford a summer trip or visit an expensive event. Don’t despair, and remember that you will always have the summer after this, and the summer after that. This summer, however, is the great place to start saving money for a fun trip next year. Save up a small amount from your salary every month, and start planning the budget for next year’s fun trip. Planning in advance might also help you save some money on early bird arrangements.

Fun is Free

You don’t have to spend a lot of money to have fun, contrary to what you might believe. Look for free festivals in the San Diego area. A lot of libraries offer fun activities for children that are free of charge, such as story readings. You could organize a family picnic – San Diego is rich in exciting picnic areas. You can look for free activities or discounted tickets for the movies or the zoo on Facebook. You would be surprised how much money you could be saving on these free activities and how many of them you can find in your area.

Use Cash Whenever You Can

Finding a free or a discounted event is just one step towards smart spending. Allocating money you are allowed to spend on such events is the other. Whether you are buying souvenirs at the zoo or expensive junk food for the picnic, the expenses can quickly go out of hand. This is why it is important to use cash instead of cards. Having cash will help gain more control over how much you spend, and if you think you might still be tempted to use it, leave your credit card back home. Fighting impulse shopping will vastly improve your financial situation.

Prepare Your Own Food

Whether you are going on a picnic or packing food for the kids, preparing your own food can save you a lot of money. Fast food is not only ridiculously expensive, it is very unhealthy. Nothing can beat food prepared in your kitchen, which is why you should stop spending money on junk food and buy groceries and prepare meals yourself. This will give you a chance to be creative, try different dishes and flavors, and have fun while cooking up a meal for your family.

The Leading San Diego Bankruptcy Attorney

Filing for bankruptcy can be stressful, which is why the professionals at Chang & Diamond, APC, are here to answer any questions you may have on planning your life after bankruptcy and share their expertise with you. If you are about to file for Chapter 7 or Chapter 13 bankruptcy, do not hesitate to contact us for legal advice and a free consultation.

Infamous Bankruptcy Myths Debunked by Leading San Diego Bankruptcy Lawyer Group

Filing for bankruptcy is a huge step for any individual, and can put you in an awkward and unpleasant situation. A lot of myths perpetuated by those who understand little about how bankruptcy works via the internet are certainly not making it easier for individuals who need to take this huge step in their lives. This is why our seasoned San Diego bankruptcy lawyer group has decided to take a closer look at the worst of these viral myths and address their verity once and for all.

All Debts Will Be Relieved

While both chapter 7 and 13 bankruptcy will relieve most debt, there are some types that cannot be forgiven. Personal debts like family or child support, debts stemming from a fraud you committed or, in most cases, student loans will not be forgiven. Debts that will be discharged include credit cards, loans, medical bills, etc.

You Will Lose Everything

Most individuals are scared of the perpetuated myth that filing for bankruptcy means they will lose their cars, homes and other possessions. However, filing for bankruptcy does not necessarily mean losing all your assets. If filing for Chapter 7 bankruptcy, you will not have to give up any assets. You can hold on to possessions that facilitate your daily needs like your car, which falls under the category of exemptions. Exemption laws vary from state to state, which is why it is best to get in touch with an experienced bankruptcy attorney. Since filing for Chapter 13 bankruptcy involves a repayment plan, you will be allowed to keep your assets. However, they will have a significant impact on your repayment plan.

Your Credit Score is Forever Ruined

It is true that your credit score will be bad in the beginning. Filing for bankruptcy is introduced to your credit report and will be there up to 10 years. However with every passing year the bankruptcy will have a reduced impact on your ability to ask for a loan. Most individuals even experience an increase after a few months. There is a number of ways you can repair your credit score, and it is best to consult with an expert in the field.

Married Individuals Cannot File for Bankruptcy on their Own

This myth is completely untrue, and you can file for bankruptcy on your own even if you are married. The only prerequisite is to assure the bankruptcy agent that your spouse is not extremely wealthy by offering insight into their income state. This way filing for bankruptcy will only affect you. It will not have any impact on your spouse’s credit or possessions.

It Will Ruin You Financially

Individuals filing for bankruptcy are usually hard-working, honest citizens and are reluctant to take this step. Whatever reason you have to file for bankruptcy, you need to remember that all of us are prone to taking a bad step and ending up in a difficult financial situation. But filing for bankruptcy is not your ball and chain, it is a way to help you regain control of your finances.