Can Bankruptcy

Student loans are non dischargeable, generally. To discharge a student loan obligation through bankruptcy you must file a complaint requesting that your government-owned student loans be discharged pursuant to section Bankruptcy Code Section 523(a)(8). The standard for the Court to determine your student loan obligation discharged was set in the case Brunner v. New York State Higher Education Services Corp. in 1987. This means you need to satisfy the so-called "Brunner Test" and the court is to consider: (1) you current level of income and expenses, and determine whether you can maintain a minimal standard of living for you and your dependents if you are required to repay the loans; (2) whether there are additional circumstances suggesting that your current financial condition is likely to continue for a significant portion of the repayment period; and (3) whether you have made a good faith attempt to repay the loans.

The "Bruner Test" is a very high standard and basically, unless you care for or are suffering from a disability that will continue for your lifetime, that prevents you for earning sufficient income to support you and your family and you have made a good faith effort to repay your loans, you will be unable to discharge your loan debts through a bankruptcy.

Testimony in the Con¬gress hearings in 1998 intended undue hardship claims to be considered in light of "the availability of various options to increase the affordability of student loan debt, including deferment, for¬bearance, cancellation and extended, graduated, income-contingent and income-sensitive repayment options." H.Rep. No. 750, 105th Cong. 2d Sess. 408 (1998).

There are other options to consider on your student loans. One such option is through the United States Department of Education, William D. Ford Federal Direct Loan Program ("Direct Loan"), offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan (the "ICR" plan). Essentially, once a loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. The maximum repayment period under an ICR plan is twenty-five years. Direct Loan provides a handy calculator for ap¬proximating ICR plan pay-ments.

Chapter 12 Bankruptcy

There is a tendency to throw all the varied kinds of bankruptcy into one pile when considering whether it may be appropriate to file for bankruptcy protection. This is a dangerous misconception because there are many important differences from one chapter of the United States Bankruptcy Code to the next. Moreover, certain forms of bankruptcy are reserved for individuals and others are reserved for businesses. The failure to properly choose the right form of bankruptcy protection for your specific situation can have an adverse effect on not only the approval or rejection of your claim.

It can also result in the unnecessary loss of assets and may require you to pay more to your creditors than you would if you had pursued the most fitting type of bankruptcy for your circumstances. For family farmers, ranchers, and fishing companies the best option in the face of serious financial distress is typically Chapter 12. Chapter 12 was introduced into the Bankruptcy Code in 1986 as it became increasingly apparent that economic circumstances had made the prospect of maintaining fiscal solvency increasingly grimmer for small family owned farming operations.

Features of Chapter 12 Bankruptcy

The primary distinguishing features of Chapter 12 bankruptcy are those that are designed to restrict its provisions to parties that are actively engaged in small scale agricultural endeavors. For example, the debts that are included in a proposed bankruptcy plan must have been at least 80 % attributable to the operation of the farm. Additionally, to establish that the farm is the primary source of a filing party's income, more than half of the income in the previous year must have been gained through revenue generated by the farm.

There are a number of reasons that you may prefer the specific provisions of Chapter 12 bankruptcy to the others for which your claim may be eligible. Some of these are:

• The lack of a means test (such as that required for Chapter 7 bankruptcy)
• No credit counseling is mandated for a filing party
• Assets are not compelled to be sold to satisfy debts outstanding to creditors
• Disclosure statements do not have to be filed

Buy Bankruptcy

Bankruptcy auctions are filled with terminology and procedures somewhat foreign to the average investor; however, with a basic knowledge of the industry, a first time buyer can not only reduce risk but also close a phenomenal deal.

In United States bankruptcy cases, a sale of an asset of a bankruptcy estate requires a court order. A trustee files an application with the Bankruptcy Court, asking the court to order the sale of the asset. When the judge signs the order, the noticing period-or period of time that the asset must remain accessible for public viewing prior to the sale-begins. The noticing period varies in length, but lasts on average 20-30 days.

As a buyer, the noticing period is an often under-utilized tool. This is the optimal time for buyers to perform their due diligence, by researching the asset on their own. Most bankruptcy assets are sold "as is, where is," and "with no warranties implied or stated." This means that the seller, trustee, and bankruptcy estate are not responsible to the buyer for the property in any way, except to provide a deed, bill of sale, or assignment. Because of this, trustees rarely order title searches on real property, and often go off of the "Schedules" (or list of debts and assets provided by debtor) to determine and disclose any liens against the property. The disclaimers can often deter more apprehensive buyers while creating the opportunities for epic deals.

Most bankruptcy asset auctions in the United States are in person auctions. However, it is possible to follow auctions on the Internet. Many in person auctions even have Internet or phone bidding. Some bidders find it helpful to watch online auctions and attend in person auctions in the beginning, to get comfortable with their surroundings before rushing into a bid.

When bidding, have a plan. Its easy to get carried away and outbid not only your competitors but also your budget. Know which assets interest you, what you are willing to pay, as well as the value of the asset before you bid. Make sure that you have the funds in hand, should you win the auction. An auctioneer acts as a middleman between the trustee and the buyer, so when the auction ends, stay in contact with your auctioneer. Occasionally, property transfer in bankruptcy can be a bit tricky, and open communication and cooperation with your auctioneer helps moves the process along.

Remember that your auctioneer knows what sales are coming up, even before the noticing period. Seasoned investors in bankruptcy assets know to register for auctioneer mailing lists, and check in from time to time to scoop their competition and get a head start on an upcoming auction.

Calculating Monthly

After the passage of bankruptcy reform in 2005, all debtors filing bankruptcy are required to calculate their average monthly income. The average monthly income is calculated using the income earned during the six months before filing bankruptcy. For example, if you filed bankruptcy in October, you would need to calculate your average monthly income for the period of April through September. For debtors who work as W-2 employees and receive regular paychecks, this can be achieved easily. But for the self-employed, calculating the average monthly income for bankruptcy will require a little more work. Here's how you can do it:

First, debtors considering bankruptcy need to gather their profit and loss statements and bank statements for the past six months. Unfortunately, many self-employed people do not create profit and loss statements each month, therefore they will need to create them using their bank account information, receipts or any other information that will help them. You can find many sites online that will give you example profit/loss statements.

After you have created a profit and loss statement for each of the previous six months before filing bankruptcy, you will need to attach a corresponding bank statement. The bank statement and profit and loss statement must be reconciled. Once you put together all of your necessary information, you can work with your bankruptcy attorney to calculate the average monthly income. Remember, if you fail to calculate your average monthly income or fail to provide supporting documentation (P&L and bank statements), your bankruptcy case may be dismissed.

Filing Bankruptcy

No one wants to have to file for bankruptcy. It can be a depressing and humiliating experience. But it does not mean that you are beaten. Sometimes bankruptcy is just the best option to eventually help you get back on your feet and you shouldn't feel bad about having the courage to take the steps to repair your financial standing. Here are a few guideline to help you when filing for bankruptcy.

Filing bankruptcy first starts off with gathering information. This is not meant to be exhaustive or ridiculous, it is just meant to make the whole process easier either for you or your lawyer. First of all you should document all of your income for the past nine months. This would include any tax refunds, dividends, paychecks, gifts, annuities, and interest. This is meant to help calculate the reasons why you are filing bankruptcy. Your amount of income will help to determine what chapter of bankruptcy that you can file for.

Next you need to gather a list of your possessions and assets. This would include any mortgages, cars, jewelry, valuable household goods, clothing, stocks or bonds, bank accounts, checking, savings, cash, CD's, annuities, retirement accounts, and anything else that might have value. This helps the state determine what can be saved and sold at auctions to help pay off your debt. Many times however the items hold no real value on the market and you are able to keep them and do what you will with them.

Bankruptcy in Texas?

The burning question in most potential bankruptcy debtors' minds is "What can I keep?" You're understandably worried about losing everything, but let me just put your mind at ease. You're definitely not going to lose everything. In fact, most people keep everything. Bankruptcy was created specifically to help consumers sinking under the waves of financial overburden, and both state and federal law provide for property exemptions. In other words, the law sets out a list of items that you can keep even after the bankruptcy process ends.

Texas allows consumers to choose to use either the federal exemption guidelines or the Texas exemptions. The federal exemptions allow you to keep:

• Your home up to $20,200
• Life insurance payments for individuals you depend upon for support
• Life insurance policy with loan value up to $10,775
• Unmatured life insurance contract, excluding credit insurance policy
• Alimony and child support used for support
• Pensions and Retirement Benefits, ERISA-qualified benefits needed for support
• $525 per item in household goods for a total value of up to $10,775
• Health aids
• Jewelry up to $1,350
• Lost earnings payments
• Your motor vehicle up to $3,225
• Personal injury compensation payments up to $20,200, wrongful death payments, crime victims' compensation, public assistance, social security, unemployment compensation, and veterans' benefits
• Tools of trade up to $20,200
• Wild Card - $1,075 of any property plus up to $10,125 of any amount of unused homestead exemption

The Texas exemptions allow you to keep:

• Your home, if not more than 10 acres in town or 100 acres out of town (200 acres for families)
• $30,000 worth of personal property ($60,000 for head of family), including one two-, three- or four-wheeled vehicle; two horses, mules or donkeys and a saddle, blanket and bridle for each; 12 head of cattle,; 60 head of other livestock; 120 fowl; pets. Athletic and sporting equipment, home furnishing, family heirlooms; food and clothing; jewelry (but not to exceed 25 per cent of total exemptions); tools of your trade
• Burial plots
• Health aids
• Unemployment, disability, veterans', workers' compensation and social security benefits
• Alimony and child support
• Retirement plan and life insurance proceeds
• Business partnership property
• Farming or ranching vehicles and implements

Also, as long as you keep up the payments on mortgages and deeds of trust, you'll be able to keep all your property that you're still paying on. And with bankruptcy to help give you the financial breathing room you need, that shouldn't be a problem. Lenders use foreclosure as a last resort, so they want you to make your payments just as much as you do.

HA Mortgage Program

One of the popular choices for those who need it is nothing other than the simple and basic FHA mortgage program. Way back in the 1930's, the FHA was already the best option for low income families as well as those who were borrowing money for the very first time. But as the years passed, a lot of additions and expansions to the FHA program envelopes almost all types of people who need to borrow money.

Right now, there are roughly 30 million clients. This is undeniable proof that applying for their loan programs is really beneficial. So what are the advantages of applying for this federal program?

- This type of loan will give you leeway to purchase a house with a miniscule down payment. Future homeowners will only need to shell out a down payment worth 3% of their entire home purchase value. There are also some instances when the down payment can be given in gift form. One must be aware though that aside from the down payment amounts there are usually other fees to take care of such as insurance and processing.

- FHA loans are unlike the mortgages that have taken over the market during recent years, and these are the very loans with hidden triggers high interest rates and that inevitably caused the wave of foreclosures. A loan from the FHA will not contain any such traps hidden within the terms and conditions. The consumer can rest assured that there will be no predatory payment increases.

- A lot of lenders and banks who give out mortgage loans are very careful with screening. They sometimes need proof that the applicant has money. What this usually means is that one will need thousands stored up beyond the down payment amount just so that they could qualify for the loan. FHA mortgage program does not have this difficult requirement.

- Sub-prime financing can be replaced by an FHA approved loan. And what is good about this is that FHA rates are much lower compared to those of sub-prime mortgage. Also, one does not need to shell out for pre-payment and FHA mortgages have a secured, fixed rate.

- Those who are troubled with bankruptcy and foreclosures should look into what the FHA has to offer. Unlike with non FHA approved lenders, the Federal Housing Administration give loans to people after three years for a foreclosure, a year past bankruptcy chapter 13, and two years for a chapter 7 bankruptcy.

- A potential borrower can apply and get an FHA mortgage program by providing repayment capacity, cash to close, credit history, and collateral. However, for those who do not have conventional credit, other documents such as rental payment slips, utility receipts, and car insurance receipts.

- With this type of loan, one may be able to get a lot more money than in conventional loan packages since the qualifications are very liberal. It is very similar to loans given to first time borrowers. One can get as high as 43% of one's monthly paycheck.