As the burdens of increased student loan debt reach historic levels, many graduates are searching for answers that will allow them to stay current each month and preserve their hopes for a solid financial future. While the banks that issue overwhelmingly high interest student loans have enjoyed unreasonable Congressional protection, various options exist for relief from excessive student loan burdens from:
Government Student Loan Debt –These are direct loans from the U. S. Department of Education.
Private Student Loan Debt – These loans are issued by banks based on credit and loan applications.
While both private and government student loans are protected from elimination in Chapter 7 bankruptcy proceedings, Chapter 11 and Chapter 13 bankruptcy allows for the restructuring and consolidation of student loan debt into affordable monthly arrangements.
Solving Student Loan Debt Through Other Debt Relief
The first step to resolving student loan debt is the prioritization or elimination of all other forms of debt. Relief from other forms of less important debt allows limited financial resources to be preserved for student loan servicing and the reduction of principal balances.
Continual deferments on student loan obligations is a costly and temporary mistake made by thousands of Connecticut graduates. It merely avoids true student loan debt solutions.
Many people feel that their student loans are too overwhelming to approach or impossible to resolve, placing themselves in a type of student loan debt paralysis that requires the assistance of financial and legal professionals.
Consolidation Of Student Loans And Prioritization
Establishing a full spread sheet with the amounts and payment terms of your student loans is the initial step to evaluating an appropriate plan of attack. This allows graduates to choose from a variety of solutions; including:
Student Loan Debt And Chapter 7 Bankruptcy Hardship
While Chapter 7 bankruptcy will allow for relief from all forms of unsecured debt, private and federal student loans are deemed non-dischargeable without proof of hardship. Unfortunately, the standard for Chapter 7 student loan hardship relief is nearly impossible to satisfy. Chapter 7 relief for hardship is not a worthwhile avenue, despite recent extreme hardship cases.
Chapter 7 relief for all other forms of debt is helpful for student loan repayment but Chapter 7 does not discharge student loan debt.
However, Chapter 7 debt relief eliminates unimportant debt and allows for the proper allocation of income resources to more important student loan obligations. On its own, Chapter 7 should not be viewed as an avenue for the discharge of private or government student loan debt.
Chapter 7 Debt Discharge For Student Loan Relief
While Chapter 7 bankruptcy will not allow for the discharge of private or governmental student loans, it does provide general debt relief that can be used in combination with other avenues for overall student loan debt relief.
Since all forms of student loan debt relief won’t make room for payments needed for other debt obligations, relief from these obligations can be critical to your success under any and all student loan debt repayment programs; including:
Student Loan Consolidation
Income Based Repayment
Chapter 13 Bankruptcy Plans
Income Based Repayment Plans
The recent strengthening of Income Based Repayment or IBR has made this program a viable option for dealing with overwhelming student loan debt. While the Income Based Repayment program is a step in the right direction, there are a number of important limitations that may reduce the relief granted; namely:
Loan dates, rates and qualifications
Gross income parameters
Seasonal income adjustments
Always understand the payments, terms, and the rates. Reduced Income Based Repayment payments can create larger unpaid balances. It’s math, it’s important, and help is available.
At the Law Offices of Neil Crane, we’ve solved financial problems for thousands of Connecticut residents since 1983. To learn more about approaching and resolving your student loan debt problems, call us at 203-230-2233 for a free consultation with one of our knowledgeable attorneys.
If the minimum monthly payments for your car loan, home mortgage, credit card or any personal loan are becoming too difficult to manage, if you find yourself “robbing Peter to pay Paul,” it is important to seek professional counsel quickly. At The Law Offices of Neil Crane, LLC, this is what we do. We have over 30 years of history dedicated to helping a wide range of Connecticut clients with different issues and needs find personally crafted debt relief and budgeting help. We create a plan and an approach to resolve debt with practical solutions. With our dedication, knowledge and experience, we can help you restructure or discharge debt completely with all available options including bankruptcy.
Contact us today to schedule a free initial consultation. We will promptly meet with you to discuss your concerns, your full financial situation and the proper options and alternatives for your problems during our first meeting. Our insightful, dedicated Connecticut attorneys serve clients at offices across the state, including Hamden, Bridgeport, Waterbury, Rocky Hill and Ridgefield.
Any Type of Loan Can Be Stopped From Direct Deduction
Stopping automatic payments will not affect your standing with your lender. It is important to review automatic deductions and your overall financial issues with a highly qualified attorney before deciding which payments to cut back on. Making these decisions and significantly altering your payment schedule without the counsel of an experienced attorney could have negative consequences if it’s not done as part of a customized, overall plan for financial recovery.
Our law firm can help you negotiate more favorable loan terms or restructure debt with or without a bankruptcy filing. It is critical to consider all your options with a professional before proceeding. We can work aggressively on your behalf to protect your assets and ensure that your rights are not violated by overly aggressive lenders or unscrupulous debt collectors. With over 15,000 satisfied clients, we know all your options. Call us.
Contact Our Connecticut Bankruptcy Lawyers
We offer a free initial consultation, and we can provide solutions to help you regain control of your finances. Call us today at 203-230-2233, or complete our online contact form. When you call us, you will always speak to a live person, not our voicemail. We are committed to providing excellent service and legal protection in a comfortable, non-threatening environment
Consumers can sue creditors who have violated consumer protection and fair debt collection laws. Unlike other attorneys, we are not afraid to file suit against creditors who violate your legal rights.
Every case is unique, but if you are being harassed or abused by debt collectors, we always offer a free consultation to properly evaluate your case and help you make informed decisions about all of your best options.
With our help, you may stand to gain the following:
Financial compensation in statutory damages
An immediate halt to all contact with all creditors/collectors or any harassing parties
A full examination of the validity and true ownership of the debt, and the actual correct amount of any obligation
Additional compensation for any actual damages you incur because of creditor/collector harassment
Creditor/collector will be ordered to pay your attorney fees if you obtain a favorable ruling.
What Debt Collectors Can I Sue?
Under the right circumstances, we can sue any debt collector/creditor that violates the law to harass or abuse you in the following ways:
Verbal harassment and threats
Deceptive tactics and statements
Contacting your family, neighbors, friends or employers and discussing your debt or anything pertaining to collections directly
Presenting you with false information
Calling you before 8 a.m. or after 9 p.m.
Seeking to communicate with you despite knowing that you are represented in the matter by an attorney
We handle legal matters with banks, mortgage lenders, auto loan financiers, medical providers, insurance companies, credit card companies, debt collection agencies and others. Our knowledgeable and skilled lawyers can sue harassing debt collectors in New Haven, throughout Connecticut and anywhere else in the country.
We represent Connecticut consumers, and we will uphold your rights against creditors and debt collectors of all types. Regardless of the amount of debt you carry, we can help you.
We can help you save your home, stop foreclosure, stop creditor harassment and obtain debt relief for a brighter future.
For many of us, maintaining a good credit score is a top priority in life. We may overlook getting that oil change or forget the annual physical at the doctor’s office, but we do everything necessary to pay our credit card bills on time, believing that on-time payments will maintain a high credit score.
In the past, this may have been true. Today-it is not the case, perfect payments don’t mean perfect credit scores. Here’s why.
How are Credit Scores calculated?
Your credit score, or FICO score, is essentially a calculation used by lenders to determine your eligibility for a loan, how much you can borrow and the corresponding interest rate.
Previously, your credit score was a mysterious, hidden computation that was primarily based on your payment history. Today, the breakdown of your score is a more clear-cut computation based on numerous important factors.
The five different factors used to calculate a score range of 300-850 need to be carefully examined and understood:
Payment history. This portion focuses on whether or not payments were made on time. It accounts for 35 percent of the score.
Amounts owed.This portion examines outstanding credit accounts and how much is owed on each obligation. This makes up 30 percent of the score. It’s called utilization and it’s now essential to maintaining a high credit score.
Length of credit history.This portion reviews how long the applicant has used credit. Generally, a longer credit history leads to a higher FICO score. This makes up 15 percent of the score.
Credit mix.This portion looks at the different types of credit given (e.g. retail store accounts, auto loans, mortgage loans). This makes up 10 percent of the score.
New credit.This portion reviews how many accounts were recently opened, triggering a potential credit risk if a borrower opens “too many” lines of credit. This makes up 10 percent of the score.
All of these are important, but number 2 above-also referred to as credit utilization-is the newest and most important factor in your credit score and your daily life. Here’s why.
Perfect Payers Don’t Have Perfect Scores
In the past, if you had a steady income and always paid your bills on time, you were rewarded with a higher credit score-even if you had an unhealthy debt burden.
Not so today. Outstanding debt is now a huge part in a FICO calculation-and that is why many of today’s so-called “perfect payers” are ending up with diminishing FICO scores. These utilization rates are the central component to rewarding perfect payers with perfect scores.
DEBT RELIEF UNDER CHAPTER 20 BANKRUPTCY PROCEEDINGS
What is Chapter 20 Bankruptcy?
The filing of a Chapter 7 bankruptcy petition, followed by the often immediate or later filing of a Chapter 13 bankruptcy petition is known as a Chapter 20 bankruptcy. The benefits of Chapter 20 proceedings have been a godsend for many troubled borrowers seeking maximum relief from overwhelming bills through a Discharge under Chapter 7 with a subsequent Chapter 13 repayment for non-dischargeable tax debts.
The discharge, or extinguishment, of numerous types of unsecured general claims of low priority to a burdened debtor under Chapter 7 can clear the way to allow for proper payment of more important priority, secured and non-dischargeable claims – items like recent taxes, mortgage payments and other critical debts, all of which are subject to favorable treatment under Chapter 13.
After eliminating low priority debts and obligations through a Chapter 7 bankruptcy discharge, those debts not eliminated or discharged can be paid from all remaining income with the importance they truly deserve. These payments can be made under the favorable repayment terms and powerful protections of a subsequent Chapter 13 Plan of Reorganization.
Altering New Debt After a Prior Chapter 7: The Four-Year Rule
Chapter 20 is available even after a prior Chapter 7 Discharge within four years.
A Chapter 7 Discharge prevents a new or subsequent Chapter 7 within 8 years of the prior Chapter 7 filing date. This is called a Chapter 7 bar, and means that 8 years must pass from a prior Chapter 7 filing to file again under Chapter 7. Fortunately, there is a limited four-year bar between Chapter 7 and a subsequent Chapter 13 that still allows for the Discharge of new, post-petition debt. While this is sometimes a unique situation, as successful Chapter 7 clients learn the dangers of new debt, any Connecticut family may be subject to surprise new debt, even with solid, newly-learned good borrowing habits. This can come in the form of medical bills, job loss or other disasters wherein new debt becomes impossible to pay.
The four-year rule means that new debt after a prior Chapter 7 Discharge can be solved in Chapter 13 four years before the borrower is eligible for a second Chapter 7 filing. The problems of the Covid-19 pandemic have made this option a savior for many recent successful Chapter 7 clients who now encounter new unforeseen financial problems.
Chapter 13 is the most powerful and most under-utilized Chapter of Bankruptcy. In fact, very few bankruptcy specialists focus their practice on the somewhat complicated and specialized provision and procedures specific to Chapter 13 of the United States Bankruptcy Code. This void in qualified bankruptcy professionals is unfortunate, since Chapter 13 allows for the greatest debtor protections and options available under any provision of the law. Our office is the largest provider of Chapter 13 and Chapter 20 solutions in Connecticut.
Chapter 13 allows the borrower:
Comprehensive debt relief with a customized repayment plan without any loss of control or loss of assets.
All the provisions and protections found under Chapter 7.
The full protections and avoidance powers of the Bankruptcy Code; i.e. lien avoidance, preferential payment, avoidance and litigation powers.
The ability to alter all forms of obligations, all types of tax claims, priority claims, secured claims, otherwise non-dischargeable claims, student loan debt, and Divorce Decree property settlements.
The ability to obtain court orders on “confirmable” plans with or without the voting rights or consent of creditors as required under Chapter 11 proceedings.
Full jurisdiction throughout the United States in a swift and favorable forum for the litigation of any and all creditor claims adjudicated “at home” in the debtor’s place of residence.
Chapter 20 for Tax Elimination and Favorable Repayment
Although few practitioners are experienced or proficient under the provisions of Chapter 13, properly utilized, Chapter 13 or Chapter 20 is the strongest forum available for complete tax elimination or restructuring. In general, older state and federal income taxes can be eliminated and more recent income taxes can be restructured in accordance with affordability and without creditor or tax authority consent.
Although somewhat unknown and rarely discussed, Chapter 20 does, in the hands of experienced counsel, provide the best possible relief available under state or federal law. Its utilization to eliminate dischargeable, low priority obligations through Chapter 7 and the immediately subsequent filing of a Chapter 13 proceeding to eliminate or restructure all forms of state, local and federal taxes makes it a solution for consumers with overwhelming tax debt.
As the leading providers of Chapter 20 relief throughout Connecticut, we are always available to discuss the applicability of the provisions of Chapter 20 to your clients’ specific circumstances. We have routinely encountered and swiftly resolved tax problems in the most complicated and long-term circumstances imaginable.
At the Law Offices of Neil Crane, we have been providing Chapter 7, 11, 13 and 20 tax solutions since 1983. Call us Today to learn about your options when it comes to bankruptcy and debt relief at 203-230-2233.
Chapter 13 bankruptcy is a federal court procedure for the deceleration and repayment of mortgage obligations along with the reduction or elimination of all other forms of debt. The filing of a Chapter 13 bankruptcy creates an immediate stop – known as an “automatic stay” – of the foreclosure process, halting a pending foreclosure and allowing for repayment of the past-due mortgage installments, and other debt obligations, over a three- to five-year time period. Chapter 13 bankruptcy will allow you to begin regularly scheduled monthly mortgage payments as if no previous default had ever occurred.
“My experience was a very positive one. Dealing with Neil Crane and his staff was the best decision that I could have made. Neil has helped me get back on a solid financial path. My case was a tough one and the Neil Crane Law Firm was the best Law Firm I could have chose.
Thanks for all the help. Now I can put all my bad choices behind me and move forward in my life.”
