Declaring bankruptcy to absolve debt/loans

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BusinessAsUsual

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A good idea? I've got immense credit card and student loan debt, not too mention other creditors in line. Would bankruptcy be a viable option? It's alot faster to get out from under huge debt than taking MORE than 7 years to pay it back (provided I live that long) even if it's 7 years, til it falls off your record? Anyone advise or been there, done that yet? Thanks.


Which reminds me, 1,2,3...:laugh:

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A good idea? I've got immense credit card and student loan debt, not too mention other creditors in line. Would bankruptcy be a viable option? It's alot faster to get out from under huge debt than taking MORE than 7 years to pay it back (provided I live that long) even if it's 7 years, til it falls off your record? Anyone advise or been there, done that yet? Thanks.


Which reminds me, 1,2,3...:laugh:

If they're governmental educational loans, they cannot be bankrupted, ever. If you don't mind my asking, what is your total debt and what are each (student loan and credit card)?
 
Was going to add the same thing-- you can't declare bankruptcy on student loans...

And in my opinion-- I don't think there's something wrong with a person who declares BK-- but I do think that the recovery time should be far longer than seven years.

Where's the lesson learned if you can play the game of credit and then just say, Eh! Can I have a do-over?
 
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How exactly does this work? My understanding was that while declaring bankruptcy absolves you of having to pay debt, it also completely destroys your credit and makes future loans impossible or very expensive to get.

Do all of the negative effects of bankruptcy disappear after the 7-year period? And, are there criteria to declaring bankruptcy? Do you have to somehow document that you cannot afford your debt?
 
I'm no expert in this but it's not as easy as some make it sound... I believe you lose most of everything you own, that will go to pay off part of your debt. Also, it's not free to file bankruptcy. It happens in a court of law and you have to pay all fees associated with that including a lawyer.... finally, like someone else said already, it will stay with you for up to 10 years depending on which state you are from, and it will make it very difficult for you to get credit loans later on...

No one should file for bankruptcy unless there is seriously no other way.

The way I see it, the only solid reasons for someone to have to file bankruptcy are hospital bills, business crashed, divorce.... and things out of control....

People raking up credit card debts and filing bankruptcy to avoid to pay them off piss me off.
 
A good idea? I've got immense credit card and student loan debt, not too mention other creditors in line. Would bankruptcy be a viable option? It's alot faster to get out from under huge debt than taking MORE than 7 years to pay it back (provided I live that long) even if it's 7 years, til it falls off your record? Anyone advise or been there, done that yet? Thanks.


Which reminds me, 1,2,3...:laugh:

Student Loans, IRS and several others are not dischargable in bankruptcy. Any secured creditor is still entitled to interest. And no, you might not automatically be able to file and then rebuild another massive amount of debt and declare bankruptcy all over again. I know someone who did this twice, then filed a third time. Only problem was the #@@#$$@#$ owed me around $30k.

There are two kinds of bankruptcy: Chapter 7 where everything you own with few exceptions is sold and the proceeds go to your creditors, things like cars, computers, your ipod, and whatever else you happened to buy with all those credit cards. Then the debt (except for IRS and student loans) is gone. Chapter 13 is a "wage earner" bankrupcty which you can use to keep what you have, and you have to repay a percentage (in the form of monthly payments) over the next 5 years according to a plan that has to be approved by the judge.

All it takes to get royally screwed in bankruptcy is to have a single persistent creditor willing to clamp his teeth around your leg and hang on. I managed to get the debtor pinned to a 100% plan and he defaulted about every other month on the plan. Each time either the Chapter 13 Trustee or I would file a motion to dismiss, we'd all have a hearing in the court and the judge was not a happy camper, until the day the @#$#@%$#% was about $20k in arrears. The judge dimissed him and threw him out of bankruptcy court and suddenly after 3 years of bankruptcy payments, he owed me more than he did at the start. A few garnishments and several weeks later, I had my nearly $40k with interest taken directly from his bank accounts in one fell swoop. He managed to get his bankruptcy reinstated, but the judge refused to allow him to re-attach the garnished money.

So, go find yourself a bankruptcy lawyer, write a check for the $2k or so and file a bankruptcy and your credit card debt will be dramatically reduced. But remember this: many hospitals, insurance companies, licensing boards are doing credit reference checks on people these days. Keep that in mind if you are contemplating getting a license or being credentialled at a hospital some day.

Personally, when I'm in practice I plan to credit screen applicants for partnership opportunities and I will reject anyone who has filed a bankruptcy, ever. And though the credit reporting agencies may have forgotten about you, the Bankruptcy Courts still have records, and they are accessible on line. There are only about 100 or so District Courts that have bankruptcy divisions and a good background check will be able to unearth those records. And those records are PERMANENT.

That's discriminatory, you say? Weill that's right. I am discriminating in my wine, my friends, and my associates. And if an individual can't be trusted to handle his/her own finances responsibly, then what convinces me he/she can handle appropriate ICD9 and CPT coding on his procedure billings. And a little fudging here can jeopardize all of the partners.
 
You can get out of gov. student loan debt, you just have to be able to prove that there is no possible way you could ever pay it back and being forced to do so would make it impossible for you to afford to live. It's extremely hard to do (you better have a damn good lawyer) and will most likely involve some perjury and collusion, but it can be done.
 
You can get out of gov. student loan debt, you just have to be able to prove that there is no possible way you could ever pay it back and being forced to do so would make it impossible for you to afford to live. It's extremely hard to do (you better have a damn good lawyer) and will most likely involve some perjury and collusion, but it can be done.
This is extremely hard to do and is a rare case. Most likely you would get a forbearance unless your loan was in default, even then they aren't going to cancel it right off the bat.

For the record


Bankruptcy

Whether a bankruptcy discharge relieves an individual of his or her obligation to repay a student loan or grant overpayment is now determined by whether a court has ruled that repayment would impose an undue hardship on the borrower and his or her dependents. If the bankruptcy was filed on or after October 8, 1998, the loan or grant obligation is not affected by a bankruptcy discharge unless the debtor received an undue hardship ruling from the court.

Prior to October 1998 changes in bankruptcy law, whether a loan or grant overpayment was discharged in a bankruptcy depended on different rules, depending on when bankruptcy was filed, how long the student loan had been in repayment, and what kind of student loan the debtor had received. Generally, loans or grant obligations owed and in repayment for more than five, and later seven, years by the time the borrower filed for bankruptcy relief were dischargeable by reason of the age of the debt; debts owed and in repayment status for shorter periods were dischargeable only if a court ruled that repayment would pose an undue hardship. In addition, a general discharge received in a Chapter 13 (wage earner plan) bankruptcy that was filed before November 5, 1990 was sufficient to discharge a student loan or grant obligation without regard to how long the debt had been owed, even if the debtor failed to prove that repayment would pose an undue hardship.

You should present documentation regarding your bankruptcy case to Department representatives, who can advise whether the Department considers bankruptcy law to relieve you of the obligation to repay this debt. You may seek advice of your bankruptcy counsel in this matter as well.

If your bankruptcy petition was dismissed rather than discharged, then none of your debts, including your loan, were discharged.

What to Do:

You must submit to Department representatives the following documents to show when, and under what provision of law, you filed for, and received, relief in bankruptcy:

* Court ruling, if any, regarding whether repayment would impose an undue hardship
* Copy of the notice of the first meeting of creditors
* List of creditors filed in the bankruptcy proceeding (schedule A-3)
* Final Discharge Order

Be sure to include a cover letter stating your name, social security number and the identification number(s) of the loan or grant obligation you believe was discharged.

Check a recent demand letter or bill for this loan; if the address to which you are requested to send payment is the National Payment Center in Greenville, TX, you should submit your documentation to:

U.S. Department of Education Unit
Educational Credit Management Corporation
P.O. Box 8809
Richmond, VA 23225
 
Where in hell did this go to? :confused: But thanks so far for all the info. I'll speak to a lawyer soon. Well, actually I'm joking. I'll try to sensibly resolve it before going to extremes.


Which reminds me,1,2,3...:laugh:
 
Personally, when I'm in practice I plan to credit screen applicants for partnership opportunities and I will reject anyone who has filed a bankruptcy, ever.

That's discriminatory, you say? Weill that's right. I am discriminating in my wine, my friends, and my associates. And if an individual can't be trusted to handle his/her own finances responsibly, then what convinces me he/she can handle appropriate ICD9 and CPT coding on his procedure billings. And a little fudging here can jeopardize all of the partners.

Some people have very legitimate reasons for declaring bankruptcy you self-righteous punk. People like you always come from money, and mommy and daddy no doubt bailed you out of all your financial mistakes. Must be nice.
 
A good idea? I've got immense credit card and student loan debt, not too mention other creditors in line. Would bankruptcy be a viable option? It's alot faster to get out from under huge debt than taking MORE than 7 years to pay it back (provided I live that long) even if it's 7 years, til it falls off your record? Anyone advise or been there, done that yet? Thanks.


Which reminds me, 1,2,3...:laugh:
Don't listen to the people posting above, for the most part they are taking shots in the dark, especially 3dtp. This is a very complicated subject. I recommend that you read up on it in books by a publisher called Nolo. Their website is www.nolo.com and it contains much free advice, and you can find their books in many public libraries. I personally use their books through my public library's ebook service. It's kind of like law for dummies. They even have step by step detailed guides on how to do legal maneuvers like bankruptcy on your own. There are many other similar books out there, too, but I have personally found Nolo's books to be the best. :luck:

Also try browsing clarkhoward.com for more free financial advice.
 
I would contact an attorney and not take ANYTHING on this site as the truth when dealing with a subject with such massive potential ramifications.
 
I would contact an attorney and not take ANYTHING on this site as the truth when dealing with a subject with such massive potential ramifications.

Contacting an attorney, while relatively safe, is not as good as educating yourself, whether or not you use an attorney in the end. Attorneys will jerk you around as much as a used car salesman if you let them.
 
Student loan debt can be deferred through all of residency - so you don't have to pay on that till you are making enough money to pay it. Most consolidation loans give you 20-30 years to pay it off, so you have plenty of time to get it paid once you start paying it, and many offer reduced payment options at the beginning if you want.

As for the credit card debt, you just have to quit spending now. Then, when you start residency (or NOW if you're already in residency) - live super super cheap - rent the cheapest place you can find, don't have a car if you are in a place that has decent public transport or can live close to the hospital or buy some $500 car to last you thru residency - plenty of these are driving around on the streets, they work okay. Eat at home all the time, cheapest food you can buy, or eat at the hospital as much as you can if you get free food there. Basically if you just stop spending money you can pay off quite a lot of the non-student-loan debt in residency making $40K or so.

Then, when you finish residency, continue living that lifestyle a few years - you can then really knock down that debt when you're making the big bucks. Say you make $150 K, that's at least $100K after taxes - if you can live on $20K like you did in residency, you have $80/year to pay off debt, or, step up your lifestyle a bit to $50K, still have $50K/year to pay off debt. By this time maybe you marry someone who makes good money too and have even more money to live on. But dont' go back to spending like you did - plenty of people who make $150K per year find themselves thinking about bancruptcy b/c they still havent' learned how to control their spending.
 
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