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student-loan-fresh-start-actFor a long time now, student loans have been pretty much prohibited from being discharged through bankruptcy.  That could change by the looks of this proposal.  The S.2598 – FRESH START Through Bankruptcy Act has been recently referred to committee.

Why is it so hard, if not impossible, for people to get rid of student loans through bankruptcy now?

Due to a 1976 law, student loans are not allowed to be treated like other forms of debt (ie: credit cards or car loans). This comes from a federal commission on bankruptcy laws that heard testimony claiming the discharge of student loans could damage federal student loan programs. Congress was concerned that students could borrow thousands from the federal government, then graduate, then file bankruptcy, and never repay their student loan debt.


Are you being haunted by a low credit score? We know how our credit score is a huge part of our financial picture. Having bad credit can cost you money (not qualifying for a particular job) and missed opportunities (paying higher interest rates, higher insurance premiums, and not being able to qualify for loans).  If your credit score has become something that sabotages your financial goals at every turn, fear not. It doesn’t take magic to bring your credit score back to life: just some good old fashioned time and effort that involves clean up of what’s out there and careful movement going forward.

The first thing you should do

Take a good, honest look at your monthly budget. Are your debts far outweighing your income? Can you pay off your debt within a reasonable amount of time without stress, anxiety, lack of sleep, lack of necessities due to working more than 1 job? Before you worry about bringing that credit score up, get your budget into a workable position. If you work on your credit but your income can’t sustain your debt level, you won’t get very far.  We offer free consultations regarding the options that bankruptcy brings to the table.  Bankruptcy can clean the slate and help you to rebuild so much faster.  Typically your score takes a 30-50 point hit when you file, but the clean up and rebuild is so much faster.  You can recover that and build in 12-18 months rather than killing yourself for up to seven years trying to out live the negative items reported.  If your income to debt ratio is under control, then dive right in and get that credit score up!

assistance-programs-300x143There are many state and local programs to help if you are having issues with rent, utilities, or other housing costs for renters and programs to help assist if you are a landlord.  You can visit this website to find programs in your state:

To apply you must first find a program in your state or local area – each program has their own policies and procedures for their local communities.  Emergency rental assistance could help cover rent, utilities, home energy costs, and other utilities. It could potentially even help cover reasonable late fees, internet, and moving expenses or security deposits for families who have to move. Each program is centered to their local area.

scam-rent_mortgage-150x150Beware of scams dealing with emergency rental assistance! Scammers are coming out of the woodwork with all the various federal relief programs being implemented across the country. They are excellent at disguising their programs to look 100% legitimate.  If you receive and email, text, call, or social media message from someone claiming to be a part of the government, chances are this is a scam.  Same thing if you are asked for cash, gift cards, wire transfers, cryptocurrency or similar forms of payment to help you get the rental assistance they say they are willing to provide – chances are this is a scam.  For trustworthy information, ALWAYS go to the source directly and visit the government or official websites.

To get rental assistance, renters must apply to a state or local rental assistance program. Click here to visit this website to find rental assistance programs in your area. This is the direct link to the Consumer Financial Protection Bureau.  You can also go here and log a complaint. If you have been solicited by scammers – report them! Help shut them down.

The Federal Trade Commission issued a warning about rental assistance scammers recently. It’s a shame that there are people out there that take advantage of others that are in a desperate situation. There are legitimate organizations out there that can help – you just have to be so careful about who you deal with.

checkYou have just learned that one of your creditors is starting to take money out of your paycheck or even your bank account. This is called a garnishment. A garnishment is a legal procedure where a portion of your paycheck is taken for the payment of a debt. Garnishments are usually by a creditor that has a court order. Some government agencies can garnish your paycheck without a court order, for debts such as back taxes and student loans. Federal laws limit the amount that a person’s paycheck may be garnished. A garnishment applies to wages, salaries, commissions and bonuses.

The amount of pay subject to garnishment is based on your “disposable earnings,” which is the amount left after legally required deductions are made. Legally required deductions are federal, state, and local taxes, the employee’s share of social security, Medicare, State unemployment, and required employee retirement.  Federal law sets the maximum amount that may be garnished in any workweek or pay period regardless of the number of garnishment orders received by the employer. Garnishments may not exceed 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

  • If the pay period is weekly and disposable earnings are $217.50 ($7.25 x 30) or less, there can be no garnishment.
  • If weekly disposable earnings are more than $217.50 but less than $290.00 ($7.25 x 40), the amount above $217.50 can be garnished ($72.50).
  • If the weekly disposable earnings are $290 or more, no more than 25% can be garnished.

There are exceptions to the garnishment limits. The limitations to wage garnishments do not apply to certain bankruptcy court orders or to debts due for federal or state taxes. If a specific state has a different wage garnishment law from Title III, then the law resulting in the lower amount of earnings being taken must be used.  Debts that are not related to taxes, but are owed to other federal agencies can be garnished up to 15% of disposable earnings to repay defaulted debts owed to the US government. The Higher Education Act authorizes the Department of Education’s guaranty agencies to garnish up to 10% of disposable earnings to repay defaulted federal student loans.

See chart below for different pay periods regarding garnishments:

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10-things-150x150I have listed some of the mistakes people make right before they file bankruptcy. People do these things because of mistaken information they got from someone else. Talk with your bankruptcy lawyer and ask questions. Your lawyer can protect you and your property as long as you tell them everything up front. Disclose all financial information to your attorney and prevent future surprises. You don’t want to end up losing the things you were trying to protect and save. If you have questions about the reasons why we don’t want you to do these things right before you file bankruptcy, call us. Once you hear the explanation, everything will make sense . Some of these thing you can do, you just need to wait for the right time.

  1. Don’t pay money to family or friends and don’t pay back loans to family members or friends.
  2. Don’t file if you are about to receive an inheritance, personal injury settlement, or large sum of money.

7-or-13-e1525536681230A chapter 13 bankruptcy can do everything a chapter 7 can do and more. A chapter 13 has  extra tools for special debts. A chapter 13 takes 3-5 years to complete and costs more than a Chapter 7 in the long run. Which one you should file depends on what you are trying to hold on to and save.

A chapter 13 has special powers which allow you to deal with foreclosure, tax debts, child support, and student loans better. You can catch up the payments on a home or car in a chapter 13 over 3, 4, or 5 years. A chapter 7 only lasts about 4 to 5 months from start to finish. It will only delay a foreclosure and put off student loan and tax problems. Chapter 7 will not help catch up the back notes on a mortgage. In a chapter 13 you can catch up the back notes over a longer period of time, lower the notes and the interest rate on vehicles and loans.

When to use a Chapter 13

breakup-with-bank-150x150No matter how much you love your bank, there are a lot of good reasons to leave them if you are going to file bankruptcy.  If you don’t want to leave them, you might want to keep your money somewhere else temporarily.

Reason #1 Frozen Bank Accounts

Several nationwide banks, like Wells Fargo, Bank of America, and Chase, freeze bank accounts with significant balances when they get a bankruptcy notice. This would apply to all bank accounts with your Social Security number attached. It doesn’t matter if you need the money to pay bills, or if the money is exempt, the account is frozen and you can’t get your money. Any money going into the account will be frozen.  The bank will claim they are helping the Chapter 7 trustee. The account can be released, but not always quickly or easily.

protection-150x150Here are 4 steps you can take to avoid a having your tax refund taken for a Student Loan default:

  • Get your student loans out of default. After nine months of nonpayment your student loans go in to default status. Making the minimum payments on time will keep you out of default.
  • Ask for a deferment or forbearance. If you can’t pay your loans on time, ask for a deferment. A deferment can postpone payments for up to three years. Depending on your loans, interest may or may not continue to accrue if you’re in deferment. You can also request a forbearance, which pauses your loan payments for up to one year. A forbearance has different eligibility rules and interest continues to add up during the forbearance period.

tax-time-e1523477928357If your tax refund has already been taken you need to request an Offset Refund.

If you think your tax refund may be been taken in the future, you need to request an Offset Refund to protect your tax refund from being taken.

You can request an refund whether your tax refund has been taken from you or not. There is no time limit to make the request, but you should move as soon as you can to protect your IRS Tax Refund.

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