Articles Posted in Discharge

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A person who cosigns, or acts as a guarantor on a debt may be affected when primary debtor declares bankruptcy. There are a few ways to protect a cosigner or guarantor during a bankruptcy, but it is important to understand each person’s roll in the process.

A guarantor, or a cosigner, is essentially a person who is responsible for paying back another’s debt if he or she is unable to. Creditors will often require a person to have a cosigner or guarantor if they feel skeptical of the person’s ability to repay the debt. This is why most young adults and those with bad credit scores are required to have a cosigner.

Further, there is a difference between a cosigner and a guarantor. A creditor can pursue a cosigner at any time if payments are not being made. With a guarantor, creditors must usually attempt to collect from the primary borrower first before going after the guarantor. If bankruptcy is declared, there is no longer a distinction and both classifications will be obligated to pay back the debt.

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bankruptcy-photo-thumb-250x219-6996Most debts can be liquidated through a Chapter 7 bankruptcy, or reorganized through a Chapter 13 bankruptcy. However, there are a few debts that can altogether be non-dischargeable.

Some types of debts are always non-dischargeable, unless a debtor can demonstrate extraordinary circumstances to convince a court otherwise. One such debt includes any debt the debtor fails to list on his or her bankruptcy petition; unless the creditor had actual notice or knowledge of the bankruptcy.

Other debts that are generally always non-dischargeable include certain taxes, such as federal tax liens, payroll taxes or fraud penalties. Child support debt and other debts owed to a former spouse that arise from divorce are also non-dischargeable. Student loans, injury caused by DUI, and homeowner association fees are also included in this list.

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Jacksonville Bankruptcy LawyerAs a Jacksonville Bankruptcy Attorney I am always being asked numerous questions about Florida Bankruptcies and their effect on individuals you file. Although individual results will vary, I strongly encourage you if you are considering Bankruptcy to consult with a local Jacksonville Bankruptcy Attorney. With that being said, here is a list of the 5 most common benefits applicable to most of my clients when filing a Florida Bankruptcy.

  1. Gives you a “Fresh Start.” This means you liability for your dischargeable will be eliminated.
  2. Will stop Foreclosure proceedings or allow you time to catch up on past due payments.
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Cut up your credit cardsMany Florida residents are under the impression that once they have filed for bankruptcy and their debts have been “discharged” they are no longer liable for those debts. This is not always the case as there are certain debts that cannot be discharged in bankruptcy. This is especially important for people to know before they begin the process of filing for bankruptcy.

Each chapter of the bankruptcy code specifies which debts are dischargeable and which are not. Section 523(a) of the Bankruptcy Code lists the types of debts that generally cannot be discharged in bankruptcy. This means that even after the debtor has prevailed in bankruptcy court, if the debts have not been discharged, then the debtor is still responsible for paying those debts. According to the Code, these non-dischargeable debts are exempt from discharge for reasons of public policy.

If a debt falls into one of the exempted categories in Section 523(a), then it is usually automatically removed from the discharge and the debtor remains obligated to pay those debts. Most commonly, those are child support and alimony debts, some tax debts, debts that the debtor failed to disclose to the court during the application process, most federal student loan debt, personal injury claims against the debtor for DUI-related incidents and personal injury claims against the debtor for willful or malicious damage to a person or to property.

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Casey Anthony Benefit From BankruptcySince Anthony was found not-guilty of first degree murder in 2008, she has been barraged by civil law suits. The most recent of these suits is brought by Mr. Roy Kronk. Kronk was a meter man who found the remains of Miss Anthony’s daughter. Kronk is suing Miss Anthony for defamation of character, as her defense team alleged that Kronk himself murdered the child. Later it was alleged by Anthony that her daughter, Caylee had drown in the family pool.

Defamation is a false and defamatory statement about a plaintiff which is heard by a third party by the fault of a defendant. Some kind of damage must result. In this case, defendant Casey Anthony, through her lawyers, said that plaintiff Ray Kronk had murdered a child and this was heard by third parties across several news stations. It’s likely that his reputation was damaged. it’s likely that Kronk will win such a suit, unless Anthony’s can prove by a preponderance of the evidence that Kronk did in fact kill the child. That would mean that she committed perjury in saying that the daughter drowned in the pool, but she’s already had perjury suits in the past.

Even if Anthony is found liable for the damages to Kronk, it is possible that she could file a Chapter 7 bankruptcy and discharge the debt. Unlike debts to the government, debts to private citizens are almost always discharged. One of the few exceptions to discharge-ability falls under 11 U.S.C. § 523(6) which requires that a willful and malicious injury by the debtor occur to the plaintiff. The case of In re George out of Tampa, Florida holds that some defamation judgments are both willful and malicious. This case found that willful merely means that an act was intentional. Malicious, on the other hand, was not defined by this court as the previous court that found the defamation had declared the defamation malicious, instantly proving it as a matter of law for the In re George case. The ultimate question is whether Casey Anthony could benefit from a bankruptcy filing. The answer to this depends on whether Kronk can prove malice on the part of Anthony. Malice is often thought of as actions arising from, “evil intent”. This poses an interesting question of what motivated Casey to accuse Kronk. Did she actually believe Kronk had murdered Caylee? No. She couldn’t have if she knew Caylee had died in the swimming pool. But Casey didn’t know Kronk, why would she want to frame him for a crime that she knew hadn’t been committed?

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IRS Passport Revocation and Discharge of Income Tax DebtsSenate Bill 1813 will allow for the revocation of passports from anyone who owes more than $50,000 to the Internal Revenue Service. The Bill will Amend Sub-chapter D of Chapter 75 of the Internal Revenue Code of 1986 to read:

“SEC. 7345. REVOCATION OR DENIAL OF PASSPORT IN CASE OF CERTAIN TAX

DELINQUENCIES.

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Student Loans Non-DischargableAs both an attorney and a holder of a postgraduate degree I am often approached by people, clients and associates alike regarding an American’s ability to discharge student loan debt in bankruptcy. I have recently read, “The Student Loan Scam” and found it to be an enlightening, albeit depressing, read. The book outlines the history of the non-dischargability of student loan debts in bankruptcy from the early stages when it was discharged like any other debt to when it required a five year Chapter 13, then a seven year case and then finally being practically impossible to discharge in any scheme at all. Apparently, student loans have only held their practically non-dischargable status since the passage of the 1998 Higher Education Act.

In Canada, recent changes to their laws have permitted discharge of student loans which originated seven (7) years prior. Recently, I spoke to an attorney out of Calgary, Canada who informed me that while Canadian loans can be discharged within the seven year period and that any of my clients who might want to file in Canada would still be liable on their U.S. loans.

Student loan borrowers are not without alternatives. “The Student Loan Scam” gave gruesome examples of those who migrated form the U.S., went underground or even committed suicide as a result of their non-dischargable debt. About three years ago the “Income Based Repayment” program went into effect. This program allows those with state backed loans to pay only a percentage of their income toward their debt. This is on a graduated scale and allows a person making less than $15,000 to have no payment. After twenty-five (25) years of these payments, the remaining debt is discharged. Just last year, this twenty-five (25) year period was reduced to fifteen (15) years. In short, the ability to discharge student loans in the United States went from dischargable in bankruptcy, to dischargable in five years, then seven, then not at all, then twenty-five years and now fifteen. What length of time is appropriate? Who knows.

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giuseppeThe final adversary proceeding in the Chapter 7 bankruptcy of Teresa and Giuseppe “Joe” Giudice is now closed. An adversary proceeding may be thought of as “case with in a case”. This adversary proceeding was filed by the United States Trustee seeking to deny the Giudices a discharge of their debts. The trustee’s one-hundred-and-twenty-five allegations indicate what may be the true nature of a “Real” housewife and her husband.

Some of the allegations include:

1. Non-disclosure of any bank accounts, vehicles, copyrights or intellectual property.

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If you want to reaffirm a debt after filing for bankruptcy, your must executed a new agreement with your creditor. This reaffirmation agreement must be written and must be signed by both you and the creditor. Should you sign this reaffirmation agreement? Here are some pros and cons.

Pros

First, if you want to keep the property, you must sign the reaffirmation agreement. Also, if you do sign, you will be certain what your payments will be, what your interest rate is, etc. Signing a reaffirmation agreement may also help rebuild your credit, since you are taking responsibility for a pre-filing debt and are making regular payments on a debt.

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Inheritance can be an issue in bankruptcy law. One might think that after you receive a discharge in your bankruptcy case, your case is done and the court does not have an interest in your finances. This is not always so.

In a Chapter 7 case, if a loved one dies and leave you an inheritance within 180 days from the date of filing your case, then this money becomes part of your bankruptcy estate. The trustee may want some or all of the inherited funds to distribute to creditors. The important thing to remember is that the date that you become eligible for the inheritance that is the date to use in this 180 day analysis. This is the date of the loved one’s death, not when you actually receive the money or property.

In a Chapter 13 case there is an ongoing obligation to keep the trustee appraised of what property you own. Once they learn of an inheritance, they will likely take those funds for the benefit of your creditors. This can occur any time during the case. Since Chapter 13 cases are often as long as five years, it is important to make arrangements with relatives who may pass on during this time.

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