Category: ‘Student Loans’

What Bankruptcy Can and Cannot Do

January 4, 2018 Posted by kingcade

Bankruptcy can be used as a powerful financial tool to eliminate debt and allow you to push the restart button on your finances  However, filing for bankruptcy does not eliminate all debts and before you file it’s important to know which debts will be discharged and which ones will remain.

Here are some things filing for bankruptcy can do:

Eliminate credit card debt and other types of unsecured debt. Your credit card debt is considered unsecured debt, which means the creditor does not have a lien on any of your property and cannot repossess any items if you fail to pay the debt. This is the exact type of debt bankruptcy is designed to eliminate. Other types of unsecured debt include: utility bills, medical bills, personal loans, payday loans, etc.  Most debts are unsecured.  Primary exceptions are home and auto loans, which are almost always secured.

Stop creditor harassment and collection attempts. The Fair Debt Collections Practices Act (FDCPA) limits the tactics that debt collectors can take to collect on a debt.  When you file for bankruptcy, the automatic stay immediately goes into effect and stops creditors from having any sort of contact with you.  They must now communicate only with your attorney.

Here are some things bankruptcy cannot do:

Eliminate child support and alimony payments. Child support and alimony payments cannot be discharged in bankruptcy. You will continue to owe these debts in full.

Eliminate other non-dischargeable debts.  These include debts for personal injury or death caused by intoxicated driving, fines and penalties imposed for violating the law, etc.

Eliminate student loan debt, except in very rare circumstances. Student loans can be discharged in bankruptcy only if you can show that repaying the loan would cause you “undue hardship,” an extremely difficult standard to meet. You must not only be able to show you cannot afford to pay your loans right now, but that you have very little likelihood of ever being able to repay your loans in the future.

Prevent a secured creditor from repossessing property. A bankruptcy discharge eliminates debts, but it does not eliminate liens.  So for secured debts, where the creditor has a lien on your property (and can repossess it if you do not pay the debt), bankruptcy can eliminate the debt, but it cannot prevent the creditor from repossessing the property.

Click here to read more on this story.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

5 Companies that will help you pay off your Student Loan Debt

January 3, 2018 Posted by kingcade

A recent survey conducted by IonTuition found that 80 percent of workers would work for a company that provided assistance with their student loan payments; which makes sense given that 44 million Americans are struggling with student loan debt.  Here are five companies that are helping their employees pay off their student loan debt.

Aetna. The healthcare company offers full-time and part-time employees tuition reimbursements on student loan repayment. Their student loan repayment program matches part-time employee student loan payments up to $1,000 per year with a lifetime maximum of $5,000. For full-time employees, Aetna matches student loan payments up to $2,000 per year with a lifetime maximum of $10,000.

Chegg. The textbook rental and online tutoring company gives eligible employees $1,000 a year as part of their student loan repayment benefit.

Fidelity Investments. Not only does this company offer tuition reimbursement for work-related educational expenses, it offers up to $10,000 ($2,000 a year contribution) paid directly to your student loan servicer.

Penguin Random House. The publishing company offers up to $9,000 through their student loan repayment benefit (up to $1,200 a year).

PwC. The accounting firm provides associates up to $10,000 in total (up to $1,200 a year) through their company’s student loan repayment benefit.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.cnbc.com/2017/12/22/5-companies-that-will-help-you-pay-off-your-student-debt.html

Exceptions to Paying Tax on Forgiven Debt

December 28, 2017 Posted by kingcade

If you recently had debt forgiven or negotiated down last year, you likely breathed a sigh of relief.  However, if you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount as income on your tax return, depending on the circumstances. Before you write a check to the IRS, see if you qualify for one of these exceptions to paying tax on forgiven debt.

  • Debts discharged in bankruptcy. If you filed for bankruptcy protection, you do not have to pay tax on the canceled debt.
  • Mortgage debt forgiven due to foreclosure. Originally set to expire after the 2012 tax year, the Mortgage Forgiveness Debt Relief Act protects you from having to pay tax on debt forgiven when you lose your home in foreclosure.  The deadline has been extended several times, most recently in December 2015 to include the calendar years 20017 through 2016.  And in early 2017, a bill to grant another exemption was introduced to Congress.
  • Debts canceled when you were insolvent. This is the most common exception, because debt is generally only cancelled when debtors are “insolvent” (i.e. – completely broke).  This exclusion only applies up to the amount by which you are insolvent.
  • Student loans forgiven after you have worked for a period of time. If your student loans contain a loan forgiveness provision based on service in your profession, do not include the canceled debt as income. In addition, certain federal student loans that were discharged by the U.S. Education Department’s “Defense to Repayment” or “Closed School” discharge process are exempt.  These apply to students at Corinthian Colleges and American Career Institutes Inc.
  • Forgiven interest that would have been deductible. For example, interest on a business debt.  You are not required to pay tax on the portion of the debt due to interest, if you could have deducted the interest if you had paid it.  However, if it was interest on a personal credit card- you must pay taxes on all the forgiven debt, including the interest.
  • Cancellation of debt as a gift. If the cancellation of debt is a gift, it is not income.  Generally, the IRS will believe you if you say the debt payoff was a gift between parties such as family members or friends.
  • Business and farm exceptions. You may not have to pay tax on canceled debt if it was in connection with your farm or if the debts were tied to business real estate and were forgiven when you owed more money than the property was worth.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.creditcards.com/credit-card-news/six-exceptions-paying-tax-forgiven-debt-1282.php

https://www.irs.gov/newsroom/home-foreclosure-and-debt-cancellation

How To File For Bankruptcy with Student Loan Debt

December 26, 2017 Posted by kingcade

For consumers struggling with significant debt, filing for bankruptcy may be your best option to provide you with a fresh start. If your debts consist of federal student loans, it is not an easy process to get these discharged in bankruptcy; however, it is possible.

The first thing you must do is to decide whether you will file for Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, the goal is to get unsecured debt wiped out. This means, you have little disposable income available to pay off your debts. If you choose to file for Chapter 13 bankruptcy, your plan is to get your debts restructured in order to repay some of it. This also means you likely have some disposable income to repay part of your debt.

The most important part of your case when you have student loan debt is that you must prove “undue hardship” to the court. This means that you must prove that you cannot pay back your federal student loans. In order to prove undue hardship, you and your bankruptcy attorney must file a petition called an adversary proceeding, which is unique to bankruptcy involving student loan debt.

In most courts, The Brunner Test is used to evaluate hardship. Below are 3 factors of The Brunner test outlined by the U.S. Department of Education’s Federal Student Aid office:

  • The filer cannot maintain a basic standard of living if paying back federal student loans
  • The filer can prove the hardship will last for a large percentage of the repayment period
  • The filer honestly tried to repay the loans before filing

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Wells Fargo Faces Penalties over Ignoring Student Loan Debt Included in Bankruptcy

December 11, 2017 Posted by kingcade

An important legal victory was recently obtained for a borrower attempting to discharge a student loan debt.  Ryan, the consumer, filed for bankruptcy and following the bankruptcy Wells Fargo Bank sued Ryan and obtained a state court judgment to collect on the debt.

Ryan had attended Capella University, a for-profit school.  In the case, Educational Financial Services, a division of Wells Fargo Bank, made the argument the loan was not actually discharged in the 2007 bankruptcy.  When Wells Fargo sued Ryan in State Court to collect on the student loan debt they made no mention of Ryan’s previous bankruptcy and discharge.

Ryan felt pressured to enter a consent judgment over the debt in 2008 and made monthly payments of $150 on the loan for the next seven years.  Frustrated, he sought legal help to reopen his previous bankruptcy case and his attorney raised the valid point, “that the loans from Wells Fargo were discharged by operation of law on November 29, 2007, because the loans were not a student debt protected by any subsection of Section 523(a)(8).”

The issue at hand was if Ryan’s discharge had been violated because the loans were not student loans under Section 523(a)(8).

“Given Wells Fargo’s actual and constructive knowledge of the timing of the Plaintiff’s loans, the “cost of attendance” at Capella University, and the nature of the Loans it extended to the Plaintiff, Wells Fargo knew or should have known that the Loans were discharged in the Plaintiff’s bankruptcy,” the complaint states.

The Judge ruled that even though Ryan had previously repaid the debt through the State Court judgment he was not prevented from reopening his bankruptcy and filing an adversary proceeding to rule on the discharge of his non-protected private student loan debt.

This is why it is important for anyone who includes student loans in a bankruptcy to pursue an adversary proceeding to get a ruling on the dischargeability of the loans, a key step which is often overlooked.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.