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Are You Looking For A Bankruptcy Attorney In New London County?

Posted by David Falvey on Sunday, November 8th, 2015

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Map of New London CountyIt’s been a rough couple of years for everyone these days and bankruptcy filings in New London are on the rise like any other county in Connecticut. As a bankruptcy lawyer it seems only right to provide my New London clients with some answers to their important questions about bankruptcy.

This information will give you a preliminary understanding of what’s involved in a bankruptcy filing, what to expect, and what to look out for.

People who file for bankruptcy always have plenty of questions and those questions should be answered. A person filing for bankruptcy should be able to understand the whole process as much as they need to so as to give them the security that their case is being handled appropriately.

What follows is a a playlist of general questions from my New London clients and a list of some of the most common questions with their answers. Feel free to list out any questions that may not have been answered and give us a call. Connecticut bankruptcy Lawyer Dave Falvey would be more than happy to answer them for you. Or you could send me an email with your questions at our contact page.

Some common questions about bankruptcy from New London County Residents

Statistics have shown that bankruptcy is quite common in New London County. They show that 1 in approximately 700 residents of New London filed for bankruptcy from the beginning of January to September of 2012. With those kind of statistics, it only proves that there are a lot of questions that need to be answered.

My New London County bankruptcy clients show a concern for their families and financial well being. Most families have children who are in college and want to know if student loans are dischargeable in bankruptcy.

Are Student Loans Dischargeable In Bankruptcy?

Student loans are no longer, as a practical matter, dischargeable in bankruptcy in New London or any other city in America. There was a time when, if a student loan was over 5 years old, it was dischargeable.

Ronald Regan became President and said, ‘Government is not the solution; Government is the Problem’. The Federal Government created student loans but Wall St. saw an opportunity for another gravy train.

Under Regan, Wall St. was able to completely dominate the student loan market. The lobbyists for Wall St. worked tirelessly to change the Bankruptcy Code and they managed to amend the Bankruptcy Code to change the rules such that only student loans which were 7 years old were dischargeable in bankruptcy.

And they pushed some more and got the law amended a second time so that now as a practical matter, student loans are no longer dischargeable in bankruptcy, except if they constitute a hardship.

Is there any way around it?

Technically yes. There have been some, but very few cases where a person is able to obtain the discharge of a student loan since the repeal of the 7 year rule, by writing directly to the loan company with the proper documentation, and by obtaining a discharge based on medical disability.

I have done this for some clients but I assure you that their health condition was tenuous at best. They all had very serious and chronic disabling illnesses.

And I tell people that under no circumstances would you want to be as disabled as my clients in order to obtain a discharge of student loans.

Even under the present law, it is still technically possible to obtain a discharge of a student loan if it can be proved that it would be a hardship to pay it.

Proving the hardship

The goal of proving a hardship is next to impossible to prove. In one unreported decision, the person was working a full-time job and a part-time job and suffering with terminal cancer. The judge ruled that this did not constitute enough of a hardship to receive a discharge of his student loan!

This debtor was not from New London but was from Connecticut and he was forced to continuing paying his student loan despite his apparent inability to do so because of his disease.

Today you can repay a student loan based on a percentage of your income over a 20 year period. I call this the ‘new indentured servants‘. When people first came to this country and someone paid their passage, they were called, ‘indentured servants’ and they had to repay the loan before they were free.

I have seen young people come to my office with over $200,000 in student loans and many of them were from New London and the only job they were qualified for was a waitress or waiter.

The colleges only want your money and they don’t care about you. It’s critical that you and your family discuss and plan your future before you incur student loan debt.

I would urge you to speak with college graduates and their post-college experiences as a way to open your eyes and ears.

Will I be able to rent again or purchase a home after filing for bankruptcy?

Purchasing a home after filing bankruptcy

Absolutely. Fannie Mae guidelines for mortgage lending requires the person who has filed for bankruptcy to wait a period of 2 years before they can once again apply for a mortgage loan. As far as obtaining a loan for the purchase of an automobile, I’ve seen many of my New London County clients actually to purchase vehicles 1 month after filing bankruptcy.

It’s much easier if you’ve been able to get a down-payment and also be gainfully employed.

Renting an apartment or home after filing bankruptcy

When it comes to renting an apartment or house, most land-lords are primarily concerned with your ability to make your monthly rental payments. In all my years as a bankruptcy lawyer in Connecticut, I have yet to see any significant problems with any of my clients in this area.

What if I owe money to relatives and friends?

Yes, all creditors have to be listed on your bankruptcy petition. The most important question you will be asked by the Trustee is

  1. Did you read the petition before you signs it?
  2. Did you list all your assets?
  3. Did you list all your debts?

The petition does not ask “did you list your non-dischargeable debts? Nor does it ask if you’ve listed your dischargeable debts? It asks if you’ve listed all your debts. There is no distinction between debts owed to a credit card company or to any of your relatives.

What about money I owe to my dentist?

A person much list a dentist or orthodontist because the debt is owed to the doctor. Many clients want to continue with their dentist, especially their orthodontist.

In this case there is no problem. You list the the doctor’s debt on you petition and you inform the doctor’s book-keeper that you had to list the doctor but you have full intention of continuing to pay money down on your medical bill, which is perfectly correct under the bankruptcy code because you are permitted to voluntarily make payments to any creditor once you file a petition.

If all my debts are dischargeable, do I still have to pay my car or mortgage?

Why keep paying? Aren’t the debts discharged? It’s important to answer this question because a few of my New London County clients have asked it. The answer is yes.

Your mortgage debt or the promissory note is discharged personally (in personam liability) and as to you but the mortgage (in rem liability -‘in the thing itself’) remains on the property. If the mortgage was removed from the land records or if you could discharge the ‘in rem liability’ then you would own the house-outright without having to make any further mortgage payments. The same applies to an automobile.

This would lead to the collapse of the banking industry and the economy. We can only imagine how many people would file for bankruptcy so they can keep their cars and homes but not have to pay on them. As a general rule: ‘Liens pass through bankruptcy unless specially acted upon’.

Mortgages as of this writing can’t be removed or ‘crammed down’ or ‘Stripped down’ in Chapter 7 bankruptcy. It is possible to do this in Chapter 13 but not in Chapter 7 which is the petition most commonly filed.

So is there an alternative to filing for bankruptcy in New London County?

The answer to this question is yes and my office actively presents and offers these options and bankruptcy alternatives.

The first and formal option is called debt management or credit counseling. In order to offer debt management and credit counseling a person or firm must be license or bonded by the State Banking Department. The following link is where you can go to actually verify a license.

The second option is called debt settlement and in order to provide customers with debt settlement services you also must be license with the State Banking Department. Since attorneys are licensed and regulated by the judicial department they don’t have to be licensed or bonded by the banking department in order to offer debt management or debt settlement services.

What is debt management?

Debt management is the process of paying 100% of your credit card debt. The debt management company gets the credit card companies to reduce your interest rates so that more of your monthly payment is applied to reducing the principle of the debt.

You make one monthly payment to the debt management company, and they in turn pay the creditors.

What is debt settlement?

Debt settlement is negotiating with the creditors to pay a percentage on the dollar value on your debt in order to lower and get rid of it. Presently there are no licensed or bonded debt settlement companies in the State of Connecticut.

When you are able to choose debt settlement, you pay approximately 50 cents on every dollar to settle your debts.

There are a few mortgage companies listed as ‘debt negotiators’ but that’s because they offer mortgages and then you pay-off the debt. In this case you are really ‘robbing Peter to pay Paul’ because you are using borrowed money to negotiate on borrowed money.

Many times consumers use their homes as ATM machines and remove all the equity in the home before they really start to address their underlying financial problems.

You can try to obtain a debt settlement offer yourself, but it’s quite complicated than one would expect because there are tax implications in debt settlement and the potential for lawsuits.

If you’d prefer to use a debt settlement company, you are highly advised to call the State Banking Department at 1-800-831-7225 and ask them if the company you are considering is license by them to provide debt settlement services. If they are not, stray away from them.

Most of these companies are located in the ‘sand states’ of California, Texas and Florida. You should always search for their name on the Internet by simply using the word ‘fraud’, ‘scam’ or ‘complaint’ after their name and see what hits you received.

Know your rights and know the law

The more you know about your rights and the bankruptcy laws in your state, the better chance of success you’ll have when filing bankruptcy. This why it is always advised to strive to be able to speak with a qualified bankruptcy firm that’s been recognized as an official federal debt relief agency.

We offer non-bankruptcy options or debt settlement for our clients who either cannot file for bankruptcy due to technical reasons or who prefer to deal with their creditors outside of the formal arena of the court.

Approximately 25% of our practice is with clients who don’t file for bankruptcy.