Can Lenders Ignore Bankruptcy Court Discharges?

Filing for bankruptcy can be a hard decision to make. Once made, those who have declared, undergo intense scrutiny in hopes that their debt will be discharged. Once discharged, the debts are legally required to be removed from the declarer’s credit report. Banks are not following the rules. Some of the nation’s largest banks are currently under investigation by the United States Trustee Program, which is part of the Justice Department, for failing to remove discharged debts from credit reports. These banks are employing less than ethical tactics in order to collect money from voided debts. This practice is lucrative to not only the banks, but also debt-buyers which are more likely to buy debts, even discharged debts, which they will yield a return from. Banks deny wrongdoing in court. Currently, several of these large national banks are facing litigation, being accused of refusing to clear debts which were legally discharged in bankruptcy court. The banks claim they are compliant with current bankruptcy law and credit reporting procedures. They also claim they have no interest in collecting payments on bad-debts. They have moved to have the lawsuits thrown out, but have so far been unsuccessful. The Judge presiding over the cases has claimed that the banks were purposely ignoring discharged debts in order to further their business interests. Court documents have confirmed these claims with bank correspondence to debt-buyers detailing the steps they take when receiving payment of discharged debts. There have even been recently revealed contracts between the banks and the buyers allowing for a certain percent of payments on voided debts to be kept by the banks....

When Banks Fail to Comply: Don’t Repay Discharged Debt

Bankruptcy is set up to allow debtors a reprieve from bills that they are unable to pay. The financial scrutiny they face is intense— every bill, bank account, asset, possession and debt is examined thoroughly. Then, if the courts decided that an individual should be granted a discharge, they are allowed what essentially amounts to a fresh start. The debtors take a hit on their credit report that will be visible for almost a decade, but in exchange, most debts are wiped out or restructured. How financial institutions are undermining bankruptcy Instead of complying with bankruptcy courts’ decision to render discharged debts void, some of the nation’s largest banks are simply ignoring the rulings. After a borrower has discharged debts through bankruptcy, financial institutions are obligated to update the information they pass on to credit reporting agencies. In some cases, they are simply failing to do so. As a debt collection tactic, some banks are failing to remove the label of “past due” or “charged off” from debts that are no longer owed. Are borrowers obligated to pay? Borrowers are, under no circumstance, required to repay any debts that were successfully discharged in a bankruptcy. Unfortunately, in these situations, debtors feel obligated to repay debts they have no legal responsibility to pay. Because their credit reports are already flawed due to the past bankruptcy, they feel pressured into paying in order to improve their credit scores. If they don’t pay, negative marks may remain on their credit reports, preventing them from obtaining certain loans or mortgages. Why file for bankruptcy? In most cases, financial institutions to comply with bankruptcy...

Tips For Filing Taxes After Bankruptcy

One of the most important things for people that have recently filed for bankruptcy to keep in mind is that taxes still need to be paid after filing for chapter 7 or 13. It can be confusing determining when and how much to pay in taxes, especially if you have to file taxes for individual returns and your bankruptcy estate. If you are unsure of what you need to do in order to pay all necessary taxes, here are some helpful tips to guide you in the right direction to getting your finances back on track. Two Different Tax Forms When filing taxes following bankruptcy, one of the trickiest and most confusing things to deal with are the different tax forms you will have to file. Since you will likely be paying a qualified Las Vegas bankruptcy attorney to handle your finances, you or your trustee will have to file taxes for your estate. This means that you will be required to fill out two different tax forms, one for your individual taxes and the other for your estate. If both of these are not paid on time, your bankruptcy case can be dismissed. Under the terms of a bankruptcy, a debtor can’t acquire any new fees or delinquent balances. Since taxes can be considered a new debt if left unpaid, your bankruptcy case can be dropped or dismissed if you do not stay current with your taxes. That is why it is vital to fully understand exactly what you need to do in order to properly pay all taxes on time. Important Tips to Keep in Mind The...

Which Comes First: Bankruptcy or Divorce?

With divorce being one of the leading causes of people filing for bankruptcy, it is important to make sure that both situations are filed appropriately and handled with extreme care. Fortunately, some steps can be taken to help you make your divorce and bankruptcy filings less expensive and more beneficial for both parties. Making the decision to file for bankruptcy before or after your divorce depends on a few factors, which could help to determine the best course of action. Here is what you need to know when filing for divorce and bankruptcy. Filing before divorce If you plan on filing for bankruptcy before filing for divorce, there are some benefits that you can take advantage of to save you and your spouse both time and money. It costs the same for joint and individual bankruptcy filings, which can save you a significant amount of money in court fees. Additionally, filing for bankruptcy before divorce can allow you and your spouse to get a better handle on your possessions. Don’t waste unnecessary time and money dealing with divorce costs. Take the time during your bankruptcy proceedings to simplify debt and property issues to take care of both issues effectively. For people hoping to file for chapter 7, it is best to file for bankruptcy prior to your divorce. Since these bankruptcy proceedings can be completed in only a few months, it is smart to get your bankruptcy filed prior to beginning your divorce proceedings. Especially if you anticipate an especially lengthy divorce, filing for bankruptcy can be a solid place to start. Filing after divorce Individuals that are thinking...

Discharging Student Debt with Bankruptcy

Student loans are one of the most difficult forms of debt to discharge through bankruptcy. In most cases, student loans remain even after a bankruptcy has been successfully filed by a debtor. Even though it is difficult to wipe out student debt, it’s important to keep in mind that it is not impossible. Who qualifies? Over 99 percent of those who file for bankruptcy fail to include student loan debt in their filings, but almost 40 percent of those who request relief are granted at least a partial discharge. If it is demonstrated that repaying student debt would cause “undue hardship” to an individual and their dependents, the likelihood of discharge increases. The exact definition of “undue hardship” varies depending on the court, but many use the Brunner standard. This standard uses three parts to determine whether an individual qualifies to have their debt discharged:  The debtor will not be able to maintain a minimal standard of living based on current income and expenses if forced to repay student loans. The debtor’s financial circumstances are likely to continue into the future. The debtor has made efforts in good faith to repay the loans. An example of an individual who qualifies for this type discharge would be a middle-aged debtor with a family who only makes a few dollars above minimum wage, but has no opportunities for advancement. The courts would likely rule that the debtor had reached their maximum earning potential, and would not be able to repay the loans while maintaining minimal family expenses. How can a bankruptcy attorney help? Discharging student debt requires many more extra steps than...