It’s always interesting to learn how clients find us. Frequently, clients find us through referrals, other times, through the Internet. With a little help from Google, I have some interesting insights into what keywords people are using to find us. Here are some popular questions you are asking (along with additional information.)
 

Do I have to be behind on payments to file for bankruptcy?

Nope. You can be totally current, 6 months behind, current on some bills, behind on others. Whether you are behind has no bearing on if you can file for bankruptcy. (Full answer here: Part 1 and Part 2.)
 

Is there a minimum debt to file for bankruptcy?

Nope. There is no minimum debt requirement, but as a practical matter, if you have very little debt it probably doesn’t make sense to file. The filing fee for Chapter 7 is $299 plus attorney fees so if you have only a couple of thousand dollars in debt, you’re probably better off paying it. (Read the long answer here.)
 

What is credit counseling – bankruptcy?

Every single person that files for bankruptcy must complete a credit counseling class. Before you start to panic or have flashbacks to your high school algebra class, relax. Credit counseling can be done online, over the phone or in person and takes less than 1 hour. I had one client complete it in 33 minutes. If you complete it in less time, let me know.
 

Transfer assets to my husband before bankruptcy?

This is a big no-no. First, certain transfers prior to bankruptcy must be disclosed on your bankruptcy petition. In addition, Trustees regularly do assets checks to screen for fraudulent transfers. Second, because California is a community property state, all of your spouses’ property counts as your property. Fraudulent transfers can result in unwinding of the transfer, denial of discharge or even criminal charges. So, please don’t exercise self-help and consult with an attorney first.
 

Can bankruptcy save my home?/ Can bankruptcy stop foreclosure?

It depends. Many clients falsely think that the “automatic stay” will permanently stop all foreclosures. Not true. In Chapter 7, the automatic stay is a temporary stop of foreclosure buying you maximum of 3 – 4 months. In Chapter 13, it may be possible to save your home by a) rolling in the missed mortgage payments into your Chapter 13 Plan, b) applying for a loan modification, c) stripping a second mortgage that is completely unsecured, or using a combination of the above strategies.
 

Bankruptcy do’s and don’ts

Here is our short list of bankruptcy do’s and don’ts.
 

Getting rid of student loans through bankruptcy

Unfortunately, student loans are non-dischargeable. In rare circumstances it is dischargeable provided you can demonstrate an “undue” hardship. This is an extremely difficult standard to meet and rarely granted. Chapter 13 can offer a breathing room and offer a temporary solution (for 5 years) but it’s not a permanent solution. (Read more about student loans and bankruptcy here.)
 

Price of a cup of coffee in San Francisco

Not bankruptcy related but it’s interesting to me that so many people found our website while searching for coffee! I love coffee but I limit myself to one (sometimes two… or three) cups a day. I used to put a lot of sugar and fatty cream into it but after I quit Starbucks, I started drinking it black.
 

Written by San Francisco Bankruptcy Lawyer, Jeena Cho

Can bankruptcy help with student loans? – This is a frequent question I get and a common situation. Most unsecured debts such as credit cards are dischargeable through bankruptcy. However, student loans, both federal and private have an immunity card. In general, student loans will not be discharged after bankruptcy. So, what should you do if you have too much student loans and do not have any realistic hope of ever repaying? There are a few options to consider.

1. Contact the lender. Most student loan programs have either deferment or forbearance programs where you can temporarily suspend repayment of your debt. In my experience, private student loans either do not have such programs or makes it almost impossible for students to qualify for such programs. It’s important you reach out to the lender as soon as possible. Many of them will refuse to work with you once you’re in default.
2. Go back to school. This may sound like a crazy idea but most student loans will allow borrowers to put the loan into deferment or forbearance if you go back to school and take more than a certain credit hour. Many local community colleges have nominal fees per credit and it may be one option to keep the student lenders at bay.
3. File for Chapter 13 bankruptcy. Bankruptcy won’t get rid of student loans but it can stall the repayment. By filing for Chapter 13 bankruptcy, we may be able to lock you into a manageable repayment amount for up to 5 years. The downside? The interest and penalties (if the minimum payment is not met) will continue to accrue during your Chapter 13. It’s not a great solution but it may be the only one available to many people whose wages are being garnished or for those who are unable to work out a reasonable repayment amount. At the end of the 5 years, hopefully your financial situation has improved and you can make the full monthly payment. Otherwise, you can start a new Chapter 13 plan.
4. Exploring “Hardship Discharge.” Student loans are dischargeable if you bring what’s known as an adversary proceeding in bankruptcy court. This is where you bring an action against the student loan to show that you have an undue hardship. In order to win, you would have to show that there is no hope of you ever being able to repay this debt. It’s an extremely difficult burden to meet and very few cases are ever granted. Additionally, you would have to pay an attorney to bring this action, which will also be very costly.

There is at least one legislation out there which would make private student loans dischargeable, which would be a welcomed relief to those who have overwhelming student debts.

Disclaimer: Unfortunately, it is impossible to give legal advice over the internet, no matter how well researched or written. Before relying on any information I give, contact a lawyer to discuss your particular situation. I am a San Francisco bankruptcy attorney. The information given is based on California law.

NYT article by: By RON LIEBER
Published: June 4, 2010

If you run up big credit card bills buying a new home theater system and can’t pay it off after a few years, bankruptcy judges can get rid of the debt. They may even erase loans from a casino.

Read more.