Another mistake people make when filing bankruptcy is leaving money in a bank that they owe money too. All banks have written in fine print, that if you fail to make timely payments, they can go into your checking account and take the money.
Yet another, and even more common mistake is treating one creditor different from the others. For example; your mom loaned you money to help you out when you needed it. You sell your house, because you can not afford it anymore, and then repay your mom the $5000 she loaned you six months, all before filing. The trustee has the right to acquire the money from her and distribute it evenly between her and the other creditors.
And last, but certainly not least, do not go buy a new car, big screen TV, furniture, or any other big-ticket items, because you will have to pay for them. These are just a few of the things that can make a bad thing worse. A bankruptcy is there to help us when things have gone bad. It enables us to put these bad times behind us in order to move forward.
What happens with student loans? Many people ask this question when they go through bankruptcy. Student loans have to be listed, because, by law, all debts that you owe have to be listed. What you have to do is contact the student loan services and make arrangements for deferment while you are in bankruptcy. If the trustee finds out that you have been making payments to your student loan, they will make you pay back your other unsecured debt. For example, if you paid 25% of the student loan, then you would have to pay 25% to all your other unsecured creditors. Student loans can not be discharged through bankruptcy. You will have to pay the loans back when you have completed the case.
Many people think that student loans can be paid through the bankruptcy. They were able to be paid in the past, but laws have since changed. People who filed their cases back in 1999 had their student loans paid through the bankruptcy, but end up having questions about why they still owe on the student loan. The misunderstanding is that the trustee did pay the student loan but did not pay any interest on the loan, so over the three to five years, it has still accrued interest, and will continue to do so until it is completely paid off.
If you have additional questions about the student loans, contact your attorney’s office before you do anything.
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