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Student Load Debt

We are seeing an increasing number of individuals coming in for bankruptcy consultations because of onerous student loan debt. Many of these people incurred the loans in good faith assuming (often relying on questionable statistics provided by school officials) that when they get their degree they will be able to get a job. Unfortunately in this bad economy many times new college graduates cannot find a job that pays well enough to cover living expenses and pay student loans.

While student loans are almost never discharged (wiped out or eliminated) in bankruptcy, filing a chapter 13 bankruptcy case may provide relief by giving the filer a 3-5 year break from paying on the student loans. While in chapter 13, the student loans are paid through a reorganization plan, and the lender cannot garnish wages or intercept tax refunds during the case. In addition, for those who qualify chapter 7 bankruptcy may eliminate other types of debts, such as credit cards and medical bills, freeing up income to pay student loan payments.

If you would like learn about the bankruptcy process or discuss your particular situation with an experienced Texas Bankruptcy Attorney, please schedule a free initial consultation by calling us toll free at 800.215.9089. If you prefer, you can also fill out our intake form and we contact you to schedule a consultation.

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It has just become a little easier to file Chapter 13 and you can keep just a little more in Chapter 7


On April 1 there were a few of small changes in bankruptcy law most of which do not affect that many people. On April first every three years certain amounts in the Bankruptcy Code automatically increase based on the Consumer Price Index.

One change that helps some consumers is the increase in the unsecured maximum debt limit in Chapter 13 from $360,475 to $383,175. Particularly some self-employed individuals may now be eligible to file Chapter 13 as the unsecured debt limited pushed upward.

Chapter 11 debtors should be aware of a bad change because the burdens of small business status now come for debtors who owe less than $2,490,925 rather than $2,343,300. Watch out because small business status used to be optional prior to 2005 but now it is more of a curse than a blessing and it is mandatory rather than optional.

The one change that is likely to affect the most debtors is the increase in the amounts under the federal bankruptcy code exemptions. The homestead exemption went up by $1,350, the automobile exemption went up by $275, total household good amounts by $725, jewelry by $100, tools of trade by $125, life insurance policies by $325, and personal injury claims by $1,350. Remember that married couples filing jointly can double the amounts and that very few people filing in Texas ever have to give up anything to the Chapter 7 trustee.

Also those who have owned their home less than about 4 years (as long as you lived in Texas two years before filing) now enjoy a $155,675 cap on their homestead exemption as opposed to the old $146,450. Most people who are our clients at Bailey & Galyen do not have that much home equity though, so this is seldom a problem.

Bankruptcy is a complex combination of law and numbers, so email or call us at 1-800-215-9098 to make an appointment with our attorneys about your situation so we can help you!