Federal Student Loans – Repayment Plans for Financial Hardship

Borrowers whose income is low or unstable, or who have low to moderate income with very high student loan debt may be eligible for certain Repayment Plans for Financial Hardship.

These repayment plans include:

• Income Contingent Repayment Plan (ICRP)
• Income Sensitive Repayment Plan (ISRP)
• Income Based Repayment Plan (IBRP)
• Hardship Repayment Plans for Perkins Loans

If you have a Federal Direct Loan, except for PLUS loans, you can choose an income contingent repayment plan. Payments on this type of plan can be as low as $0-5 per month. However, if your payment is lower than the accrued interest each month, the loan principal will continue to increase. After 25 years, the government will cancel the remaining balance on this type of loan, and the IRS will treat the canceled debt as income.

If you have a FFEL loan, you could qualify for an income-sensitive repayment plan. These plans base your payments on your annual income, family size, and total loan amount. Payments must cover at least the accruing interest and the loan must be paid off in ten years.

People with Direct loans and/or FFELs are eligible for income based repayment plans.  You cannot qualify for an IBRP if you are in default. These plans offer more flexible options than ICRP and ISRP plans, and your debt is eliminated after 25 years of payments. Payments can be less than the accruing interest.

 If you have a Perkins loan, your payments must be at least $40 per month. However, the school may extend repayment for another ten years, or allow additional extensions for people with prolonged illnesses or unemployment.

Contact your loan provider for further information about Hardship payment plans. If you would like to speak to an experienced attorney with regard to student loans contact R. Richard Croce, LLC.
Richard Croce - Rich@rrc-llc.com

Forbearance Agreement

When a borrower falls behind on their payments, or is having trouble making their payments, it is important for them to talk to their lender. Communication with a lender is extremely important, because a lender is more likely to work with you to resolve your delinquency if you explain your situation and are honest with them, instead of avoiding contact. A lender may have options such as a forbearance agreement that can be extended to you if you are struggling with your loan payments.

If a borrower goes into default on their mortgage loan, student loan or other type of loan, they may be eligible for a forbearance agreement. A forbearance agreement is typically an arrangement to postpone, reduce, or suspend payments for a specified amount of time. Interest still accrues during the time of forbearance, and is added to the principal balance of the loan at the end of the time of forbearance.

Forbearance agreements were designed for people with temporary financial woes that are inhibiting their ability to make their payments. The idea is to give borrowers time to resolve the problems that are causing them to fall behind on their payments. For example, if you are temporarily out of work, a forbearance agreement will give you time to find another job so that you can resume making your loan payments.
Richard Croce - Rich@rrc-llc.com

Federal Student Loans – Repayment Options

Student Loans are generally not discharged in Bankruptcy, but there are repayment options available. If you have a federal student loan, there are several repayment options available.

These options include:

• Standard Repayment Plan
• Graduated Repayment Plan
• Extended Repayment Plan 

The standard repayment plan is the plan offered by your lender. You will make loan payments for up to ten years. With this plan, your monthly payments are higher than in other plans, but your total number of payments is lower because you are paying less interest.

The graduated repayment plan is where payments start out low and increase throughout the repayment period, typically every two years. This option is a good choice for people who will be working in a profession where their income will increase quickly once they are established in their career.

An extended repayment plan is one that allows you to spread out your repayment over a period of up to 25 years, depending on the amount of your loans. In order to be eligible for the extended repayment plan, you must have an outstanding balance of over $30,000 on your loan. While your monthly payments are lowered on the extended plan, you will end up paying more in the end, due to additional interest payments.

Lenders also offer the ability to combine an extended repayment plan with a graduated repayment plan, allowing you to further lower your payments. However, your overall costs will be further increased, due to all the additional interest.

There are additional repayment options available for those who are having difficulty making their payments.

If you gave a federal Direct loan, except for PLUS loans, you can choose an income contingent repayment plan. Payments on this type of plan can be as low as $0-5 per month. However, if your payment is lower than the accrued interest each month, the loan principal will continue to increase. After 25 years, the government will cancel the remaining balance on this type of loan, and the IRS will treat the canceled debt as income.

If you have a FFEL loan, you could qualify for income-sensitive repayment plan. These plans base your payments on your annual income, family size, and total loan amount. Payments must cover at least the accruing interest and the loan must be paid off in ten years.

People with Direct loans and/or FFELs are eligible for income based repayment plans. You cannot qualify for an IBRP if you are in default. These plans offer more flexible options than ICRP and ISRP plans, and your debt is eliminated after 25 years of payments. Payments can be less than the accruing interest.

If you have a Perkins loan, your payments must be at least $40 per month. However, the school may extend repayment for another ten years, or allow additional extensions for people with prolonged illnesses or unemployment.

Contact your local provider for further information about Hardship payment plans.

If you fall behind your payments, or are having trouble making your payments, it is important for them to talk to your lender. Communication is extremely important, in order to resolve your delinquency and avoid default which will damage your credit options such as a forbearance and alternate repayment agreement which may be available to you if you are struggling with your loan payments. There are options such as a deferment, forbearance, and is added to the principal balance of the loan at the end of the time of forbearance.

Forbearance agreements were designed for people with temporary financial woes that are inhibiting their ability to make their payments. The idea is to give borrowers time to resolve the problems that are causing them to fall behind on their payments. For example, if you are temporarily out of work, a forbearance agreement will give you time to find another job so that you can resume making your loan payments.
Richard Croce - Rich@rrc-llc.com

Myths Concerning Bankruptcy

There are many myths and misconceptions concerning bankruptcy. Here are some of those myths, and the facts to help you understand bankruptcy more clearly.

Myth 1: Everyone will know I filed for bankruptcy. The truth is, unless you are running for office, or otherwise famous, it is unlikely that anyone will know you have filed bankruptcy besides your creditors. Bankruptcy is a public legal proceeding, and some local newspapers print the names of people in the community that have filed. But again, unless you are a public figure, it is unlikely to receive much attention.

Myth 2: If I file Chapter 7, all my debts will be wiped out. Truth: There are certain types of debts that cannot be discharged. These include child support, alimony, student loans, criminal restitution, and debts acquired as the result of fraudulent acts.

Myth 3: It is too hard to file for bankruptcy. Truth: It is not difficult to file for bankruptcy. It is even easier if you have the help of a good bankruptcy attorney.

Myth 4: Only deadbeats file bankruptcy. Truthfully, many people file for bankruptcy after a life-altering event such as a divorce, serious illness, or loss of employment. These people have tried to pay their bills, but have fallen further and further behind, and just need help to get a fresh start.

Myth 5: I will never be able to have good credit again. Fortunately, this is not true. Many lenders are willing to give you another chance, even quickly following a bankruptcy.
There are many other misconceptions about bankruptcy. If you have questions and reside or have a business in the State of Connecticut or Massachusetts, it is wise to consult with a Connecticut Bankruptcy Attorney in your area for further information and answers to your concerns.
Richard Croce - Rich@rrc-llc.com

Deficits of The Automatic Stay

In a certain instances, the automatic stay cannot help you. These occasions include the following:

• Certain tax proceedings. The automatic stay cannot prevent the IRS from auditing you, issuing a tax deficiency notice, demanding a tax return, issuing tax assessments and demanding payment of said assessments. However, the automatic stay will stop the IRS from issuing a tax lien or seizing your property or income.
• Support actions. The automatic stay does not stop any lawsuit against you seeking to establish paternity, nor lawsuits seeking to establish, modify, or collect child support or alimony.
• Criminal proceedings that can be broken down into criminal and debt components will be separated and the criminal component cannot be stopped by the automatic stay. 
• Loans from a pension. In spite of the automatic stay, money can be withheld from your income for repayment of loans from certain types of pensions, including most job-related pensions and IRAs.
• Multiple filings. If you already had a bankruptcy case pending during the previous year, then the stay will automatically be terminated after 30 days; unless you, the trustee, the U.S. Trustee, or a creditor asks for the stay to continue. Also, you must then prove that the current case was filed in good faith, and if a creditor has filed a motion to lift the stay during the previous case, the court will assume that you did not act in good faith, and it may prove difficult to receive the automatic stay in your present case. To often individuals and companies disregard the importance of consulting an experienced attorney and make hasty decisions or in many cases don't take any action. If you have property in the State of Connecticut or Massachusetts, be sure to get legal advice from a Connecticut Attorney.

Richard Croce - Rich@rrc-llc.com

What Can the Automatic Stay Accomplish?

The automatic stay can prevent utility disconnections – including water, electricity, gas, and telephone service - for at least 20 days. While prevention of utility disconnections is not typically a good enough reason to file bankruptcy, it can be one factor, especially for people in climates with severely extreme weather, and/or small children or elderly people in their home.

If your home mortgage is in danger of foreclosure, the automatic stay temporarily will stop those proceedings. However, the mortgage lender may be able to proceed with the foreclosure later, depending on what type of bankruptcy you are filing. An attorney can help you determine which type is best, and devise a plan to help you keep your house.

The automatic stay may be able to help you avoid eviction. New bankruptcy laws are making it easier for landlords to proceed with evictions, and if your landlord already has already filed a judgement against you before you file, the automatic stay will not affect the eviction proceedings, and the landlord can continue with the eviction as if you have never filed bankruptcy. Also, if your landlord claims you are damaging or endangering the property, or using controlled substances on the property, the automatic stay will not be in effect.

If you receive public benefits and were overpaid, the agency is typically allowed to collect the overpayment from your forthcoming payments. The automatic stay can prevent this collection.
Many people file for bankruptcy if their wages are garnished. Especially if more than one wage garnishment is imminent. The automatic stay stops garnishments immediately.
Richard Croce - Rich@rrc-llc.com

Automatic Stay

When you file for bankruptcy, the “automatic stay” will put an immediate stop to any lawsuits filed against you, as well as most actions against your property by creditors and collections agencies.

The automatic stay is often a dominant motivation for people to file for bankruptcy; especially in cases where they are at risk of foreclosure, eviction, being found in contempt of court for failure to pay child support, or losing necessary resources including utility services, welfare, unemployment benefits, or their job (due to wage garnishments).

The automatic stay can help with many problems including the following:

• Utility disconnections (including water, electricity, gas, and telephone service)
• Foreclosure proceedings
• Eviction proceedings
• Collection of overpayments of public benefits
• Multiple wage garnishments

There are also limits to what the automatic stay can do for you. The automatic stay cannot help in certain instances, including the following:

• Certain tax proceedings – however, the automatic stay does stop the Internal Revenue Service from issuing a tax lien and from seizing your property and income
• Support actions (child support and/or alimony)
• Criminal proceedings
• Loans from a pension
• Multiple filings

Also, creditors can sometimes sidestep the automatic stay by asking the bankruptcy court to lift the stay if it is not serving its proposed function. For instance, if you file for bankruptcy the day before your house is to be foreclosed, have no equity, and you cannot pay your mortgage debts, the mortgage lender will likely go to the court and ask for authorization to proceed with foreclosure proceedings. The court would likely grant permission. This information can be very overwhelming and it is always advised to seek professional advice from an experience Connecticut Law Firm should you reside or have a business in the State of Connecticut.
Richard Croce - Rich@rrc-llc.com

How Can I Cure a Delinquent Mortgage?

When dealing with a delinquent mortgage, you need to investigate the options that are available to you. Your goal is likely to find a way to cure the delinquency and bring the mortgage current. If this is your aim, Chapter 7 bankruptcy or Chapter 13 bankruptcy may be the best plan of action for you. In accordance with the U.S. Bankruptcy Code, you can file for bankruptcy to cure a delinquent mortgage and legally protect yourself from foreclosure.

The first step is to find out which Chapter of bankruptcy is best for your financial situation. Chapter 13 helps you to contrive a repayment plan, while Chapter 7 discharges most, or even all, of your debts. When you file for either of these bankruptcy Chapters, you will notate that you intend to cure your delinquent mortgage through a reaffirmation agreement with your mortgage lender during the bankruptcy proceedings.
Contact your mortgage lender in writing and let them know you intend to reaffirm your mortgage loan through bankruptcy proceedings. When you reaffirm a loan, you retain possession and ownership of the home/property and the mortgage loan is adjusted to reflect a current status, and you make an agreement to keep the account current in the future.

The mortgage lender can prepare a reaffirmation agreement, or you can acquire one from the bankruptcy court trustee. It is very important to follow the terms of your reaffirmation agreement and keep the mortgage current and make your future payments in a timely fashion. Don't ever forget to consult with a bankruptcy attorney before making any decisions. If you own a business or reside in the State of Connecticut, be sure to contact a Connecticut Law Firm that specializes in bankruptcy.
Richard Croce - Rich@rrc-llc.com

Chapter 13 Payment Plan Calculator

If you need to file for bankruptcy, but want to retain your assets, Chapter 13 bankruptcy may be a good option for you. Chapter 13 is a good option for people who have a consistent, reliable income. After you file a petition for Chapter 13, you must file a repayment plan within 15 days. Calculating your monthly payments under a Chapter 13 repayment plan can be complicated. First, you need to determine whether you have “priority claims” debts according to the Bankruptcy Code. Priority debts include, but are not limited to, spousal support and child support. These debts must be repaid in full and have payment priority over other types of debt.

Care must be taken when calculating Chapter 13 repayment plans. Each state may use a slightly different calculation for repayments plans, and the median income for each state is different. Chapter 13 repayment plans typically are set up for a three year or five year plan, and your disposable income each month will help to determine how much your payment will be each month, as well as the length of your repayment plan.

There are Chapter 13 repayment calculators available online. While these calculators may be helpful in getting a ballpark idea of your payments, they should not be considered as a substitute for legal advice from a bankruptcy attorney. A bankruptcy attorney in your state is the most reliable source for determining your monthly repayment amount in a Chapter 13 bankruptcy case.
Richard Croce - Rich@rrc-llc.com

Chapter 7 Means Test

The Chapter 7 “means test” determines whether you are eligible to file Chapter 7 Bankruptcy. The means test is a formula that is designed to stop people with high income levels and/or low monthly expenses from filing Chapter 7 bankruptcy.  The test was designed to ensure that Chapter 7 is only used by people who are truly unable to repay their debts.

Before taking the means test, you can determine if your income is less than the median income for your household size in your state. If your income is lower than the median income level, you are eligible for Chapter 7 bankruptcy and do not have to take the means test. If your income is higher than the median income level, you have to take the means test to see if you are eligible to file Chapter 7 bankruptcy.

The basic formula for the means test involves deducting specific monthly expenses from your average income for the six months preceding your bankruptcy. This formula will determine your monthly “disposable” income. If you have a high amount of disposable income, you are unlikely to be eligible for Chapter 7 bankruptcy. Filers with higher income, and who fail the means test, may be eligible for Chapter 13 to repay part f other debts, but are not eligible for Chapter 7 which completely eliminates debt altogether.

You can find online versions of the means test to see if you may be eligible for Chapter 7. These tests may not always be accurate, and should not be substituted for legal advice from a bankruptcy attorney.
Richard Croce - Rich@rrc-llc.com

Keeping my home and my car after a Bankruptcy filing

One of the first questions a person typically asks when considering bankruptcy is “Will I lose my house?” The next question is often “Will I lose my car?” Depending on the Chapter of bankruptcy filed, what state you live in, and many other factors, the answer may vary. If you are considering retaining a bankruptcy attorney, these are questions he or she will be able to help answer.

There are instances where you would not be able to keep your home as well as cases where you would be able to keep your home. Also, there is the possibility that even if you lose your home, or are forced to sell the home, you may not lose the equity. 

Again, there are options that an attorney can help you sort through.

In the case of vehicles, there are also different situations that affect the outcome. If you own antique automobiles that are paid free and clear, and that are worth a lot of money, you will probably not be allowed to keep them. They will likely be liquidated to pay your debts. 

On the other hand, if you have a car that you still owe money on, you will likely be able to keep it if you can continue to make the payments. Likewise, a leased car has no equity and you will need to continue to make the payments on said vehicle.

Your situation is unique and there are often no clear cut answers to these questions. A bankruptcy attorney is qualified to help you find the best solution for your circumstances and can walk you through the best options for your individual bankruptcy case.

Hope this helps!
- Richard Croce -  Rich@rrc-llc.com

Rebuilding Credit through Loans and Retail/Gas Credit Cards

You may be able to apply for loans soon after your bankruptcy proceedings have ended. As with credit cards, you may be able to apply for secured or unsecured loans. The procedures for applying for a secured loan are very similar to applying for a secured credit card. Also, the procedures for applying for an unsecured loan are very similar to applying for an unsecured credit card.

Credit cards from retail stores and gas companies are another option for rebuilding credit. Many department stores, hardware stores, office supply stores, electronics retailers and gas stations now offer their own credit cards. However, these cards have become more difficult to acquire over the past several years. You may have to reestablish your credit through a secured credit card, unsecured credit card, secured loan or unsecured loan before you are eligible for retail store credit cards. 

One main reason why acquiring this type of card has become challenging is that even though numerous retailers offer credit cards, most of their credit card transactions are processed through only a few key lenders. A considerable majority of retail stores use Citibank, GE Money Bank, Chase Bank, HSBC and WFNNB to process their credit transactions. If you are already in the system of one of these major lenders, a new application may red flag a formerly delinquent account, further damaging your credit if you are denied a new credit line. Therefore, retailer credit cards should not be your first avenue for rebuilding your credit score.

It is always advised to speak with an experienced bankruptcy attorney to clarify any doubts about the pros and cons concerning bankruptcy proceedings. 

Useful Information to Help Re-Build Your Credit
Your Rights: Credit Reporting
Credit Cards & Consumer Loans
Credit Reports & Scoring
Free Credit Reports 
Hope this helps!
- Richard Croce -  Rich@rrc-llc.com

Unsecured Credit Cards for Rebuilding Credit after Bankruptcy

You truly can have excellent credit again after a bankruptcy. You can have a credit score of 750 even before the bankruptcy mark falls off your credit report if you begin working hard on your credit score immediately after your bankruptcy proceedings are over. Once you receive the discharge notice from bankruptcy court, you can show this discharge paperwork to creditors and you may be offered new credit lines.

After filing for bankruptcy, you will likely start to receive numerous credit card offers. Some will be unsecured, which means you do not have to give the lending institution any money in order to open the credit card. When opening a new credit card, the higher the limit, the better it can be for your credit score (or worse, if you fail to keep the balance low). 

As with secured credit cards, you must be careful of upfront fees and also find out if the lender will report your credit card activity to all three major credit bureaus - Experian, Equifax and TransUnion.

With an unsecured credit card, you should be able to request and receive a credit line increase every 12 months. 

Also, you should try to avoid carrying a balance on your cards. The fastest way to improve your credit score is to only use the card if you can pay it off in full each month or within a few months. It's always great to speak o an experienced attorney who understands the pros and cons.

Richard Croce - Rich@rrc-llc.com

Secured Credit Cards for Rebuilding Credit after Bankruptcy

If you work hard, you can have excellent credit again after a bankruptcy. Even before the bankruptcy mark falls off your credit report, you can have a credit score of 750 again, if you begin working hard on your credit score immediately after your bankruptcy proceedings are over and you receive the discharge notice from bankruptcy court. You will need to show this discharge paperwork to creditors before you will be offered new credit lines.

One of the easiest ways to start reestablishing credit is with a secured credit card through a local bank or credit union. A “secured” card means that you give the bank or credit union an amount of money to hold, and they give you a credit limit equal to that amount. Unfortunately, many secured cards have extremely high up-front fees to open the credit line.

Before opening a secured credit card, you should ask whether the bank will report the card to all three major credit bureaus – Experian, Equifax and TransUnion. You should only open a secured card with a bank or credit union that reports your activity to all three of these bureaus. You should also find out how soon you can increase your limit on the card. Some banks will allow you to have secured cards up to $10,000. You would have to deposit the amount of money to increase your card’s limit, but the higher the limit and lower the balance, the faster you can improve your credit scores.

You should also be sure to find out if the bank or credit union will ultimately give you an unsecured credit card. Many banks or credit unions want to see at least one to two years of good payment history before they will offer an unsecured credit card. They should provide this information prior to opening the card. Be sure to consult a bankruptcy attorney to find out what are your options.

What are the Benefits of Filing Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is sometimes referred to as a wage earner's plan. Chapter 13 bankruptcy allows a debtor with regular income to offer a repayment plan to repay debt in installments over the course of three to five years.

If a debtor’s current monthly income is less than the state median where they reside, the plan will typically be set in place for three years. If their income is more than the applicable state median, the repayment plan is typically set up for five years. A repayment plan cannot exceed five years. As long as the debtor complies with the repayment plan, creditors are forbidden by law from starting or continuing collection attempts.

One of the most significant benefits of filing Chapter 13 is the opportunity to save your home from foreclosure. Chapter 13 gives a debtor the opportunity to make their delinquent mortgage payments over the term of their plan, while making current payments. Another benefit of Chapter 13 is that it has a special provision that protects co-signors. In chapter 13, the debtor makes planned payments to a trustee who distributes payments to creditors. Creditors are not allowed to have direct contact with t debtors while under chapter 13 protection. A no cost consultation with an experienced Bankruptcy Lawyer in CT RRC-LLC can help you decide if Chapter 13 Bankruptcy is best for your situation.

What are the Benefits and Advantages of Filing Chapter 7 Bankruptcy?

The main purpose of filing bankruptcy is to give deserving debtors an opportunity for a fresh start Chapter 7 bankruptcy is the most common form of bankruptcy filed in the United States. Businesses and individuals can file Chapter 7 of the United States Bankruptcy Code. The Chapter 7 filing process involves liquidating nonexempt assets and distributing the proceeds to creditors in accordance with the provisions of the U.S. Bankruptcy Code. In keeping with providing deserving debtors with a fresh start, the Bankruptcy Code allows you to keep certain exempt property.

The benefits of filing a chapter 7 petition include the following:

•    Stop harassment from creditors
•    Stop all collection efforts from creditors
•    Halt foreclosure proceedings temporarily; which may give you time to negotiate a modification to your mortgage or find an alternative to foreclosure
•    Discharge eligible debts, which may, among other things, enable you to modify mortgage debts
•    Debt can be discharged in a relatively short amount of time, since Chapter 7 proceedings take only about three to six months to be completed
You should consult with an attorney before filing a petition under chapter 7, or any other chapter of the Bankruptcy Code. You should also be aware that debt counseling or out of court agreements may be an alternative to filing bankruptcy. A no cost initial consultation with an experienced Connecticut Bankruptcy Attorney, RRC-LLC, can help you decide which route is best for your situation.