While a 3.4% interest rate is great for new and current students, it doesn't help the thousands of former students currently carrying an average of at least $25,000.00 in student loan debt - if not substantially more. Since 1998, federally subsidized student loans have been non-dischargeable in bankruptcy, except in extreme situations of death or disability. In 2005, private student loans were also made non-dischargeable. So, an individual swimming with a student loan that is the same size as a house note has no option but to continue paying.

Allowing individuals with high student loan to debt to use bankruptcy as an option - as an individual can in almost any other type of debt - would end some of the horror stories.  Take the recent story of two schoolteachers that filed Chapter 7 bankruptcy. They lost their home and their car, but are still in dire financial straits due to their student loan debt.

Rep. Hansen Clarke introduced the Student Loan Forgiveness Act of 2012 in Congress recently. Hopefully, this proposed legislation will gain traction in Congress to allow those unable to manage student loan debt to have some option, like nearly every other debtor, to manage the debt and continue to live a normal lifestyle.

While the automatic stay is important, some of the big creditors don't always listen. However, the bankruptcy judges in the Middle District of Florida want these creditors to wise up. Judge Arthur Briskman recently sanctioned Bank of America and ordered them to pay a debtor $12,500.00 for calling the debtor 38 times after filing for bankruptcy. $2,500.00 of this award was for the debtor's attorneys fees.

Bank of America failed to even appear for the evidentiary hearing regarding this matter. They had received a copy of the discharge, but still continued to harass these debtors. 11 U.S.C. 524 governs the limited actions that a creditor can take after the order of discharge. Bank of America blissfully ignored this rule, despite receiving notice from the bankruptcy court. It is a breath of fresh air that Judge Briskman punished Bank of America for their action. Bankruptcy relief is a right in this country, and there are safeguards in place for a reason. Hopefully, these sanctions will be a lesson to large creditors to back off after an individual files and receives a discharge in bankruptcy court.

Now, just because you scored a refund from the IRS does not mean that the Trustee can jump in and take the refund. There are many steps a person can take to exempt the tax refund money or keep it from exposure to the trustee and the debtor's creditors. An experienced Chapter 7 bankruptcy attorney can assist in these matters. If you can wait to file a bankruptcy, it is often recommended to wait until later in the year to file for bankruptcy. The Trustee does not expect you to not spend the refund. If you use your refund to pay for food, mortgage payments, medical bills, maybe even attorneys fees for the bankruptcy, then the debtor is fine. However, avoid paying back your aunt for that loan you took from her last year, or you may end up having to pay the bankruptcy court that money back.

What if the refund is sitting in your bank account for a rainy day or as an emergency fund? There are certain exemptions that debtors receive so that debtors can keep their property after a bankruptcy. Depending on the amount of assets you already have, you may be able to exempt this refund amount and avoid creditors from being able to touch it.

Whatever decision you make, if you are thinking about filing for bankruptcy, it is recommended that you talk to a bankruptcy attorney regarding the tax refund issue and any other questions you may have.

The issuing government agency will look at the factors leading up to the bankruptcy. These factors include determining whether the bankruptcy was caused by financial irresponsibility or factors outside the employee's control, such as unpaid medical debt from a recent surgery. The government may have more of an issue with individuals with gambling debts as opposed to a mortgage that has doubled in monthly cost, but it likely will not be a huge.

In fact, having a large amount of outstanding debt may have more impact on a security clearance than a bankruptcy would. Bankruptcy is a a federal government approved means of dealing with significant debt and bankruptcy may actually be seen as a sign of financial responsibility.

Lastly, as a further note, Section 525 of the U.S. bankruptcy code prohibits governmental units from revoking or suspending a license or discriminate with respect to employment against a person that filed a bankruptcy. While there are always cons to filing bankruptcy, the loss of a security clearance and possibly employment likely is not one.

The most common (and helpful) deduction is a mortgage payment. Many homeowners, including those who walked away from their homes, would deduct their mortgage payment to qualify for a Chapter 7. The Middle District of Florida has called this practice into question. In a new Order, the bankruptcy court ruled that a homeowner who elects to surrender his property and has moved on and lives in a new home is not intending to actually make these payments, so he cannot use them to qualify under the Means Test.

The debtor argued that his mortgage payment is still a valid deduction because he has an enforceable contract with the bank. The Court ruled, however, that a debtors cannot claim an expense that they will not actually make to qualify under Chapter 7. The Order leaves some room for interpretation and says the ruling is fact specific. This debtor declared that he intended to surrender the property. He was also already living in a rental property. The Order does not address the issue of homeowners still living in their properties that may file for bankruptcy to open up the opportunity of entering into a loan modification or reaffirmation agreement that they can afford. The case in question is the following: 6:11-01403 . Hopefully, the Court's ruling won't impact homeowners that turn to bankruptcy in hopes of getting back on track on a mortgage that has started to fall behind.

What does this have to do with the past six months of income? The court takes 6 months of actual income and multiplies it out over the course of the year. Say in December you get a holiday bonus and your income jumps up a few thousand dollars. If you are close to qualifying, it is possible that this boost income may make it that you no longer are eligible.

If you are curious as to who qualifies for a Chapter 7 bankruptcy, consult with a bankruptcy attorney who can help you determine which Chapter of bankruptcy is best for you. Don't be concerned about the monthly shifts in income - just remember that even a slight boost can make an impact on an otherwise straightforward bankruptcy filing!

Harrisburg, with a population of about 50,000, is struggling to pay for essential services and to pay back a debt of $300 million related to an incinerator project that has yet to yield cash.

Harrisburg's mayor, the state legislature, and PA governor dispute the legality of Harrisburg City Council's decision to file the bankruptcy. A hearing is set for November 23 regarding the legality of the filing.

The action immediately generated conflict between the City Council and the mayor, Linda Thompson, the state legislature, and the governor, who dispute the legality of the Council's action in filing for bankruptcy. The governor may also need to get approval from the bankruptcy court to take over the city. Under the emergency bill, the governor can declare a fiscal emergency if it is determined that the city is insolvent or near insolvency, unable to provide vital services and has not adopted a fiscal recovery plan.

Whatever the extent of Harrisburg's troubles really are, this recent news is only troubling that bankruptcy effects everyone from the small to the large. Even a city can make attempts to file for bankruptcy to protect itself. Hopefully, Harrisburg gets on a plan to recover and keep functioning at its best for its citizens.

From July 2010 through June 2011, Florida was number 3 in the number of filings, with 59,199 filings. The number one slot - the Central California District - had 145,741 filings, which is a huge difference. Nevertheless, pushing nearly 60,000 filings is a clear sign that Florida is still hurting in the current economic climate.

The Middle District of Florida comprises over half of Florida's 67 counties at a total of 35 counties, which includes Jacksonville, Orlando, Daytona, Tampa, and Fort Myers. Bankruptcy filings have slowed down likely due to the slowdown in foreclosure filings. With foreclosure filings down based on allegations of robosigning and inconsistent documents, the need for bankruptcy has diminished some. With the amount of homes lost to foreclosure down, there isn't as much of a need to file for bankruptcy.

At the current pace, 2011 may end with around 55,910 filings, which is down about 11,000 from last year. However,with foreclosure filings on the rise again, it is likely that bankruptcy filings may pick up, too. If a homeowner is facing foreclosure with a home upside down, there is not always reprieve from the possibility of a huge judgment being entered. Bankruptcy can sometimes often protection in this scenario. Whatever way the current financial setting turns, it will likely impact bankruptcy filings - either for better or for worse.

Specifically, my experience in one of our other practice areas, foreclosure defense, is what gives me doubt about a true recovery to the economy. It is also true that locally, in Central Florida, foreclosure filings are also down. However, this may not be because fewer homeowners are going into foreclosure. More likely, the decreased filings are because banks are perfecting their foreclosure practices and have thus slowed down their filing of foreclosure cases to assure more quality in the process. I think that soon foreclosure filings will pick up again and then bankruptcy filings will also rise.

That is exactly what happened with a bankruptcy trustee down in South Florida. Marika Tolz, 65, was sentenced to more than 6 years in federal prison for appropriating assets within her control. The estimated losses due to her fraud come in at approximately $2.4 million. I told you trustees have a lot of control and power and as they say "with great power comes great responsibility."

This first story is about a Florida law firm that went under for a ponzi scheme. One of the partners of this firm was convicted of the fraud and is now in bankruptcy for the purpose of repaying creditors. The story is basically about some recent actions that the trustee has taken to help recover some of the money spent by the debtor. Click here for the story.

The second story is a continuation from last week discussing more in depth what led to Borders / Waldenbooks to file for bankruptcy protection and ultimately fail as a company. Click here for the story.

The last story is somewhat a companion to the Borders story. This article ranks the 10 largest bankruptcy filings in U.S. History (Hint: most of them are in the last ten years). Click here for the story.

The goal and hope when Borders filed for Chapter 11 bankruptcy protection was to figure out a way to pay creditors and allow the business to remain viable. As those plans have failed, Borders will basically sell all of its remaining assets to pay off its creditors. I previously posted a story about Borders and the impact of a major retailer filing for bankruptcy. The point I made then and will make again here is this: it is the average worker who loses here.

Borders, at present, still employs roughly 10,700 people in the remaining 399 stores. Now those people will be without work and may face personal bankruptcy of their own. Besides those actual employees of Borders losing out, people who did business with Borders, like those who sold them inventory, truck drivers, and other workers who serviced Borders stores will have less job security. When a retailer as large as Borders closes down it has a ripple effect through the industry. While we can analyze how this came about, we must not forget how this harms so many good, hard-working Americans like ourselves.

Regardless of how you feel about the topic of same-sex marriage, it is interesting to see that the federal government will now back off its position of trying to have same-sex couples petitions dismissed from bankruptcy court. Before it seems that the U.S. Trustee's office, which is part of the Department of Justice, decided to stop trying to dismiss these cases. I have linked the story HERE so you can read more in-depth.

The first story is about a woman in Florida who bought some dresses worn by the late Princess Diana shortly before the Princess' death many years ago. The woman is now filing for bankruptcy and plans to use the sale proceeds from the dresses to repay creditors.

The second story is a story that traces some of the root causes of the financial meltdown and mortgage foreclosure crisis. Since it is pretty well documented that the mortgage foreclosure crisis has driven a number of people to file for bankruptcy, I thought this article would be of particular interest to others as it was for me.

What I am really getting at is what could be more American than a professional baseball team filing for Chapter 11 Bankruptcy?! Well as luck would have it, a professional baseball team filed for bankruptcy today. The Los Angeles Dodgers filed because they were expected to have difficulty making payroll on June 30th and wanted to avoid being taken over by Major League Baseball.

Essentially, now the Dodgers organization will seek to force Major League Baseball to accept certain revenue generating endeavors that the Dodgers seek to repay creditors. Specifically, the Dodgers will try to convince the Court to force Major League Baseball to accept certain media deals, like selling television rights, to make the Dodgers solvent again.

I think I am just happy to be kind of sort of writing about sports this week. Have a Happy Fourth of July weekend!

The thing I think most would find interesting about this story is that this man hid 80 of about 2000 pieces of art that he owned and the bankruptcy trustee is still looking for the art well after his death. If anything, this should illustrate that trustees will find what you are trying to hide. So don't lie in your petition.

It is easier when the thing you may lose is a vehicle or a sum of money in a bankruptcy. However, for a small business owner, the loss may be a business and the ability to generate income from that business. That potential loss can sometimes be enough to prevent a person from filing a Chapter 7 Bankruptcy at all. The problem that many clients face is the prospect of either being prisoner to their debts or forfeiting the assets of a business that they personally built. For many the test of whether to file is tied to the probability of the business remaining viable for long enough to bring financial woes under control.

However, most times a client’s business is what created the financial trouble in the first place. The silver lining here is that not every business is necessarily going to be lost just because an owner files for Chapter 7 Bankruptcy protection. If a business doesn’t have tangible assets, oftentimes that business will not be of any benefit to one’s creditors. If that is the case, then it is possible to keep a small business even after bankruptcy.

This article from the Huffington Post gives a pretty good historical background for why bankruptcy itself made its way to being an enumerated power for Congress to regulate. Basically, the concern came from British treatment of bankruptcy debtors back in the 18th century. There was actually a law in jolly-olde England that allowed debtors to be hanged for not paying debts. I have clients that are still concerned about debtors' prison, but who would think you could actually be hanged for not paying debts in full?!!?! I have previously discussed client moral objections to bankruptcy, but I just think this article is a good read for anyone interested about the topic.

What is this nefarious type of debt, for which there is no cure in bankruptcy? Government Backed Student Loan Debt.

That's right, our American dream of making our way in the world by getting an education and then securing our piece of the pie is actually the new debt crisis. As I am sure most people are aware, the country, and Central Florida in particular, has been in a recession for the last few years. Well, many young people have found themselves newly minted with a higher education, and unable to find work to pay back their student loans. This has led to large percentages of young borrowers to default on this debt. Even more troubling is that, because much of this debt stays with a person until they pay it off or die, people will be carrying around this debt for the foreseeable future.

The latest tally places student loan debt at just under $1 trillion, and ahead of credit card debt, for the first time ever. My personal experience is that in many of bankruptcy petitions I file, my clients have almost as much,if not more, student loan debt as any other type of debt. It is certainly something to keep in mind when making the ultimate decision to file a bankruptcy.