Tag Archives: debtors
Debt Settlement Programs and Chapter 7 – Part 1 (Page 1 of 2)
When debtors find it difficult to redeem their outstanding dues, they generally try to find various ways and means to repay their debt. However, in many cases, this does not work out properly owing to various reasons, and debtors start thinking in terms of Chapter 7 and filing for bankruptcy. Availing the facilities offered by the statute can solve some of your immediate debt problems, but a certain amount of debt will remain even after discharging Chapter 7, and your credit ratings will carry a “flag” for at least seven years. Needless to say, it becomes almost impossible to avail large credit facilities in the future. Many companies offer debt settlement facilities in the form of debt settlement programs. One of the most common type of debt is credit card debt, in which cases the companies offer credit card debt settlement programs so the debtors can redeem their dues.
Generally, credit debt settlement companies work to provide customized solutions for individuals who have low monthly incomes and delinquency problems. The extent of debt settlement services vary from company to company. However, all companies provide certain features which remain common, and facilitate credit card settlement. A debt settlement company can provide options to redeem, and it is advisable to avail the facilities rather than file for Chapter 7 and bankruptcy. It is important to know exactly what Chapter 7 is, and what issues are associated with engaging in bankruptcy. The knowledge can be useful in deciding whether to file for Chapter 7, or avail debt settlement program to repay.
What does Chapter 7 signify? Chapter 7 of the Title 11 of the United States Code, dealing primarily with the bankruptcy code, fundamentally governs the process of liquidation under the bankruptcy laws of the United States government. Chapter 7 is associated with liquidation and bankruptcy issues. It offers the simplest and quickest way to file for bankruptcy – and the statute is available to all U.S. individuals, corporations, and partnerships. As per the statute, a trustee is appointed by the court to gather and sell all non-exempt property, and use the proceeds availed from the sale to pay off the outstanding dues to the creditors.
According to the law “Exempt property” is the property that the debtor is allowed to keep or retain on his or her own name. The facility is given to the debtors, so it becomes possible to “save” something for the sustenance and livelihood of the debtor’s family, as well as the debtor. The nature and kind of property exempted depends upon the state jurisdiction and its bankruptcy laws. It is advisable to consult a good attorney to have a clear understanding regarding exempted properties. According to the new law, it is mandatory to keep residence in a particular state for certain duration before availing the statute benefits and facilities. The new updation was enforced to prevent a debtor from “moving” to another state offering more generous exemptions, just prior to filing for bankruptcy.
About Student Loan Garnishment
What is Administrative Wage Garnishment (AWG)?
Administrative wage garnishment (A.W.G) is the process by which a Federal agency (Dept. of Education) or a third-party given authority by a Federal agency (the collection agencies) may, without first obtaining a court order, order an employer to withhold amounts from the debtors wages to satisfy a delinquent debt. Dept. of Education considers AWG to be a tool of last resort. Before using AWG, Dept of Education expect its representatives to have attempted to resolve the debt through voluntary means: attempting to secure the balance in full, an approved settlement, or installment payments that are “reasonable and affordable” based on the debtors individual financial circumstances. Some within the industry may consider this the guaranteed recovery method.
Representatives must consider whether the debtor presents a legitimate defense to the repayment of the debt(s), and whether AWG may be ineffective because the debtor is self-employed or a Federal employee, in which cases the collection agency will recommend litigation or a salary offset.
What is the purpose of AWG?
The purpose of an AWG is to recover the amounts for the Federal taxpayers without the cost of litigation fees. It was created to basically recover the unpaid debts arising from federally supported activities, which include student financial assistance.
What are the debtors rights in the AWG process?
-To be sent a notice 30 days prior to ED ordering the wage garnishment that explains EDs intention to garnish, the nature and amount of the debt obligation, and the opportunity to inspect and copy records relating to the debt, to object to garnishment to collect the debt, and to avoid garnishment by voluntary repayment on terms agreeable to ED.
-To have the opportunity to inspect and copy Department records pertaining to the debt. (A copy of the original signature left on the promissory note and a payment history)
-An opportunity to present evidence and argument and on any objection by the debtor to the existence, amount, or enforceability of the debt, and to obtain a ruling on the objection.
-An opportunity to prove that the garnishment of 15% of the debtors disposable pay would produce an extreme financial hardship.
-Having garnishment action withheld by filing a timely request for a hearing, until the hearing is completed and an adverse decision issued; Not to be discharged from employment, refused employment, or subject to disciplinary action due to the garnishment, and to seek redress in federal or state court if such action occurs; and Not to have any information provided to the employer but that which is necessary for the employer to comply with the withholding order.
-An opportunity for a hearing to present and obtain a ruling on any objection that garnishment cannot be used at this time because the debtor is now employed for fewer than 12 months after involuntary separation from the most recent prior employment.