Tag Archives: student loan debt

Emergency fund do I really need one?

Recently on our bankruptcy forum a user asked, “I have heard for years that I need a three to six-month emergency fund which can cover my living expenses., I have very high student loan debts, a $10,000 credit card bill and secured assets which are costing me a great deal of money. What are your thoughts? Should I pay off my debt or start to save for my emergency fund?”

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Wage garnishment will it continue during bankruptcy?

Recently on our bankruptcy forum a user asked, “I have $50,000 in student loans and I owe another $5,000 in child support. I have a wage garnishment to repay both of these debts. I filed for bankruptcy protection, but my wages are still being garnished for child support. Is there any way to stop the creditors from deducting money from my paychecks?”

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Can You be Discriminated Against for Filing Bankruptcy?

Under Title 11 of the United States Code, section 525, the law prohibits discriminatory treatment of debtors by both governmental units and private employers.

Sub-section (a) of the code states this in relation to a governmental unit: “a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.”

Sub-section (b) of the code states this in relation to private employment: “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.”

Sub-section (c) of the code deals with government and private units that operate student grants and loans. Basically, the law states neither government or private units can discriminate against anyone who has filed a bankruptcy or been a debtor under Title 11 or under the Bankruptcy Act. They cannot deny someone from getting a student grant, loan, loan guarantee, or loan insurance just because they were a debtor or filed for bankruptcy.

Although the law is explicit in regards to government and employer practices concerning discrimination, when it comes to private businesses like a bank, they can discriminate against you if you have filed for bankruptcy protection and want credit. In other words, they will most likely not give you a loan when they find out you have filed a bankruptcy, and if they do provide a loan, the loan will have a much higher interest rate.

Bankruptcy filings appear on your credit report for up to 10 years, and most businesses will check the reports before they extend you credit. This practice is currently legal and protects the rights of the creditors.

Landlords who lease or rent property to tenants may also investigate a potential tenants credit history. Since you are promised a place to live over a period of time and pay monthly, many landlords check your credit rating before signing a rental contract. If you have a bankruptcy on your record, some will not allow you to rent.

Filing for bankruptcy protection is your Constitutional right, and it can be a sound strategy for starting over, but it is also the right of private enterprise to refuse to extend credit to anyone they feel is a credit risk.

Bankruptcy laws can be complicated. Talk to a bankruptcy lawyer before filing for bankruptcy protection. If you need relief from the stress of debt and you live in or around the metropolitan area of Springfield, Massachusetts, contact us at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.