-“I won’t have to pay for my student loans anymore if I file for bankruptcy”
This, unfortunately, is false. Many people will hear or read on the internet that it is possible to discharge, or no longer be responsible for, student loans when they file for bankruptcy. While in the technical context of the bankruptcy code this is true, it is virtually impossible to actually qualify to have your student loans discharged. This is in large part due to the reforms made to the Bankruptcy code in 2005. Because many people were abusing the bankruptcy system, changes were made to also protect creditors and lenders. So, to qualify to discharge your student loans you must meet a three part standard. First, you must show that you are in a state of permanent disability or poverty, next you must show that there is no possible way this state will ever change in the future, and finally that you have made a good faith effort to pay back your student loans. To many, this section of the bankruptcy code seems to be a Catch 22, in that if you are in a state of poverty, how can you possibly be able to pay back any of your loans. While there are some people who have managed to discharge their student loans, they are of only a hand full of people who have managed to do this. It is extremely uncommon to qualify to do this. In the overwhelming majority of cases, debtors will still be responsible for repaying their student loans post-filing bankruptcy.
-“I won’t be able to keep my house”
This is will actually depend on a couple of things, including what type of bankruptcy you are interested in filing, and if you are current on your house. If you are current on your house and do not have a large amount of equity in it, you will most likely be able to file a Chapter 7 or a Chapter 13 bankruptcy. However, if you are behind on your house and still want to keep it, a Chapter 13 bankruptcy would most likely be the better option for you. A Chapter 13 bankruptcy will allow you to take any mortgage arrearage and pay that through a chapter 13 plan. This will break up the arrearage amount over the length of your plan (3-5 years) and make the amount owed on the home more manageable.
-“can I keep my car?”
Cars are treated very similarly to houses in bankruptcy. If you have a loan on your car, and are current on your car payments, you should be able to do a Chapter 7 or a Chapter 13 bankruptcy (assuming you qualify for either in all other areas). However, if you are not current on your car and would like to keep it, a Chapter 13 may be the better option for you.
-“Will filing for bankruptcy stop a garnishment?”
Filing for bankruptcy will stop a garnishment of wages due to the protection debtors receive from the automatic stay that goes into effect immediately upon filing. If you are going to have a garnishment starting but it has not yet started, filing a bankruptcy will stop the garnishment. If you have an ongoing garnishment, the filing will also stop it from continuing. If your garnishment is ongoing, it may take a couple of weeks before it actually stops being pulled from your check, due to processing time and when your pay periods fall, but anything garnished post filing has to be returned to you.
If you have questions regarding your situation, and how a bankruptcy would work for you, contact a St. Louis Bankruptcy attorney today!