Student Loan Debt

Massachusetts Bankruptcy Lawyers Anthony Bucacci and Robert Simonian (508)673-9500


In some cases, you can have your federal student loan discharged after declaring bankruptcy.

However, discharge in bankruptcy is not an automatic process.

What circumstances do I need to prove to have my loan discharged in bankruptcy?

You must declare Chapter 7 or Chapter 13 bankruptcy and demonstrate that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court. Your creditors may be present to challenge the request.

How do bankruptcy courts determine undue hardship?

The bankruptcy courts do not use a single test to determine undue hardship but may look at the following factors to determine whether requiring you to repay your loans would cause an undue hardship:

  • If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.
  • There is evidence that this hardship will continue for a significant portion of the loan repayment period.
  • You made good faith efforts to repay the loan before filing bankruptcy.

What happens to my loan if the bankruptcy court determines repayment would cause undue hardship?

It depends on the terms of the bankruptcy court’s determination. The terms may include the following:

  • Your loan may be fully discharged, and you will not have to repay any portion of your loan. All collection activity will stop.
  • Your loan may be partially discharged, and you will still be required to repay some portion of your loan.
  • You may be required to repay your loan, but with different terms, such as a lower interest rate.

What can I do if the bankruptcy court doesn’t discharge my loans but I can’t afford the payments?

Many different repayment plans exist, and switching to a plan that’s a better fit is usually a possibility. Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to “My Federal Student Aid.”

Source : studentaid.gov


All Debts Discharged

Are all of the debts discharged?

Bankruptcy: not all debts discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable.  Public policy reasons do not allow the discharge of certain debts.  Debts incurred for drunk driving injuries to another is one example.

Chapters 7, 11, 12,  lists 19 categories of debt excepted from discharge. A more limited list of exceptions applies to cases under chapter 13.

Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

The types of debts described in sections 523(a)(2), (4), and (6).  Obligations obtained by fraud or maliciousness not automatically excepted from discharge. Creditors must ask the court to determine that these debts excepted from discharge. Discharge can apply to the debts listed in sections 523(a)(2), (4), and (6).  Only with the absence of an affirmative request by the creditor and the granting of the request by the court.

A slightly broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7.  This includes debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations.  Also debts arising from property settlements in divorce or separation proceedings. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court.  There are some limited circumstances under which the debtor may request the court to grant a “hardship discharge.”  Even though the debtor has failed to complete plan payments.

Such a discharge is available only to a certain debtors.  Failure to complete plan payments is due to circumstances beyond the debtor’s control. The scope of a chapter 13 “hardship discharge” is similar to that in a chapter 7 case. With regards to the types of debts that are excepted from the discharge. A hardship discharge also is available in chapter 12.  Failure to complete plan payments.  If due to “circumstances for which the debtor should not justly be held accountable.”

If you have specific questions please call Bucacci And Simonian at 508-673-9500 or visit our website.

Massachusetts Evictions Unpaid Rent Bankruptcy

How bankruptcy helps with evictions and unpaid rent in Massachusetts.

The eviction moratorium is ending and unpaid rents are due.  How does bankruptcy help?

Generally, in most cases, a person threatened with eviction can move to a new place, list the past due rent in a bankruptcy petition and wipe out the unpaid rent.

Most people qualify for a basic Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, tenants in debt and an evicted person can list their debts, including unpaid rents, and all of those debts are wiped out except for certain priority debts like taxes, criminal restitution, child support, alimony and student loans. Unpaid rents are the kind of debts that are wiped out.

The unpaid rent can also be wiped out in a Chapter 13 bankruptcy.

Bankruptcy can help with evictions in Massachusetts for unpaid rent.  Here are a few different choices:

Eviction filing prepared before bankruptcy filed

Eviction proceeding not filed yet then property owners cannot evict a person for unpaid rent.  The bankruptcy automatic stay protects a renter from eviction for as long as it is in effect. When bankruptcy is filed before the eviction is filed a party  involved in an eviction is protected.  The landlord will need to file a motion to lift the automatic stay.  This would remove the bankruptcy protection and then the property owner can evict a tenant for unpaid rent. A renter would still owe rent for the time a tenant occupied the home after filing bankruptcy until the tenant moves out.

Move to new home then file bankruptcy

Example: rent has not paid due to the pandemic.  Tenant moves to a new home. Past due rent scheduled in the bankruptcy.  Unpaid rent subject to bankruptcy discharge. Fees subject to bankruptcy discharge.  Costs subject to bankruptcy discharge.  The bankruptcy does not affect the new rental agreement and the tenant can keep paying rent at the new home. In Massachusetts, bankruptcy can stop evictions for unpaid rent.

Eviction filed before bankruptcy filed

Eviction not presently allowed by a court.  The bankruptcy court can protect tenants. A tenant must move out immediately if the court awards the landlord an eviction.  This is if the tenant has not filed for bankruptcy protection and included the unpaid rent. This applies to Chapter 7 bankruptcy or Chapter 13 bankruptcy.  If a renter is facing possible eviction consider filing bankruptcy before the eviction date to get the bankruptcy court protection.  A tenant with unpaid rent will get more time in the home and allow the renter to search for a new rental property.

No eviction yet? File bankruptcy then move

If the renter has not paid rent in a while and the tenant needs to file bankruptcy right away the tenant can file bankruptcy and wipe out those unpaid rent amounts.  However the renter is liable for any fees, costs and expenses.  Rent incurred from the day of the bankruptcy filing until the day property owners force tenants to move out.  Unpaid rent is subject to bankruptcy discharge.  The tenant will be responsible for any rent due after the filing of the bankruptcy.

Call us today to schedule a free consultation or visit our websiteBucacci & Simonian

Mortgage Relief and Foreclosure Prevention

There will be a great need for mortgage relief and foreclosure prevention in Massachusetts and the entire country.  The CFPB stated today “we are at really an unusual point in history”.  Nobody has ever before seen this many mortgages in forbearance at one time that are expected to exit forbearance all at one time.”

This may be the calm before the storm. If mortgage companies don’t get it right when all these forbearance periods end.

With stimulus money and no federal student loan payments, people have been able to firm up their finances. People are paying off car loans, clearing off credit card debts or other old debt. Many are actually establishing a savings account for the first time in a long while.

What Mortgage Relief and Foreclosure Prevention is Expected

The CFPB hopes to have a plan to prevent a sharp rise in foreclosures this fall.  The present proposal would:

  • Establish a pre-foreclosure review period once forbearance ends
  • Delay the start of any Covid-related foreclosure to 2022
  • Provide mortgage servicers with streamlined loan modification options
  • Revise mortgage servicer communication rules to keep borrowers better informed.

Here is what to know.

The deadline for borrowers affected by Covid-19 to request or extend a forbearance plan is June 30.  This is also the end of a foreclosure moratorium on federally backed mortgages.  For borrowers who are behind in mortgage payments now, it’s imperative to act before June 30 to ask for a 180 day forbearance, and if needed, a second 180 day forbearance.  This will get you a year.  If that isn’t done, then the new CFPB rules would at least block servicers from filing a foreclosure lawsuit until after December 31, 2021.

The new rules if they are approved, will apply to all mortgages, not just those that are federally backed.

Certain fees such as late fees and stop payment fees would be waived.  If a loan modification were to include any catch up payments, servicers will not be allowed to charge extra fees or interest on those payments.  The new rules would be in effect until August 31, 2022 but may not apply to smaller lenders with less than 5,000 loans.

If you have the threat of a foreclosure, you can call us anytime or visit our website for more information.