Personal Bankruptcy

Once a debtor has decided that he wants to file a bankruptcy petition, he will be required to present the court with various statements that will enable them to determine under which chapter the debtor should file. The debtor is also expected to present a list of all the creditors and a list of the assets that are under his name.

This way, the court will be able to weigh the options available and determine whether they are applicable in the case of that particular debtor. Once the debtor has filed a personal insolvency it is important that they understand what the court will do with the debts accumulated. They might wonder what will happen to the students loan, the tax or any other debt in their name.

In the past, before 1998 all student loans in the United States of America were discharged under the liquidation chapter. This would be done in case the first payment was expected to be paid seven years or more before the petition was filed. The new law allows student loans to be discharged under chapter 13. Personal bankruptcy filed under the wage earner chapter allows for the students loan to be consolidated along other outstanding balances.

It is also possible that the attorney handling the case to arrange for a free interest repayment plan. This way the debtor will be freed from harassment from student loan agencies. Tax relief can only be gotten if an individual files a personal bankruptcy petition more than three years after filing a timely truthful tax return. In case the court does not receive this in time, then you are advised to wait for two years to get the tax relief.

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