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Does Chapter 7 Stop a Sheriff Sale or Only Chapter 13?

Sheriff sales can be stopped by Chapter 7 and Chapter 13 bankruptcy.

We are frequently ask if a Chapter 7 bankruptcy stops the sheriff sale. The answer to this question is “yes.” Chapter 7 does stop sheriff sales.  However, Chapter 7 only stops the sheriff sale for a limited period of time.

Chapter 7 Stop Sheriff Sales But Does Not Fix Your Mortgage Problem

The purpose of Chapter 7 is to get a fresh start from your debts. In Chapter 7, there is no built-in mechanism for dealing with a behind mortgage. Although the Chapter 7 filing will stop a sheriff sale for a limited period of time, eventually (usually in 3 to 6 months or greater) the sheriff sale likely be reset for a future date.

Chapter 7 can stop a sheriff sale while getting rid of excessive amounts of debt. However, because Chapter 7 does not fix the mortgage situation, a loan modification or other agreement with the mortgage company must also be pursued in order to save your home.   Chapter 7 is not designed to re-organize your debts and create all-inclusive solutions like the Chapter 13.

Chapter 13 Can Be A Better Choice

Chapter 13 both stops the sheriff sale and has a built in mechanism for bringing your mortgage back up to date.  Therefore, if you are attempting to stop at sheriff sale, Chapter 13 may be a better choice in behind-mortgage situation.   Chapter 13 can fix the entire mortgage and debt situation.   

The primary question in a Chapter 13 is whether you will be able to afford your plan payments. There is no question as to whether the sheriff sale can be stopped through Chapter 13.  The only question is whether you can afford to pay both the ongoing mortgage payment and the entirety of your arrears. A Chapter 13 filing used to stop at sheriff sale can be much more expensive monthly than what is achievable sometimes through a loan modification.  

In Chapter 13, the entirety of your arrears must be paid through the plan. Your arrears will not be put on the “back of the loan.”   Therefore, a Chapter 13 payment to save your house is usually always more expensive monthly than if a loan modification payment amount can be negotiated.

If you are facing a sheriff sale, the only forceful remedy you may still have available is bankruptcy. If you would like to talk to somebody about stopping a sheriff sale, feel free to give her office a call.  We will book you for a free consultation.

Should You Be Able To Get Rid of Student Loans Through Bankruptcy?

Find out if student loans are discharegable in bankruptcy

The answer to this question is probably “Yes.”  You should be able to discharge student loans in bankruptcy during most situations.    However, under the current law you cannot discharge student loans in bankruptcy with almost no exceptions.  Many strongly argue that the legislation which culminated in the complete banning of student loan bankruptcy in 2005 is immoral and biased.  The legislation was clearly motivated by private business interests.  It has created a “student loan debt crisis,” a new hot topic of interest and debate.   Some say this “crisis” is next “melting point” our economy will face.  

But, more importantly, what about the moral perspective?   From a moral perspective, you SHOULD be able to discharge student loans in bankruptcy. But why?

Student Loan Lending is Oppressive and Should Be Against Public Policy

Student loan lending is clearly oppressive and should be against public policy.  The student loan industry has quickly transformed education into an “industry” as well.  Higher education should never be allowed to grow into a profit-driven industry.  Education should be affordable or free: it should always be about the students or society as a whole.  Higher education in the past was promoted and controlled by churches, charities, and true non-for-profit organizations.  Higher education should be a mainstay of freedom.   Higher education should remain untainted by corporate greed and economic oppression.

Higher education has grown into a monster funded by never ending student loan funding.   Astronomical building projects, sports programs, and other non-necessary ventures dominate the higher education world.   This money-raking beast has replaced previous higher education system.  The old system was focused on the students, the welfare of society, and higher ideals.   

Students are charged astronomical rates to attend classes.  These 18-19 year old students are told not to worry: just sign the loans documents.   However, most of these students have never had a job or a loan in the past. The students have no concept of the oppressive debts they quickly assign to themselves so early in life.    

What do the students get in return?  Many times absolutely nothing.  In fact, many places of “higher” education are so devoted to a profit model that they accept almost anyone with no regard to their drop-out rates.  Other schools are slightly more dignified, but almost the entire system has been corrupted by this student loan legislation.   A good part of these problems can be eliminated over time with a single law change: the full discharge of student loans in bankruptcy. 

Falsified claims of “immoral” bankruptcy filings were the Trojan Horse

The Trojan Horse was simple: some people were filing bankruptcy to immorally discharge their student loans.   However, these minor immoral occurrences were showcased intentionally to get law changes passed that were clearly against common sense public policy.   Student loans became the norm: this far greater evil quickly seeped into our entire higher education system. 

By intention, the real question at hand was improperly phrased: should the government allow and support a large student loan industry?  By progressively disallowing the discharge of student loans in bankruptcy, two new industries for profit developed.  The “big” education and the “big” student loan industries. Both of these industries are very bad for society.  They should have never been allowed to develop.  Education was once considered a “sacred” institution.   Can such a claim of sacredness still apply after the changes “big” business has made?

Student Loans are Not Dischargeable in Bankruptcy . . . But Probably Should Be

The non-dischargeability of debts is oppressive in any case.  Obviously, it is very oppressive for the government to support non-dischargeable loans for young students who have no proper financial understanding.  When educational debts were forbidden for discharge, many undesirable, profit-driven aspects began to be woven into our higher education system. 

Therefore, should student loan debts be discharged in most bankruptcy cases?  The answer this question is probably “yes” for obvious societal reasons.  Current legislation forbids student loan discharge.  Hopefully, the future will see the need to change this law after the full effects of our altered education system become apparent.   

PERSONAL NOTE: I write to support law change.  Student loans should be discharged like any other form of debt.  This is not due to personal reasons: I have no student loan debts.  Instead, I have seen this immoral system and it’s result “up-close.”  My experience as a Bankruptcy attorney and with higher education have clearly revealed all the abuses that are taking place under the current legal system. 

Credit Card Havoc May Follow 2017 Federal Reserve Rate Increases

The Federal Reserve has reported that it anticipates raises in the Federal Reserve prime rates for 2017.   This raise in rates may have a massive “trickle down” effect that will alter many current financial norms.   Among these “norms,” credit card interest rates may soon be increasing.

Credit Card Interest Rates are Adjustable

Credit card interest rates are usually set to a variable or adjustable rates according to the terms of the credit card contract. This essentially means that credit cards rarely have “hard terms” when it comes to minimum payments or charged interest.  When the Federal Reserve changes the prime rate, the entire financial industry makes massive changes to adapt to these increases.   Many mortgages, investment loans, and smaller loans like credit cards will instantly become much more difficult to repay or even service monthly.

Credit Card Interest Rate Increases will Create More Payment Defaults

Essentially, the moment that interest rates increase on credit cards via prime rate increases, everything becomes much more expensive. All the items purchased through the credit card and the continuation of the credit card services greatly increase in price.  Because the total cost of servicing the credit cards increases, this increase can sometimes break an already tight budget.  Once a credit card payment is missed or late, many times the interest rate then increases exponentially. Interest rates as high as 24% in such situations are not uncommon. This can equate to charging up to four times the original amount or greater for the good or service that was purchased through the credit card.

Credit Card Defaults Frequently Lead to Bankruptcy

Because credit card defaults are very difficult from which to recover, bankruptcy frequently follows.  An already stretched budget cannot accommodate such large required monthly payments. In fact, the increase in interest rates cause defaults across the entire financial spectrum.  Credit cards are not the only avenue to bankruptcy during a Federal Reserve rate increase. 

The Rates Must Increase: Are We Living on Borrowed Time?

Because of the nature of our financial systems, eventually the Federal Reserve Bank rate must increase. The United States currently operates on an excessively over-leveraged, debt laden financial system.  As a nation, we may only be living on borrowed time.  Massive changes to our nation’s financial and debt systems will likely be required to put things back on track. If you are in need of a personal financial overhaul, do not take it personally.   The entire national financial system is right there with you. If you need to talk to somebody about debt relief or possibly about bankruptcy, do not hesitate to give our office a call.   

Why Does God Support Debt Forgiveness?

Open bible

Did you know that God supports debt forgiveness? The Bible lays out a formula for the full forgiveness of debts every seven years.  God does not intend debts to be collectible forever.  God understands that society must periodically forgive debts in order to prevent oppression and other unjust practices. 

God Wants Brotherhood not Oppression

The Bible strongly supports good stewardship and productive business practices. However, the Bible requires that all business practices take place in the atmosphere of brotherhood and not oppression.  God does not support business profit when it results in defrauding or oppressing other members of society.  God intends for us to take care of our fellow countrymen with sense of honor, protecting and providing for those who are the weakest.

The automatic forgiveness of debts laid out in the Bible prevents creditors from oppressing debtors.  Without a bankruptcy system or the automatic release of debt, slavery (whether in its fullest form or just economically) would quickly follow.   God does not want a system that supports oppression and the defrauding of people.  Bad economic circumstances should not allow a fellow countryman to be forever imprisoned in a system of debts.

God Does Not Want Complex, Fraudulent Money Systems to Develop

God also supports the forgiveness of debt because he does not want complex economic systems to develop that defraud the common people.   God believes in protecting generational inheritances and preserving the rights and dignity of the individual.  God would prefer that wealth stays in its proper place: with the common people who work and save for it.  Everyone is to receive their just financial reward in God’s system.  Work and productivity is to be rewarded equally among all people.

Jesus, the promised Messiah and Son of God, drove out the money changers that were defrauding sincere visitors to the temple in Jerusalem.     The Bible also talks about God judging the wicked financial practices of a wayward, worldly economic system.  God has no tolerance for fraud and financial oppression, regardless of its “legality” or modern acceptance as a new societal “norm.”

Therefore, God strongly supports the automatic, periodic forgiveness of debts.  This forgiveness of debts prevents complex economic systems based on leverage and debt from developing in the first place.  The method in which people treat each other and handle their economic affairs is much more important to God than achieving maximum profits or higher living standards.  God wants to keep debt forgiveness as a common practice to make sure that everybody stays on an “even financial playing field” regardless of whether any individual is currently rich or impoverished.   This “even playing field” is stable.  It treats everybody according to their actual stewardship and economic contribution.   The manipulation of people’s hard work and the diminishing of the individual’s wealth is not possible in God’s simple and fair approach to economics.