Businesses Repaying Employee Student Loans

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                               American Consumer Credit Counseling is a
                               national leading provider of consumer financial
                               education and debt management services.

                               Throughout the year our company provides many
                               educational workshops within the community that
                               covers a wide range of financial topics.

                               It is our mission to provide individuals with the
                               necessary information so they can make better
                               financial decisions in the future.

Wednesday, November 10, 2010                                                       2
                               This educational study course on Bankruptcy
                               has been developed specifically to educate
                               individuals within the community on:

                                       What to Know About Bankruptcy
                                       The Types of Bankruptcies
                                       How Bankruptcy Affects You
                                       Your Options in Bankruptcy
                                       Consequences of Unpaid Debts

Wednesday, November 10, 2010                                                 3
                               What is Bankruptcy?

                               Bankruptcy is a method of eliminating unsecured,
                               secured and other debts through the legal system,
                               therefore giving a consumer a fresh start in life.
                               Bankruptcy, in many cases, means that you walk away
                               from the current debt you owe your creditors.

                               Generally, there are two different types of personal
                               bankruptcy that an individual may use. They are:

                                              Chapter 7 bankruptcy
                                              Chapter 13 bankruptcy

Wednesday, November 10, 2010                                                          4
                               What is Chapter 7 Bankruptcy?

                               Chapter 7 is the full liquidation of debts more commonly
                               known as “straight” Bankruptcy. This is the most
                               common bankruptcy form that an individual will file.
                               Chapter 7 is only for individuals, not businesses or

                               Under Chapter 7, a trustee is appointed from the court to
                               collect and sell, if economically feasible, all property you
                               own that is not otherwise exempt, from liquidation.

                               Most individuals file Chapter 7 to completely eliminate
                               large credit card debt, personal loans and other
                               unsecured debts.

Wednesday, November 10, 2010                                                             5
                               Who qualifies for Chapter 7 Bankruptcy?

                               1) You must reside, or have a domicile, or a place of
                               business, or real property in the United States. Within
                               the last 6 years you could have not been granted a
                               discharge through Chapter 7.
                               2) Within the last 6 years you could not have completed
                               a Chapter 13 bankruptcy plan.
                               3) Within the last 180 days you couldn’t have had a
                               Chapter 7 or Chapter 13 dismissed for cause by the
                               4) If an individual has disposable income after paying
                               monthly living expenses, the courts will usually not grant
                               a Chapter 7 discharge.

Wednesday, November 10, 2010                                                             6
                               What should I do if my Chapter 7 is not

                               Our best advice to you is to immediately seek the help of
                               a non-profit consumer credit counseling agency.
                               A non-profit consumer credit counseling agency in most
                               cases, can help you re-establish payment plans with
                               those creditors that you tried to file bankruptcy against.

Wednesday, November 10, 2010                                                            7
                               What type of debts can be discharged in a
                               Chapter 7 bankruptcy?
                               In a Chapter 7 bankruptcy you can discharge almost any
                               consumer debt such as:
                                   All credit card debt                       Auto Repossession
                                   Personal loans (banks or credit unions)    Charge-off accounts
                                   Finance companies                          Collection accounts
                                   Automobiles (purchased or leased)          Eviction (rent) debt
                                   Mortgage debt                              Old utility bills
                                   Other motor vehicles                       Medical bills
                                   Some student loans may qualify             Dental bills
                                   Some past-due taxes may qualify            Attorney bills
                                   Creditor lawsuits                          CPA bills

Wednesday, November 10, 2010                                                                           8
                               What is a discharge?

                               The filing of a chapter 7 bankruptcy petition is designed
                               to result in a discharge of most, if not all, of the debts
                               you listed on your bankruptcy schedules.
                               Certain debts such as a mortgage or car loan will
                               continue to be paid by you if you elect to retain the
                               asset. A discharge is a court order that says you do not
                               have to repay your debts.
                               Creditors cannot ask you to repay any debts which have
                               been discharged in bankruptcy. You can only receive a
                               chapter 7 bankruptcy discharge once every six (6) years.

Wednesday, November 10, 2010                                                                9
                               Are there debts that I cannot discharge?

                               Yes. You should first understand that not all debts are
                               dischargeable in a bankruptcy case.

                               Examples of debts that are not able to be discharged
                                      Most state and federal taxes
                                      Child support
                                      Alimony support
                                      Most student loans
                                      Criminal fines, restitution or penalties
                                      Debts obtained through fraud or deception
                                      Personal injury debts
                                      Credit card charges made within 40 days of filing

Wednesday, November 10, 2010                                                               10
                               What are the potential effects of a discharge?

                               The fact that you filed bankruptcy will appear on your
                               credit report for as long as 10 years. Thus, filing a
                               bankruptcy petition may affect your ability to obtain credit
                               in the future.
                               Generally speaking you may not be excused from
                               repaying any debts that were not listed on your
                               bankruptcy schedules or that you incurred after you filed

Wednesday, November 10, 2010                                                            11
                               In a bankruptcy do I have to give up all my
                               personal property?

                               No. Federal and state laws provide exemptions for your
                               Exempted property is property such as household
                               goods, furniture, clothes, and personal belongings,
                               which you may keep even if you file bankruptcy.

Wednesday, November 10, 2010                                                         12
                               What are the effects of reaffirming a debt?

                               After you file your bankruptcy petition to the courts, a
                               creditor (that you owe) may ask you to voluntary reaffirm
                               a certain debt or you may seek to do so, on your own.
                               Reaffirming a debt means that you will sign and file a
                               legally enforceable document with the court, which
                               states that you promise to repay all or a portion of the
                               debt that may otherwise have been discharged in your
                               bankruptcy case.
                               Once reaffirmed, the debt becomes a renewed
                               obligation, which survives bankruptcy.

Wednesday, November 10, 2010                                                              13
                               What is Chapter 13 Bankruptcy?

                               Chapter 13 generally permits individuals to keep their
                               property by repaying creditors out of their future income.
                               Each chapter 13 debtor (you) submits a plan of
                               repayment for 3 to 5 years, which must be approved by
                               the bankruptcy court.
                               Chapter 13 is only available to individuals with regular
                               income whose debts do not exceed $1,077,000
                               ($269,250 in unsecured debts and $807,750 in secured

Wednesday, November 10, 2010                                                           14
                               How do I determine if a Chapter 13 is best for
                               Chapter 13 is best for people who have too much
                               disposable income and also have the kind of consumer
                               debt (like student loans, taxes, etc.) that cannot be
                               discharged in a Chapter 7.
                               People that are behind in their mortgage payments and
                               want to avoid foreclosure on their property may also file
                               a Chapter 13.
                               Chapter 13 allows a person to make up past due
                               payments over a specific time period, therefore
                               reinstating the creditors original agreement.

Wednesday, November 10, 2010                                                           15
                               Will a bankruptcy filing, stop any collection or
                               legal action against me?

                               Yes. A bankruptcy filing under federal law imposes an
                               automatic stay, which stops your creditors from
                               collecting on the debts and/or obtaining a court judgment
                               while your bankruptcy is pending and awaiting approval
                               of a discharge.
                               For example: If one of your creditors serves you with a
                               lawsuit the bankruptcy filing will stop the lawsuit.

Wednesday, November 10, 2010                                                         16
                               Will bankruptcy stop wage garnishments or
                               repossession from creditors?

                               Yes. Creditors must stop any wage garnishments or
                               repossession efforts under a bankruptcy filing.

                               A creditor can only proceed against you once your
                               bankruptcy is over and that specific debt was not
                               discharged in your bankruptcy.

Wednesday, November 10, 2010                                                       17
                               When do my creditors get notified of my
                               bankruptcy filing?

                               Once your bankruptcy petition has been filed with the
                               courts, the bankruptcy court clerk will mail a notice within
                               10 to 14 days of your bankruptcy filing on your behalf to
                               all your creditors, which will impose an automatic stay.
                               Therefore, your creditors must stop all collection efforts
                               on the debt. If a creditor does not stop collection efforts
                               the courts can impose sanctions against them.

Wednesday, November 10, 2010                                                             18
                               How long does a bankruptcy take to be
                               A Chapter 7 bankruptcy can take anywhere from 3 to 5
                               months to be fully discharged.
                               A Chapter 13 bankruptcy can take anywhere from 3 to 5
                               years to be fully completed. A Chapter 13 takes longer
                               because you are setting up re-payments plans with your

Wednesday, November 10, 2010                                                       19
                               Once I file a bankruptcy petition do I continue
                               paying my creditors?
                               No. If you plan to reaffirm your auto loan and mortgage
                               loan and keep it out of your bankruptcy you need to
                               continue making those monthly payments on time.
                               You also need to continue making your monthly
                               payments on your daily living expenses; rent, utilities,
                               telephone, gasoline, insurance, etc.
                               If you plan to include all your credit card debt in your
                               bankruptcy to be discharged, you can stop making those

Wednesday, November 10, 2010                                                              20
                               Should I hire a bankruptcy attorney or a
                               paralegal to prepare my bankruptcy?
                               Everyone’s situation is different. As a rule of thumb, you
                               should hire a bankruptcy attorney if you:
                                          Own a home
                                          Are self employed
                                          Have substantial amount of assets
                                          Receiving a settlement from a lawsuit
                                          Have over $15,000 of cash in savings,
                                           stocks, bonds, mutual funds, etc.
                                          Receiving an inheritance

Wednesday, November 10, 2010                                                           21
                               Will I lose my car or home when I file

                               If you do not include these debts into your bankruptcy for
                               discharge, you must reaffirm these debts and keep them
                               out of your bankruptcy.
                               If you plan to keep them out, you must continue to make
                               monthly payments on time to the creditors.

Wednesday, November 10, 2010                                                          22
                               Do I have to include all my credit cards in my

                               No. You can reaffirm a credit card debt if you have a
                               balance on it. In most cases the credit card issuer will
                               agree to keep it open for you as long as you continue to
                               make the agreed minimum monthly payment as required
                               on the monthly statement.
                               If you have a credit card with a zero balance on it you
                               will not include that credit card in your bankruptcy filing.

Wednesday, November 10, 2010                                                              23
                               Can I charge on my credit cards before I file

                               No. If you charge or take cash advances within 90 days
                               on credit cards that you plan to include in your
                               bankruptcy, you may be liable for those charges and
                               cash advances and the courts may not discharge those
                               credit cards.
                               In addition, the courts may fine you under the basis of
                               fraud. You should seek legal advice from a bankruptcy
                               attorney if you have recently incurred large amounts of
                               debt on credit cards you plan to bankruptcy.

Wednesday, November 10, 2010                                                             24
                               Who will know about my bankruptcy filing?

                               All bankruptcy filings are public record. Your close
                               friends, your family members, your boss, your co-
                               workers, etc. will not find out about your bankruptcy filing
                               unless you tell them.
                               Bankruptcy filings are not usually published in the
                               newspaper. The only people who will know about your
                               filing are the courts and your creditors.

Wednesday, November 10, 2010                                                            25
                               Will I lose my job if I file bankruptcy?

                               No. Your employer cannot fire you for filing bankruptcy. It
                               is against federal law for an employer to discriminate
                               against an employee for filing personal bankruptcy.
                               Your bankruptcy filing is none of your employer’s

Wednesday, November 10, 2010                                                           26
                               Will a bankruptcy filing destroy my credit?

                               If bankruptcy is your only option, your credit is already
                               damaged due to late or non payments to your creditors.
                               A bankruptcy can stay on your credit report for up to 10
                               This does not mean that your life is over. Once your
                               bankruptcy has been discharged, you will receive credit
                               card offers in the mail that will help you reestablish your
                               Most people can rebuild their credit within 2 years from
                               the time their bankruptcy is discharged.

Wednesday, November 10, 2010                                                            27
                               Once I file my bankruptcy petition, what
                               happens next?

                               Within 30 to 45 days you will be required to attend a
                               hearing of creditors in front of a court-appointed trustee.
                               At this hearing, the creditors will have an opportunity to
                               ask you questions about merchandise that you
                               purchased on credit with them. In most cases if you do
                               not have assets, creditors will not appear at this hearing.
                               When you appear for this hearing usually there will be a
                               lot of other people in the room, all there for the same
                               reason as you. Therefore, there is no need to be

Wednesday, November 10, 2010                                                            28
                               Once I file my bankruptcy petition, what
                               happens next?


                               In most cases, if your petition was filled out correctly by
                               your attorney or paralegal the trustee should have few

                               If your petition passes the trustee’s questioning, your
                               bankruptcy will be normally discharged within 3 to 4
                               months from the time you filed.

Wednesday, November 10, 2010                                                             29
                               How does bankruptcy affect a co-signer on a
                               If the debt qualifies by the courts to be discharged, then
                               the co-signer on the debt will become primarily
                               responsible to pay the debt.
                               The person filing the bankruptcy should list the co-signer
                               as a creditor in their bankruptcy petition.
                               For example: A husband and wife separate and divorce.
                               The wife decides to file bankruptcy on several credit
                               cards that are joint accounts with both their names on it.
                               If the husband does not participate in the bankruptcy
                               filing then he will become solely responsible for those
                               joint accounts once the wife’s bankruptcy has been
Wednesday, November 10, 2010                                                           30
                               Can I go to jail if I file bankruptcy?

                               No. There is no such thing as a debtor’s prison in the
                               United States. Every consumer has the right to file a
                               bankruptcy petition every 6 years.

Wednesday, November 10, 2010                                                            31
                               Can a bankruptcy remove a lien?

                               Under some circumstances, your attorney can file a
                               special motion to remove the lien.
                               The bankruptcy court will have to issue a court order to
                               remove the lien.
                               This procedure is complicated and you need a
                               bankruptcy attorney who understands this area of the

Wednesday, November 10, 2010                                                          32
                               Will a bankruptcy filing stop a home
                               Yes. You need to keep in mind that a home is an asset
                               secured by a deed of trust.
                               The mortgage company has the right to petition the court
                               for relief from the “automatic stay” provision. In most
                               cases, an individual may be able to prolong the
                               foreclosure until they have received a discharge from the
                               bankruptcy court.

Wednesday, November 10, 2010                                                           33
                                       OTHER BANKRUPTCY OPTIONS

                               Besides chapter 7 and chapter 13 bankruptcy there are
                               two additional choices within the Bankruptcy Code. They
                                           Chapter 11 bankruptcy
                                           Chapter 12 bankruptcy

Wednesday, November 10, 2010                                                        34
                               What is Chapter 11 Bankruptcy?

                               Chapter 11 is the reorganization chapter most commonly
                               used by businesses, but it is sometimes available to
                               The debtor submits a plan of reorganization and
                               creditors vote on whether to accept or reject a plan,
                               which also must be approved by the court.
                               While the debtor normally remains in control of the
                               assets, the court can order the appointment of a trustee
                               to take possession and control of the business.

Wednesday, November 10, 2010                                                           35
                               What is Chapter 12 Bankruptcy?

                               Chapter 12 offers bankruptcy relief to those who qualify
                               as family farmers.
                               Family farmers must propose a plan to repay their
                               creditors over a three to five year period and the court
                               must approve it.
                               Plan payments are made through a chapter 12 trustee
                               who also monitors the debtor’s farming operations during
                               the course of completion.

Wednesday, November 10, 2010                                                              36
                               What types of debts can be affected if unpaid?

                               When financial problems arise, consumers need to
                               understand the consequences of the different type of
                               debts and how they can be affected if not paid.
                               There are 7 different types of debts. They are:

                                                  Secured debts
                                                  Unsecured debts
                                                  Foreclosure
                                                  Eviction
                                                  Auto repossession
                                                  Utility shut-offs
                                                  Lawsuits

Wednesday, November 10, 2010                                                          37
                               What are the consequences of secured debts?

                               Most secured debts are backed by collateral. Collateral is
                               property that can be seized in the event of a debt
                               payment delinquency.
                               Secured credit cards. If you don’t pay on your secured
                               credit card the card issuer who has control of your
                               collateral (savings deposit) can seize your savings
                               deposit and suspend your privileges to charge on that

Wednesday, November 10, 2010                                                          38
                               What are the consequences of secured debts?


                               Home mortgage. If you should fall behind on your
                               mortgage payments, the mortgage lender can seize your
                               home (foreclosure), leaving you with nothing. All current
                               and future equity accumulated in the property would now
                               belong to the mortgage lender.

                               Automobile Loan. If you should fall behind on your car
                               payments, the bank or financial institution has the right
                               to legally repossess your car without your permission. If
                               the car is repossessed, the car is now the property of the
                               bank or financial institution that holds title.

Wednesday, November 10, 2010                                                          39
                               What are the consequences of unsecured

                               Banks and other financial institutions that provide
                               unsecured credit to consumers do not have the legal
                               power that secured lenders have.
                               Lenders that cannot collect on unsecured delinquent
                               debt, must first file and obtain a court judgment before
                               they can seize money or property.
                               Unsecured credit cards are by far the hardest to collect
                               on. Most collection agencies generally will make threats
                               to sue for monies or garnish wages for monies owed, but
                               in most cases these threats are not carried out, because
                               litigation is a costly and timely process.

Wednesday, November 10, 2010                                                              40
                               What are the consequences of a foreclosure?

                               If you miss one or two payments on your mortgage, your
                               lender will send you a letter and in most cases call you
                               and ask you to send in the missed mortgage payments
                               plus late fees.
                               If you fall behind 60 to 90 days on your monthly
                               mortgage payments, your lender will send you a written
                               notice in the mail, which is referred to as the Notice of
                               Default. This Notice of Default is the first step in the
                               foreclosure process.

Wednesday, November 10, 2010                                                           41
                               What are the consequences of a foreclosure?


                               If you do not make up the missed mortgage payments
                               and late fees, the lender will send another written notice
                               in the mail. This is referred to as the Notice of
                               Acceleration. The homeowner at this point must pay the
                               full mortgage off to avoid a foreclosure sale by the lender.

                               If the full mortgage amount is not paid in full, a court
                               summons will be delivered to the property as well as a
                               Notice of Sale. This Notice of Sale will outline the time
                               and date that the property will be foreclosed on.

Wednesday, November 10, 2010                                                               42
                               What are the consequences of an eviction?

                               Being evicted from a rented apartment, condo or home
                               can be disruptive and dangerous, knowing that you could
                               be homeless should you have no where else to live.
                               If you do not pay your rent, the first step that your
                               landlord will take to start the eviction is to send you (the
                               renter) a written Notice to Quit or Notice to Vacate.
                               These written notices basically tell you to either pay the
                               rent or vacate the premises within a specific time.

                               If you do not pay the past-due rent within the Notice to
                               Quit time frame, the landlord will seek and file a court
                               order to evict you from the premises.

Wednesday, November 10, 2010                                                              43
                               What are the consequences of an eviction?


                               If you choose to not appear in court, the court will
                               automatically enter a default judgment against you and
                               you will be evicted from the premises, in most cases by
                               a sheriff or another law enforcement person.
                               When you are forced to move against your will, you are
                               considered a refugee. Your belongings can be removed
                               and put on the streets.
                               In addition to being evicted, the landlord can file suit
                               against you for all past-due rent, plus court fees and

Wednesday, November 10, 2010                                                              44
                               What are the consequences of an automobile

                               If you miss one payment a lender must send you a
                               Notice of Default letter giving you an opportunity to
                               bring the loan current.
                               If payments are not brought current, a lender can
                               schedule your car for repossession as well as place a
                               lien on your car and sell it in order to pay back the
                               money you borrowed.
                               Repossession means that a “repo man” can take your
                               car at anytime without your consent, open your car and
                               drive it away.

Wednesday, November 10, 2010                                                           45
                               What are the consequences of an automobile


                               When your repossessed car is sold at auction, in most
                               cases a Deficiency Balance will occur. At auction sales,
                               auto dealers bid on repossessed cars at drastically
                               reduced prices.
                               For example: Your car may be valued at $10,000, but
                               through an auction sale the lender sells it to an auto
                               dealer for $6,000. Immediately, your repossessed car
                               now has a $4,000 Deficiency Balance which you must
                               pay to the lender.

Wednesday, November 10, 2010                                                            46
                               What are the consequences of an automobile

                               In addition to the $4,000 Deficiency Balance, you will owe
                               the lender for repossession fees, storing and all auction
                               cost for the sale of your repossessed car.

Wednesday, November 10, 2010                                                          47
                               What are the consequences of a utility shut-

                               If you don’t pay your bill, utility companies don’t send you
                               to collections, they simply shut off your service.

                               By law a publicly owned utility company must send you a
                               termination notice, stating that if you don’t pay the
                               amount due your service will be turned-off.
                               Privately owned utility companies do not have to send
                               you a termination notice and they can turn off your
                               service due to non-payment at anytime without warning.

Wednesday, November 10, 2010                                                            48
                               What are the consequences of a utility shut-

                               Whether you’re dealing with a publicly or privately owned
                               utility company, getting your utility service turned back on
                               can be costly.
                               You will have to pay the past due amount in full, plus late
                               charges and a re-installment fee, and in some cases, a
                               security deposit.
                               Some utility companies may allow you to make monthly
                               installment payments over time to make up past-due

Wednesday, November 10, 2010                                                            49
                               What are the consequences of a lawsuit?

                               If you are a consumer who had unsecured credit
                               extended to you and you where unable to make the
                               monthly payment obligations, the lender has a legal right
                               to file suit in a court of law against you in order to collect
                               on that unsecured debt.
                               If a lender successfully files suit and wins, it can result in
                               the following:

                                              Judgment Liens
                                              Wage Garnishment and
                                               Bank Account Seizures

Wednesday, November 10, 2010                                                              50
                               Judgment Liens:

                               A judgment lien allows a lender to place a lien against
                               your property (home, car, boat, etc.). This lien prohibits
                               the owner of the property to sell or re-finance until the
                               lien is cleared (debt is settled).
                               Once a judgment lien has been won in court, the lender
                               has the right to inspect and examine your property. The
                               lender must further file a formal request in court to seize
                               or sell the property.

                               The law states that certain possessions, like household
                               items are exempt from seizure. You should contact an
                               attorney in your state for legal advice on judgment liens
                               and what can be seized.
Wednesday, November 10, 2010                                                            51
                               Wage Garnishment and Bank Account

                               If a lender successfully files suit and obtains a court
                               order, that lender may garnish up to 25% of your take-
                               home pay without your consent.
                               A lender can take more of your take-home pay if it
                               involves unpaid child support. A court order wage
                               garnishment can be served directly to your employer or
                               to your bank.

                               Note: Not all states allow wage garnishment. Speak to
                               an attorney in your state on wage garnishment and
                               whether it’s enforceable in your state.

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                                  This concludes our educational study
                               course on Bankruptcy and Unpaid Debts.

                                    Thank you for attending!

Wednesday, November 10, 2010                                         53
                                         Corporate Address:
                               American Consumer Credit Counseling, Inc.
                                    130 Rumford Avenue, Suite 202
                                          Newton, MA 02466

                                        Contact Information:
                                      Toll Free: 1-800-769-3571
                                        Main: 1-617-559-5700
                                        Fax: 1-617-244-1116
                                Web Address:

Wednesday, November 10, 2010                                               54

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