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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9684
Experience:  Licensed to Practice Law
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I am filing an adversary proceeding for defaulted student loans.

Customer Question

I am filing an adversary proceeding for defaulted student loans. When I file does this stop wage garnishes I have? If so do I just give the filing to my employer? How does that work?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 5 years ago.

Hello and thank you for allowing me the opportunity to assist you. Before I can adequately answer your question, I need a little more information.

Can you clarify why you’re filing an adversary proceeding with regard to student loans? I’m unclear of what you’d be seeking.

EDIT: Ohhh, I think I see. You're looking to have the judge discharge them for undue hardship, correct?
Customer: replied 5 years ago.
I have defaulted on them.I am trying to have them discharged based on financial hardship. I am 59 yrs old with medical problems. did not finish my educational program and can not afford to. I have been homeless at times even though I work. I now live with my son and daughter-in-law because I can not afford rent and utilities.I only made 10,000 last year as a massgage therapist and my days as a therapist are numbered. Job prospects do not look good. My retirement plan which will be at 65 so I can have medical care,is social security at $1,300 a month which is about what i make now. If you need anything else please contact me.
Expert:  TJ, Esq. replied 5 years ago.

Thanks for the additional information. It does look like you have a good argument to have your student loans discharged due to financial hardship. With regard to your original question, filing for bankruptcy will temporarily stop the garnishment because of the automatic stay. However, the act of filing an adversary proceeding alone will not stop the garnishment. Therefore, if you’re reopening a past bankruptcy in order to file the adversary proceeding, then your wages may still be garnished. If you’re filing the bankruptcy now, then the automatic stay should stop the wage garnishment.

In order to stop the wage garnishment with the automatic stay, you should be sure to send your bankruptcy filing to the creditor who is garnishing your wages. You may also wish to send it to your employer, though it shouldn't be necessary since the creditor should immediately stop the garnishments.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

.

DISCLAIMER: Please understand that the complexities of most legal problems cannot be adequately addressed in this setting, and that I am only licensed to practice law in the state of Maryland. Accordingly, you acknowledge (1) that we have not formed an attorney-client relationship, and (2) that my post is general information only and not specific legal advice.

 

Customer: replied 5 years ago.
hi I am not filing bankruptcy and have not had a bankruptcy only advesary proceeding and the wage garnishment is from the california student aid commission for the defaulted loans. Again can this wage garnishment be stopped because of the filing of the advesary proceeding.
Expert:  TJ, Esq. replied 5 years ago.

You Wrote: “I am not filing bankruptcy and have not had a bankruptcy only advesary proceeding”

My Response: Now I’m confused. An adversary proceeding is a lawsuit within a bankruptcy. There is no such thing as filing an adversary proceeding outside of a bankruptcy. The only way to have your debts discharged is with a bankruptcy, and the only way to have your student loans discharged is with an adversary proceeding within a bankruptcy. Does that make sense?

Customer: replied 5 years ago.
Now I'm confused. I understand that the advesary proceeding is a special form of bankruptcy. I am not filing chapter 7 or 13 to discharge any other debts. I just need to know if the garnishment from the student loans I am trying to discharge will be stopped with the filing of the advesary proceeding.Sorry about the confusion but it seems straight forward to me. You said that the advesary proceeding alone will not stop the wage garnishment of creditors but these are not creditors outside of the advesary action. It is the same debt I am trying to discharge. There are only three student loan debts I want to discharge them in advesary proceeding. One is garnishing my wages. Does this filing stop them until the decision is made. Thanks
Expert:  TJ, Esq. replied 5 years ago.

You Wrote: “I understand that the advesary proceeding is a special form of bankruptcy.”

My Response: Unfortunately, your understanding is not correct, and that seems to be causing the confusion. An adversary proceeding is not a special form of bankruptcy. As I mentioned in my other post, an adversary proceeding is a lawsuit within a bankruptcy. Therefore, in order to file an adversary proceeding, you must first file for bankruptcy (most likely a Chapter 7 or 13).

Once you file for bankruptcy, there will be a "stay" on all collection activity of your debts, including garnishments. This means that the garnishment must stop. Since student loans are not ordinarily discharged in bankruptcy, you will need to file an adversary proceeding (i.e. the lawsuit within the bankruptcy). In the adversary proceeding, you will need to prove to the bankruptcy judge that paying your student loans present an undue hardship. If the judge agrees, then your student loans will be discharged when your bankruptcy is complete.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

.

DISCLAIMER: Please understand that the complexities of most legal problems cannot be adequately addressed in this setting, and that I am only licensed to practice law in the state of Maryland. Accordingly, you acknowledge (1) that we have not formed an attorney-client relationship, and (2) that my post is general information only and not specific legal advice.

 

TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9684
Experience: Licensed to Practice Law
TJ, Esq. and other Bankruptcy Law Specialists are ready to help you
Expert:  TJ, Esq. replied 5 years ago.
I realize that New Mexico isn't your jurisdiction, but the information contained in this New Mexico Bankruptcy Court's website may be helpful. The website is located HERE. In part, it states:

"An adversary proceeding is a lawsuit filed within the bankruptcy case. It is an action commenced by a plaintiff filing a complaint against one or more defendants. An adversary proceeding resembles a typical civil case from state court. The plaintiff is the person, partnership or corporation initiating the lawsuit. The defendant is the person, partnership or corporation being sued.

Certain types of disputes cannot be handled by motion in the bankruptcy case, but instead require the commencement of an adversary proceeding. Federal Bankruptcy Rule 7001 lists types of actions that require an adversary proceeding. Adversary proceedings are governed, for the most part, by Part VII of the Federal Rules of Bankruptcy Procedure. These rules incorporate most of the Federal Rules of Civil Procedure and are designed to make practice before the bankruptcy and district courts as similar as possible."

 

The discharge of student loans is one type of dispute that cannot be handled by motion in the bankruptcy court, and therefore, must be handled by adversary proceeding.

 

I hope this is clearer now!

Customer: replied 5 years ago.
I get it. I file ch. 7 as well as the ad proceeding. By the way I have been operating from that very website N.M. I want to give you a bonus but have to make a deposit to my account tomorrow Thanks for all your help. You have been fantastic.
Expert:  TJ, Esq. replied 5 years ago.
Yes, I think you understand. Just in case I have tried to explain it in a clearer fashion:

Only a bankruptcy can discharge your debts (whatever type they are). Therefore, you have to file for bankruptcy if your goal is get rid of your student loans. But there are two types of debt: (1) Debt that is automatically discharged unless the creditor successfully argues otherwise, and (2) Debt that is not automatically dishcarged unless the debtor successfully argues otherwise. Most debt falls into the first category, but student loan debt falls into the second category.

If a creditor wants to argue that a debt in the first category should not be discharged, or if a debtor wants to argue that a debt in the second category should be discharged, then it requires evidence to be presented that will sway the judge. In order to present such evidence, there needs to be a trial, and that trial is called the adversary proceeding.

I hope that is clearer.

I appreciate your accolades, and I truly wish you luck! Please come back anytime you need additional information. Smile

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