Differences Between Chapter 7 and Chapter 13

 

IMCGRUP has an article on the "Differences Between Chapter 7 and Chapter 13 Bankruptcy. The article can be found at 
https://www.imcgrupo.com/difference-between-chapter-7-and-chapter-13-bankruptcy/
Jim Shenwick, Esq.  jshenwick@gmail.com  917 363 3391 
"We help people & monies with too much debt". 

Please click the link to schedule a telephone call with me.
 https://calendly.com/james-shenwick/15min

Chapter 11 Bankruptcy Filings Increase 83%

 

Chapter 11 Bankruptcy Filings Increase 83% Y/Y in February 2023  based on article in Monitor Daily. See  https://www.monitordaily.com/news-posts/chapter-11-bankruptcy-filings-increase-83-y-y-in-february/

Jim Shenwick, Esq.  917 363 3391  jshenwick@gmail.com

We held individuals & companies with too much debt!

Please click the link to schedule a telephone call with me.
 https://calendly.com/james-shenwick/15min

How student loan debt became a trillion-dollar problem for Americans

 See the post at https://www.cnn.com/2023/02/27/politics/us-student-loan-debt-timeline/index.html

Jim Shenwick, Esq.  917 363 3391   jshenwick@gmail.com

At Shenwick & Associates we help people and businesses with too much debt!

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

Falling behind on federal student loans can lead to other major financial problems according to CNBC

 

Falling behind on federal student loans can lead to other major financial problems

A story on CNBC reports that "more than 80% of borrowers who experienced default stated that they’d faced at least one additional consequence as a result. The most common impact was a drop in their credit score (62%) followed by being subject to collection fees (47%) and losing eligibility for future federal financial aid (37%)."

The story can be found at 

https://www.cnbc.com/2023/02/22/falling-behind-on-student-loans-can-lead-to-other-financial-problems.html

We help individuals & businesses with too much debt!

Jim Shenwick, Esq   917-363-3391   jshenwick@gmail.com

Office Landlord Debt Defaults Rising as Remote Work Takes Hold

The New York Post is reporting that “A growing number of office landlords are defaulting on loan payments as the rise of remote work causes more corporate tenants to rethink long-term leases". The story can be found at https://nypost.com/2023/02/21/office-landlord-debt-defaults-rise-as-remote-work-takes-hold-report/?utm_source=gmail&utm_campaign=android_nyp  

If New York City office landlords are defaulting on their mortgages, should commercial tenants in New York City with surplus space due to remote work or the recession also be asking for concessions such as a reduction in base rent or additional rent or seek to exit or terminate their leases? 

At Shenwick & Associates, we believe they should be, and we have helped many commercial tenants surrender, exit, or terminate their leases. We also work with their good guy guarantors to reduce or eliminate their exposure.

We recently helped a garment center company surrender their lease on very favorable terms and the post can be found at https://shenwick.blogspot.com/2023/01/office-lease-closing-termination-or.html

Jim Shenwick Esq. has office leasing, bankruptcy & workout experience and an LLM in Taxation from NYU Law School.  "Jim Shenwick, Esq helps individuals & businesses with too much Debt!"

Relief of Indebtedness Income and Workouts under Section 108 of the Internal Revenue Code

 Relief of Indebtedness Income and Workouts under Section 108 of the Internal Revenue Code.

Shenwick & Associates performs many workouts for clients, and one point that is often overlooked during negotiations is relief of indebtedness income. 

Section 108 of the Internal Revenue Code provides that income from discharge of indebtedness is income to the Debtor, unless otherwise provided for in that section.

 The following example illustrates the point: If a debtor owes a creditor $100,000.00 and the creditor agrees to accept $50,000.00 as payment for that debt, the debtor has been enriched by the sum of $50,000.00 and the Debtor must report $50,000 of income on its tax return.

Answers to many relief of indebtedness income questions are provided below:

1. Question: Do creditors really report relief of indebtedness income to the IRS?

Answer: Yes they do and the income is reported on IRS Form 1099-C

2. Question: Which creditors report income to the IRS? 

Answer: All banks and financial institutions do. Landlords, hospitals and trade vendors generally do not report relief of indebtedness income, although they should.

     3. Question: Is the income ordinary income or capital gain? 

Answer: Sadly, it is ordinary income.

     4.  Question: Is relief from indebtedness income recognized by the guarantor of a debt?

            Answer: The IRS generally holds that a guarantor (whether or not the primary obligor has defaulted and the guarantor has become liable for the indebtedness) does not realize relief of indebtedness income on release of a liability. IRC 108(e)(2)

5. Question: Do I have to recognize relief of indebtedness income if I file for bankruptcy?

Answer: No. See section 108(a)(1)(A) of the Internal Revenue Code. This is why many debtors elect to file for bankruptcy rather than do a workout.

6. Question: If I am insolvent (my Liabilities exceed my Assets also known as the Balance Sheet test) do I have to pick up relief of indebtedness income?

Answer: No. See section 108(a)(1)(B) of the Internal Revenue Code

7. Question: What if I am a member, partner, or shareholder of a company that defaults on an unpaid debt? 

Answer: A member, partner, or shareholder of an LLC, partnership, or S corporation (a pass-through entity) must report income unless an exception applies.

Clients or their advisors with questions regarding relief of debt income should contact Jim Shenwick, Esq.   jshenwick@gmail.com   917 363 3391

 "We held individuals and businesses with too much debt!"

SDNY Revisits Section 502(b)(6) Cap on a Landlord’s Claim for Rejection Damages

 

Judge Wilde's, a Bankruptcy Judge Revisits the Rent Cap Calculations allowed a Landlord under Section 502(b)(6) of the Bankruptcy Code. The article can be found at jdsupra at https://www.jdsupra.com/legalnews/sdny-revisits-rent-cap-calculations-a-8004543/?origin=CEG&utm_source=CEG&utm_medium=email&utm_campaign=CustomEmailDigest&utm_term=jds-article&utm_content=article-link

Jim Shenwick, Esq.  jshenwick@gmail.com   917 363 3391

"We held individuals and businesses with too much debt!"

WE HELP INDIVIDUALS & BUSINESSES WITH TOO MUCH DEBT! PLEASE CLICK THE LINK BELOW TO SCHEDULE A TELEPHONE CALL WITH JIM SHENWICK, ESQ.

   https://calendly.com/james-shenwick/15min

Crypto In Bankruptcy: Tax Apocalypse For Celsius Customers?

 Garrett L. Brodeur at Kostelanetz has published a very informative article on crypto and related tax and bankruptcy issues. The article can be found at https://kflaw.com/crypto-in-bankruptcy-tax-apocalypse-for-celsius-customers/

The article touches on many important bankruptcy and tax issues related to cryptocurrency in the Celsius case and other crypto cases.  Jim Shenwick, Esq.  917-363-3391  jshenwick@gmail.com 

WE HELP INDIVIDUALS & BUSINESSES WITH TOO MUCH DEBT! Please click the link to schedule a telephone call with me.

  https://calendly.com/james-shenwick/15min

Client Review from Melissa ________ January 29, 2023

 "Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time.  We are so grateful for his counsel and support and the successful outcomes he achieved for us."

 

What You Need To Know About Buying A Home After Bankruptcy

 HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at   https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/

Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles.  Jim Shenwick, Esq  jshenwick@gmail.com  917 363 3391

Schedule a telephone call with Jim Shenwick, Esq

Please click the link to schedule a telephone call with me.

 https://calendly.com/james-shenwick/15min

SBA EIDL Loan Repayments have Commenced according to an article in abc 11

Beginning in January 2023, millions of small businesses will have to budget for a new monthly expense. During the pandemic, federal loans granted to small businesses will begin repayment, according to a story at  https://abc11.com/small-business-ppp-loans-pandemic/12721676/

Many small businesses will now have to begin repaying their SBA EIDL loans despite a difficult business environment, including high interest rates and inflation. This may result in many businesses filing for chapter 7 bankruptcy or closing. Jim Shenwick, Esq  jshenwick@gmail.com   917 363 3391

FOR MORE BLOG POSTS ABOUT SBA EIDL LOANS SEE:

EIDL LOAN WORKOUTS AND BANKRUPTCY

https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html EIDL Defaulted Loans https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan" https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html PPP & EIDL Fraud https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

Party City files for Bankruptcy with plans to restructure mounting debt-is the party over?

Party City files for Bankruptcy with plans to restructure mounting debt-is the party over?

CNBC is reporting that Party City has filed for Bankruptcy protection. The story can be found at 

 https://www.cnbc.com/2023/01/18/party-city-files-for-bankruptcy-to-restructure-piling-debt.html

Jim Shenwick, Esq.   212 541 6224  jshenwick@gmail.com

Another Crypto Company Genesis Files for Bankruptcy

 

Genesis, a Crypto Lending Firm, Files for Bankruptcy according to the New York Times. The article can be found at   

https://www.nytimes.com/2023/01/20/technology/genesis-bankruptcy-crypto.html

Jim Shenwick, Esq.  212 541 6224   jshenwick@gmail.com

Social Security benefits can be taken to pay student loans in default

Many individuals are not aware that Social Security benefits can be used to pay student loans that are in default. The Social Security Administration (SSA) can take up to 15% of a persons benefits to pay off defaulted student loans; however, it cannot take more than $750 a month or $9,000 a year to pay for defaulted student loans.

For further details see the Fox Business article at https://www.foxbusiness.com/personal-finance/student-loans-default-diminish-social-security-benefits

Regrettably these defaults often impact retired parents who have taken out student loans for their children or Parent Plus Loans.

Jim Shenwick Esq.   212 541 6224   jshenwick@gmail.com 

Millions of Businesses Need to Start Paying Back Coronavirus Loans

The Toledo Blade is reporting that millions of businesses need to start paying back coronavirus loans. The article states that nearly 3.8 million small business owners took out Economic Injury Disaster Loans (known as EIDL loans) from the federal government, averaging roughly $100,000 per loan, according to the Small Business Administration. These 30-year loans carry an interest rate of 3.75 percent for businesses and require repayment.

The first EIDL loan monthly payments will commence in January 2023 and the article reports that 2.6 million businesses across the country will owe money by that date.

The article can be found at https://www.toledoblade.com/business/development/2023/01/14/businesses-pandemic-paying-back-coronavirus-loans/stories/20230114082

Jim Shenwick, Esq.   jshenwick@gmail.com   212 541 6224

Office Lease Closing, Termination, or Surrender in New York City

 Office Lease Closing, Termination, or Surrender in New York City 

As many readers of our emails and blog are aware, at Shenwick & Associates we are helping many small businesses close, terminate or surrender their office leases in New York.

 

As a result of the cooling labor market, many industry experts predicted employers would have more leverage to force their employees back to work. However, with the recession and troubled economy in New York City, we are seeing more and more small businesses close their offices and surrender, abandon or terminate their leases to cut costs.

 

A recent study by a Columbia business professor stated that to provide a seat for an employee in Manhattan costs the employer  $16,000 per year. It is important to note that the Columbia business professor referred to a "seat" rather than an "office". Providing an office for every employee would cost substantially more than $16,000 per year.

 

We were recently retained by a small garment center company that was struggling and wanted to move to a remote work structure to save business and money. The facts of the case are interesting and illustrative: the company owed $65,000 in rent and additional rent to its landlord. For them to be released from the guaranty, they needed to give the landlord three months notice and be current on their rent (total amount owed to landlord over $100,000). 

Jim Shenwick, Esq. was retained by the company and we reviewed the commercial lease, the guaranty, the financials' for the company and the guarantor. 

We formulated a strategy and negotiated a very favorable deal for our client. 

As part of the agreement, the tenant vacated the space quickly, abandoned its buildout to the landlord, forfeited its security deposit, and paid the landlord $25,000. The landlord agreed to release the company and the guarantor.

The result  was a "win/win" for all parties,  the landlord obtained possession of its space quickly without incurring legal fees and court costs, the company saved approximately $75,000 in rent payments and the guarantor was not sued and did not have to file for bankruptcy.

 

Jim Shenwick, Esq has experience in commercial leasing, workouts and bankruptcy and clients can contact him at 212 541 6224 or jshenwick@gmail.com  

 

Excerpts from the Elon Musk story are below.

Elon Musk, who was a skeptic of the benefits of remote work, recently announced that he was closing the Twitter offices in Seattle.  The Seattle Times had a fascinating article about musk's move, the article can be found at https://www.seattletimes.com/opinion/musks-about-face-on-remote-work-shows-its-value-in-recession/

 

The article stated in part that "As part of ongoing cost-cutting measures under new owner and CEO Elon Musk, Twitter is shutting down its Seattle offices and instructing employees to work remotely. That’s despite Musk earlier claiming that remote workers are only “pretending to work” and banning remote work at Twitter upon taking it over in early November.

So what explains his change of heart? Apparently, it’s the costs associated with the company’s Seattle office: rent and services such as cleaning and security.

The fact that Musk — an extreme skeptic of remote work — acknowledged its cost-cutting benefits illustrates the future of remote work for the U.S. economy. It highlights the misleading nature of many headlines about how an impending recession would lead to the end of remote work. 

They claim that a cooling labor market will give executives more control to require employees to return to the office. That’s because many employees prefer to work remotely and most executives want their employees in the office.

However, the reality is much more complex. Of course it’s true that during a recession, employers have more leverage. At the same time, executives need to focus on maximizing the return on investment from their employees.

In times of economic growth, executives have more freedom to make decisions based on their personal preferences and intuitions. But during a recession, they may need to hunker down, be more disciplined, and rely on data to make decisions that make the most financial sense for the company — like Musk choosing to have Twitter staff work remotely for the sake of cutting costs. This focus on profitability over personal preferences benefits remote work."

Jim Shenwick, Esq jshenwick@gmail.com 212541 6224

What to Know About Biden’s Income-Driven Repayment Proposal

 The New York Times has an article about "What to Know About Biden’s Income-Driven Repayment Proposal". The story can be found at https://www.nytimes.com/2023/01/10/your-money/student-loans-income-driven-repayment.html.

The Income-Driven Repayment Proposal would tie a  borrowers’ monthly payments for their student loan debt to their income and family size, and after a set number of years, any remaining debt is forgiven.  

Jim Shenwick, Esq.  212 541 6224  jshenwick@gmail.com

US Bankruptcy Court Rules Celsius Deposits Belong to the Firm

 

US Bankruptcy Court Rules Celsius Deposits Belong to the Firm. This story can be found at  the bitcoin website at https://news.bitcoin.com/us-bankruptcy-court-rules-celsius-deposits-belong-to-the-firm/

There ruling is bad news for people or companies who had deposits at Celsius, but may be good news for Celsius' unsecured creditors. 

At Shenwick & Associates, we are helping creditors file Proof of Claim in the Celsius and FTX cases.  Jim Shenwick, Esq   212 541 6224  jshenwick@gmail.com

Bed Bath & Beyond ("BBB") Warns of Potential Bankruptcy

The New York Times has an article that warns about a bankruptcy filing by Bed Bath & Beyond. The article can be found at https://www.nytimes.com/2023/01/05/business/bed-bath-beyond-bankruptcy.html

Landlords and creditors who are owed money by BBB, should take appropriate action prior to a bankruptcy filing by BBB. Landlords and creditors who are owed money by BBB should contact a bankruptcy attorney as soon as possible. Jim Shenwick, Esq   jshenwick@gmail.com  212-541-6224

DYING OUT ‘Retail apocalypse’ warning after legendary retailer begins 100 store closures with Kohl’s & Nordstrom ‘under pressure’

The Sun is reporting that over 100 retail stores will close in 2023. The article can be found at 

 https://www.the-sun.com/money/7035971/retail-closures-kohls-nordstrom-under-pressure/

Suppliers to these chains should proceed with caution. Jim Shenwick, Esq  212-541-6224  jshenwick@gmail.com

FTX customers are reportedly taking huge losses on their outstanding investments so they don't have to wait months for bankruptcy claims

 Yahoo is reporting that many FTX creditors are selling their Proof of Claims. The story can be found at https://finance.yahoo.com/news/ftx-customers-reportedly-taking-huge-201238856.html

At Shenwick & Associates, we helping many clients file Proofs of Claim. 

Jim Shenwick, Esq   jshenwick@gmail.com  212 541 6224

Happy Holiday and a Happy and Healthy New Year to All!

 Happy Holiday and a Happy and Healthy New Year to all!

This year, we received many referrals from friends and colleagues.

At Shenwick & Associates, we have been very busy counseling clients with regard to defaulted SBA EIDL loans, advising clients who want to vacate their leased property in Manhattan, and dealing with Good Guy Guaranty issues.

Personal bankruptcy filings have increased and we expect more personal bankruptcy filings in 2023 due to the new procedures in place for discharging student loans in chapter 7 bankruptcy, due to “hardship”.

Jim Shenwick

Already slammed by inflation, small businesses struggle to repay COVID-19 disaster loan

 CBS News has a post titled "Already slammed by inflation, small businesses struggle to repay COVID-19 disaster loans". The post can be found at https://www.cbsnews.com/news/small-businesses-eidl-loans-repayment-inflation-covid-19-pandemic/

This article is consistent with what we are hearing from many clients, who took out EIDL covid 19 loans and who are unable to repay them due to market factors. Jim Shenwick, Esq jshenwick@gmail.com 212 541 6224

Does My Spouse Have To Pay My Student Loans If I Die?

 Many clients contact Shenwick & Associates and ask if they are liable for a spouse's debts, particularly student loans.  AOL has an article titled “  Does My Spouse Have To Pay My Student Loans If I Die?” which answers that question and others. The article can be found at https://www.aol.com/finance/does-spouse-pay-student-loans-143003556.html 

Jim Shenwick, Esq.   212 541 6224  jshenwick@gmail.com

Student loan debt: 9 million wrongly told they were approved for debt forgiveness

 kiro 7 is reporting that "Student loan debt: 9 million wrongly told they were approved for debt forgiveness" The article can be found at

https://lnkd.in/e9iAtkkV

Jim Shenwick, Esq. 212 541 6224 jshenwick@gmail.com

Biden administration asks the Supreme Court to take on another student-loan forgiveness lawsuit, saying the lower court blocking the debt relief 'profoundly erred

 Biden administration asks the Supreme Court to take on another student-loan forgiveness lawsuit, saying the lower court blocking the debt relief 'profoundly erred as reported by Yahoo at https://lnkd.in/egUmizFb

Jim Shenwick, Esq 212 541 6224 jshenwick@gmail.com

CANCELING, TERMINATING, OR BREAKING A COMMERCIAL LEASE IN NEW YORK CITY AND THE GOOD GUY GUARANTY

 CANCELING, TERMINATING, OR BREAKING A COMMERCIAL LEASE IN NEW YORK CITY AND THE GOOD GUY GUARANTY

Whether it is crime, quality of life, or economics, many small businesses are looking to terminate or break their commercial leases before they expire.  Those tenants include  retailers, restaurants or office lease tenants.

Mr. Van Nieuwerburgh, a Columbia professor, calculates that New York office space on average costs about $16,000 a year per employee. “That’s real money,” he said, “and companies will try to save that”. The article quoting Mr. Nieuwerburgh can be found at https://www.nytimes.com/2022/11/17/business/office-buildings-real-estate-vacancy.html 

Many tenants looking to terminate their leases have contacted us regarding an early termination of their lease and the sticking point is usually the Good Guy Guaranty that the principal of the business signed. Strategies for dealing with Good Guy Guaranties are discussed below. 

Jim Shenwick, Esq has represented over 500 tenants in commercial lease negotiations and he has an active bankruptcy and workout law practice. 

BACKGROUND

In New York City, most commercial tenants are corporations or limited liability companies, and these entities are the tenants on the commercial office leases. The principal or principals of the corporation or LLC are almost always required to guarantee the lease in New York City.

 In New York, there are two types of lease guarantees. The full or complete guarantee of rent payment or the GOOD GUY GUARANTY, which is a specialized form of guarantee that can be limited in duration, if certain conditions enumerated in the GOOD GUY GUARANTY are met.

As example, under a  full or complete guarantee, if a tenant fails to make lease payments for 6 months and owes $50,000 for the remaining term of the lease, the Landlord can sue the guarantor for $50,000.

 A second type of guarantee is known as a Good Guy Guaranty, which limits the principal's exposure under the guarantee. To be a “good guy” means that the tenant vacates the space and delivers possession to the Landlord and the guarantor complies with the terms of the Good Guy Guaranty.

 Below is an example of how GOOD GUY GUARANTY operates.

The GOOD GUY GUARANTY  commonly provides that the guarantor’s financial exposure terminates when the following conditions are met: 1. the tenant sends notice to the Landlord that it is vacating the leased space (the notice required is generally 90 to 120 days), 2. the tenant must be current on  rent, when it sends the notice to the Landlord or when it vacates the space, 3.the space must be left “broom clean” and 4. keys for the office must be delivered to the Landlord.

 If all four conditions are met, the guarantor is released from liability under the Lease. In the event that the 4 conditions are not met, the guarantor remains liable until the lease expires.

 If a tenant closes for business or files for bankruptcy, and the conditions for the Good Guy Guaranty are not satisfied, the Landlord can or will sue the guarantor.  The statute of limitations is 6 years.

What can the Good Guy Guarantor do?

1. The Good Guy Guarantor can engage in asset protection planning, prior to entering into the GOOD GUY GUARANTY or prior to terminating the lease, provided that that planning is allowed under  New York State law and not a fraudulent conveyance.   

2. The Good Guy Guarantor can file for chapter 7 bankruptcy to discharge the monies owed under the Good Guy Guaranty.

3. The Good Guy Guaranty can engage in workout negotiations with the landlord and/or threaten a bankruptcy filing  or

4. The Good Guy Guaranty can do nothing and hope that the landlord does not sue the guarantor.

The optimal strategy depends on the facts and circumstances of each case and involves a thorough review of the lease, the guarantee and the financial situation of the guarantor. 

Clients who have guaranteed leases can contact Jim Shenwick, Esq. 212 541 6224 jshenwick@gmail.com to discuss their options.

U.S. appeals court rejects Biden's bid to revive student debt plan

 Reuters is reporting that U.S. appeals court rejects Biden's bid to revive student debt plan. The article can be found at https://www.reuters.com/world/us/us-appeals-court-rejects-bidens-bid-revive-student-debt-plan-2022-12-01/

Jim Shenwick, Esq.

Discharging Student Loans In Bankruptcy May Be Simpler & Easier

On Nov  17, 2022 the Biden Administration announced a new path to Discharging Student Loan Debt in Bankruptcy (litigation in Bankruptcy Court).  The New York Times has a story on this topic that can be found at https://www.nytimes.com/2022/11/17/your-money/bankruptcy-student-loans.html

The new path “outlines a better, fairer, more transparent process for student loan borrowers in bankruptcy,” according to Associate Attorney General Vanita Gupta. 

Once enacted, the guidance will make it easier for attorneys at the Justice Department and Education Department to identify cases in which Federal student loans may be discharged.

The New York Times article states that under the new guidelines, debtors will complete an "attestation form" that the government will use to determine whether a discharge should be recommended for Federal Student Loans. A Debtor will have to demonstrate hardship, such as having expenses that exceed their income or having a mental or physical disability that prevents them from repaying the loan. In such cases, the government lawyers will recommend a full or partial discharge of the debtor's student loans.

Student loans can only be discharged under the current system by filing for personal bankruptcy and then filing a lawsuit or adversary proceeding.

Adversary proceedings are expensive and difficult to pursue, and according to experts less than 1 percent of personal bankruptcy filers try to discharge their student loans.

The attestation form will hopefully make the adversary proceeding simpler and easier, so more debtors will be able to discharge their loans. 

Shenwick & Associates will close following these developments, and anyone with questions should contact Jim Shenwick, Esq.  jshenwick@gmail.com  212-541-6224