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Pull up a stool and spill the tea—er, terms and conditions. We provide straightforward answers to your burning consumer questions, whether you're overwhelmed by robocalls, puzzled by credit reports, or just curious if that warranty is filled with hot air. No jargon, no judgment—just legal clarity, on the rocks, with a splash of wit.
what will i learn in the bankruptcy counseling course?
Bankruptcy Overview (The Foundation)
01/30/26- Chapter 7 vs Chapter 13 (which one is for you?)
Think of bankruptcy like this:
- Chapter 7 is a reset (fast discharge, possible loss of non-exempt property)
- Chapter 13 is a repayment plan (3–5 years, keeps property, cures arrears)
Chapter 7: The Fresh Start Bankruptcy
What Chapter 7 does -It wipes out most unsecured debts (credit cards, medical bills) and gives you a discharge — meaning the law permanently stops collection on those debts.
What you give up - Not your paycheck — but you may give up non-exempt property. The trustee’s role - A Chapter 7 trustee looks for property you own that is: valuable, AND not protected by exemption. If you have non-exempt property, the trustee can sell it to pay creditors.
Chapter 13: “Catch Up and Keep Your Stuff”
What Chpter 13 does - Instead of wiping out debt immediately, you make monthly plan payments for 3–5 years. The plan is like a court-supervised repayment arrangement.
Why people choose Chapter 13 = You choose Chapter 13 because it can do things Chapter 7 can’t do as well:
- stop foreclosure and let you catch up on arrears
- stop repossession and catch up
- manage certain tax debts
- protect non-exempt assets
Quick self-check exercise
Answer these:
- Are you behind on your mortgage and want to keep the home?
→ Chapter 13 is usually the tool.
- Are you mainly trying to erase credit cards/medical and you rent?
→ Chapter 7 is often the tool.
- Do you have high income but heavy debt?
→ Chapter 13 may be required.
Who Chapter 7 is best for - You may be a strong candidate if:
- your income is low/moderate
- you have mostly unsecured debt
- you are not behind on mortgage/car (or you don’t mind surrendering)
- you have limited assets/non-exempt equity
Who Chapter 13 is best for - You may be a strong candidate if:
- you have steady income
- you’re behind on your mortgage or car
- you have assets you’d lose in Chapter 7
- you don’t qualify for Chapter 7 (means test issue)
Which debts are discharged (wiped out) vs not?
Key definition: discharge -A discharge is the court order that says you are no longer legally required to pay certain debts. Creditors can’t sue, garnish, or call you for those debts anymore. Debts bankruptcy usually DOES wipe out
- credit cards
- medical bills
- personal loans
- old utility bills
- most old cell phone/internet bills
- most old apartment lease balances
- repossession deficiency balances (usually)
Bankruptcy works best on unsecured debt.
Debts bankruptcy usually does NOT wipe out
These are “survivor debts” — they tend to live through bankruptcy.
A) Child support / alimony
These are called Domestic Support Obligations (DSOs). They are:
- not dischargeable
- collected aggressively
- treated as high priority
If you owe support, bankruptcy will not erase it.
B) Most student loans
Generally not discharged unless you prove “undue hardship.”
That is very hard and requires a separate lawsuit inside the bankruptcy (adversary proceeding).
Assume student loans survive.
C) Many taxes
Some older taxes can be discharged, but many cannot.
A good rule for consumers:
- recent taxes usually survive
- tax liens can survive even if personal liability is discharged
D) Court fines and criminal restitution
Not dischargeable.
E) Debts caused by fraud or intentional harm
If a creditor proves you incurred the debt through fraud, it may be ruled non-dischargeable.
Mini-quiz
Which of these usually gets wiped out?
- Credit card debt → Yes
- Child support → No
- Medical bills → Yes
- Parking tickets / criminal fines → Usually no
- Payday loan → Yes (but the lender may still be aggressive before filing)
Exemptions — how you keep property
What exemptions are
Exemptions are legal protections that say:
“This property is protected. You can keep it.”
Bankruptcy does not mean you lose everything.
Most people in Chapter 7 keep everything because exemptions cover their property.
The #1 rule: equity matters
Equity = value – loans
Example:
- Car worth $12,000
- Loan balance $10,000
Equity = $2,000
The trustee only cares about equity.
Common exempt property
Usually protected (depending on state/federal rules):
- clothing
- basic household furniture
- retirement accounts (401k often protected strongly)
- some amount of vehicle equity
- some amount of home equity (homestead)
- tools needed for work
- benefits (Social Security, disability)
Bankruptcy exemptions are one reason bankruptcy exists:
- you erase debt
- you keep basic life stability
Secured debts (car loans and mortgages)
What “secured” means - Secured debt is tied to collateral:
- mortgage = house
- car loan = vehicle
The rule you must understand - Bankruptcy can wipe out your personal obligation to pay, but it does not erase the lien. Meaning:
- if you don’t pay, they can still take the car/house
- but if you surrender it, you usually don’t owe the leftover balance (deficiency)
Car loan options in bankruptcy
Option 1: Keep and pay - You keep the car and keep making payments.
Option 2: Surrender - You give it back. The loan gets discharged (no deficiency, in most cases).
Option 3: Redemption (Chapter 7) - You pay the lender a lump sum for the car’s current value.
Example:
- Loan balance $18,000
- Car worth $9,000
Redemption lets you pay $9,000 and keep it.
Mortgage options in bankruptcy
If you’re current - You can often keep paying and keep the home.
If you’re behind - This is where Chapter 13 shines. Chapter 13 can:
- stop foreclosure immediately
- let you catch up arrears over 3–5 years
- while you also keep paying the regular mortgage payment
Budget + Income Review (Fixing the Root Problem)
Bankruptcy helps debt — but the goal is to prevent the debt from coming back.
1) Household income and expenses
Step 1: Calculate household monthly net income - List all income after taxes:
- wages
- gig income
- benefits
- child support
Use monthly numbers.
Step 2: Track expenses - Break into:
Needs - housing, utilities, food, transportation, insurance, medical
Wants - subscriptions, dining out, entertainment
2) Are your expenses “reasonable”? This isn’t about shame. It’s about whether your spending matches your income reality. The 3 categories of “unreasonable” expenses:
Mathematically impossible
- spending > income every month
High fixed expenses
- expensive car payment, high rent, too many financed items
Hidden leaks
- subscriptions, impulse spending, delivery apps, overdraft fees
3) Stabilizing cash flow - Goal: stop the “survival borrowing”
If you use credit cards to buy groceries, gas, utilities — that’s survival borrowing. That is a sign of insolvency.
5 practical stabilizers
- Stop overdraft fees
- Set due dates
- Starter emergency fund ($500–$1,000)
- Automate necessities first
- Cut financial bleeding
- subscriptions
- high interest loans
- payday advances
Debt Analysis (Know what you owe)
1) Categorize debts correctly
Secured debt - Collateral attached: mortgage, car loan
Priority debt - Special legal status:
- child support
- alimony
- certain taxes
Unsecured debt - No collateral:
- credit cards
- medical
- personal loans
2) Identify high-risk debts -
Taxes - High risk because:
- hard to discharge
- liens survive
- strong collection power
Child support / alimony - High risk because:
- not dischargeable
- can lead to contempt, license suspension, interception of refunds
Student loans - High risk because:
- likely survive bankruptcy
- can resume collection after discharge
Alternatives to Bankruptcy (Know your options)
Bankruptcy is a tool — not the only tool.
1) Debt settlement
What it is - Offer creditors less than owed.
When it works
- you have access to lump sums
- you’re not being sued (or can manage risk)
Major warnings
- you can get sued while saving money
- forgiven debt can create tax consequences
- many settlement companies are predatory
2) Debt Management Plan (DMP)
What it is - A structured plan through a nonprofit agency:
- reduced interest
- one monthly payment
- full repayment over time
When it works
- stable income
- debt not too large
- you can afford the monthly payment
When it doesn’t
- too much debt
- already behind on necessities
3) Negotiation with creditors - This can include:
- hardship programs
- interest reduction
- payment plans
- balance reductions
Tip: negotiate before charge-off if possible.
4) Mortgage modification options
What a modification is - A lender changes the loan terms:
- reduce interest
- extend term
- add arrears to end of loan
Key lesson - Mortgage modification is paperwork heavy.
Success depends on:
- documentation
- follow-up
- income stability
Credit Report Basics (Know what’s really on your record)
1) Reviewing credit report entries
Pull reports from:
- Equifax
- Experian
- TransUnion
Look for:
- correct name/address
- correct balance
- correct payment history
- collection
- charge-offs
- duplicate debts
2) Identifying inaccuracies
Common errors
- wrong balance
- wrong creditor
- duplicate collection account
- debts that aren’t yours
- incorrect delinquency dates
- discharged debts still reporting as owed
Why accuracy matters before filing
Because:
- you must list all creditors
- missing creditors causes post-filing collection headaches
- identity theft debts should be addressed separately
When Global Events Cancel Your Flight
1/8/26 - Help! I’m Stranded Abroad Because of the Venezuela Crisis — What Can I Do?
Question: I was traveling in the Caribbean when flights were suddenly canceled after the recent situation involving Venezuela. My airline says it’s not their fault, my travel insurance is “reviewing,” and I’m stuck paying for hotels and meals. What are my rights, and what should I do right now?
Answer: You’re not alone. Recent airspace restrictions and flight cancellations linked to international events involving Venezuela left many travelers unexpectedly stranded. When this happens, it’s frustrating — and expensive. Here’s how to protect yourself and your rights.
Start With the Airline (Even If They Say “Not Our Fault”)
Airlines often claim that cancellations caused by government or military action are “extraordinary circumstances.” That does not mean you have no rights.
You should still ask for:
- A refund for any flight the airline canceled and did not rebook
- Free rebooking on the next available flight
- Reimbursement for hotels and meals if the delay lasted more than 24 hours
Even if the airline initially refuses, submit the claim in writing and keep copies. Airlines sometimes reimburse later, especially when delays last several days.
File a Travel Insurance Claim — Even If You Think It’s Excluded
Many travelers are surprised to learn that some travel insurance policies exclude: acts of war, military action, and political unrest.
However, coverage depends on:
- When you bought the policy
- The specific language in your plan
- Whether your delay is classified as a trip interruption or trip delay
Important: Always file the claim. Insurers do not automatically deny these claims, and partial reimbursements are common.
Don’t Forget Your Credit Card Benefits
Many travelers don’t realize their credit card includes built-in travel insurance, which can cover hotel stays, meals, baggage issues, and even canceled trips.
If you paid for your trip (or even part of it) with a travel credit card, you may be covered for:
- Trip delays (often 6–12 hours or overnight)
- Trip cancellation or interruption
- Lost or delayed baggage
- Rental car damage or theft
- Travel accident insurance
This is why many frequent travelers skip buying separate travel insurance.
Credit Card Travel Insurance: What You’re Already Covered For
When things go wrong on a trip, travel insurance can help get your money back — but many travelers don’t realize they already have travel insurance through their credit cards. If you paid for your trip with the right card, you may not need to buy a separate policy at all.
That’s why many frequent travelers rely on cards like Chase Sapphire, Capital One Venture X, and American Express Platinum instead of standalone insurance.
The Catch?
You usually must:
- Pay for the trip (or at least part of it) with the card
- Follow strict claim rules and deadlines
- Have a covered reason for the disruption
What Credit Card Travel Insurance Typically Covers
Coverage varies by card, but higher-tier travel cards usually include several of the following:
Common Covered Problems
- Trip delay – Reimbursement for hotels, meals, and transportation if your flight is delayed (often 6–12+ hours or overnight)
- Trip cancellation – Refunds for prepaid, nonrefundable trips canceled for covered reasons
- Trip interruption – Reimbursement if your trip is cut short
- Baggage delay – Money to buy clothes and essentials while waiting for bags
- Lost or damaged luggage – Compensation if baggage is lost, stolen, or damaged
- Rental car damage/theft – Coverage for damage or theft of a rental ca
- Travel accident insurance – Coverage for accidental death or dismemberment
Some premium cards also include:
- Emergency medical coverage
- Medical evacuation
Cards With the Strongest Travel Insurance Coverage
🥇 Best Overall Coverage (Transferable Rewards Cards)
Chase Sapphire Reserve®
- High annual fee, very strong protections
- Trip cancellation/interruption up to $10,000 per person
- Trip delay after 6 hours
- Primary rental car insurance
- Travel accident coverage up to $1 million
Chase Sapphire Preferred®
- Much lower annual fee
- Similar cancellation/interruption limits
- Trip delay after 12 hours
- Primary rental car insurance
Capital One Venture X
- Lower fee than many premium cards
- Trip delay after 6 hours
- Solid cancellation/interruption coverage
- Primary rental car insurance
- Very strong for frequent travelers
American Express Platinum®
- Excellent trip delay coverage
- Strong cancellation/interruption benefits
- Rental car coverage is secondary
- High annual fee, but popular with frequent flyers
Airline Credit Cards With Travel Insurance
If you frequently fly a specific airline, these cards may be enough:
United Explorer Card
- Trip delay, cancellation, baggage delay
- Primary rental car insurance
- Lower annual fee than premium cards
Delta SkyMiles® Gold AmEx
- More limited coverage
- Focuses mainly on lost luggage and rental cars
- Best used as a supplement, not primary protection
Hotel Credit Cards With Travel Insurance
Hotel cards often include solid travel protections plus loyalty perks:
- Marriott Bonvoy Brilliant® AmEx
- Hilton Honors Aspire AmEx
- World of Hyatt Credit Card
- IHG One Rewards Premier
These cards typically offer:
- Trip delay and cancellation coverage
- Lost luggage protection
- Rental car insurance (often secondary domestically, primary abroad)
Do I Still Need Separate Travel Insurance?
Sometimes — yes. You may want additional travel insurance if:
- Your trip cost exceeds your card’s coverage limits
- Your card does not include trip cancellation/interruption
- You want Cancel For Any Reason (CFAR) coverage
- You’re traveling somewhere with high medical or evacuation risks
A good rule of thumb: If losing the cost of the trip would seriously hurt, buy extra insurance.
Key Takeaways for Travelers
- Many credit cards already include valuable travel insurance
- Premium cards usually offer broader and faster coverage
- You must follow claim rules carefully
- Coverage only applies for covered reasons
- Separate travel insurance may still make sense for expensive or high-risk trips
Keep Proof of Why You Were Stranded
Documentation is critical. Save:
- Airline cancellation notices
- Emails or texts from the airline
- Hotel and meal receipts
- News articles or government advisories explaining the airspace disruption
This evidence helps support both insurance and credit card claims.
What the Government Can (and Can’t) Do
Governments may provide:
- Travel alerts
- Emergency guidance
- Information about evacuation options
But governments do not reimburse travel costs, and consular help may be limited depending on the country.
When Should I Talk to a Lawyer?
Talk to a lawyer if:
- Your expenses are significant
- An airline or insurer denies your claim without explanation
- You’re being passed back and forth with no resolution
A consumer rights attorney can review whether the denial is lawful and help you push back.
Bottom Line: Even when airlines and insurers say a disruption is “out of their control,” you still have options. File claims, document everything, and don’t take the first “no” as the final answer.
Need Help? Reach out to Ginsburg Law Group - just fill out our Travel Disruption Claim Form for a free case assessment (link below).
Have a consumer question? That’s what Ask the Barista is for!
This response is for informational purposes only and does not constitute legal advice.