Clients frequently come in asking if they can discharge their student loans in bankruptcy.  And time and again, for years now, my answer has always been, "generally, no."  This may be about to change. See the article below: 

http://www.reuters.com/article/2012/02/27/tagblogsfindlawcom2012-lawandlife-idUS124877907920120227

Friends who aren't filing bankruptcy, or who aren't having trouble with their finances, often suggest to me that people who file bankruptcy deserve whatever they get; that they were "living beyond their means"; and that bankruptcy is their punishment.  But see below:  

http://www.google.com/hostednews/ap/article/ALeqM5idxi57Ot86QxfQNwVi8TeikucXBQD9IN27BO1?docId=D9IN27BO1

Often, bankruptcy is the result of life circumstances that are outside of our control, and yes, sometimes the cards, and the systems that were supposed to help, are stacked against us. 

If you don't need to file bankruptcy, or can find a way to settle with your creditors without filing, I congratulate you.  But sometimes, bankruptcy is the only solution, and you shouldn't feel guilty if you have no other choice.   

It's true that credit counseling can be beneficial; indeed, very specific types of credit counseling and debtor education are in fact *required* before filing bankruptcy.  

But beware of unscrupulous companies purporting to solve all your problems with the wave of a magic wand.  The following article discusses these types of companies:  

http://news.yahoo.com/s/prweb/20100818/bs_prweb/prweb4396554_1

I've had clients tell me that they had signed up with one of these debt relief companies, only to be told that they had to pay a massive fee up front *or* spend the first 18 months of their payoff period paying the debt relief company's "fees." Often times, the debt relief company did very little to lower my clients' debts at all.    

Don't get caught in this trap.  Spend a little time shopping around before you use any company purporting to provide quick solutions.  There are answers to debt problems, but they rarely can be provided overnight.    

On June 1, 2010, Supplemental Directive 10-02 (SD10-2) will go into effect, modifying the Home Affordable Modification Program (HAMP).  Basically, this will compel lenders to allow borrowers to make modifications to their home loans, even if they are in bankruptcy.  Check out the link below for more info:

http://ecreditdaily.com/2010/03/hamp-rules-foreclosure-bankruptcy/

If you were hesitant about filing bankruptcy because you didn't want to affect your chances for a loan modification, SD10-2 may be able to help.  Check with a lawyer to see if the changes fit your situation.  

The answer to this question, as with many things in life, is "it depends."  Do you have an outstanding loan on your car?  Are you current on that loan?  If the answer to the two previous questions is "yes," then more likely than not you will be able to keep your car.

You see, the lender on your car loan is what is called a "senior lienholder"; in other words, if your car is taken by the trustee and sold for cash, that lender is the first one paid.  Generally speaking, cars under these circumstances are worth less than the loan used to purchase them.  If the trustee were to force a sale on your car in this situation, the lender (again, the "senior lienholder") would get less money on the sale than its loan was originally worth.  Moreover, there wouldn't be enough money left over for secondary creditors, either.  Indeed, if you are continuing to pay on your vehicle's loan, it is usually a waste of time and money for the trustee or the lender to come after your car.  

But what if you own your car outright, with no loans attached?  Here, if there are not enough bankruptcy exemptions to cover your vehicle's worth, you may have enough value, or "equity," in your vehicle to warrant the trustee selling it at auction.  However, whether or not the trustee deems this prudent, again, depends on your individual case.  Talk to a bankruptcy attorney and see which scenario applies to you.