Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Typically student loans are not discharged in bankruptcy. In order to have your student loans discharged, you must be able to show that repaying your student debt will impose an “undue hardship” on you and your dependents.

It is difficult, but not impossible, to make this showing. However, you generally will not be able to prove undue hardship unless the court finds that you are physically unable to work and have no chance of gaining future employment.

In order to have your student loans discharged, you must file a separate motion and present your case to a judge. Both privately funded and federally funded student loans are treated the same way.

For free legal advice on bankruptcy, including the effect of bankruptcy on student loans, contact Fears | Nachawati today. To speak with one of our experienced bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

Reaffirming your debt after you have filed for bankruptcy means that you are agreeing to repay a certain debt that would have otherwise been discharged. You sign a debt reaffirmation agreement, reaffirming to your lender or creditor that you will repay your debt. In return, you are allowed to keep the property that is the subject of the debt.

Normally, when you file for bankruptcy, creditors of your secured debts can treat the bankruptcy as a default and therefore repossess their collateral, such as a car. While there are property exemptions applicable to bankruptcy cases, the only sure way to retain a piece of property is to reaffirm the debt.

That does not mean, however, that reaffirming your debt is always a good idea. If you fail to make your payments, not only can your creditor repossess your property, but you are also still responsible for the balance of the debt.

Whether or not you should reaffirm a debt is a matter of deciding how badly you want to keep the property and whether you will be able to afford to make the payments. An experienced bankruptcy attorney can assess your situation and help you decide whether it is a good idea to reaffirm your debt.

To receive free legal advice from a bankruptcy lawyer, contact Fears | Nachawati today. You can email us or phone us toll free at 1.866.705.7584.

One of the main criteria that determines whether you are eligible to file Chapter 13 bankruptcy is the amount of debt you currently have. To be eligible to file Chapter 13 bankruptcy, you must have less than $336,900 in unsecured debt and less than $1,010,650 in secured debt.

In order to file for Chapter 13 bankruptcy, you must also reside in the United States and have a regular income. Specifically, you must be able to show the court that you have sufficient income to meet your repayment obligations. Additionally, you must have received credit counseling within the preceding 180 days.

Other criteria that must be met in order to file for Chapter 13 bankruptcy are:

• You must not have been granted a Chapter 7 bankruptcy discharge in the past 4 years.
• You must not have been granted a Chapter 13 bankruptcy discharge in the past 2 years.
• You cannot have had a bankruptcy petition dismissed within the past 180 days because of failure to appear before the court, failure to comply with a court order or a voluntary dismissal after your creditors tried to recover property through the bankruptcy court.
• You must have filed both your federal and state income tax returns for the four years preceding your bankruptcy filing date.

To find out if you are eligible to file for Chapter 13 bankruptcy, contact the bankruptcy attorneys of Fears | Nachawati today. To receive free legal advice on bankruptcy, email us or phone us toll free at 1.866.705.7584.

Individuals facing a financial crisis are concerned that by filing Chapter 13 they will lose their home to repay debts. In a Chapter 13 bankruptcy, you don't have to give up any property, but you are required to use your income to pay some or all of your debt over time. Depending on the size of your debts and income it can take from three to five years.

The most important part of your Chapter 13 paperwork will be the repayment plan as this will list the secured and unsecured debt you have. Your repayment plan needs to be carefully drawn up to show how much you will pay towards your secured and unsecured debts. The plan must show any disposable income you have left after making required payments on secured debt. You also need to demonstrate how much will go towards repaying your unsecured debts, such as credit card or medical bills. Many times you will not have to pay your unsecured debt or will only have to pay pennies on the dollar.

Contact us today for further information on what qualifies as unsecured debt by calling Fears | Nachawati at toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com.

Many people who were in financial crunch a few years ago are facing the same dilemma once again. As a result, many bankruptcy attorneys are being asked:

Can I File Chapter 13 After Filing A Chapter 7? Yes, you can file for Chapter 13 any time after your Chapter 7 bankruptcy is discharged.

Can I file Chapter 7 if I filed Chapter 7 a few years back? Only if it was over 8 years ago. But as an individual (versus a corporation) you have the option to file a Chapter 13 any time after your Chapter 7 bankruptcy is discharged.

How do I know when my Chapter 7 bankruptcy was discharged? You should have or will receive a notice from the bankruptcy court where you filed your Chapter 7 bankruptcy.

Most people who file a Chapter 13 bankruptcy are trying to save their homes from foreclosure, so it may be a better option than a Chapter 7 bankruptcy where you may have to sell your home and use any equity you may have to pay your creditors. For more specific information on your options based on your personal information, it is best to get advice from an experienced bankruptcy attorney.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation on bankruptcy and your eligibility options.

The simplest way to explain unsecured debt is to describe it as debt that is not “secured” by any property or collateral. That means that debt cannot cause a lien against your property and that your property cannot be taken away from you in order to pay the debt. Examples of unsecured debt include debts from credit cards, personal loans, medical bills, and even cell phone bills.

In other words, the credit card company cannot take your purchases back as payment for your overdue bill or place a lien on your home. Unsecured creditors usually try to get paid through many aggressive tactics, including the use of collection agencies, constant letters and phone calls, but they really have little legal recourse in getting this debt paid back. But they have the power to report delinquent payment that will affect your credit rating.

An option to stop the harassment and to get a fresh start is to file for a Chapter 7 bankruptcy. When you file for a Chapter 7 bankruptcy most, if not all, of your unsecured debt will be canceled when your case is discharged. Once your Chapter 7 case is discharged, all remaining unsecured debts will be erased.

It is important to note that by filing a Chapter 7 bankruptcy, some of your property might be sold to pay off some unsecured debts. Additionally, if you are behind in your mortgage or car payments, your home or car may be repossessed by the mortgage company that financed the loan, but they can’t be sold to cover your unsecured debt. For more information on how to save your home through bankruptcy it is best to consult with an experienced bankruptcy attorney in your local area.

For a free consultation on getting rid of unsecured debt, contact bankruptcy law firm, Fears | Nachawati, by calling us at toll free 1.866.705.7584 or send an e-mail to info@fnlawfirm.com.

It is not uncommon for homeowners who file for bankruptcy also have past due HOA fees or even a lien on their property. Many homeowners also complain how stubborn and inflexible the Home Owners Association (HOA) Board of Directors and the HOA attorney are with any type of payment arrangements. When you file for bankruptcy, an automatic stay will be put into place and any collection effort by the HOA needs to stop. That includes HOA liens as well.

If you file a Chapter 13 bankruptcy, all past due HOA fees will be included in your repayment plan. For those who file a Chapter 7 bankruptcy the process is a bit more complicated. The HOA fees may be turned into unsecured debt which may mean you will not have to repay most or any of the HOA past due fees.

Although most HOA liens do survive bankruptcy you can avoid losing your home through foreclosure by overzealous HOAs when you file for bankruptcy. It is advisable to consult with an attorney when dealing with HOAs as most are very aggressive and inflexible regarding HOA fees and placing a lien on your home.

For more information on stopping HOAs in their tracks through bankruptcy, contact bankruptcy law firm, Fears | Nachawati, by calling toll free at 1.866.705.7584 or emailing us.

There is no one right answer as to whether it’s better to file Chapter 7 or Chapter 13 bankruptcy. The best choice depends on your financial circumstances and your goals.

Each type of bankruptcy has relative advantages and disadvantages. Which type is best is a matter of deciding which advantages apply to your situation.

The primary advantage of Chapter 7, for example, is that all of your unsecured debts are discharged. However, you may have to give up some of your assets. For that reason, Chapter 13 is a better choice for some people.

Chapter 13 is essentially a repayment plan, and it doesn’t require you to give up any of your property. Also, it avoids foreclosure, enabling you to keep your house even if you’re behind on your mortgage payments.

A potential disadvantage of Chapter 13 bankruptcy is that you debts are not discharged until the payment plan is done, which could be as much as 5 years. With Chapter 7, by contrast, your debt is discharged within 3 to 5 months.

An experienced bankruptcy attorney can help you understand the differences between Chapter 7 and Chapter 13 bankruptcy and advise you on which is more beneficial to you given your financial circumstances and current debt.

To receive free legal advice from a bankruptcy lawyer, contact Fears | Nachawati today. You can email us or phone us toll-free at 1.866.705.7584.

In order to be eligible to file for Chapter 7 bankruptcy, you must meet all of the following criteria:

• You must have received credit counseling within the six months prior to filing for Chapter 7 bankruptcy.
• You cannot have received a Chapter 7 bankruptcy discharge within the past eight years or a Chapter 13 discharge within the past six years.
• You must pass the Chapter 7 bankruptcy Means Test. You qualify for Chapter 7 bankruptcy if your income is less than the median income for a family of your size in your state.
• You cannot have had a prior bankruptcy petition dismissed within the past six months on account of failure to appear before the court or failure to follow court orders.

To learn more about Chapter 7 bankruptcy and receive free legal advice from a bankruptcy attorney, contact Fears | Nachawati today. You can email us or phone us toll-free at 1.866.705.7584.

While every bankruptcy case is different, it is safe to say that most individuals who file for bankruptcy get to keep most of their property. Every state has its own set of laws that exempt certain types of property from the reach of bankruptcy creditors and trustees. If the property is exempt, you get to keep both the property itself and, in many cases, the equity you might have in it.

To understand how bankruptcy property exemptions apply to you and your situation, contact Fears | Nachawati today to speak with a bankruptcy attorney. Simply email us or phone us toll free at 1.866.705.7584.

A reaffirmation agreement is a new contract signed by you and your lender or creditor reaffirming your existing debt on a piece of personal property.  It is an agreement that states that, bankruptcy notwithstanding, you will still pay the debt that you owe to this lender.

The reason that a debtor would sign a bankruptcy reaffirmation agreement is so they can keep the piece of property on which they still owe money. The debtor will continue to repay the loan, even though it would otherwise be discharged by the bankruptcy.

Reaffirmation agreements are completely voluntary. Neither you nor your lender are required to enter into one. Also, after you sign a bankruptcy reaffirmation agreement, you have 60 days within which to revoke it, thereby relieving yourself of the debt.

In most cases, reaffirmation contracts are overseen by a bankruptcy lawyer. If the debtor does not have a bankruptcy lawyer, then the contract must be approved by the bankruptcy court judge.

To receive free legal advice from a bankruptcy lawyer, contact Fears | Nachawati today. Simply e-mail us or call us toll free at 1.866.705.7584, and you will speak directly with an experienced bankruptcy lawyer who will provide you with a free legal consultation.

Chapter 7 and Chapter 13 bankruptcy differ significantly from one another in several major aspects. The main difference, however, is that with Chapter 7 bankruptcy, most of your debts are being discharged by the court – you will no longer owe your creditors anything.

With Chapter 13 bankruptcy, on the other hand, you are restructuring rather than discharging your debts. Rather than eliminating your debts, a Chapter 13 bankruptcy sets up a new payment plan under which you pay back all or some of your debts over a designated time period.

Depending on your state’s laws regarding exemptions, you may lose some of your property with a Chapter 7 bankruptcy filing. You do not have to give up any of your property when you file bankruptcy under Chapter 13.

A third major difference between the two types of bankruptcy is the length of time it takes before the slate is “wiped clean,” so to speak. With Chapter 7 bankruptcy, the entire process is complete within approximately 4 months. Because Chapter 13 involves a repayment plan, it takes anywhere from 3 to 5 years to complete.

Both types of bankruptcy have their advantages and disadvantages. A qualified and experienced bankruptcy lawyer can help you understand these differences and advise you on whether bankruptcy is the right decision for your financial circumstances.

For free legal advice from a bankruptcy attorney, contact Fears | Nachawati today. You can email us or call us toll free at 1.866.705.7584.

During bankruptcy a debtor is required to reveal all assets and give an estimated value of the property. When the asset is cash money or an investment, figuring its value is easy. In other cases nailing down a value can be very elusive. This is especially true when dealing with a unique or expensive household item. So how does the bankruptcy trustee expect the debtor to come up with a value for household property?

To understand how to value household property for bankruptcy purposes, it is important to understand the bankruptcy process. One of the chief functions of the bankruptcy trustee is to uncover assets for the benefit of creditors. Federal and state laws allow the debtor to keep certain modest items of household property that are considered “necessary,” like clothing and household items, but only up to a certain dollar amount. That amount is called an “exemption,” and that property is considered “exempt” and protected from a creditor’s collection remedies. Any property that is worth more than the allowed exemption amount is subject to be liquidated, usually at auction.

So the easy answer to how household property should be valued is, “At auction prices.” Since auction prices can vary, that doesn’t really answer the question at all. Instead, what most bankruptcy trustees suggest is to set a price like you would at a yard sale. Additionally, internet resources like eBay can be helpful to determine the quick-sale market value of a unique item. Using one of these on-line resources can provide good evidence that your new-in-box Barack Obama Chia Pet is only worth $20.00.

Many used household items, like common dinner dishes or bedding, have little or no value. On the other hand, a grandfather clock, piano, or gun safe usually has some value. A bankruptcy trustee is not in the used furniture business, and will usually incur significant costs in selling a debtor’s property. Consequently, the trustee will not be interested in your household property unless you own a non-exempt item that can be sold for a substantial profit to the bankruptcy estate. 

As owner of your property, you are entitled to give an opinion regarding its value. It is important not to under-value or over-value your household property, but instead give a fair and reasonable estimate. If you own an expensive household, do some research and speak to your bankruptcy attorney. There are many ways to protect property in bankruptcy and your bankruptcy attorney can help you decide on the best course of action.

For free legal assistance from an experienced bankruptcy attorney, contact Fears | Nachawati. To receive your no charge legal consultation, email or call us toll free at 1.866.705.7584.

One of the principle aims of the U.S. bankruptcy laws is to give an honest debtor a "fresh start." It is important to know how bankruptcy will affect your financial life, during and after your bankruptcy case. An experienced bankruptcy attorney can guide you through the process, and get you the relief that you need, but what then? What happens after the bankruptcy court issues your discharge, your case closes, and your bankruptcy attorney sends you a nice letter wishing you well in the future? It is important to know what to expect after your bankruptcy ends, and how you can get that "fresh start."

There is actually quite a bit of confusion surrounding when a bankruptcy can no longer be reported on your credit report. Some sources say ten years, others say ten years for a chapter 7 and seven years for a chapter 13. The law is actually very clear. The Fair Credit Reporting Act ("FCRA") directs credit reporting agencies to exclude bankruptcy case information from all consumer reports ten years after “the date of entry of the order for relief.” The FCRA does not distinguish between chapter 7 or chapter 13. However, many credit counselors cite an "unofficial policy" of the three largest credit reporting bureaus (Experian, TransUnion, and Equifax) that removes a chapter 13 filing from your credit report after seven years.

Many individuals (and some credit experts!) are also confused over when the FCRA's ten year bankruptcy clock starts. Some say the information must be removed ten years after the date of the discharge. Section 301 of the bankruptcy code states that the “order of relief” date is the filing date, so the ten year period is measured from the bankruptcy filing date, not the discharge date. Information about your bankruptcy must be removed from your credit report not later than ten years after the date you filed the case. If you file on January 1, 2010, the bankruptcy must be removed before January 1, 2020.

Knowing what to expect during and after your bankruptcy case can help you plan for the future. Do not be bashful about asking your bankruptcy attorney questions, and make the most of this fresh start opportunity.

For free legal advice from a bankruptcy attorney, contact Fears | Nachawati. Simply email us or call us toll-free at 1.866.705.7584.

As consumers venture out shopping for gifts this holiday season, many will be surprised by the number of stores that have gone out of business since last Christmas. Many shopping favorites have closed their stores for good, including Linens N’ Things, Goody’s, Mervyns, KB Toys, Sharper Image, and Circuit City. However, many stores like Circuit City and Linens N’ Things have filed a business bankruptcy, but are still selling on-line.  This kind of restructuring through a business bankruptcy is not unusual in today’s economy. Shrewd businessmen like Donald Trump know the power of the federal bankruptcy laws. In fact, Mr. Trump has seen his businesses file, and emerge from, bankruptcy several times.

According to the Wall Street Journal, business bankruptcies are up 16% from last year, and number 74,832 filings through October. For many retailers, the holiday season is a make-or-break time of and will do what they can to attract shoppers. For instance, BusinessWeek reports that Sears, Amazon.com, and Wal-Mart are invoking Black Friday deals weeks before Thanksgiving and retailers are planning to offer more holiday promotions and discounts this holiday season.

The federal bankruptcy laws have helped retailers keep their stores open.  Eddie Bauer and Mrs. Fields Cookies are two well-known businesses that recently filed chapter 11 bankruptcies to reorganize finances, get a breathing spell from creditors, and continue operating. Chapter 11 of the bankruptcy code is a reorganization bankruptcy, usually used by a corporation or partnership. In a chapter 11 the debtor proposes a plan to keep its business alive and pay creditors over time.  An individual can also file a chapter 11 bankruptcy, but usually opts for filing under chapter 13 or 7.

If you are struggling with bills you can’t pay, you are not alone. Many businesses and individuals are hurting during this recession period. The good news is that the federal bankruptcy laws have helped millions of individuals and businesses get back on their feet, and it can help you too! 

Speak with an experienced bankruptcy attorney and learn how you can get relief and a fresh start in your financial life. For free bankruptcy advice, contact Fears | Nachawati. Email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

The U.S. Department of Labor reports that since December of 2007 the economy has shed more than eight million payroll jobs. The number of unemployed workers has surged from 7.5 million to 15.7 million, and 36 percent have been out of work longer than six months. Many struggling families are unable to meet their monthly financial obligations and are filing for bankruptcy protection. The American Bankruptcy Institute reports that 135,914 consumers filed for bankruptcy in October, and total bankruptcies are projected to exceed 1.4 million in 2009, the highest figure in four years.

The recession has forced bankruptcy courts to examine the effect of unemployment on bankruptcy cases. The most challenging issue is whether an unemployed debtor can qualify for a Chapter 7 case, or if the debtor must file a Chapter 13 repayment plan case. The touchstone for determining this answer is the bankruptcy Means Test, which makes certain presumptions about the debtor’s finances and projects the debtor's ability to pay debts based upon a historical six month average. Failing the Means Test means that the debtor is presumed to be able to repay some of the debts during a Chapter 13 bankruptcy.

Calculating the six month average income can be tricky when dealing with a recently unemployed individual. First, income has usually sharply decreased and the actual present monthly income is considerably less than the six month average calculated by the Means Test. Fortunately, most bankruptcy trustees and judges are compassionate when a debtor has lost a job, and this presumption of repayment may be rebutted by evidence by the debtor of the involuntary reduction of income, actual current income, employment status, etc.

Second, the Means Test income calculation includes any bonus or severance pay received during the six month period prior to the bankruptcy filing. This additional money may result in an inflated and inaccurate income calculation. Again, the presumption of an ability to repay can be rebutted, but the trustee and the bankruptcy court will require detailed financial records regarding how this money was spent.

Third, unemployed debtors often receive unemployment compensation pay. How unemployment benefits are applied in calculating current monthly income under the Means Test differs from one jurisdiction to another. The issue turns on whether the unemployment compensation is a benefit received under the Social Security Act and is therefore excluded from a debtor’s income calculation. Some courts have held that unemployment compensation is a benefit received under the Social Security Act and are excluded from the debtor’s current monthly income. See In re Munger, 370 B.R. 21 (Bankr.D.Mass. 2007): In re Sorrell, 359 B.R. 167 (Bankr.S.D.Ohio 2007). Other courts find unemployment benefits are not excluded. See In re Kucharz, No. 09-81258 (Bankr. C.D. Ill. 10/28/2009); In re Baden, 396 B.R. 617 (Bankr.M.D.Pa. 2008).

If your family has experienced an involuntary job loss and are struggling to make ends meet, consider your options. An experienced bankruptcy attorney can explain how the bankruptcy laws may help you restructure your finances and live within your means.

To receive free legal advice on bankruptcy, contact Fears | Nachawati today. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

You cannot be fired for filing for bankruptcy. Federal laws prohibit discrimination against employees based on that employee filing for bankruptcy. 

This protection is contained within Section 525 of the bankruptcy code, which states in part, “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or her been a debtor under this title…solely because such debtor is or has been a debtor under this title or has not paid a debt that is dischargeable in a case under this title.”

In fact, if you are fired because you file for protection under bankruptcy laws, you may be able to sue your former employer for your losses and damages.

If you are considering filing for bankruptcy, contact the attorneys of Fears | Nachawati today for free legal advice. To speak with one of our experienced bankruptcy lawyers, email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

If you are considering filing bankruptcy, it is important that you are aware of both the advantages and disadvantages of taking this legal action. Bankruptcy, while it may be the right solution for your debt problems, is not without its downside.

First is the effect that bankruptcy will have on your credit. Bankruptcy remains on your credit report for as much as 10 years. During those 10 years it will be difficult for you to obtain credit and loans. If you are approved for a loan, it will likely be at a much higher interest rate. 

Even when bankruptcy is no longer on your credit report, you will always have to answer yes to having had a bankruptcy when asked on an application for a credit card or loan.

The second downside to filing for bankruptcy is the effect that it can have on your future employment prospects. Certain industries will not hire individuals who have filed for bankruptcy because they are considered to be high risk.

A third potential downside to bankruptcy is the effect that it can have on your ability to rent housing. Applications for rental housing often include credit checks, and having a bankruptcy on your credit report can result in a denial of your application.

Fourth, having a bankruptcy on your credit report can also adversely impact your ability to obtain car insurance. Some car insurance companies will deny your request for insurance, and others may charge you much higher premiums.

Last, you should also consider the cost of filing bankruptcy. Bankruptcy is not free. Once all is said and done, it will likely cost you around $2000 to file bankruptcy.

If you’re considering filing bankruptcy, you are well advised to first speak with a qualified bankruptcy attorney. The bankruptcy lawyers of Fears | Nachawati will provide you with a free initial legal consultation. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

Contact bankruptcy law firm Fears | Nachawati toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation on bankruptcy.

In the early 1980s the British punk band The Clash asked a question many homeowners are struggling with today:

Should I stay or should I go now?

If I go there will be trouble

And if I stay it will be double

So you gotta let me know

Should I stay or should I go?

Walking away from a home that is worth less than the mortgage debt is not simply a financial decision, it is a moral dilemma. University of Arizona associate professor of law Brent T. White argues in a paper entitled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis” that Americans who own homes that have depreciated far below the amount owed would be better off walking away and renting. In this paper recently featured by the Wall Street Journal Online, Mr. White says homeowners are kept in these “upside-down” homes by feelings of fear, shame, and guilt that are encouraged by politicians and bankers.

No one wants to walk away from a family home, but one should consider the financial consequences of staying. White gives the example of homeowners “Sam and Chris” who purchased a home for $585K 2006. Their mortgage payment is $4,300/mo. White explains:

Unfortunately for Sam and Chris, the housing market began to collapse in 2007. Though they still owe about $560,000 on their home, it is now only worth $187,000. A similar house around the corner from Sam and Chris recently listed for $179,000, which, with a modest 5% down, would translate to a total monthly payment of less than $1200 per month – as compared to the $4300 that they currently pay. They could rent a similar house in the neighborhood for about $1000.

Assuming they intend to stay in their home ten years, Sam and Chris would save approximately $340,000 by walking away, including a monthly savings of at least $1700 on rent verses mortgage payments, even after factoring in the mortgage interest tax reduction. The financial gain for Sam and Chris from walking away would be even more substantial if they took their monthly savings and put it into an investment account. If they stay in their home on the other hand, it will take Sam and Chris over 60 years just to recover their equity[.]

Walking away from a financial obligation can be a gut-wrenching decision. If you are struggling with an upside-down home and indecision’s bugging you, speak with an experienced bankruptcy attorney. Only a licensed attorney can explain the legal consequences of walking away from a home.

To receive free legal advice on issues related to foreclosure and bankruptcy, contact Fears | Nachawati today. You can email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

A creditor is sometimes forgotten or overlooked when preparing the debtor’s bankruptcy schedules. Even the most diligent individual can occasionally forget a past debt. When this happens, the bankruptcy law offers several remedies:

First, if the debt is remembered during the bankruptcy, the debtor is required to file amended schedules and identify the creditor. It is important to ensure that your schedules are honest and accurate, so let your bankruptcy attorney know immediately if you remember an old debt.

Second, sometimes a debtor will discover a pre-bankruptcy debt after the bankruptcy case has closed. How this omitted debt is handled depends on the court and the circumstances. In some cases it may be prudent to ask the bankruptcy court to reopen the bankruptcy case and discharge the debt. In other cases the debt may be considered discharged as a matter of law - in other words, the bankruptcy discharge took care of that debt even though it wasn’t listed in the schedules. Finally, in some rare cases the debt cannot be discharged and the debtor is simply stuck with it.

The bankruptcy courts expect the debtor to be open and honest in describing assets and debts. Failure to list a creditor means that the creditor did not receive notice of the bankruptcy case and was not given an opportunity to protect its interests during the case. In cases where there are no assets for creditors, inadvertent omission of a creditor will not matter much. On the other hand, an omission matters a great deal in cases where creditors are paid. An intentional failure to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases courts have denied a bankruptcy discharge because of the debtor’s intentional failure to list all debts.

In bankruptcy, honesty is the best policy. Fully disclose all of your assets, debts, income, and expenses to your bankruptcy attorney. If you forget something, let your attorney know as soon as possible. Your attorney can advise you on the best course of action.

To receive free expert bankruptcy advice, contact the law firm of Fears | Nachawati. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

Rebuilding a credit score after bankruptcy is not as difficult as one would imagine. While there is no silver bullet for improving your credit score, demonstrating a positive payment history and responsible credit management really comes down to common sense. With that in mind, below are some common sense ideas to help get you started:

First, pay your debts that survive the bankruptcy early every month. Certain debts may be non-dischargeable (e.g. student loans), and others may have been reaffirmed during the bankruptcy (e.g. a car loan). Pay these monthly debts religiously and early.

Second, obtain a secured loan from your local bank. Some banks and credit unions will help you rebuild your credit history by extending a small loan secured by collateral. In most cases that collateral is a cash deposit. For instance, you borrow $500 and deposit $500 with the bank as collateral to secure the loan. Each month you make monthly loan installments to the bank until the debt is paid (and your $500 deposit is returned to you). Make sure that the bank reports these on-time monthly payments to the credit bureaus. At the end, you not only have a positive credit history, but you have the beginnings of a good relationship with a local bank.

Third, obtain revolving debt. This is tricky because we are talking about credit cards here. In some cases a friend or family member may be able to add you as an authorized user to an existing credit card account. If the card holder is responsible with the monthly payments, the credit card company will report these payments as a positive payment history on your credit report.

A high interest credit card is also an option, but these cards are not advisable immediately after a bankruptcy as the terms and interest rates are horrific. Bankruptcy debtors are amazed at the number of credit card offers they receive after their bankruptcy discharge, so be judicious (and sensible!) in deciding which offers to accept.

Fourth, monitor your credit report and make sure that your on-time monthly payments are reported by your creditors. Debts that were discharged by your bankruptcy case may also reappear, so it is important to inspect your credit report from time-to-time to safeguard your score.

The goal of rebuilding your credit score is to demonstrate a history of responsible credit management. This requires time and effort. Remember that because of the bankruptcy on your record, your credit score is very fragile and requires vigilance and regular attention. Fortunately, with each month, and each on-time payment, your credit score will increase.  

Contact Fears | Nachawati today for free legal advice on bankruptcy. Email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

Congress has said that one aim of a consumer bankruptcy is to give the debtor a fresh start. Congress and the bankruptcy courts provide a specific process for eliminating debt, but offer no guidance when it comes to rebuilding your financial life after a bankruptcy. Fortunately, the rebuilding process is not difficult, but it does require some time and effort.

Immediately after your case closes (usually soon after the discharge order is issued), you should obtain a copy of your credit report. Federal law states that you are entitled to one free copy of your credit report every twelve months. The "big three" credit reporting bureaus (Experian, Equifax, and TransUnion) have established a web site for obtaining these reports free of charge: https://www.annualcreditreport.com

Once you have obtained one free credit report from each credit reporting bureau, review each report for errors. All of the credit bureaus have simple instructions for contesting erroneous information on your report. The debts that were discharged by your bankruptcy should be listed as "Discharged in Bankruptcy" with a "Zero Balance." These discharged debts should reflect no activity after the date of your bankruptcy filing. After the credit bureau updates its records, it will send you a new credit report. Review this new report for errors. You may need to repeat the process once or twice before your report is finally accurate. Remember, your credit report is only as good as the information the credit reporting bureau receives. It is your responsibility to ensure that it has accurate information. It is also wise to check your credit report at least twice each year to prevent fraud and erroneous reporting.

Once you have corrected your credit report, it is time to rebuild your credit score. Your credit score is a number that lenders use to estimate risk, and is made up of several aspects. Approximately 1/3 of your score is based on your payment history; 1/3 is your available credit; and 1/3 is various items like types of credit and length of credit history. Unfortunately, immediately after a bankruptcy most credit scores are terrible. The best way to rebuild a credit score is to start a new, responsible history of managing credit. Since approximately 1/3 of a credit score is based on payment history, many individuals have found that they can quickly rebuild by making on-time payments to a secured credit card or small bank loan (that may require a co-signor). On-time payments to a secured debt, such as a home mortgage or auto loan, will also improve your score.

One word of caution: avoid negative reports at all costs! A thirty day late will significantly harm your rebuilding efforts, as will a collection account or any other derogatory report. If you begin having difficulty, speak with the creditor immediately and make payment arrangements. The road to financial recovery takes persistence and some patience. However, if you follow the above steps, you will see steady improvement each month.

For free bankruptcy advice, contact Fears | Nachawati today. You can email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.