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

Here are six of the most common reasons that people file for bankruptcy:

1. Stop a foreclosure on your home: Bankruptcy doesn’t eliminate your mortgage, but it does restructure your payment plan so you can catch up on missed payments.

2. Reduce medical bills: Overwhelming medical bills incurred as a result of a serious illness is one of the most common reasons for filing for bankruptcy. Filing for bankruptcy can greatly reduce or even completely eliminate your medical bills.

3. Loss of employment: Loss of employment is another of the most common reasons that people file for bankruptcy. Without a regular salary, you have no way to pay your bills, and your debts simply continue to mount. In some cases, bankruptcy is the only way out.

4. Stop repossession of your vehicle: If you file for bankruptcy quickly enough, your creditor could be forced to return your vehicle even if it has already been repossessed.

5. Stop harassing calls from creditors: When you file for bankruptcy, an automatic stay is put in place that prevents your creditors from taking steps to collect on your debts.

6. Stop wage garnishments: Wage garnishment is a type of debt collection. Like the harassing calls from creditors, the automatic stay will put a stop to the garnishment of your wages.

The bankruptcy discharge is generally the goal of a debtor’s bankruptcy. The bankruptcy discharge is the cornerstone of the fresh start and debt relief promised by the bankruptcy laws. The discharge is a permanent court injunction prohibiting creditors from enforcing certain obligations against the debtor. That may seem simple and straightforward enough, but the devil is in the details.

First, the bankruptcy discharge does not “erase” a debt; it simply prohibits collection against the debtor personally. Since the debt still exists, the creditor can take any legal action so long as he does not collect from the debtor personally. That means no legal action and communications with the debtor. The creditor is permitted to contact or sue a co-debtor, or repossessing property if it secures a debt. For instance, if the debtor’s car loan is discharged in bankruptcy, and the debtor does not pay for the vehicle, the car can be repossessed after the case closes. However, the creditor cannot try to collect any money from the debtor.

Second, the discharge does not apply to all debts. Some debts, like child support obligations, are not dischargeable. Other debts, like taxes owed to the government, may be discharged under certain circumstances. To avoid any confusion consult your attorney regarding the extent of your discharge. Additionally, debts that occur after the bankruptcy filing date are usually not covered by the bankruptcy discharge.

The order of discharge generally occurs at the end of the debtor’s bankruptcy case and copies of the discharge order are mailed to all of the debtor’s creditors by the bankruptcy court. The discharge order informs creditors generally that the debts owed by the debtor have been discharged and that they should not attempt any further collection. If a creditor does try to collect from the debtor personally, the debtor can complain to the bankruptcy judge and the creditor may be held in contempt of court.

The bankruptcy discharge is usually the culmination of the bankruptcy case and relieves the debtor of the burden of overwhelming debt. An experienced bankruptcy attorney can help explain the extent of the bankruptcy discharge on your debts and help clearly define your fresh start under the bankruptcy code.

The number of Texas homeowners filing for bankruptcy to avoid foreclosure on their homes is on the rise according to a recent study.

An analysis of post-bankruptcy cases of homeowners in 60 Texas counties was done by Foreclosure Listing Service. Included in the study were bankruptcy cases filed in courts in Dallas, Fort Worth, Sherman, San Antonio, Houston and Austin.

In their analysis, Foreclosure Listing Service found that $2.28 billion worth of real estate was affected by a bankruptcy filing in 2009. That’s an increase of 26% over the $1.92 billion figure from 2008.

The overall number of properties affected was higher, too. In 2008, 11,171 properties were affected by bankruptcy. In 2009, the number increased by 9% to 12,170.

The U.S. bankruptcy court in Fort Worth handled 3,154 properties affected by a post-bankruptcy filing in 2009, up 3% from 2008 when the number was 3,064. The dollar volume increased 10% from $420.4 million in 2008 to $464.5 million in 2009.

In Dallas, the number leapt even higher. In 2009, 4,764 properties were affected by a post-bankruptcy filing, 21% higher than the 3,952 properties affected in 2008. The dollar volume saw a significant increase of 38% from $548.4 million in 2008 to $757.9 million in 2009.

For more on this look at bankruptcy and foreclosures in Dallas and Fort Worth, Texas, click here for the article from the Star-Telegram.

Sometimes a young couple who has struggled for years will finally decide to file bankruptcy. For a young family the financial difficulty is often a combination of unstable income, medical bills and overextended credit. While desperate to buy their first home, they have resigned themselves to the belief that the bankruptcy will prevent home ownership for the foreseeable future.

Not so.

Most debtors emerge from bankruptcy financially stronger and determined to not repeat past mistakes. Many debtors who receive bankruptcy discharges have steady jobs, no unsecured debt, and low debt-to-income ratios. Additionally, a bankruptcy debtor cannot receive a second discharge for several years. That actually sounds like a good credit risk combination, right? 

The federal government recognizes that a person who has recently discharged unsecured debt through bankruptcy has little debt, but must demonstrate a commitment to managing credit in a responsible manner. That is why the FHA credit guidelines require the debtor to show two years of responsible credit management after the bankruptcy discharge before it will issue a federal guarantee on a home loan. It is also possible to obtain a federal guarantee after twelve months, if the debtor can show that the bankruptcy was caused by extenuating circumstances beyond his or her control. An FHA guarantee means that the lender is guaranteed money if the borrower defaults on the loan. This federal guarantee makes your loan application more appealing to banks and other lenders.

Rebuilding your credit report and safeguarding your credit score is very important if you want to buy a house after bankruptcy. Your bankruptcy attorney can provide helpful tips regarding the rebuilding process and help you on the path to home ownership.

When you file for bankruptcy, you must make one appearance in court. This appearance is formally called the meeting of creditors. It has been given the nickname of “341 meeting” because it is required by section 341 of the bankruptcy code.

The trustee assigned to your case presides over the meeting and will ask you questions about your assets, liabilities, bankruptcy petition, schedules and related documents that you have filed. You will be sworn in and must answer these questions under oath. The meeting will be recorded either on video or by a court reporter.

Your creditors are invited to attend the 341 meeting, but they are not required to be there and it is rare for creditors to come. Creditors, if they do come, are allowed to ask you questions as well.

The 341 meeting is not like a trial. You do not have to “prove” your case. All you have to do is answer the trustee’s questions fully and honestly. The trustee is simply verifying the information you have provided in your filings and determining whether any information may be missing.

These meetings are typically quite short, usually lasting only about 15 minutes, and your Texas bankruptcy attorney can attend the 341 meeting with you and answer any questions you may have about the process.

There’s a common misconception that a Chapter 13 bankruptcy will require you to pay back all of your debts in full. Quite the opposite is true. In many cases, the debtor’s unsecured debts are considerably reduced, with the debtor paying back only a percentage of what is owed.

Chapter 13 bankruptcy is essentially a debt repayment plan. The amount of debt you are required to repay depends on your disposable income and the value of your assets. For many petitioners, what they are required to pay back through their Chapter 13 debt repayment plan will be substantially less than what they currently owe.

An experienced Texas bankruptcy attorney can help you understand Chapter 13 bankruptcy and the effect that it will have on your debt.

One day, the Pastor sees Matthew walking slowly out of Church. Matthew is dejected, disheveled and looks terrible. "Matthew," asked the Pastor, "what's the matter?" "Well, Pastor, my business is shot, I'm losing my house and my wife says she is going to leave me and take the kids if I don't straighten things out. I just don't know what to do." "Matthew, find the answer in the Bible," the Pastor replied. And Matthew left.

Four months later, the Pastor sees Matthew coming out of Church, only this time, he's smiling, wearing a nice suit, and lighting a cigar.

"Matthew, you look great! Did you follow my advice?" "I did. I went home that day and decided to open the Bible and to follow the advice I saw. So I opened the Bible and the first phrase I saw said: Matthew Chapter 7."

Here is a funny answering machine message:

"Sorry, Chris and Ashley aren't here right now. Please leave your name and number after the tone. If you are calling regarding an outstanding debt, please leave your message before the tone."

Finally, the video below is from Tim Clue, a very funny and talented entertainer, who gives his unique perspective on credit card debt. Many thanks to Tim for his permission to use this clip. Check out more of Tim's videos at his website.

While you are in bankruptcy, you must report your income to the Trustee every month. In general, however, the money you make after your bankruptcy has started belongs to you, and typically, the Trustee won’t interfere with your earnings.

You will, though, be under some income restrictions. The Superintendent of Bankruptcy sets standards that dictate what is a reasonable net income level for you based on the number of people in your family and your personal situation. Any amount of money you earn above that level will be collected by the Trustee and distributed to your creditors.

A Texas bankruptcy attorney can help you understand how bankruptcy will affect your wages and answer any questions you may have about Texas’ bankruptcy laws.

A reaffirmation agreement is a new contract between a debtor in bankruptcy and a creditor in which the debtor agrees to continue personal liability on a secured loan and the creditor agrees to not repossess the property. Reaffirmation agreements are only available to Chapter 7 debtors and the agreement must be executed before the bankruptcy discharge is entered. The debtor can revoke the agreement with 60 days after the agreement is signed.

Reaffirmation agreements are typically used to continue payments on secured property the debtor wishes to retain, like a car or house. A debtor that reaffirms a debt is personally liable for any subsequent default on the loan, and can be sued by the lender and the property may be repossessed. This is a serious consideration since the debtor is not eligible for another Chapter 7 bankruptcy discharge for eight years, and is not eligible for a Chapter 13 discharge for 4 years.

The Bankruptcy Code requires that the agreement contain many disclosures concerning the contract terms. The debtor must also file a statement of current income and expenses. If the debtor’s income after expenses is not enough to pay the monthly loan, the court may decide to not approve the reaffirmation agreement. The debtor’s attorney must also certify to the bankruptcy court that the debtor was advised of the legal effect and consequences of the reaffirmation agreement, and that the reaffirmed debt will not create an undue hardship for the debtor or the debtor's family.

Since reaffirmation agreements are new contracts, the parties are able to change the terms of the original agreement. This could mean a reduction of principal, interest, or a change in payment length in order to make the monthly payments more affordable to the debtor. While the reaffirmation process is a voluntary process, the creditor is generally not anxious to repossess the property, and the debtor usually has more leverage in bankruptcy to negotiate a better deal with the creditor.

If you are considering a bankruptcy and a secured car or house loan, discuss your individual situation with an experienced bankruptcy attorney. There are many options to retain property both during and after bankruptcy. Your bankruptcy attorney can help you select the best course of action.

In order to file for bankruptcy, you must first get credit counseling from a government-approved agency.

To get started, visit the U.S. Trustee Program website for a list of approved credit counseling providers.

It’s a mistake, however, to simply pick a counselor off the list at random. To be sure that you get the best counseling for your time and money, there are some questions you should ask before selecting a credit counselor.

Call several of the agencies provided on the list and ask them the following questions in order to make a wise decision about your credit counseling:

• What are your fees?
• What if I am unable to afford your fees?
• What services do you provide?
• Can you assist me in creating a plan for avoiding financial pitfalls in the future?
• What qualifications do your counselors hold?
• What type of training and accreditations do your counselors have?
• How do you protect my information to ensure that it is kept confidential?
• Do your employees receive additional pay if they get me to sign up for certain services or pay a fee?

A reputable credit counseling agency will have no problem answering these questions. If you have any questions about the bankruptcy process, you can contact the Texas bankruptcy attorneys of Fears | Nachawati for free legal assistance.

A Chapter 7 bankruptcy debtor receives a discharge and the case closes generally within four to six months. Chapter 13 is a repayment plan that lasts three to five years. Why in the world would anyone choose to file Chapter 13? Below are five reasons why Chapter 13 may make sense:

Reason 1: A Forced Repayment Plan under Court Protection.

When a creditor is unwilling to work with you, a Chapter 13 can force the creditor to accept payments on your terms. Some debts, like child-support or taxes, are non-dischargeable through bankruptcy and must be paid. Chapter 13 allows the debtor to propose a three to five year repayment plan according to what you are able to pay. During this time the creditor is not allowed to take any collection action without permission of the bankruptcy court.

Reason 2: The Cram Down. 

In some cases a vehicle or other secured loan can be reduced to the value of the collateral. The debtor retains the property, but may pay a lower monthly payment and less in principle and/or interest. The loan term may be also lengthened or shortened in a Chapter 13.

Reason 3: Curing Home Loan Defaults and Lien Stripping

A debtor who has defaulted on a home loan can stop a foreclosure action and force the creditor to accept payments on the arrearage. Some debtors can receive a substantial benefit by stripping away a second or third mortgage.

Reason 4: The Effect of Bankruptcy May Be Shortened

While the federal law states that bankruptcy information can remain on your credit report for up to ten years, the “big three” credit reporting bureaus (Experian, Equifax, and Trans Union) will generally remove chapter 13 information seven years after the filing date. That means the bankruptcy will drop off your credit report two to four years after your last Chapter 13 payment!

Reason 5: Retain Non-Exempt Property

In some cases, a debtor may own property with equity that cannot be protected. Say, for instance, that the debtor owns a Harley Davidson motorcycle free-and-clear and the non-exempt equity is $10,000. In a Chapter 7 case the trustee will want either the motorcycle to sell, or a cash payment of $10,000 from the debtor. In a Chapter 13 the debtor does not lose the motorcycle, but will pay $10,000 through the bankruptcy plan to unsecured creditors over three to five years. 

Deciding between Chapter 13 and Chapter 7 requires careful deliberation. An experienced bankruptcy attorney can discuss the pros and cons of each bankruptcy chapter and help guide you to a healthy and successful fresh start.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added two new requirements to the bankruptcy filing process: pre-bankruptcy counseling and post-filing debtor education.

In order to successfully file for bankruptcy, you must receive credit counseling from a government-approved agency within 180 days of filing.

The pre-bankruptcy counseling session will cover three main topics: an evaluation of your individual financial situation, an explanation of bankruptcy alternatives and a personal budget plan.

These counseling sessions typically last hour to an hour and a half. The session does not have to be in person. Online counseling and sessions conducted by phone are also accepted. Pre-bankruptcy counseling sessions cost around $50, but you can request a fee waiver if you cannot afford to pay.

Once you complete the session, you will receive a certificate that serves as proof. It is critical that you receive your counseling from an organization that is approved by the judicial district in which you are filing for bankruptcy.

The second requirement, post-filing debtor education, includes information on managing your money, creating a budget and using credit wisely, among other topics. As with pre-bankruptcy counseling, debtor education can take place in person, online or over the phone.

Debtor education courses typically last about two hours, and the fee ranges from $50 to $100. However, as with pre-bankruptcy counseling, a fee waiver can be sought by those who cannot afford to pay the fee.

After you complete the debtor education course, you will receive a certificate that serves as proof; this certificate is separate and distinct from the certificate provided for completing the pre-bankruptcy counseling session.

A qualified Texas bankruptcy attorney can answer all of your questions about pre-bankruptcy counseling and post-filing debtor education, as well as explain all of your legal options.

It’s a vicious cycle: You lose your job, causing you to fall behind on your mortgage, car payments and other bills. As a result, your credit suffers. You finally land an interview with good prospects, but a credit check costs you the job.

You need employment to improve your finances, but it’s your finances that are holding you back from employment.

Some legislators are taking steps to prevent this situation from occurring. Recently a House bill was introduced that would prohibit employers from using consumer credit checks to make adverse employment decisions.

The Equal Employment for All Act (H.R. 3149) would amend the Fair Credit Report Act and prohibit employers from making hiring decisions based on an applicant’s consumer credit report. The Act makes exceptions for financial firms, government agencies and jobs that require certain security clearances.

The bill was introduced by Representative Steve Cohen from Tennessee. According to Cohen, the bill would provide some of our country’s “most vulnerable, ‘credit challenged’ citizens” the chance to start rebuilding their credit by getting a job.

Supporters of the bill do not believe that a person’s credit history is a reflection of how they would perform on the job. Critics of the bill, however, point to the vulnerability of small businesses to employee theft, citing the bill’s limited exceptions as a cause of concern.

To read more on the Equal Employment for All Act, click here for the complete article from the U.S. News and World Report.

Regardless of whether the bill passes, one thing remains certain: an experienced Texas bankruptcy attorney is the best source of advice for consumers facing credit difficulties. A Texas bankruptcy lawyer can explain your options and help you make decisions that will get you back on the road to financial stability.

Mandatory arbitration, one of the credit card industries’ dirties tricks, may soon be a thing of the past. Mandatory arbitration has been a wide-spread practice among credit card companies that forces the consumer to address any dispute in a pre-selected arbitration forum. These arbitration forums act as private judges pre-selected by the credit card company. 

How fair can that be? Well, recently the Minnesota Attorney General filed a lawsuit against National Arbitration Forum of Minnesota accusing it of unfair and biased practices against consumers. A 2007 study found that consumers lost 94 percent of the cases filed by MBNA (now owned by Bank of America) and arbitrated by the National Arbitration Forum. After the Minnesota lawsuit was filed, the National Arbitration Forum announced that it would not accept new cases from many “clients,” including credit card companies.

The handwriting is on the wall. Bank of America, Chase, and even the notorious Capital One Bank have stated that they will eliminate the arbitration requirement from future credit card agreements and will not enforce the provision in existing contracts. Congress has indicated its commitment to protect consumers by passing the Credit CARD Act of 2009, and the current trend is to create a federal consumer financial protection agency that would have the power to eliminate such unfair practices. Currently there are two bills pending in Congress that would address mandatory arbitration forced upon consumers by the unfair contracts.

Credit card companies are not your friends! If you are overwhelmed by credit card debt and struggle to make minimum payments each month, consult with an experienced bankruptcy attorney and consider your options. A bankruptcy attorney can eliminate credit card debt through the power of the federal law.

On Wednesday, the Supreme Court heard arguments addressing the question as to whether lawyers can be held liable as debt collectors if they serve a foreclosure notice that may have been incorrect in its statement of the law.

At issue in this case is a notice sent to a woman named Karen Jerman. Jerman, who owned her home outright and had paid off her mortgage in full, was served a foreclosure notice by lawyers for Countrywide Home Loans.

In the notice, Jerman was told that she had to dispute the debt in writing. Jerman hired a lawyer to draft the written response. Countrywide later realized its mistake and withdrew its complaint.

Jerman filed a class action lawsuit against the Ohio law firm that represents Countrywide,  Carlisle, McNellie, Rini, Kramer & Ulrich, and against a particular associate attorney at the Carlisle firm.

In her lawsuit, Jerman claimed that the Carlisle firm violated the Fair Debt Collection Practices Act (FDCPA) by erroneously informing her that the FDCPA states that the debt would be presumed valid unless she disputed it in writing.

At issue is whether the lawyer’s mistake of law qualifies for the bona fife error defense under the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act excuses debt collectors if they can prove that their wrongdoing was not intentional and was in good faith. If this can be proven, then the debt collector is shielded from civil liability.

Jerman v. Carlisle comes to the Supreme Court as an appeal from a ruling made by the Sixth Circuit. The appellate court ruled that, while the law firm violated the law in requiring Jerman to object to the foreclosure in writing, the law firm nonetheless qualified for the bona fide error defense.

The Supreme Court will be deciding whether a debt collector’s unintentional legal mistake falls under the FDCPA’s bona fide error defense, thereby shielding the debtor collector from civil liability for violating the FDCPA.

Ultimately, the court’s decision in this case will affect the recourse potential plaintiffs have when making complaints about unfair debt-collection practices. It could also have an effect on the debt-collection practices themselves.

Jerman v. Carlisle is also significant because it will likely settle a split in the federal courts as to whether a debtor collector’s mistake of law, as opposed to a clerical error, qualifies as a bona fide error under the FDCPA.

If the Supreme Court rules in favor of Carlisle, then a debt collector will be able to assert a mistake of law as a defense to civil liability as a “bona fide error.”

The bankruptcy reform legislation enacted in 2005 requires bankruptcy debtors to complete a personal financial management course. The debtor must file a certificate of course completion with the bankruptcy court before an order of discharge can be entered. This class averages about two hours in length and instructs the debtor on issues such as developing a budget, money management, and use of credit.

Many bankruptcy debtors initially resent this course requirement.   However, most debtors report that they learn useful information and consider the course worthwhile. That is not surprising as most personal financial management studies indicate that our nation suffers from financial illiteracy. For example, a 2009 survey of 1,000 adults by the National Foundation for Credit Counseling found that:

• 41 percent graded themselves C, D, or F on their knowledge of personal finance;
• 42 percent surveyed kept close track of their spending;
• 64 percent have not ordered a copy of their free credit report in the past year;
• 33 percent do not contribute towards their retirement

Financial illiteracy can be a major contributor to personal financial failure. Some debtors have become overwhelmed by debt because they lack the tools for effectively managing their personal finances. The Personal Financial Management Course required by the bankruptcy laws is an opportunity for debtors to learn some basic management techniques. The aim is to educate the debtor to adopt a more disciplined and deliberate approach in managing household finances. 

The opportunity for a fresh start after bankruptcy means much more when you have a plan for your future financial success. If you are struggling with debt, speak to an experienced bankruptcy attorney and make the choice to get control over your personal finances.

When you file for Chapter 7 bankruptcy, your goal is to have your debts discharged. When a debt is discharged, that means that it can no longer be enforced against you personally.

When you incur a debt, you are personally liable for paying it back. If you don’t pay back your debt, your creditor can use a legal process, such as wage garnishment, in order to get paid.

If a debt is discharged in bankruptcy, however, your personal liability for that debt is wiped away. In the most simple terms, you are no longer legally obligated to pay that debt. It also means that your creditors can no longer take legal actions, such as wage garnishment, to extract payment from you.

A Texas bankruptcy attorney can evaluate your case and determine whether Chapter 7 bankruptcy is the right decision for you. Your bankruptcy lawyer can help you take the necessary steps to have your debts discharged and stop the harassing calls from creditors.

Here are five situations that should tell you that your finances are in desperate shape and may need federal bankruptcy relief:

You regularly ask for payroll advances from your employer, take cash advances from credit cards, or borrow from payday loan companies.

Once a person is borrowing next month’s paycheck to pay this month’s bills, the situation is very grim. Taking constant payroll advances can jeopardize your job; credit card cash advances carry very high fees and interest; and payday loans have high interest rates. All of these advances have the same effect on your paycheck: there is less money next month to pay bills. This often creates an endless cycle of debt.

You are constantly late on paying basic monthly obligations including rent or mortgage, car payment, or utilities.

Late penalties can consume a paycheck very quickly. Late payments can also place your property at risk. For instance, if you are consistently late on your car payment, not only will you incur late fees, but at some point your lender may decide to repossess your vehicle.

You have stopped paying creditors and are ignoring collectors.

People who are unable to pay monthly bills often compound the problem by ignoring their creditors. Late notices turn into harassing phone calls which turn into court summonses which turn into wage garnishments. Nothing good can come from ignoring your debts.

Your paycheck is being garnished or your bank account is frozen.

People unable to pay their debts often wind up with court judgments and wage garnishments. Bankruptcy attorneys regularly receive desperate phone calls from people who have just discovered a wage garnishment or bank levy.

You are consistently depressed by a hopeless debt situation and contemplate illegal acts or suicide.

Individuals in debt often become depressed and feel that their situation is hopeless. Not so! The federal bankruptcy laws were written by Congress to give hope to those overwhelmed by debt. You can have a fresh financial start and a different future. There is no reason to commit an illegal act to solve a debt problem that can be fixed legally.

If you are experiencing any of the above warning signs, talk to an experienced bankruptcy attorney and consider your legal remedies. Don’t let debt control your life or your future. Take charge today!

Yes. You will have to attend a hearing called the First Meeting of Creditors. This meeting takes place about 30 to 40 days after you file for bankruptcy and is required for both Chapter 7 and Chapter 13 bankruptcy.

The bankruptcy trustee presides over this meeting, and during the hearing the trustee will ask you questions about your assets, debts and other matters related to your bankruptcy filing.

After the trustee is finished asking their questions, your creditors are allowed to ask you questions as well. It is rare, though, for creditors to actually show up for this meeting.

In most cases, you will not have to return to court after this hearing is over. However, if a creditor files a motion or initiates an adversary action, you will likely have to go to court again.

Don’t worry. You do not have to go to court alone. If you hire a Texas bankruptcy attorney, they will be there to represent you during all of your court appearances.

To receive free legal advice on bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Recently the Supreme Court of the United States heard oral argument concerning whether bankruptcy attorneys should be allowed to advise their clients to incur more debt before filing. Currently the law states that "debt relief agencies" are not allowed to advise clients to incur more debt in contemplation of bankruptcy. The case before the high court also questions whether attorneys are "debt relief agencies" according to the statute.

Justice Antonin Scalia said of the statute, “It’s a stupid law,” but also asked, “Where is the prohibition of stupid laws in the Constitution?”

The popular consensus is that Congress enacted this prohibition to prevent attorneys from advising their bankruptcy clients to incur debt that could be discharged in a bankruptcy. In short, that situation amounts to a fraudulent act, the debt would be determined non-dischargeable, and the attorney could be held civilly or even criminally liability.

However, the statute is not narrowly tailored to prevent this kind of abuse; it also stops bankruptcy attorneys from effectively advising honest debtors in anticipation of a bankruptcy filing. In other words, the law can prevent "bankruptcy planning." For instance, in certain circumstances it may be highly beneficial to refinance a house or car loan at a lower interest rate prior to filing bankruptcy. The current law ostensibly forbids this type of helpful advice.

The Supreme Court is now considering this case and will interpret the intent of Congress. Hopefully, the Supreme Court can make sense of "a stupid law" and bankruptcy attorneys will be able to provide full, legal, and ethical legal advice to their clients.

To receive free legal advice from a Texas bankruptcy lawyer, contact the law firm of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Are you in financial distress? Is it also causing you health problems?

A 2008 health poll by the Associated Press and AOL found that people in financial distress are more likely to report health problems, including “serious” health problems like ulcers, severe depression, and even heart attacks. Individuals reported the following health problems related to debt stress during the poll:

• 44 percent had migraines or other headaches, compared with 15 percent of those with low levels of debt stress;
• 29 percent suffered severe anxiety, compared with 4 percent;
• 27 percent had ulcers or digestive tract problems, compared with 8 percent;
• 23 percent had severe depression, compared with 4 percent; and
• 6 percent reported heart attacks, twice the rate of those with low debt stress;

More than half, 51 percent, reported muscle tension and/or lower back pain compared with 31 percent of those with low levels of debt stress. Those individuals with high debt-related stress also reported trouble concentrating and sleeping.

This information is neither new nor surprising. In 2005 researchers at three major universities surveyed three thousand people regarding the negative effect of financial stress and found that the top three health effects of financial distress are stress, anxiety, and depression. Anyone who works with individuals in debt on a regular basis sees the negative physical effects that debt stress can have.

Financial distress can negatively impact many areas of your life including your health. Take charge of negative financial stress today and do something to improve the quality of your life. An experienced bankruptcy attorney can evaluate your situation and give you legal advice that can lead to a fresh financial start. 

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

Bankruptcy is the process by which a person legally declares themselves unable to pay their creditors for their outstanding debts. In general, bankruptcy proceedings are governed by federal law, but there are some aspects of bankruptcy that are governed by state law.

These state laws can vary considerably from one another, so it is important that you speak with an experienced Texas bankruptcy attorney to be sure you understand Texas’s bankruptcy laws.

A person can go into bankruptcy in one of two ways. One way is for the debtor’s creditors to petition the court to have the debtor declared bankrupt. The more common way is for a person to voluntarily file for bankruptcy.

There are several types of bankruptcy, and which type you file for depends on many factors, including whether you are a business or an individual, the amount of debt you have, the amount of income you have and your personal financial goals.

For individuals, the two most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 “wipes the slate clean,” so to speak. Most, if not all, of your debts are discharged, and you get a chance to start fresh.

Chapter 13 is a debt repayment plan. You get to keep all of your property in exchange for committing to a plan whereby you repay some or all of your debt over the course of 3 to 5 years.

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

There are two basic types of bankruptcy: liquidation and reorganization.

Chapter 7 falls into the liquidation category. It is referred to as a liquidation bankruptcy because any of your property that isn’t exempt can be sold (“liquidated”) and the proceeds used to pay back your creditors.

Chapter 13 is a reorganization bankruptcy. Under a Chapter 13 bankruptcy, you get to keep all of your property. Rather than wiping out your debts completely, a Chapter 13 bankruptcy “reorganizes” your debts, and a monthly payment plan is created by which you repay all or some of your debt over the course of 3 to 5 years.

Whether liquidation or reorganization bankruptcy is right for you depends on your financial situation and other individual circumstances. An experienced Texas bankruptcy attorney can advise you on the most beneficial course of action.

For free legal advice on Chapter 7 and Chapter 13 bankruptcy, contact the Texas bankruptcy law firm of Fears | Nachawati today. To speak with a Texas bankruptcy lawyer at no charge, simply email us or phone us toll free at 1.866.705.7584.

Some transfers of assets that would be perfectly legal and valid outside the context of bankruptcy are invalid when bankruptcy is involved. A bankruptcy trustee has the power to invalidate transfers that are deemed to be fraudulent conveyances.

Fraudulent conveyances, or fraudulent transfers as they are sometimes called, are an attempt on the part of the debtor to hide an asset before filing for bankruptcy by giving it to someone, such as a relative, free of charge or at an unreasonably low price.

There are two types of fraudulent conveyances: actual fraud and constructive fraud. Cases of actual fraud require proof that the debtor acted with the intent to hinder or defraud a creditor.

With constructive fraud, the debtor’s intention behind a transfer is irrelevant. A transfer will be considered constructive fraud if two conditions are met: the debtor received less than a reasonably equivalent value in exchange for their asset and the debtor was unable to pay their debts at the time the transfer was made or as a result of the transfer.

If you file for bankruptcy, any transfer of your assets that you make within 90 days of filing for bankruptcy, or within one year if a relative or business associate is involved, will be carefully scrutinized by the court.

To receive free legal advice on transferring your assets in the context of bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Chapter 7 bankruptcy wipes out most unsecured debts, but it does not get rid of all of your debts. If you successfully file for Chapter 7 bankruptcy, you will still be responsible for:

• Your most recent back taxes
• Child support
• Alimony
• Most student loans
• Government fines or penalties
• Fraudulent debt
• Recent purchases of luxury goods of more than $550 bought within 90 days of filing for bankruptcy
• Cash advance loans of $825 or more within 70 days of filing for bankruptcy

If you are considering filing bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati for free legal advice. Simply email us or phone us toll free at 1.866.705.7584.

There is no formal announcement made when someone files for bankruptcy, but bankruptcy filings are public records, which means the information is available to anyone who looks for it. However, under normal circumstances, the only people who will know you filed for bankruptcy are the people that you choose to tell.

Note that if you are asked on a job application, you do have to disclose that you filed for bankruptcy.

In general, though, your friends, family members and co-workers won’t know that you filed for bankruptcy unless you choose to tell them.

If you are considering filing for bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today for free legal advice. Simply email us or phone us toll free at 1.866.705.7584 to speak with an experienced Texas bankruptcy attorney.

Bankruptcies are reported by credit reporting agencies. The number of years for which a bankruptcy will stay on your credit report depends on the type of bankruptcy you filed. A Chapter 7 bankruptcy, for example, will stay on your credit report for 10 years, while a Chapter 13 bankruptcy will be reported for 7 years.

Your credit report is used by credit card companies and lenders to determine your creditworthiness. However, having a bankruptcy on your credit report does not automatically mean that you can’t obtain credit.

Some credit card companies are willing to extend credit to people who have filed bankruptcy. Typically, though, you will have a higher interest rate and/or lower credit limit than someone who has not filed bankruptcy.

It is also worth noting that some creditors will see a person as a better credit risk after they have filed for bankruptcy because they have less debt, they are in a better position to repay new debt and they can’t file a Chapter 7 bankruptcy again for another 8 years. If you filed a Chapter 13 bankruptcy, then you have shown that you can manage regular payments.

If you take the proper steps to responsibly rebuild your credit after you file for bankruptcy, you can improve your credit standing within a few years.

For free legal advice on Texas bankruptcy, contact the law firm of Fears | Nachawati today. To receive free legal assistance from a Texas bankruptcy lawyer, email us or phone us on our toll free number at 1.866.705.7584.

A bankruptcy trustee is the individual assigned by the court to administer a bankruptcy case. Bankruptcy trustees are appointed by the United States Trustee, who is an officer of the Department of Justice.

The role of a bankruptcy trustee varies depending on whether it is a Chapter 7 or a Chapter 13 bankruptcy.

In a Chapter 7 bankruptcy case, the role of the trustee is to determine whether any of the debtor’s assets must be liquidated, review the claims of exemption and evaluate whether the debtor is entitled to a discharge.

For purposes of a Chapter 7 bankruptcy proceeding, the trustee basically acts as a representative for the debtor’s creditors. The trustee can object to exemption claims or oppose the debtor’s discharge. Those issues are then decided by the bankruptcy judge.

The trustee in a Chapter 13 bankruptcy case performs the same basic duties as a Chapter 7 trustee. The difference is that a Chapter 13 trustee has the additional responsibility of  disbursing the payments made by the debtor under their Chapter 13 repayment plan.

For free legal advice on Texas bankruptcy laws, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

The fear of losing property stops many people from exploring their options in bankruptcy. The fact is that only four percent of chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor. For the other 96% of chapter 7 cases, the debtor continues to pay secured debts, like a house or car, and is able to keep the property.

Determining whether a debtor has an asset case is a simple arithmetic calculation using bankruptcy law exemptions. Bankruptcy exemptions are provided by state law. Every state grants exemptions so that the debtor can retain property, like home equity, a modest vehicle, some personal property, and household furnishings.

The homestead equity exemption can vary greatly from state to state. Some states grant an unlimited homestead exemption to their residents (which the federal law may limit in some circumstances), and other states do not offer much protection. Ohio, for instance, only provides a $5,000 exemption, while Kansas gives its residents an unlimited exemption.

The motor vehicle exemption generally allows the debtor to exempt equity in one (sometimes more) personal vehicle. The exemption can vary greatly by state, usually ranging from $2,000 to $10,000.

Every state grants an exemption for basic household furniture.  In addition, most states give an exemption for tools used for work, musical instruments, etc.

Many states provide a wild card exemption to exempt miscellaneous items. This wild card exemption can be used to protect otherwise non-exempt equity in a vehicle or home. Generally it is used to protect cash money in the bank.

Identifying your property, determining its value, and applying your exemptions is the difference between retaining and losing property in a bankruptcy case. An experienced bankruptcy attorney can guide you through this process.

For free legal assistance from a Texas bankruptcy lawyer, contact the law firm of Fears | Nachawati today. You can email us or phone us toll free at 1.866.705.7584.