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

 Bankruptcy is a legal process to relieve the burdens of unmanageable debt. By filing a bankruptcy case an individual receives time to reorganize finances, either by repayment or discharge of debts. After a bankruptcy discharge a person is in an improved position to pay financial obligations and build a better financial future.

Businesses also benefit from the federal bankruptcy laws. In some cases a company may decide to close its doors permanently and liquidate, but in many cases a company files bankruptcy for the same reasons an individual may file: for time to restructure its finances.

Recently, the Los Angeles Dodgers filed a Chapter 11 reorganization bankruptcy case. Instead of “bleeding Dodger Blue” as Dodger Hall of Fame manager Tommy Lasorda is famous for saying, the Dodgers have been hemorrhaging red ink. The Dodgers are the tenth major sports team in North America to file for bankruptcy protection. The list includes five Major League Baseball teams, and six National Hockey League teams:

Seattle Pilots (later the Milwaukee Brewers)(MLB), 1970
Pittsburgh Penguins (NHL), 1975
Cleveland Barons (later Dallas Stars)(NHL),1978
Baltimore Orioles (MLB), 1993
LA Kings (NHL), 1995
Pittsburgh Penguins (NHL), 1998
Ottawa Senators (NHL), 2003
Buffalo Sabres (NHL), 2003
Chicago Cubs (MLB), 2009
Phoenix Coyotes (NHL), 2009
Texas Rangers (MLB), 2010
Los Angeles Dodgers (MLB), 2011

Filing bankruptcy does not prevent future success. For individuals, much like businesses, life goes on. In 1999 the Pittsburgh Penguins won the Stanley Cup, a year after filing its second bankruptcy case. The Texas Rangers played on to reach the World Series the same year the team went through bankruptcy.

Bankruptcy is not the end of the road; it is a chance to legally adjust your debts and give yourself a second chance. Notice that with the exception of the Cleveland Barons, who merged with the Minnesota North Stars in 1978, all of the teams still exist. The North Stars moved to Dallas and won a Stanley Cup in 1999.

If you are struggling with debt, consider a bankruptcy filing to give yourself a second chance and a fresh start. Call one of our Texas bankruptcy lawyers at (214)890-0711 today to learn how the federal law can help keep you in the game.

There is no denying it: the bankruptcy process is unpleasant. It is not easy to meet with an attorney, disclose detailed information about your personal finances, or file a federal bankruptcy case to discharge debts. However, bankruptcy is a legal remedy that can help an individual who desperately needs relief from an overwhelming debt burden. The bankruptcy process can turn around an unhealthy situation and put you on a course to financial well-being.

Some clients ask whether bankruptcy will destroy their credit score. Well, the short-term answer is, "Yes." In the short-run your credit score will drop and it takes time and patience to recover. Typically, one to two years of responsible post-bankruptcy credit management is required before a credit score is returned to the "average" range.

While the immediate drop of your credit score after bankruptcy is sharp, the effect on a credit score from debt negotiation can be slow and painful. Debt settlement is known by many names including “debt settlement” or “credit counseling” and includes any debt relief program in which the creditor receives less than full payment or agrees to terms different from the original credit contract. During any settlement or repayment program missed or late payments are reported to the credit bureaus until the debt is satisfied. If the debt is settled for less than full payment, your credit report will negatively reflect that the creditor settled for less than 100%. This could mean years of negative reporting before your credit can start to recover. Additionally, you may receive a tax bill for any debt amount that was settled. The IRS calls this a "forgiven debt" and considers the savings as part of your income.

On the other hand, a Chapter 7 discharge takes around four months, start to finish. At the end the debt is discharged, and your credit report will state that the debt was "discharged in bankruptcy." The federal law dictates that the report of bankruptcy is the last negative information that can be recorded on your credit file concerning a discharged debt. You can start rebuilding your credit immediately after your discharge and without the burden of unpaid debts.

If you are considering bankruptcy to relieve you of financial difficulty, speak with a qualified and experienced bankruptcy attorney. The federal bankruptcy law offers powerful protections for individuals struggling with debt. Call (214)890-0711 and learn how a Texas bankruptcy lawyer can quickly eliminate your debt.
 

While some Americans are able to get by without a personal vehicle, having reliable
transportation is necessary to most. Whether it is a means to get to work, or to school, or
to take the kids to soccer practice, a vehicle can be an important part of daily life. It is no
wonder that one of the first questions bankruptcy clients ask is, “Can I keep my vehicle
during bankruptcy?”

Keeping your vehicle during a Chapter 13 bankruptcy case starts with a few questions.
First, when did you purchase your vehicle? If your purchase was within 910 days of your
bankruptcy filing, the Bankruptcy Code requires that you pay the entire value of the loan,
usually within the three to five year payment period of bankruptcy case. If the vehicle
was purchased more than 910 days before the bankruptcy filing, the court will adjust the
monthly payment based on how much the vehicle is worth.

The second issue is: what is the contract interest rate? In a Chapter 13 case the interest
rate can be adjusted to a maximum allowed interest rate, called the “Till rate” so named
after the U.S. Supreme Court case, Till v. SCS Credit Corp., 541 U.S. 465 (2004). The
Till rate is adjusted twice a year by the bankruptcy court, and has recently been around
5%. Vehicle debt for many Chapter 13 debtors is paid at the Till rate over the course of
the bankruptcy case.

The final issue is: how much is owed? For vehicle purchases more than 910 days prior to
filing the bankruptcy case, the vehicle debt may be “crammed down” to the present value
of the vehicle. In other words, if you purchased a car more than two and a half years ago,
and you owe more than its worth, your car loan will be adjusted to the vehicle’s value
and the debt will be amortized over the Chapter 13 payment period at the Till rate. That is
generally a substantial savings!

The federal law contains several strategies for keeping a vehicle during bankruptcy. If
you need to discharge your debts in bankruptcy, speak with an experienced bankruptcy
attorney to discuss your options to retain your vehicle. In many cases bankruptcy debtors
pay less for monthly vehicle payments after filing bankruptcy. Get the facts today and get
control over your financial future by calling (214)890-0711 & speaking with a Texas bankruptcy lawyer.

Recently the U.S. Bankruptcy Court for the Central District of California, the nation's largest bankruptcy court, ruled that the federal Defense of Marriage Act violates the equal-protection clause of the U.S. Constitution. In a decision signed by 20 judges, the court found that “there is no valid governmental basis for DOMA.” The case is In re: Balas and Morales, and can be read here.

The Balas case centers on a gay male couple in California who filed a joint Chapter 13 bankruptcy case seeking federal protection from their creditors as a married couple. Gene Balas and Carlos Morales were legally married in California in 2008 and are still legally married, despite the enactment of Proposition 8 in California. The Bankruptcy Code provides that any individual and his or her spouse may file a joint bankruptcy case. However, the U.S. Trustee’s office sought dismissal of the case, citing the Defense of Marriage Act which does not recognize same sex marriages.

The Central District of California Bankruptcy Court found that there is “no valid governmental basis for DOMA,” and that the law “violates the equal protection rights of the debtors as recognized under the due process clause of the Fifth Amendment.” The Obama administration has stated that it believes the Defense of Marriage Act (DOMA) violates the Constitution, and has reportedly ordered the Justice Department and bankruptcy trustees to stop defending the DOMA in court.

While other federal judges around the country have declared DOMA unconstitutional, this 20 judge signed opinion sends a clear and powerful message. This decision may have a far-reaching impact on similar cases in Massachusetts, Connecticut and Washington, D.C., where same-sex marriage is legal.

The federal law is not always clear, and is constantly changing. If you are struggling with debt and need bankruptcy assistance, get the help you need by consulting with an experienced bankruptcy attorney. Your bankruptcy attorney can guide you through the bankruptcy process to a successful resolution. Call today and discover how the federal laws can work to your advantage. 

 During World War II American servicemen were cautioned against careless talk that might reveal information useful to the enemy. One popular saying was, “Loose lips sink ships.” Today, debt collectors are using a variety of information sources to locate income and assets. A similar warning may be applied to bankruptcy debtors: “Loose lips may sink your bankruptcy.”

For some time debt collectors have used social media sites to discover information about a debtor. One popular method is through Facebook, which boasts more than 500 million active users. Some collectors make a friend request in order to gain access to the debtor’s private information and friends. Once the friend request is accepted, the collector will monitor the Facebook page for information concerning income and assets.

While Facebook is a fun way to keep in touch with your friends and discuss what is currently happening in your life, it can also create problems when you reveal too much. For instance, pictures of your home (including furnishings), yourself wearing jewelry, or photos of Christmas or birthday presents could reveal assets that were not listed in your bankruptcy schedules, or perhaps were erroneously under-valued. Additionally, discussion about jobs or even hobbies may reveal un-reported or under-reported income.

Not only are debt collectors looking for this information, but the bankruptcy trustee, private creditors, or perhaps an angry ex-spouse or ex-business partner may also be interested. In most cases debtors adequately account for income and assets, and the information obtained on an individual’s Facebook page is negligible. But why take the chance? The best advice is to heed this advice: “Loose lips may sink your bankruptcy.” Be careful what you disclose publicly – especially over the internet.

If you are struggling with debt, discuss your financial situation with a bankruptcy attorney. A licensed bankruptcy attorney will keep your financial information confidential and give you legal advice that will lead to a financial fresh start.

It is important to have a clear understanding of which bills to pay after your Chapter 7 bankruptcy case is filed. Of course, every case is different and the specifics of your case and your debts should be discussed with your attorney. However, in most Chapter 7 bankruptcy cases payments for unsecured debts are generally stopped, while payments on secured debts and household expenses are continued.

First, dischargeable unsecured debts, like medical bills and credit cards, will generally be included in your discharge. Unsecured debts are financial obligations that are not backed by property. A signature loan is unsecured, while a car loan is usually secured by the car. If you don't pay, the bank repossesses your car. Because your unsecured debts will be discharged by the bankruptcy court, there is no negative consequence to nonpayment before the discharge. Additionally, after the bankruptcy case is filed, the creditor is prohibited from reporting anything negative on your credit report other than the inclusion of the debt in your bankruptcy.

Second, utility bills and household expenses should be paid. This includes your rent, your cell phone bill, your electric bill, etc. If you are behind on these bills and need time to catch-up, speak with your attorney regarding legal options. Monthly bills that are incurred after your bankruptcy filing date are not included in the bankruptcy case.

Third, pay secured debts that you wish to keep, such as your home mortgage or a vehicle loan. Failure to make these monthly payments may result in repossession after the bankruptcy case is concluded. Again, if you have trouble making these payments, speak with your attorney.

Finally, domestic support obligations such as child support must be paid. Likewise, it is a good idea to continue any non-dischargeable court-ordered payments.

The best advice is to discuss future creditor payments with your attorney when you sign your bankruptcy case. Your attorney can identify creditors that should be paid, and those that your can stop paying. 

The New York Times has written a story about the debt collection industry and its poor telephone collectors who, not surprisingly, get no respect. The article states that one debt collector, Lesllie Rogers, uses a pseudonym because she has “been routinely insulted, pummeled with obscenities, crudely propositioned and threatened with violence by the people she calls.”

Really? The collectors feel threatened by the debtors?

The Fair Debt Collections Practices Act (FDCPA) is a federal law that protects the debtor from abusive collection practices, such as:
Telephone contact before 8:00 a.m. to 9:00 p.m. local time;
Telephone harassment such as constant telephone calls or repeated telephone conversations with the intent to annoy, abuse, or harass;
Telephone contact at the debtor’s job after being informed that such contact is unacceptable or prohibited by the employer;
Contacting a debtor known to be represented by an attorney;
Contact after a debtor has made a request for validation of the debt;
Threatening arrest that is not lawfully permitted;
Using abusive or profane language towards the debtor;
Discussing the nature of a debt with a third party; and
Contact by embarrassing media, such as a postcard or telegram.

The FDCPA applies to third parties, such as collection agencies and attorneys, and carries a penalty of up to $1,000 and attorney fees. The FDCPA also prohibits “any false, deceptive, or misleading representation or means in connection with the collection of any debt,’ including “The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” So, does the use of a pseudonym used by Lesllie Rogers and other debt collectors violate the federal law? Does the FDCPA allow such falsehoods during the process of collecting a debt?

The FDCPA is a federal law that protects consumers. There are several laws that can help protect your property, your liberty, and even your sanity from bill collectors. If you are experiencing financial trouble, speak with an experienced bankruptcy attorney and discover the federal and state laws that protect your rights. 

Preparing to file bankruptcy is about as fun as preparing for a tax audit. Fortunately, the preparation is the most difficulty part of the bankruptcy process, and the end result of your bankruptcy case is financial relief, rather than a potential tax bill. To get you started on the right track, here are four tips for preparing to file bankruptcy:

Stop Using Credit Cards
If you are considering bankruptcy, you are likely already insolvent. Using credit when you cannot repay the creditor may be fraudulent. Your credit card charges may be found nondischargeable in bankruptcy, or, at worst, you could be charged with a criminal act. The safest advice is to stop charging immediately.

Assemble Important Documents
You will need to verify your identity and social security number with the court, usually in the form of a government issued photo I.D. and a Social Security Card. Additionally, the bankruptcy trustee may want to see important legal and financial documents, such as:
Pay stubs
Business income and expense records
Income tax returns for the past two years
Retirement and investment accounts
Life insurance policies
Vehicle titles and loan paperwork
Home documents such as deeds and notes

Collect Information Regarding Your Debts
Collect your monthly bills and obtain a copy of your credit report. A free (no-strings-attached) credit report can be obtained from www.annualcreditreport.com. If you do not have paper documentation concerning a debt, write down the name and address of the creditor, and the amount owed.

Find a Bankruptcy Attorney
Bankruptcy is a powerful legal and financial tool to help the honest individual who is overwhelmed with debt. However, this federal process can be very complicated and you need the guidance of an experienced bankruptcy attorney. Your attorney can help you make decisions before and during the case, and create a plan for you to get back on your feet after bankruptcy. Your attorney understands the bankruptcy laws and procedures and can take advantage of the streamlined nature of the bankruptcy system. Debtors represented by experienced counsel can expect their cases to proceed quickly and smoothly to resolution, without surprises. Don’t go it alone! Ensure your fresh start by hiring a skilled bankruptcy attorney.

In theory debt settlement is simple: the debtor negotiates with the creditor to reduce a debt to an amount that is regarded as payment in full. It sounds honest enough: the debtor cannot afford to repay a debt, so the creditor agrees to accept a reduction. The creditor is paid something and the debtor avoids bankruptcy.

In practice debt settlement is a nasty game of chicken. The debt settlement company advises the debtor to stop making monthly payments to the creditor. In response, the creditor pressures the debtor to pay through harassing telephone calls, damage to the debtor’s credit report, mounting interest and fees, and perhaps legal action. The resolution comes when one side blinks: either the creditor is convinced that it better take a settlement or risk discharge in bankruptcy; or the debtor realizes that his or her credit is ruined and actually files bankruptcy.

Debt settlement is big business, but many debt settlement companies have caused big trouble for their clients. Take for example Debt Relief USA. This company, like many debt settlement companies, advised its customers to stop paying its creditors and instead deposit money into a Debt Relief USA settlement account. This money, held by Debt Relief USA, was to be used as settle funds for the individual’s debts. Customers were assessed fees for services including burdensome “administration fees” and monthly “maintenance fees” that further damaged its customers’ financial situations. When a debt was settled, the Debt Relief USA charged a 13 percent “negotiation fee.”

In 2009 Debt Relief USA filed a Chapter 11 bankruptcy and claimed that it owed its clients $5 million from these settlement accounts. In December 2010, the bankruptcy court approved a $3.7 million disbursement to Debt Relief USA’s clients. The case was also converted to Chapter 7 and Debt Relief USA is no longer conducting business.

Bankruptcy attorneys regularly see the damage caused by debt settlement companies. In some cases money is not returned to debt settlement customers, or the company itself files bankruptcy, or the individual’s credit is destroyed. Before agreeing to any debt relief program, discuss your financial situation an experienced bankruptcy attorney. There are powerful federal laws that can protect you from overwhelming debt, and a bankruptcy attorney can review your legal options without risking your cash.
 

 Call it poetic justice, or even karma. . .

During the past few years Bank of America has been at the subject of harsh criticism for business practices that range from the mean-spirited (such as doubling credit card interest rates without notice, up to 28% for cardholders in good standing), to irresponsible (such as foreclosing on the wrong homes), to even fraudulent (such as the recent robo-signing scandal involving mortgage documents). Bank of America is the nation’s largest servicer of mortgage loans, and the second largest mortgage loan originator. You’d think good record keeping would be important to such a large company, but apparently mistakes abound at Bank of America.

Take for example the case involving Florida couple Warren and Maureen Nyerges. In 2009 the couple moved from chilly Cleveland, Ohio, to warm Naples, Florida. They purchased a foreclosed home from Bank of America and paid $165,000 cash. However, in February 16, 2010, Bank of America filed a Complaint to Foreclose on Mortgage against them, claiming the Nyerges owed almost $141,000 in unpaid mortgage debt.

Warren Nyerges, 46, a former sheriff’s deputy in Ohio, spent months trying to dismiss the suit and clear up Bank of America’s error. In April of 2010, the lawsuit was dropped, and in December the Nyerges were awarded $2,534 in attorney fees. The bank did not respond to the repeated requests to pay the court judgment. Warren called the bank, sent certified letters, called the bank’s attorney, but nothing worked. Then, in January, he hired an attorney to pursue the case. The attorney sent letters and made phone call, and still Bank of America failed to respond or pay the judgment.

On June 3, the attorney for the Nyerges, accompanied by Collier County deputy sheriffs and a moving company, arrived at a local branch of Bank of America and presented the bank manager with a writ of execution to seize assets: either pay up or the movers will start taking things. An hour later checks were cut to satisfy the court judgment.

This may seem to be an extreme example of one case that has fallen through the cracks, but the truth is that banks make errors regularly. In Utah and Nevada courts issued foreclosure injunctions against Bank of America for improper practices. Other banks have also had their share of problem in producing mortgage documents and verifying that the bank is the rightful holder of the mortgage.

If you are facing foreclosure, don’t get steamrolled by the bank! You have legal options to negotiate a lower payment or possibly strip away a junior mortgage. Call today and discover how the federal and state laws can help you save your home and protect your rights.

 The federal bankruptcy process is streamlined to provide timely financial relief to deserving individuals. A Chapter 7 “erase-your-debts-and-start-fresh” bankruptcy generally takes a mere 4-5 months, start to finish. The debtor discharges burdensome unsecured debt, and may get additional relief by restructuring secured debts.

A trustee is assigned to each bankruptcy case. The trustee has hundreds of cases each month to review, and a bankruptcy judge will preside over thousands of bankruptcy court cases. Consequently, the Chapter 7 process relies heavily upon the honesty and candor of the debtor who is required to accurately account for all income, expenses, assets and debts. The vast majority of debtors are honest, but the Department of Justice (DOJ) estimates that one out of ten cases have some element of fraud attached to it. When fraud is suspected, bankruptcy trustees aggressively investigate and use the resources of the DOJ, the FBI, and the IRS.

Bankruptcy fraud carries a maximum penalty of 5 years in prison and a $250,000 fine. Those convicted on federal bankruptcy fraud charges spend an average of 31 months in prison. Still, some people never learn. . .

The Portland Division of the FBI recently issued a press release concerning a bankruptcy debtor’s guilty plea to fraud charges. Viengkham Virasak, 44, of Corvallis, Oregon, incurred debt in his family members’ names and then filed bankruptcy cases in their names. Virasak actually discharged $87,500 in debt, and then filed other bankruptcy cases when he was discovered.

In May, former baseball player Lenny Dykstra was indicted on bankruptcy fraud charges. The indictment alleges that Dykstra took and sold items from his $18 million mansion after filing for bankruptcy protection. Once an individual files Chapter 7 bankruptcy the assets of the individual become part of a “bankruptcy estate” which is the responsibility of the trustee. The trustee claims that “Dykstra stole and destroyed more than $400,000 worth of property in the estate.”

Bankruptcy fraud is serious business. Dishonest acts during bankruptcy could cause the court to deny your discharge, or you may face criminal charges. Whatever your financial situation, it is best to discuss your options with an experienced bankruptcy. The bankruptcy laws are written to help the honest, but unfortunate debtor. Your attorney can work to achieve the best legal result possible and keep you out of trouble.

An individual's lifetime is filled with highs and lows. Take for example the life of auto maker Henry Ford. Ford worked for years as an engineer for Thomas Edison's company, where he experimented with gasoline engines. At age 36 he started his first car company, the Detroit Automobile Company, which went bankrupt two years later. A few years later he formed the Henry Ford Company, but clashed with his partners and was forced out. The Henry Ford Company was renamed Cadillac. Ford then formed a partnership, the "Ford & Malcomson" company, but again ran into financial trouble. Ford reincorporated this company as the Ford Motor Company and, well, you know the rest of the story. At the height of his wealth, Henry Ford was worth almost $200 billion in today's dollars.

The federal bankruptcy law gives Americans like Henry Ford a second chance. In the 1918 U.S. Supreme Court case of Stellwagen v. Clum the Court stated:

“This purpose of the act has been again and again emphasized by the courts as being of public, as well as private, interest, in that it gives to the honest but unfortunate debtor . . . a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

Bankruptcy attorneys refer to this second chance opportunity as a "fresh start." It is a financial "do-over" and many Americans have taken advantage of the bankruptcy law to reorganize their finances and go on to a better future, including Mark Twain, Walt Disney, and Donald Trump. Financial distress can happen to anyone - just like Abraham Lincoln and Harry S. Truman who suffered devastating business failures before becoming our 16th and 33rd Presidents.

Bankruptcy is a legal process that allows an individual time to repay or entirely discharge overwhelming debts. It is supervised by a federal bankruptcy judge, and overseen by a trustee appointed by the U.S. Department of Justice. If you have bills you cannot afford to pay, bankruptcy may be the legal remedy you need. Discuss your fresh start options with an experienced bankruptcy attorney.  

 When a bankruptcy case is filed, information about the case is reported on the individual’s credit file. The report lists the date filed, the type of bankruptcy case (i.e. chapter 7, 11, 12 or 13), the case number, the case status, and closing date. The federal Fair Credit Reporting Act (FCRA) permits credit reporting agencies to keep this information on an individual’s credit report for up to ten years. Note that the FCRA does not mandate that reporting agencies list the bankruptcy for ten years; only that bankruptcy information must be removed from the individual’s credit report at that time.

Each credit reporting agency has its own policy regarding the length it reports a bankruptcy case as a public record. In general, Chapter 7 cases are reported for ten years and Chapter 13 cases are reported for 7 years. However, the FCRA does not distinguish between Chapter 7 and Chapter 13 cases and a bankruptcy case under either chapter may be reported for up to ten years.

The FCRA is very clear regarding when the ten year period commences. Credit reporting agencies are directed to exclude bankruptcy case information from an individual’s consumer report ten years after “the date of entry of the order for relief.” The “order of relief” is a bankruptcy term defined in Section 301 of the Bankruptcy Code as the date the bankruptcy case is filed. The day the bankruptcy case is filed is the day the ten year clock begins to run. For instance, if a case is filed on January 1, 2012, then the bankruptcy record must be removed from a credit report before January 1, 2022.

Knowing the time limitation for reporting your bankruptcy information is an important part of the “fresh start” promised by the bankruptcy laws. Filing bankruptcy does not brand an individual for life; bankruptcy relieves the individual of overwhelming debts and provides the opportunity for a second chance at a better future. If you need a financial fresh start, discuss your options with an experienced bankruptcy attorney.