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

Only debts that are listed on your petition will be discharged in bankruptcy. Additionally, when you file a petition for bankruptcy, you are swearing under oath that you have included all of your debts and assets. Intentionally omitting a creditor is actually perjury.

Of course, you should exercise extreme care to ensure that you list all of your debts on your bankruptcy petition. However, there can be circumstances where an individual does not know about a creditor at the time of filing.

If you accidentally leave a debt off of your bankruptcy petition, the bankruptcy court will allow you to file an amendment to your schedules. As long as the amendment is filed in a timely manner, then the creditor will be added to your bankruptcy.

Note, though, that there are time limits on how long you have to file amendments. These time limits are strict and specific. That is why you should immediately seek the advice of a qualified bankruptcy attorney to ensure that you do not lose out on any discharges to which you would otherwise be entitled.

For most, the decision to file a bankruptcy is a tough choice. It is the final step in a long journey that has included great compromise and sacrifice. A person usually experiences a sense relief when deciding to file bankruptcy, and there may be a tendency to "let go" of your debt problem. Unfortunately, in some cases people will “let go” by recklessly spending money and running up credit card balances.

It is generally not a good idea to incur any new debt before a bankruptcy filing. The Bankruptcy Code has several provisions prohibiting the debtor from loading up on debt prior to filing bankruptcy. One of the most commonly cited is a spending spree prohibition against purchasing “luxury goods or services” totaling more than $550.00 within 90 days prior to filing a bankruptcy case. Another provision makes credit card cash advances presumptively non-dischargeable if taken within 70 days prior to the bankruptcy filing.

Recently the United States Supreme Court in Milavetz, Gallop & Milavetz, P. A. v. United States reiterated that incurring new debt before bankruptcy with the intent to discharge the debt is not only prohibited, but may also amount to civil fraud or a criminal act. The high court said that bankruptcy attorneys cannot instruct or encourage debtors to take on more dischargeable debt before bankruptcy, but attorneys “remain free to talk fully and candidly about the incurrence of debt in contemplation of filing a bankruptcy case.” 

There are many situations where taking on additional debt is beneficial and permissible. The Supreme Court cited three of those situations in the Milavetz opinion: (1) refinancing a mortgage; (2) purchasing a reliable car; and (3) incurring “additional debt to buy groceries, pay medical bills, or make other purchases ‘reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor[.]’”

The bankruptcy process can relieve you of many financial worries. However, your path to financial recovery can be complicated without the sound advice from an experienced bankruptcy attorney. Don’t make any significant financial decisions prior to filing bankruptcy without consulting your attorney.  

Most bankruptcy clients are aware of the attorney-client privilege, an evidentiary rule that protects confidential communications between an attorney and client. It encourages candid communication between clients and attorneys without fear that the discussion will be used against the client. This privilege belongs to the client and the client determines when to waive it. The privilege exists generally in every legal forum in the United States, however its application can vary. 

In a Chapter 7 bankruptcy case, a trustee is appointed to administer the case and liquidate the debtor's nonexempt assets. In performing these duties it may become important for the trustee to have certain information and the trustee may seek to have the debtor’s attorney disclose information obtained during a confidential attorney client discussion.

To compel the disclosure of this information, the trustee may invoke section 542(e) of the Bankruptcy Code which states that “[s]ubject to any applicable privilege, after notice and a hearing, the court may order an attorney, accountant, or other person that holds recorded information. . . relating to the debtor’s property or financial affairs, to turn over or disclose such recorded information to the trustee.” In opposing this disclosure, the debtor may assert the attorney-client privilege and argue that the trustee does not have the power to waive this privilege.

Bankruptcy Courts have taken three different approaches to resolving the issue of whether the trustee can waive the attorney-client privilege: (1) the trustee can waive attorney-client privilege; (2) the attorney-client privilege is absolute and cannot be waived by the trustee; and (3) whether the trustee is entitled to waive the attorney-client privilege depends upon the circumstances in the case. Bankruptcy courts using this last test generally balance the benefit to the bankruptcy estate against the potential harm to the debtor. See In re Courtney, 372 B.R. 519 (Bankr. M.D. Fla. 2007).

The bottom line is “let the client beware!” Discussions with your bankruptcy attorney, personal injury attorney, or other attorney may be subject to disclosure during your bankruptcy case. While most financial records would not be subject to the attorney-client privilege, the discussion of these records with your client may be privileged. Be warned that protecting this privileged communication may be at the discretion of the bankruptcy court.

The bankruptcy laws are constantly changing. Make sure that your fresh start is not a false start and hire an experienced and knowledgeable bankruptcy attorney who can protect your rights. 

Consumers who file for bankruptcy tend to face a lot of the same problems, such as the loss of a job or a serious illness. For these individuals, bankruptcy is often a viable option for getting their finances back on track after a life-changing event.

Here are five of the most common financial pitfalls from which bankruptcy can help save a consumer.

1. Severe or prolonged illness

A prolonged or serious illness can lead to massive medical bills. Some families find themselves unable to get out from underneath mounting medical expenses. Bankruptcy is a legitimate way to eliminate medical-related debts.

Because medical bills are unsecured debts, they can be discharged in bankruptcy. In these cases, a Chapter 7 liquidation bankruptcy is often a viable option for eliminating your medical bills and getting your finances back under control.

2. Job loss

The poor economy has resulted in job loss and layoffs for countless individuals in Texas and across the United States. The reduction in income that comes from a job loss is one of the most common reasons for individuals filing bankruptcy.

Even if you find a new job, it can be difficult to catch up on your past overdue mortgage, car and credit card payments. Bankruptcy will stop the garnishment on your wages at your new job.

For individuals who find themselves suddenly without a job, bankruptcy may be the best solution.

3. Divorce

As a result of a divorce, debts are often apportioned between the two former spouses. One spouse may find themselves unable to repay their portion of the debt. Bankruptcy, be it Chapter 7 or Chapter 13, is one way that this individual can get back in charge of their finances.

Note that child support and alimony payments are not dischargeable debts in bankruptcy. Bankruptcy, however, can still wipe out unsecured debts incurred as a result of a divorce.

4. Massive consumer debt

Most consumers who file for Chapter 7 bankruptcy have between $50,000 and $75,000 in debt. With interest mounting on credit card debts, it can be difficult, if not impossible, for these consumers to catch up on their payments.

Rather than liquidating your retirement savings, you can consider filing for bankruptcy and have those debts discharged. Bankruptcy, in some cases, can be a matter of saving your financial future.

5. Impending foreclosure

Bankruptcy can be the solution for a homeowner who is facing imminent foreclosure. Filing for bankruptcy can put an immediate stop to a foreclosure. In many cases, due to exemptions, the homeowner will be able to keep their property.

If you are considering filing for bankruptcy in Texas for these other reasons, contact a qualified bankruptcy attorney today to receive expert advice on your options.

Bankruptcy filings are on the rise – that’s according to the American Bankruptcy Institute which pulled data from the National Bankruptcy Research Center. This past February, 111,693 consumer bankruptcies were filed, which represents a 14% increase over the 98,344 consumer bankruptcy filings in February of 2009.

The number of consumer bankruptcies filed in February was also 9% higher than the 102,254 filings in January 2010.

 

The director of the American Bankruptcy Institute, Samuel Gerdano, believes that the number of bankruptcies filed in 2010 could ultimately exceed 1.5 million.

 

Last year, there were more than 1.4 million bankruptcy filings, including both consumer and business bankruptcies. That represented a 31.9% increase over the previous year, according to a report released by the Administrative Office of the U.S. Courts (AOUSC).

Of those bankruptcies, says the AOUSC, the majority were filed by consumers rather than businesses. Overall, consumer bankruptcies in 2009 increased 32% from the 1.07 million filed in 2008.

 

While business bankruptcies may have totaled fewer than consumer bankruptcy filings, the overall increase was higher, with 60,837 filings equating to a 40% increase over 2008.

 

If you are considering filing for bankruptcy in Texas, seek the advice of a qualified bankruptcy attorney today.

 

Most bankruptcy clients worry about how a bankruptcy might disrupt their lives. While many of these fears are unfounded, it is important for you to know the truth about the bankruptcy process and how it may affect you after your case. One serious matter is how a bankruptcy may affect an individual’s employment.

The first concern is how a bankruptcy can affect your current job. An employer will not receive notice of your bankruptcy except under two circumstances. First, you owe a debt to your employer, the bankruptcy court will notify your employer. Second, if you file a chapter 13 debt repayment bankruptcy, and choose a voluntary wage garnishment to pay creditors, your employer will be notified. 

Additionally, section 525 of the Bankruptcy Code prohibits a government or private employer from terminating or discriminating against an employee who files bankruptcy. You cannot be fired from your current job because you filed bankruptcy.

A second concern is how a bankruptcy may affect your ability to get a job. Government employers are absolutely prohibited from denying employment to a person solely on the basis of a bankruptcy filing. As for private employers, most courts have found that the bankruptcy code does not prohibit a private employer from denying a person employment because of a bankruptcy filing.

Refusing to hire a person solely because of a bankruptcy filing seems like a very short-sighted and naïve policy. Consider that the U.S. Census Bureau estimates there are around 308 million people in the United States. From 2000 to 2009, there were over 13 million non-business bankruptcy filings (source: American Bankruptcy Institute). That is over four bankruptcy filings per one hundred people. That figure rises substantially once you take into account that the census includes many that are not in the “working” population, and that many of the non-business bankruptcy filings were joint husband and wife filings. Add to the fact that there are many legitimate and blameless reasons for filing bankruptcy, and it is no wonder that most employers do not discriminate based upon a bankruptcy filing.

If you are experiencing financial difficulty, consult with a bankruptcy attorney and explore your options. Bankruptcy is a federally guaranteed legal process that helps individuals recover from overwhelming financial hardship. Get your financial fresh start today.

When you file for bankruptcy in Texas, you are required to list all of your assets on your bankruptcy petition. What many debtors do not realize, however, is that a potential legal claim against a third party is considered an asset for purposes of bankruptcy.

A bankruptcy attorney should always ask their clients whether they have any claims against any third party that could potentially be filed in court. Essentially, your bankruptcy attorney needs to know if you have any potential lawsuits.

Why is a potential lawsuit an asset? Because, if you file the claim and win the lawsuit, then you will likely receive financial compensation – and that money is obviously another asset.

One reason that it is so important that you tell your bankruptcy attorney about any potential lawsuits is that if you fail to list the claim on your bankruptcy petition, you could forever lose your right to file a lawsuit based on that claim.

For example, if you have a potential personal injury lawsuit against a driver that caused a car accident in which you were hurt, you must list that potential lawsuit as an asset. If you don’t list it, and you later attempt to file that lawsuit, you may be found guilty of committing bankruptcy fraud. You would then be prohibited from filing the lawsuit even after your bankruptcy case has concluded.

Upon your filing for bankruptcy, a bankruptcy estate is created. All of your assets, which includes potential lawsuits, then become the property of this estate. That is, it becomes property of the bankruptcy estate unless you are able to exempt it, which means that the proceeds of the settlement would be distributed amongst your creditors. For that reason, it is always the smartest move to list and attempt to exempt an asset than to not list it at all.

As always, being completely open and honest with your bankruptcy attorney is key to filing a successful petition.

Receiving a lawsuit summons is a very scary thing. Whether served by a law enforcement officer, private process server, or received by mail, the idea of facing a judge and a skilled attorney is very intimidating.  Fortunately, your legal options are very clear: (1) do nothing; (2) defend the law suit; (3) negotiate a settlement; or (4) file a bankruptcy.

The first option, do nothing, is obviously a bad choice. The court will enter a judgment against you and your wages may be garnished or property seized (e.g. the contents of a bank account). Even if the debt is ultimately paid or discharged in bankruptcy, the judgment will remain on your credit report for at least seven (7) years.

The second and third options, defend the law suit and/or negotiate a settlement, are very difficult to accomplish.  Once the creditor has hired an attorney and filed a lawsuit there is very little that a person or non-attorney debt settlement firm can do to “settle” the debt.  The collection attorney will use the legal processes to its advantage and knows that an unrepresented person is generally unable to successfully defend the lawsuit.  Even the lay-person-friendly small claims process can be filled with pitfalls. Additionally, the cost of hiring an attorney and defending a lawsuit can get very expensive and the collection attorney is betting that you will not pay $3,000 to an attorney to contest a $3,000 credit card debt. The collection attorney believes (rightly) that it has the advantage and will ultimately obtain a legally enforceable judgment against you. Depending on your cardholder agreement, you may be liable for the principal, interest, penalties, court fees, and attorney fees. Why would they settle for less?

The final option, bankruptcy, is a very powerful tool. Bankruptcy immediately stops the lawsuit and prevents the entry of a judgment. Once the individual’s obligation to pay the debt is discharged by the bankruptcy court, the lawsuit must be dismissedand cannot be refilled. Filing bankruptcy prevents almost all future lawsuits from being filed and can discharge the obligation to pay most court judgments.

If you have been sued by a credit card company, discuss your situation with an experienced bankruptcy attorney. There are many options for dealing with your financial difficulty, and a bankruptcy attorney can help you select the best course of action for you and your family.

People often fear the idea of filing for bankruptcy in Texas because they are operating under myths and misconceptions. The fact is, there is a lot about Texas bankruptcy that most people don’t know.

To help you make a more informed decision, Fears | Nachawati – a team of experienced Texas bankruptcy attorneys – has put together this list of five of the most surprising secrets about bankruptcy:

1. You may be able to keep most, if not all, of your property: Texas bankruptcy law allows you to choose between Texas state exemptions and federal exemptions. These exemptions allow you to keep a good deal, if not all, of your property when you file for bankruptcy. For example, in Texas, you may be able to keep your car, home, household goods, jewelry and retirement savings, among other things.

2. There is no minimum amount of debt necessary to file for bankruptcy in Texas: No law, in Texas or elsewhere, exists that dictates the amount of money you must owe in order to file for bankruptcy.  Bankruptcy laws were designed to help out individuals who are unable to pay their existing debts. Whether or not you can file for Chapter 7 bankruptcy in Texas is a matter of evaluating your debts, assets and income.

3. It is possible to get credit after bankruptcy: Because bankruptcy does negatively affect your credit for a time and does remain on your credit report for up to 10 years, many people understandably but mistakenly believe that they will never be able to obtain credit again if they file for bankruptcy in Texas. However, the reality is that you will be able to get credit within a relatively short time after you file for bankruptcy. You will, for instance, be able to get secured credit cards that will improve your credit score. You might even be able to get a mortgage within as little as two years after filing for Texas bankruptcy.

4. Your employer will not be notified of your bankruptcy: While it is true that bankruptcy records are public, there is little chance that your employer will find out about your bankruptcy. No one from the bankruptcy court will notify your employer of your bankruptcy. The only people who will know about your Texas bankruptcy are your creditors and the people that you choose to tell.

5. Your spouse is not required to file for bankruptcy with you: There is absolutely no legal requirement that you and your spouse file jointly for bankruptcy in Texas. One spouse can file for bankruptcy without the other. The effect that your bankruptcy will have on your spouse’s assets and liabilities is a question that can be answered by a qualified Texas bankruptcy attorney.

The internet is full of half-truths that feed the speculative fears of the evils of bankruptcy. Most of this information comes from sources outside the bankruptcy process, like debt counselors, or financial planners who often are selling alternatives to bankruptcy. The most commonly stated “reasons to avoid bankruptcy” are:

1. It will ruin your credit

2. You will lose property

3. Not all debts are eliminated

4. You may be subject to repossession or foreclosure

5. You may not be able to get a job

6. You cannot get credit

Those are serious allegations, so let’s look at them.

First, bankruptcy is typically a last-resort option, so the average bankruptcy filer’s credit is already ruined. The bankruptcy wipes the slate clean and stops future adverse reporting for past debts. In other words, if you are 120 days late on a credit card, your credit report will continue to show that you are 120 days late month after month. A bankruptcy stops that reporting from the day you file your case so your credit can improve.

Second, it is exceedingly rare that a debtor loses property unexpectedly. When it happens it is generally the result of poor communication with the client. In all other cases the debtor will only lose property that is voluntarily surrendered, meaning the debtor has made a financial decision to not keep a house or car.

Third, there are actually very few debts that cannot be eliminated. The most common types are child support, some IRS debts, and student loans. However, even these non-dischargeable debts can be managed within the bankruptcy.

Fourth, the bankruptcy automatic stay will stop any foreclosure or repossession. If the creditor wants to take possession of the property after the bankruptcy filing, it must petition the bankruptcy court for permission.

Fifth, it is against the federal law to discriminate against a job applicant solely on the basis of filing a bankruptcy.

Sixth, many bankruptcy debtors have rebuild their financial lives within a year or two of the bankruptcy filing. It takes time and effort to rebuild, but there are no past debts to drag you down!

Don’t get your bankruptcy information from internet sources that use scare tactics and half-truths. Talk to an experienced bankruptcy attorney and get the facts. Find out how bankruptcy can solve your debt problems today.

The decision whether to extend a person credit is up to each individual creditor. There is no law that dictates how long you must wait after filing for bankruptcy before you can seek a credit card or loan.

Creditors vary greatly from one another in their willingness to grant credit to a person who has recently filed for bankruptcy. While bankruptcy can remain on your credit report for up to 10 years, it is quite possible to establish good credit within a short time after filing for bankruptcy.

Obtaining and using credit is critical to your ability to improve your credit score after bankruptcy, which is why financial experts recommend that you apply for a secured credit card. With a secured credit card, you are given a line of credit equal to an amount of money you deposit with the issuing bank. You may be able to find one that converts to an unsecured credit card after 12 to 18 months of on-time payments.

Another important step you can take to rebuild your credit after bankruptcy is ensuring that your credit report is accurate. Review a copy of your credit report to ensure you’re your discharged debts are no longer listed as open and overdue.

The bottom line is that credit will be available to you even after you file for bankruptcy. You won’t have to wait until the bankruptcy disappears from your credit report before you will be able to obtain a loan or credit card.

When Congress passed the Fair Debt Collections Practices Act (“FDCPA”) it stated that its purpose is “to eliminate abusive debt collection practices by debt collectors[.]” Congress cited the need for consumer protection because of the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.  Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

Abusive debt collection practices are just bad news.

On February 22, 2010, the United States Supreme Court declined to hear an appeal from the Fifth Circuit U.S. Court of Appeals on a FDCPA case: Kay v. Gonzales, U.S., No. 09-542. In that case the Plaintiff, Jose Gonzalez, received a letter from the Kay Law Firm. The letter, written on law firm letterhead and unsigned, told Gonzalez, “Please be advised that your account, as referenced above, is being handled by this office.” On the back of the letter was this statement: “At this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.” Gonzalez sued the Kay Law Firm for violating the FDCPA which prohibits debt collectors from falsely representing or implying that the debt collector is an attorney or that the communication is from an attorney. 

The federal district court found that the disclaimer was sufficient to notify Gonzalez that the collection matter was not being handled by an attorney and the Gonzalez’s case was dismissed. On appeal the Fifth Circuit Court of Appeals found that the letter’s disclaimer on the back was mixed in with “legalese” which may not be sufficient to notify the consumer of the attorney’s non-involvement in the case. The Fifth Circuit reversed the district court dismissal and remanded the case for trial. Gonzalez v. Kay, No. 08-20544 (5^th Cir., 2009). Now that the Supreme Court has denied the Kay Law Firm’s appeal, Mr. Gonzalez will have his day in court.

The Fifth Circuit in its opinion cites the Seventh Circuit Court of Appeals for why it is important to protect against this type of deceptive collection practice:

“An unsophisticated consumer, getting a letter from an ‘attorney,’ knows the price of poker has just gone up. And that clearly is the reason why the dunning campaign escalates from the collection agency, which might not strike fear in the heart of the consumer, to the attorney, who is better positioned to get the debtor’s knees knocking.” 

Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996).

If you receive a collection letter from a law firm, speak to an experienced bankruptcy attorney and learn your rights. Bankruptcy attorneys are trained in matters of debt defense and can help explain your rights under the FDCPA and the federal bankruptcy laws. Don’t let an unscrupulous debt collector get your “knees knocking.”

There is no legal requirement that both spouses file for bankruptcy. If you choose to file for bankruptcy alone, in general, your spouse’s assets and liabilities will not be directly affected. Just because you are married, that does not make your spouse automatically responsible for all of your debts.

However, there are some ways that bankruptcy could potentially have an effect on your spouse. If an asset, such as a house, is owned jointly by both spouses, then the Trustee will liquidate the one-half interest owned by the spouse who is filing for bankruptcy. Also, if both you and your spouse are responsible for a debt, such as a loan, then the non-filing spouse will then be liable for the full debt.

But, as long as your spouse is not responsible for any of your debt, they will not be affected by you filing for bankruptcy. Also, your spouse’s credit rating will not be affected if you file for bankruptcy.

An experienced Texas bankruptcy attorney can help you understand what, if any, effect your bankruptcy filing will have on your spouse’s debts and assets.

While many attorneys advertise their qualifications on their web sites, NO ONE should hire legal counsel based solely upon the results of an online search. However, information you obtain from the internet can be useful in narrowing your search, provided you know what to look for in a prospective bankruptcy attorney. 

First, is the attorney licensed to practice in your area? Usually the attorney’s biography will state his or her bar admissions. Each of the 94 federal judicial districts has a bankruptcy court, and these courts are defined by geographic jurisdictions. More information concerning federal court geographic boundaries can be found here.

An attorney who is not a member of the bar where you reside will have to petition the court for admission pro hac vice (“for this event only”). An attorney who is not active in a court may not have useful information regarding the bankruptcy judge, the trustee, local customs and rules, or contacts to make your case go smoothly.

Second, how long has the attorney been practicing bankruptcy law? The federal bankruptcy laws are complex and attorneys spend years learning how to successfully navigate a case from start to finish. Don’t be a test case or a learning experience for a new attorney.  

Third, does the attorney belong to any professional associations? The National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute are two outstanding resources for attorneys to keep current on changes in the bankruptcy law. Member attorneys also receive training and information that is beneficial to their clients.

An experienced bankruptcy attorney is easy to find, if you know the tell-tale signs. Use these signs to narrow your search, and then interview your candidates either by phone or in-person. Your choice of a bankruptcy attorney is a serious matter and should be carefully considered, so get to know your attorney’s qualifications before your make a hiring decision.

Here are six common mistakes that debtors make when they are considering filing for bankruptcy – mistakes that can lead to additional debt and even to having your bankruptcy petition dismissed.

Avoid the following mistakes to ensure that your bankruptcy petition is successful and that as much debt as possible is discharged:

1. Running up credit card bills once you’ve decided to file for bankruptcy: Some debtors mistakenly believe that they can charge as much to their credit cards as they want since their debts are going to be eliminated in bankruptcy. The fact is, however, certain debts you incur within 90 days before filing for bankruptcy are non-dischargeable – which means you’re left with the bill and you won’t get the clean slate you were hoping for.

 2. Transferring property out of your name: Often consumers mistakenly believe that they can protect assets such as their home or car by giving it to a family member before they file for bankruptcy. Under the law, a bankruptcy trustee has the authority to reverse transfers of property if those transfers were made in an attempt to hide assets from creditors. Undertaking these transfers is typically unnecessary anyway because property exemptions allow debtors to keep much of their property after filing for bankruptcy.

3. Repaying family members:Under bankruptcy law, you cannot treat one creditor more favorably than another, and that includes family members.Payments that you make to family members within one year of filing for bankruptcy may actually be reclaimed by the bankruptcy trustee and then distributed proportionately amongst your creditors.

4. Liquidating your retirement account: In general, retirement accounts are considered exempt property in bankruptcy filings. By cashing out your retirement accounts, you could lose your security for the future while still being left with considerable debts.

5. Using an equity line of credit to pay off debt: Under bankruptcy law, you typically have the ability to claim an exemption for equity in your home, which means that you retain that equity even after you go through bankruptcy. If you convert your equity into debt before filing for bankruptcy, however, you may be left with new debt that will be non-dischargeable, meaning you will still be responsible for paying it off even after your other debts have been wiped out.

6. Failing to be completely honest with your bankruptcy attorney: Unless your bankruptcy attorney has complete and accurate information about your debts and assets, they cannot properly file your bankruptcy petition. By withholding information from your bankruptcy attorney, you are taking the chance of having your bankruptcy petition dismissed as well as losing out on assets you may otherwise have been able to keep. Attempting to hide an asset can even result in criminal charges.

Remember, your bankruptcy attorney is there to help you, not judge you – there is no reason why you can’t be completely open and honest with your bankruptcy attorney throughout the entire process.

Bankruptcy law has its own confusing language. It is a good idea to have a basic understanding of bankruptcy terms before your initial consultation with a bankruptcy attorney. While most bankruptcy attorneys are very skilled at explaining the bankruptcy process and its impact to their clients in plain language, sometimes technical terms can sneak into the conversation. Below is a very general explanation of the most common bankruptcy terms:

Automatic stay – a court injunction that stops all collection action against the debtor. The automatic stay is effective immediately upon filing the bankruptcy

Bankruptcy estate – the debtor’s legal and equitable interest in property at the time the bankruptcy case is filed

Chapter – a section of the bankruptcy code. Some chapters are general and apply to all cases; other chapters apply only to specific bankruptcy cases.

Debtor – an individual who files a bankruptcy petition

Discharge – a court permanent injunction prohibiting the collection action against the debtor personally for any debt discharged in the bankruptcy

Equity – the value of a debtor's interest in property after subtracting monetary liens

Exemptions – legal protections that shields property from creditor collection

Means test – a calculation of the debtor’s income and expenses meant to determine the debtor’s ability to pay creditors

No-asset case – a Chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims

Nondischargeable debt – a debt that cannot be absolved through bankruptcy and the debtor remains personally liable after the bankruptcy case has closed.

Petition – the papers filed by the debtor that commences the bankruptcy.

Plan – the debtor’s description of repayment of debt during a Chapter 13 bankruptcy

Preference – a debt that was paid prior to the bankruptcy when the debtor was insolvent and unable to pay other creditors

Proof of claim – the creditor’s claim and verification of a debt

Reaffirmation agreement – an agreement between the debtor and creditor that entitles the debtor to retain property in exchange for continued personal liability to pay a debt (common examples are a car or house loan)

Schedules – the detailed description of the property, debts, income and expenses of the debtor

Secured creditor – a creditor holding a lien against property of the debtor’s as security for payment of a debt

341 meeting – a mandatory meeting that the debtor must attend with the trustee. The debtor’s creditors are invited to the 341 meeting and are allowed to ask questions.

Trustee – an individual appointed to oversee the debtor’s bankruptcy case. This is not the bankruptcy judge.

 

The two most common types of consumer bankruptcies are Chapter 7 and Chapter 13. In a Chapter 7 all of the debtor’s property is placed into an estate which is controlled by the bankruptcy trustee. While no property physically changes hands (at least not at the beginning of the case), the trustee and bankruptcy court have broad legal power over your property. If you have money in a bank account on the day you file, your bank account and money are assets of the bankruptcy estate. You are no longer free to transfer funds or assets as they now belong to the bankruptcy estate.

Take for example that you have $5,000 sitting in your checking account on the day you file bankruptcy. That money is property of the Chapter 7 bankruptcy estate and is no longer yours to control or use. If you take the $5,000 out of the bank the day after filing to pay your mortgage payment and other bills, the Chapter 7 trustee can seek to recover those funds, either from you or from the payee.

During a Chapter 13 bankruptcy the debtor retains possession and control over his or her property, and is free to use any funds in the debtor’s bank account. An accounting is performed and the debtor’s property is classified as either exempt or non-exempt. Non-exempt property is not taken from the debtor (as is often the case in a Chapter 7), but the Chapter 13 debtor is required to pay unsecured creditors a sum equal to the amount of non-exempt equity. For instance, if there is $5,000 in the debtor’s bank account, the debtor may only be able to exempt a portion of the entire sum. The non-exempt portion must be paid to the creditors through the debtor’s Chapter 13 plan (over three to five years).

Cash in a bank account can be a problematic issue for a debtor. Avoiding these problems is the joint responsibility of the debtor and the debtor’s bankruptcy attorney. Timing is critical to minimizing your financial exposure. An experienced bankruptcy attorney can help you maximize the benefits of the bankruptcy laws and navigate around any pitfalls. 

 

 

Lately municipal bankruptcy has been the subject of many news features as economic troubles press cities to consider their legal options. San Diego and Los Angeles are two major cities that are reportedly considering federal bankruptcy protection. 

While federal bankruptcy protection has been available to U.S. cities since the 1930’s, only a few hundred have actually filed. Chapter 9 of the Bankruptcy Code provides a financially distressed municipality the opportunity to reorganize its debts under federal protection. A “municipality” as defined in the Bankruptcy Code includes cities, counties, and special districts. This definition does not include states.

A Chapter 9 bankruptcy can only be commenced after the governing body specifically authorizes the filing. Twenty-six U.S. states have prohibited their municipalities from filing bankruptcy: Alaska, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Mississippi, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming. 

Once filed the federal bankruptcy law’s automatic stay provision enjoins creditors from taking any collection action against the municipality. The automatic stay provides an opportunity for the municipality to raise new revenues, renegotiate contracts, or restructure its debt without pressure from creditors. Chapter 9 is tricky business for the bankruptcy court because the Tenth Amendment to the U.S. Constitution and section 904 of the Bankruptcy Code prevents a federal bankruptcy court from interfering with the city’s political or governmental powers. The bankruptcy judge is largely a facilitator of the restructuring process.

The essence of a Chapter 9 bankruptcy is that it gives the municipality an opportunity to reorganize and restructure its debts through an agreement with its creditors called a “Plan of Adjustment.” If a creditor cannot agree with the municipality, Chapter 9 allows the bankruptcy court to force the municipality’s Plan of Adjustment on the non-consenting creditor. The bankrupt municipality is also empowered to accept or reject contracts and leases through the Plan of Adjustment.

Chapter 9 municipal bankruptcy is a very rare and special bankruptcy case. The stigma and complexity of Chapter 9 makes it a last option for U.S. municipalities. However, if the debt problem is serious and substantial enough, the federal bankruptcy laws can protect a city of millions and give it a chance for a fresh start, just like it can protect an individual or family in financial distress.

 

Bankruptcy can have a serious impact on an ex-spouse. That is because a family court will often assign payment of a joint debt to one party only. In many cases the obligated party lacks the resources to pay the debt in full or to refinance it. Therefore the ex-spouse remains legally obligated to the creditor. This is often the case with automobile debt and credit cards with large balances.

A court-ordered debt to a former spouse is given special consideration by the bankruptcy laws. In a Chapter 7 bankruptcy case these debts are generally non-dischargeable. An order directing payment to a third party (e.g. a mortgage payment) is also generally non-dischargeable if the payment is effectively a form of spousal support. Even an obligation to pay your ex-spouse's attorney fees in connection with the divorce proceeding is generally non-dischargeable.

While past due support obligations are also non-dischargeable debts in a Chapter 13 bankruptcy, debts not in the nature of support (e.g. a division of marital property) can be discharged. The ex-spouse must contest the debtor's characterization of the obligation and convince the bankruptcy court that the debt is a support obligation in order to save it from discharge. If the court determines the debt is a support obligation, it must be paid by the debtor through the Chapter 13 bankruptcy.

Whether the family court-ordered obligation arises from a property division or from a support obligation, the ex-spouse will likely suffer harm from the debtor's bankruptcy filing. The sad truth is that any non-payment of a joint monthly obligation will harm the ex-spouse's credit report and there is little that can be done to remedy it. If the debt is discharged through the debtor's Chapter 13 bankruptcy, the creditor may elect to pursue the ex-spouse and there will be no recourse against the debtor.

Regardless whether you or your ex-spouse owes a court-ordered joint obligation, if bankruptcy is in the future, you should seek professional help. It is important to evaluate the impact the bankruptcy will have on the debt and determine a course of action that will best protect you. Timing can be very critical, so consult with an experienced bankruptcy attorney early.

 

The length of a bankruptcy case depends primarily on which type of bankruptcy you file: Chapter 7 or Chapter 13.

The average Chapter 7 bankruptcy case takes between 3 and 6 months before the debtor receives their bankruptcy discharge. Because a discharge of debts is the goal of a Chapter 7 bankruptcy, the bankruptcy case, from the debtor’s perspective, is essentially over once the discharge is obtained.

Note that even though it takes 3 to 6 months to obtain a discharge, an automatic stay that protects you from further debt collection efforts goes into place immediately after you file for bankruptcy.

By their nature, Chapter 13 bankruptcies take longer than Chapter 7 bankruptcies. A Chapter 13 bankruptcy is a repayment plan. Under the repayment plan, the debtor is given a set amount of time – between 3 and 5 years – to repay the reduced debts. Once the repayment plan is successfully completed, the debtor’s remaining debts can be discharged.

 

 

One of the most common questions asked by bankruptcy clients is, “Can I go to jail if I can’t pay my debts?” The general answer is no, there are no debtors’ prisons. The federal judicial system abolished debtors' prisons in 1833, and most states did the same during the 1830s and 1840s.

But that’s not exactly the whole story. A person can be jailed by a court for non-payment of many debts including unpaid taxes, court-ordered debts or fines, and non-support issues such as criminal non-support or owed child support. Additionally, a court can imprison a person to coerce compliance. Just ask H. Beatty Chadwick, the Pennsylvania lawyer who spent 14 years in jail for failing to comply with a court order.

Chadwick, now 73, was ordered to retrieve $2.5 million from an off-shore account and place it into a court-controlled account until his divorce was settled. He told the court that the money had been lost in a bad business deal, but the court did not believe him. Chadwick was ordered to jail for contempt of court until he produced the $2.5 million. Fourteen years later, in July of 2009, Chadwick was released when the last in a long series of judges (several who are now deceased) ruled that his continued imprisonment would be punitive instead of coercive. In other words, after 14 years it was obvious either Chadwick would not or could not pay up.

While debtors’ prisons are illegal, the threat of imprisonment still remains for some debt issues. It is important that anyone with serious debt problems to seek competent legal advice. It is equally important to provide honest information and documents to your attorney.  

 

 

You cannot pick and choose which debts to list in your bankruptcy petition. You must list all of your debts, including credit cards and debts you owe to friends and family members.

Intentionally leaving a debt off your bankruptcy petition is against the law. When you sign a bankruptcy petition, you are certifying under penalty of perjury that all of your assets and debts are listed. During the meeting of the creditors, you will also be asked under oath if all of your debts have been listed on the petition.

Even though you have to list a particular debt, there is nothing in the law that prevents you from voluntarily repaying the debt after it has been discharged. In fact, with secured debts, such as mortgages and car loans, you can choose to reaffirm the debt in order to keep the property.

 

 

The bankruptcy code describes categories of debts that are excepted from discharge in a bankruptcy case. For most of these debts, the exception to discharge applies automatically. In other cases, the creditor must file a lawsuit (called an adversarial action or adversary case) with the bankruptcy court and have the judge determine whether the debt will excepted from the discharge order. A debtor may also want the bankruptcy judge to determine whether a debt is excepted from discharge.

Debts described in sections 523(a)(2), (4) and(6) (debts incurred by fraud or malicious conduct) are not automatically excepted from discharge. A creditor or debtor must file an adversary case requesting the bankruptcy court to determine the discharge status of these types of debts. The adversary case is generally filed within 60 days after the first 341 Meeting of Creditors.  Failure to file a timely adversary case waives the right to challenge the dischargeability of the debt.

In some rare cases a creditor or the bankruptcy trustee may ask the bankruptcy court to deny the debtor a discharge. Hiding assets, lying during the bankruptcy process, failing to obey a court order, and destroying documents with the intent to defraud creditors are all actions that could result in the bankruptcy court denying the debtor a discharge. In bankruptcy, honesty is not only the best policy, it is the only policy that will get you a discharge.

If an adversary case is filed against you, do not panic. You and your bankruptcy attorney must be served notice of the adversary case and you will have time to answer the complaint. In most cases an experienced bankruptcy attorney will anticipate the adversary case and will discuss options with the client. However, some cases come “out of the blue.” In those cases there is still time to develop a strategy including negotiating a settlement with the creditor.

 

 

You know that bankruptcy can reduce your debt and give you a fresh financial start, but how do you know when it’s time to take the first step and contact a bankruptcy attorney? Here are 11 signs that it may be time for you to consider filing bankruptcy:

1. You can barely afford the minimum monthly payments on your credit cards.
2. You have taken, or are considering taking, cash advances or payday loans to meet your basic living expenses.
3. You are losing sleep over not being able to pay your bills.
4. Stress over your financial difficulties is negatively affecting your health.
5. You are living paycheck to paycheck with no reserve funds for an emergency.
6. You are afraid to answer the phone or go to your mailbox.
7. You are taking cash advances on one credit card to make payments on another one.
8. You are considering cashing out your retirement savings to pay your bills.
9. Your debt is increasing rather than decreasing every month.
10. You’re behind on your rent or mortgage payments.
11. Your car is about to be repossessed.

If the above statements describe your current financial situation, then take charge of your life and learn about your options. Contact a bankruptcy attorney today to find out if bankruptcy is the right solution for you. The sooner you act, the sooner you can get your life back.

 

 

On February 22^nd, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) will go into effect.

One of the provisions of the act that has drawn the most commentary is the requirement that credit card statements show how long it will take the cardholder to pay off their balance if they make only the minimum monthly payments – and how much doing so will truly cost them.

Under the CARD Act, each statement must show the long-term savings of paying off your balance in three years. It must also tell you the amount of monthly payment you would need to make in order to pay off the balance within that time.

The goal of the provision is to help consumers realize the financial pitfalls of only making the minimum payment each month.

For expert opinions on what effect the disclosures will have on consumers’ behavior, see this piece from the Milwaukee Journal Sentinel.

This disclosure requirement is among several other consumer-friendly rules that will go into effect as a result of the new federal law. For more on the CARD Act, including several provisions affecting interest rate increases, see this piece from credit.com entitled “Understanding the Credit Card Accountability Responsibility and Disclosure Act.”

If you are facing mounting credit card debt, a bankruptcy attorney can explain your legal options and help you decide if bankruptcy is the right option for your financial situation.

 

 

Bankruptcy is an area of the law that is fraught with myths and misconceptions. Often people know very little about the true nature of bankruptcy and how it will affect them. It is important to understand that bankruptcy is not something to be feared. Rather, it is a tool that can be used in the appropriate circumstances to eliminate or reduce your debts and give you a fresh opportunity to rebuild your finances.

In that spirit, we’ve put together this list of 5 things that most people don’t – but should – know about bankruptcy:

1. Most people are able to keep most, if not all, of their assets: None of your property will be taken in a Chapter 13 bankruptcy because you will be repaying a portion of your debts over a set time period. In Chapter 7 bankruptcy, you are allowed to keep some of your property under what is known as “exemptions.” In Texas, you can choose between the federal exemptions statutes or the Texas state statutes. Large assets, such as the equity in your home and vehicle, are protected, and many smaller assets, such as your clothing and household furniture, are exempt up to a certain amount.

2. You may be able to stop foreclosure and keep your home: As mentioned above, a generous amount of equity in your home is exempt under Chapter 7 bankruptcy. If you are behind on your payments, a Chapter 13 bankruptcy gives you the opportunity to catch up on your missed payments through a court-approved payment plan and has the effect of stopping any foreclosure sales dates.

3. You can often rebuild your credit after only a few years: While it’s true that a Chapter 7 bankruptcy stays on your credit report for 10 years and a Chapter 13 bankruptcy stays on your credit report for 13 years, the actual effect that bankruptcy has on your credit is often much less severe. Because bankruptcy wipes out your current debts, your cash is now freed up to pay your bills on time and improve your overall crediting rating. It is also possible get credit cards, albeit at higher interest rates, after you have filed for bankruptcy. If you use your new credit wisely, you can improve your score in much less time than you probably think.

4. Most people will never know that you filed for bankruptcy: Bankruptcy filings are public record, but in reality, very few people will ever find out that you filed for bankruptcy unless you choose to tell them. The only people who will receive notification are those who are directly involved in your bankruptcy in some way, such as your creditors. Even if your employer does find out that you’ve filed for bankruptcy, it is legal for them to fire you because of it.

5. The cost of hiring a bankruptcy lawyer is far less than the cost of making a mistake in filing for bankruptcy: Filing for bankruptcy requires you to comply with both Texas state and federal laws. It also involves a large amount of paperwork and court filings. If you make a mistake in your bankruptcy filing, your case can be dismissed. Also, by hiring an attorney you can maximize your exemptions, ensuring that you keep as many of your assets as possible. There is a limit on how often you can file for bankruptcy, so it is critical that you seek the advice of an experienced attorney to be sure it is done correctly.

 

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.

 

 

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.

 

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.

 

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.

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.

There is a common myth that gambling debts cannot be discharged in bankruptcy. The truth is that gambling debts usually receive the same treatment as any other unsecured debt, like credit cards or medical bills. However, under some unusual circumstances, a bankruptcy court may find that a gambling debt cannot be discharged.

Gambling debts commonly appear as credit card charges or cash advances. An important factor in the discharge of this debt is whether there was an intent to repay the debt when the charge or advance was incurred. If the debtor had no intent to repay the obligation, the credit card company may object to the discharge of this debt on the basis of fraud. Courts have generally been reluctant to listen to this objection by a creditor unless there is strong evidence of fraud. For instance, a debtor who takes out a $10,000 cash advance at the casino, even though he is recently unemployed and overwhelmed by debt, and who files bankruptcy the next day will likely have the hall-marks of fraud.

Most gambling debts in bankruptcy are not as cut and dry as the above example. If the credit card company objects, the bankruptcy court will hold a hearing. The court may look to the debtor’s past credit card transactions, any attempt to repay the obligation, and the records and testimony of the debtor to determine the existence of a fraudulent intent.

All gambling losses must be disclosed by the debtor on the Statement of Financial Affairs. This disclosure is a mandatory requirement and the intentional failure to disclose this information may result in a finding that the gambling debt cannot be discharged, or worse, the court may deny any discharge in the case as a result of the debtor’s misrepresentation. It is particularly important to disclose recent gambling losses to your attorney prior to the filing of your bankruptcy case. Recent credit card charges or cash advances can be problematic to any bankruptcy case; and especially troublesome if related to gambling debt.

Bankruptcy courts can be very forgiving to the honest, although perhaps foolhardy debtor, and very unsympathetic to the dishonest. Honesty and full disclosure is especially important in a case involving gambling debts. Discuss these debts with your bankruptcy attorney and provide all the requested documentation. The success of your bankruptcy case depends on it!

For free legal advice on gambling debt and other bankruptcy issues, contact the Texas bankruptcy lawyers of Fears | Nachawati today. You can email us or phone us toll free at 1.866.705.7584.

A joint petition for bankruptcy is a single bankruptcy petition filed together by a husband and a wife. Only individuals who are legally married on the date they file for bankruptcy can file a joint petition. Unmarried partners must each file for bankruptcy separately.

Note that there is no legal requirement that both spouses file for bankruptcy. It is possible for one spouse to file for bankruptcy individually.

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

When you file for bankruptcy, an automatic stay is put in place that stops all debt collection proceedings against you. Under bankruptcy laws, wage garnishment is considered a collection proceeding. Therefore, when you file for bankruptcy, all wage garnishments against you will stop – including IRS wage garnishments.

If your wages are being garnished and you are considering filing for bankruptcy, contact the attorneys of Fears | Nachawati today for free legal advice. To receive free legal assistance from a Texas bankruptcy lawyer, email us or phone us toll free at 1.866.705.7584.

Federal law guarantees open access to the courts and permits self representation in lawsuits, including bankruptcy proceedings. However, the most important question is not “can you,” but “should you” represent yourself in a bankruptcy case.

Proceeding pro se (Latin meaning “for himself”) in a bankruptcy case is like navigating a mine field while blindfolded. Is it possible to be successful? Sure! Will your bankruptcy case blow up? Probably. Books and internet resources simply cannot substitute for competent legal advice. Below are a few reasons why a pro se bankruptcy is a bad idea:

Reason 1: The Federal Bankruptcy Code is complex.

Reason 2: The Federal Rules of Bankruptcy Procedure are complex (and changing as of December 1, 2009).

Reason 3: The bankruptcy court’s local rules are complex.

Reason 4: The applicability of state law to federal bankruptcy law is complex, including state exemption laws, state criminal laws, and state collection laws.

Reason 5:  The bankruptcy trustee will examine your case more closely since you are not represented by counsel. The trustee will likely put you at the end of the 341 meeting docket to have extra time to review your bankruptcy case and ask questions.

Reason 6: Most skilled bankruptcy attorneys will not step into the middle of a pro se case when things go wrong.

Reason 7: Are you really qualified to answer important questions, like: “When should you file?” “What chapter should you file?”

Reason 8: Most courts will not allow a pro se bankruptcy debtor to file documents electronically through the court’s internet ECF system.

Reason 9: You can be audited by a CPA firm selected by the Department of Justice.

Reason 10: Occasionally the pro se case is such a chaotic mess that the debtor is forced to dismiss the bankruptcy and later re-file with the assistance of an attorney. That’s two bankruptcies on your credit report for the price of one!

Reason 11: If you are reaffirming a debt, you must appear in open court and answer the bankruptcy judge’s questions.

The upside of representing yourself is saving a few dollars. The downside is a considerable risk to your property, your future finances, and, in extreme cases, your liberty. Don’t risk your family’s well-being! Let an experienced bankruptcy attorney guide you through your bankruptcy case.

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

A person can go into bankruptcy in one of two ways. The most common way is for the person to voluntarily file a petition for bankruptcy. The second way a person can become bankrupt is for their creditors to ask the court to issue an order declaring that the person is bankrupt. This second method, involuntary bankruptcy, is rarely used, however.

In either case, the process is administered by a Trustee in Bankruptcy. You start by completing an application and providing it to the Trustee along with several other pieces of required information and documentation.

The Trustee will then assess your situation and help you determine whether bankruptcy is the most suitable option for you. If it is, the Trustee will prepare the legal documents for you to sign. Once the legal papers are signed and filed with the Superintendent of Bankruptcy, then you are officially bankrupt.

For free legal advice about Texas bankruptcy, contact the law firm of Fears | Nachawati today. To speak with one of our experienced Texas bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

If you’re considering filing for bankruptcy, you may feel like the you’re the only one. You’re not alone. In fact, more than one million people filed for bankruptcy in 2008.

There is a misconception that filing for bankruptcy is about “cheating the system.” The truth is, however, most people who file for bankruptcy do so after a life-changing event that puts them in financial constraints.

Filing for bankruptcy is not a sign of personal failure. More often than not, a person files for bankruptcy because circumstances beyond their control have caused them to fall further and further behind on their bills.

One of the most common reasons for filing for bankruptcy is a serious illness. Other reasons include job loss and divorce. These three reasons account for more than 90% of all bankruptcy filings. In these cases, an already difficult situation is compounded by mounting debt and worries over foreclosure and repossession.

Bankruptcy helps individuals who have found themselves in financial straits by wiping the slate clean. Bankruptcy can give you a fresh start, and many people who have filed for bankruptcy have gone on to get their life back in order and earn back their good credit.

If you are considering filing for bankruptcy, contact Fears | Nachawati today for free legal assistance. To speak with one of our Texas bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

As soon as you file for bankruptcy, an automatic stay is put in place that prevents your creditors from collecting on your debts – which means that the harassing phone calls will stop.

The automatic stay is essentially a temporary injunction. It halts creditors from taking any further action to collect the debts you owe them for as long as your bankruptcy case is pending.

An automatic stay gives the debtor some breathing room. While the stay is in place, collectors cannot call you and all foreclosure, repossession and wage garnishment actions are stopped. The stay basically freezes the debt collection activities, giving you time to proceed with your bankruptcy filing and get your finances back in order.

Note, however, that a creditor can petition the court to be granted relief from the stay. In order to be granted this relief, the creditor must make a showing that the stay does not give them adequate protection or that their interest in a certain piece of property will be in jeopardy.

To receive free legal advice on Texas bankruptcy, including your protections under the automatic stay, contact Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584 to receive free legal assistance from a Texas bankruptcy lawyer.

Whether or not you can keep your credit cards after you file for bankruptcy is up to the credit card company to decide.

When you file for bankruptcy, you must list any existing credit card balances. Those balances, because they are unsecured debts, will be wiped out by bankruptcy. The credit card company will then cancel your credit card.

However, you can choose to reaffirm your debt, which means you agree to pay the debt even though you could have it canceled by bankruptcy. Also, you may be able to keep a credit card that has a zero balance. Again, though, this decision is up to the credit card company.

Note that even if the credit card company allows you to keep your credit card, they do have the option of adjusting your credit limit, interest rates or both in relation to the increased risk.

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

The Bankruptcy Judges Division of the Administrative Office of the United States Courts has published a 77 page Ebook and nine short online videos to explain the bankruptcy process. The series entitled “Bankruptcy Basics” provides basic information to debtors, creditors, and to the general public on different aspects of the federal bankruptcy laws. It also provides a basic explanation of the different bankruptcy chapters and answers commonly asked questions.

The nine part video series includes the following topics:

Part 1: Introduction - Bankruptcy is a legal process that provides relief to many individuals who can no longer pay all of their debts.

Part 2: Types of Bankruptcy - There are three main types of bankruptcy cases for individuals, the most common of which are chapter 7 and chapter 13.

Part 3: Limits of Bankruptcy - Some debts cannot be discharged in a bankruptcy.

Part 4: Filing for Bankruptcy - In order to file for bankruptcy, an individual must take a credit counseling course and accurately complete and file a number of documents.

Part 5: Creditors' Meeting - Every debtor is required to appear at a creditors' meeting conducted by a trustee who asks the debtor questions about the debtor's financial condition and gives creditors the opportunity to do the same.

Part 6: Bankruptcy Crime - A debtor must be honest and accurate in dealing with the court or face serious consequences, including being charged with a bankruptcy crime.

Part 7: Court Hearings - In some cases, a debtor may be required to appear at hearings before a bankruptcy judge.

Part 8: The Discharge - Debtors are usually able to discharge most or all of their debts. Once a debt is discharged, a creditor may not attempt to collect it from the debtor.

Part 9: Legal Assistance – Debtors are strongly encouraged to find competent legal counsel.

Please be advised that while the court’s resources are excellent sources for general information, the courts cannot give legal advice, and your unique situation will certainly require the advice of a competent bankruptcy attorney.

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

There are specific limits set on how often an individual can file for bankruptcy. For Chapter 7 bankruptcy, you have to wait eight years after a previous Chapter 7 filing before filing again and six years after a previous Chapter 13 filing.

For Chapter 13 bankruptcy, you must wait two years after a previous Chapter 13 filing before you can file again and four years after a previous Chapter 7 filing.

For free legal advice on whether you are eligible to file for Chapter 7 or Chapter 13 bankruptcy, contact the Texas personal injury lawyers of Fears | Nachawati. Simply email us or phone our toll free number at 1.866.705.7584.

There is no minimum amount of debt you must have in order to file for bankruptcy. What qualifies as unmanageable debt for one person may be completely manageable for another. It depends on your personal financial situation.

However, it is important to keep in mind that it does cost money to file for bankruptcy, so it might not make sense to file if you have only a few hundred dollars worth of debt.

Note also that while there is no minimum threshold for filing bankruptcy, there is a limit set on the maximum amount of debt you can have to file for Chapter 13 bankruptcy. In order to be eligible to file for Chapter 13 bankruptcy, you must have less than $336,900 in unsecured debt and less than $1,010,650 in secured debt.

To receive 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.

The case of In re Bourguignon, Ch. 7 Case No. 09-00766-TLM (Bankr. D. Idaho Sep. 23, 2009) provides yet another unfortunate example of the importance of obtaining sound advice before filing a bankruptcy case. On March 10, 2009, Christian and Tarra Bourguignon opened a 529 college savings plan for their daughter. The couple contributed $14,500 into the plan and the girl's grandmother put in another $40,000.

Approximately two weeks after opening the 529 account Christian and Tarra Bourguignon filed for chapter 7 bankruptcy.

The bankruptcy trustee claimed that the entire 529 account was property of the estate and subject to turnover to pay the Bourguignon’s creditors. The debtors proposed several reasons that the college savings funds are protected. The court first dispensed with a preliminary argument from the debtors that section 541(c)(2) of the bankruptcy code protects the entire account as a qualifying trust. The bankruptcy court found that Christian Bourguignon is the owner of the account, and "the College Account does not contain the requisite anti-alienation and anti-assignment provisions required under nonbankruptcy law and recognized by § 541(c)(2)."

The bankruptcy court next turned to the debtors' main argument: that the funds are excluded under Section 541(b)(6) because they were deposited within 365 days of the bankruptcy filing date. The bankruptcy court found that funds deposited in a 529 account are fully protected if deposited more than 720 days before the filing date; are protected up to $5,475 if deposited between 365 and 720 days; and are not protected at all if deposited within 365 days of the bankruptcy filing. The court also stated that the source of the funds (in this case the child's grandmother) did not matter, and ordered the debtors to turn over the entire college savings account ($54,500 plus interest) to the trustee for payment to creditors.

There are three important lessons to be learned from this case:

• First, grandparents and other relatives should be careful when contributing to college savings plans if there is a risk of the account owner filing a Chapter 7 within two years of the contribution;
• Second, if you are experiencing financial difficulty, it is important to discuss any significant transfer of money with a qualified professional; and
• Third, it is important to discuss all of the aspects of your finances with an experienced bankruptcy attorney prior to filing your case.

To receive free legal advice on bankruptcy, contact Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584 to speak with an experienced Texas bankruptcy attorney.

There is no requirement that married couples have to file for bankruptcy together. A husband or a wife can file bankruptcy separately.

If most of the debts belong to only one spouse, then it may be the best choice for that spouse to file for bankruptcy alone.

However, most spouses own at least some property jointly and have the same debts. In these cases, the creditors can still go after the non-filing spouse for repayment of the debt.

The precise effect that bankruptcy will have on the non-filing spouse depends on the marital property laws in the state where you live.

For free legal advice on bankruptcy, contact Fears | Nachawati. To speak with one of our experienced Texas bankruptcy lawyers, email us or phone us toll free at 1.866.705.7584.

A recent study by Fidelity Investments found that many young working Americans are growing more conservative in their behavior towards financial matters and employment decisions. The Fidelity Generation Y study investigated the attitudes and behaviors of more than 1,000 employed Americans ranging from 22 years to 33 years old. The Fidelity study found:

• Over 70 percent of Gen Y workers are very concerned about their finances with daily money management and budgeting as their biggest focus;
• Most Gen Y individuals are using mobile technology to stay updated on their cash flow situations;
• 41% say the economic crisis has made their generation more conservative; and
• More show a reluctance to “job hop” with one in four indicating the intent to remain with a current employer until retirement, up from 14 percent of those surveyed in early 2008;

Fidelity Investments reports that:

“The change in the mindset of young workers has been remarkable," said Brad Kimler, executive vice president of Fidelity's Consulting Services business. "Their attitudes and views toward their employer and finances are now more conservative and reflective of their parents' generation[.]”

So what is your financial attitude? Most people who go through bankruptcy emerge with a greater understanding of their monthly finances and a resolve to manage their financial life better. Most people are more conservative and careful with their finances after bankruptcy, slowly improving their credit scores and making wise decisions that lead to home ownership, retirement savings, and financial well-being.

Congress wants the bankruptcy debtor to succeed in the future. The bankruptcy laws require a debtor to go through a credit counseling session and a class on personal financial management. Surprisingly, most bankruptcy debtors are eager to take these classes.

If you are eager for a new beginning free of overwhelming debt, consult with an experienced bankruptcy attorney and consider your options for a better financial future.

To speak with a Texas bankruptcy lawyer for free, contact Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Non-custodial parents facing mounting debts sometimes turn to bankruptcy as a way to get out from under their financial burdens. However, child support is not dischargeable in bankruptcy.

In fact, the Bankruptcy Reform Act of 1994 in part provides greater protection for debts owed to children and former spouses. These “domestic support obligations,” as they are sometimes referred to, are given high priority over other debts by the courts.

Also, if you owe back child support payments, you will still be responsible for those payments even if you successfully file for bankruptcy.

While bankruptcy will not relieve a parent of current or back child support obligations, it may still be a way to get back on track with your payments. By discharging other unsecured debts, such as credit card bills, you will free up money that can be put towards your domestic support obligations. 

To learn more about whether bankruptcy is the right option for you, 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.

Many professionals, including bankruptcy attorneys, will advise a debtor who is unable to pay monthly debts to “investigate your options.” So how many “options” does a person have when there is not enough money to pay the bills? The answer is: three. 

The first is the “Do Nothing” option. Debtors who engage in this option hope that by avoiding phone calls and collection letters the debt will somehow just disappear. That is the same magic that makes a two year old become invisible when she closes her eyes. Obviously if you won’t see it, the collection companies can’t see it.

The “Do Nothing” option is the worst option of all because the debt does not disappear. In fact, the debt becomes bigger with increased fees and interest. Additionally, the debt collection efforts become more aggressive and may result in harassing telephone calls to family, neighbors, or your employer. Finally, you will likely be sued, your property seized or your income garnished.

The second option is “Negotiation.” Many debtors have had positive experience with this option which may include direct negotiation with the creditor for better terms, or help through a third party like a credit counselor or an attorney. Unfortunately, many people do not realize the consequences of negotiation which may include a resulting tax debt, negative items on a credit report, increased debt through fees and default interest rates, and substantial third party fees. It is well documented by the media and state attorney generals that many debtors that attempt the Negotiation option (e.g. credit counseling, debt settlement, debt negotiation, etc.) end up in worse financial shape because they opted for debt negotiation. If you elect the Negotiation option, hire a qualified and experienced professional.

The final option is “Bankruptcy.” Many professionals describe Bankruptcy as the “final option,” but in truth it may be the best option when you cannot pay your bills. Bankruptcy can give an honest debtor breathing room to reorganize debt without the pressures from collection agencies. Bankruptcy can also legally discharge debt without increased fees or tax consequences. At the end of a bankruptcy case the debtor can go forward with a “fresh start” and new financial beginning.

If your family is struggling with more month than money, it is time to examine your options. In the end, choose the option that is best for your family. Speaking with a qualified bankruptcy attorney can answer many of your debt questions.

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

Yes, you can still purchase a home after filing for bankruptcy. Bankruptcy does not create any type of legal barrier to home ownership. As long as you are otherwise creditworthy, you can buy a house after you have filed for bankruptcy.

Also, the property you acquire after you file for bankruptcy, such as a new home, is not subject to the claims of your pre-filing creditors. You can purchase a home without fear that your past creditors will try to repossess it from you in order to fulfill your old debts.

As mentioned above, the issue really boils down to whether mortgage lenders see you as creditworthy. Most everyone needs a loan in order to be able to afford to buy a house. These days, bankruptcy typically ceases to have a real effect on your credit within about two years after you file. That means that within 24 months, many people who have filed for bankruptcy will qualify for a loan on as favorable of terms as they would have had they not filed for bankruptcy.

To learn more about the legal effects of bankruptcy, contact the bankruptcy lawyers of Fears | Nachawati today for free legal advice. Simply email us or phone us toll free at 1.866.705.7584.

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.

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.

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.

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.

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.

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.

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.

Earlier this year a bill that would have given bankruptcy judges the authority to modify home mortgages was soundly defeated in the Senate after intensive lobbying by the financial industry. After the defeat Sen. Dick Durbin said of the bank lobbying effort, “Frankly, they own the place.”

Six months later, it is apparent that legislation designed to encourage home loan modification between lender and home owner is impotent. The “Home Affordable Program (HAMP)” and the 2008 HUD “Hope for Homeowners” are voluntary programs that have proven too costly and cumbersome to be effective. The Huffington Post recently characterized the situation this way:

“The Obama administration had high hopes for the law Congress passed intended to encourage mortgage modifications. The law is all carrot, however, and no stick. Cramdown is the stick. If banks think they could get hit in bankruptcy court, they're more likely to bargain.”

Rising unemployment rates and mounting home foreclosures are putting new pressures on Congress to do something. Some lawmakers are revisiting the idea of bankruptcy cramdown to encourage voluntary modification by lenders, or to enable forced modification by the bankruptcy courts. Passage of this cramdown legislation would give Federal bankruptcy judges the authority to modify bankruptcy debtors’ mortgage contracts by lengthening terms, cutting mortgage rates, or reducing loan balances. The current bankruptcy law allows modification of some contracts, but not home loans.

House Financial Services Committee Chairman Barney Frank (D-Mass.) has announced his intent to push for legislation giving bankruptcy judges the authority to modify home mortgages. The Huffington Post reports that Frank has met with key members of the Senate Banking Committee who are ready to make a serious push at major financial regulatory reform before the year was out.

If you are behind on your mortgage and experiencing difficulty with your lender, consult an experienced bankruptcy attorney for advice. There are many options available to homeowners, and new opportunities are developing, but quick action is still vital to your chances for a positive result. Take control of your situation by learning your rights and legal options.

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.

American author Mark Twain was fond of saying, "There are three kinds of lies: lies, damned lies, and statistics." While it is important to scrutinize any statistic with a healthy dose of skepticism, bankruptcy statistics can help attorneys, courts, creditors, and even debtors understand who is filing bankruptcy and the reasons.

Today’s post will examine some bankruptcy statistics from a major study of bankruptcy debtors by Harvard Professor Elizabeth Warren entitled The Fragile Middle Class: Americans in Debt. This study found some surprising statistics:

● the average age of a bankruptcy filer is 38
● couples filing jointly make-up 44% of all bankruptcy filings. 30% of the filers are
women filing bankruptcy alone, and 26% of the bankruptcy filers are men filing alone
● most bankruptcy filers are slightly better educated than the general population
● two out of three bankruptcy filers have lost a job
● half of all bankruptcy filers have experienced a serious health problem
● 91% of bankruptcy filers have suffered a job loss, medical event or divorce
● 40% of bankruptcies result from medical crises, unemployment or divorces
● 90% of these filers have two car payments, a house payment, and an average of $2500
in credit card debt
● 10% of filers were delinquent only 5 to 29 days before bankruptcy

In 2008 there were 1,074,225 consumer bankruptcy filings. For the second straight year, Tennessee had the overall highest per capita rate of filings, with 7.65 filings per 1,000 residents. Put another way, that’s one-and-a-half people out of 200, per year.

While these bankruptcy statistics are enlightening and even useful, no two bankruptcy cases are the same. Unfortunately, some firms take a “one size fits all” approach to bankruptcy. If you are experiencing financial difficulty, seek out a qualified bankruptcy attorney to explain your rights and treat your case with the care and attention you need and deserve. Don’t be treated like just another statistic.
 

Contact Fears | Nachawati today for a free consultation regarding your bankruptcy needs.  Call us at toll free 1.866.705.7584 or reach us by e-mail at info@fnlawfirm.com. 

I recently read a newspaper advice column written by a Certified Financial Planner who suggested that, as a practical matter, there is no difference between ignoring your credit card debt and filing bankruptcy. Well, let’s look at the “practical effects” of ignoring your credit card debt:

First, ignoring credit card obligations will cause a persistent series of harassing telephone calls and letters from credit card companies, collection agencies, and finally law firms. Phone calls are systematically made to the debtor’s home and work, and sometimes to third parties including neighbors, extended family, and your employer. The agencies that collect credit card debt are experts at telephone harassment – it is one of their most important weapons.

Bankruptcy, on the other hand, stops all collection calls.

Second, your credit score will be ruined on a continuing basis. For each month that a credit card goes unpaid, the creditor will report negatively to the credit reporting bureau. Additionally, collection agencies will often further harm your credit score by “resetting” the date of last activity when the account is transferred to a new collector.

Bankruptcy stops all negative reporting. Discharged debts should be identified as “Discharged in Bankruptcy” with a zero balance. The debtor’s credit report and score can begin to recover from the date of the bankruptcy discharge.

Third, you can (and will) be sued. The typical consumer will undoubtedly lose a lawsuit over a legitimate debt. The resulting judgment may include substantial penalties, interest, court fees, and attorney fees. A judgment creditor can collect from your wages, your property, and your bank account. While there are some people who are judgment proof, they are the exception and not the norm. Most people have assets that a judgment creditor can attack.

Bankruptcy prevents all lawsuits and even stops collection actions from judgment creditors.

Many consumer advocates have likened credit card debt to an illness. Like any illness, the cure is not found in ignoring the problem, which will only make things worse. If you are sick from credit cards and are unable to pay your debts, consult with a bankruptcy attorney and find the cure!

Call Fears | Nachawati today for a free consultation regarding you options at toll free 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 

 

When we were children a preference was a good thing, such as: I prefer Johnny on my team for kickball; or my preference is chocolate ice cream. In the bankruptcy world a preference payment is a bad thing. A preference payment is a transfer of money by a debtor, on account of a pre-existing debt, that is made while the debtor is insolvent, and gives the creditor more than it would receive from the liquidation of the debtor's assets during a chapter 7.

The idea behind a preference payment is that the debtor chose to pay a certain creditor instead of other creditors – the debtor “preferred” this creditor. Preference payments are unfair to the debtor’s other creditors, and, if the transaction took place within 90 days, the bankruptcy trustee can compel the turnover of this preference payment to the bankruptcy estate for equal distribution to all creditors. And there is one other important caveat to preference payments: if the payment is made to an “insider,” then the avoidance period is one year. An “insider” is a generally a relative, business partner, etc. who has a special relationship with the debtor.

A common preference payment scenario is a payment by the debtor to a family member on account of a previous debt. For example: Mary borrows $3,000 from her mother to help pay bills. In March Mary receives her income tax refund and repays her mother the $3,000. Mary files bankruptcy in May, and doesn’t tell her bankruptcy attorney about the March payment. The trustee learns of the payment while examining the debtor’s bank statements and sues Mary’s mother to recover the $3,000 for the bankruptcy estate.

This awful situation for Mary and her mother can be easily avoided. First, do not withhold information from your attorney. Second, provide your attorney with any requested documents. Third, do not pay any creditor (or relative) without first consulting with your attorney. Cooperating with your attorney can ensure that your bankruptcy case is preference-free.

 

On November 1, 2009, chapter 7 debtors must pass the bankruptcy “means test” using new income figures released by the U.S. Trustee Program. In thirty-two states and the District of Columbia the median income figure for a family of four has decreased. These new figures are not surprising when considering the widespread unemployment and economic hardships our nation has recently faced.

State median income figures are used in the means test to identify debtors who may have the ability to repay some the debts in bankruptcy. When a debtor “fails” the means test by having too much disposable income, the debtor may be denied relief under chapter 7 and must proceed under chapter 13 (a three to five year repayment plan). If a debtor is above the state median income for his or her family size, the chapter 13 repayment plan must last for five years.

The new income figures could make it more difficult for a family in many states to file for chapter 7 bankruptcy protection, or make a debtor’s chapter 13 plan last longer. This added burden seems unfair for families that are struggling with a job loss, or facing a foreclosure due to the economic recession. In most cases the difference is a few hundred to a few thousand dollars annually. The State of Alaska saw the biggest plunge: an income reduction of over $6,000 per year.

If you are contemplating a bankruptcy, speak to an experienced bankruptcy attorney and take the bankruptcy means test. Pass or fail, you have options that your attorney can explain to you.  Contact Fears | Nachawati today for a free consultation to discuss your options at toll fee 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 
 

Your bankruptcy attorney will have many questions for you during your initial meeting. The most important goals of this meeting are learning about your situation, and helping you determine whether bankruptcy is the right option for you and your family. In order to achieve these goals you will want to come prepared to answer your attorney’s questions. While every case is different and may require additional documents from the client, below is a list of the most common documents and records your attorney needs:

1. Photo ID and social security card;
2. The last six months of pay check stubs. Sometimes this information can be obtained from your employer;
3. Last two years of income tax returns;
4. Real estate deeds and mortgage paperwork;
5. Vehicle titles along with lease or purchase agreements;
6. All loan paperwork;
7. Any child support or maintenance (alimony) court order;
8. Any recent credit report (you can obtain a free credit report at https://www.annualcreditreport.com/cra/index.jsp);
9. Information regarding your debts;
10. Any important documents that impacts your income, assets, debts, or expenses. For instance: a foreclosure notice, or a notice of an upcoming bonus;
11. Investment records;
12. Last six months of bank statements;
13. Any tax bill showing assessed value;
14. Proof of insurance on all property secured by a lien; and
15. Any documents pertaining to a legal claim or pending lawsuit (e.g. a personal injury or worker’s compensation claim).

While this is not a complete list, it is a start to help your attorney understand your circumstances and advise you on how to improve your financial situation.

For families in financial difficulty, sometimes paying for even the most basic things is a struggle. Fortunately, the bankruptcy code protects debtors from the disconnection of necessary utilities like water, electricity or gas services. Specifically, a utility company may not alter, refuse, or discontinue service to an existing customer solely because either (1) the customer filed for bankruptcy protection; or (2) the customer failed to pay a pre-petition debt to the utility.

However, this protection is limited. Within 20 days after the bankruptcy filing the debtor must give the utility company "adequate assurance of future payment." This assurance is usually in the form of a new security deposit. The law allows the utility company to keep any previous security deposit and apply that deposit to your prior bill. The amount of the new security deposit is negotiated between the parties, but can be decided by the bankruptcy court if no agreement is reached. If the debtor does not provide "adequate assurance of future payment" within the 20 day time period, the utility provider may discontinue services.

A few years ago the Fifth Circuit Court of Appeals decided that a cable television provider is not a utility service for purposes of the bankruptcy code. In issuing its decision, the Court said:

“This section is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier, or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility.”

By analogy internet and cell phone services would not be considered utilities by the bankruptcy courts.

If your family is overwhelmed by debt and facing a utility disconnection, consider bankruptcy as a way to "keep the lights on" and provide some relief. An experienced bankruptcy attorney can explain how the bankruptcy code can prevent a utility disconnection and stop all creditor collection action.  Call Fears | Nachawati today for a free consultation by dialing toll free 1-866-705-7584 or e-mail us at info@fnlawfirm.com. 

 

Like most people, you would think that it is crazy to spend more money in the current economy, especially if you are heavy in debt. Many people prefer to avoid creditors and their debt versus paying fees for a Chapter 7 bankruptcy. Unfortunately, what they do not realize is that some companies are very aggressive in collecting on past due debts through strong-arm collection tactics including liens on your paycheck and repossession of your vehicle. A Chapter 7 bankruptcy may give you the option to keep your vehicle and avoid or remove liens on your paycheck.

 

When you file for bankruptcy, all collection efforts from creditors on your salary or other assets and other debts will stop. What this means is that no creditor can makes calls or take any type of action to collect on any past due bills. It is probably the most cost effective way to get a fresh start. For more information, an experienced bankruptcy attorney can discuss your specific case to answer any questions that you may have.

 

If you are feeling the stress of too many bills and not enough money to pay your bills, then bankruptcy may be an option for you.  For a free bankruptcy consultation contact Fears | Nachawati, toll free at (866) 705-7584 or by e-mail at info@fnlawfirm.com.

 

Bankruptcy fraud is a federal felony that carries a sentence of up to five years in prison and/or a fine of up to $250,000. Some examples of bankruptcy fraud include concealing assets, intentionally filing false or incomplete forms, and providing false information while under oath. Often bankruptcy fraud is accompanied by other serious offenses like identity theft, mortgage fraud, tax fraud, or money laundering.

Bankruptcy fraud can become very complex and may involve the IRS or FBI. The penalty may involve many years of incarceration when coupled with other criminal charges. Other cases are relatively simple like a recent case in Pennsylvania:

A husband and wife were each sentenced to fifteen days in prison by U.S. Magistrate Judge J. Andrew Smyser in the Middle District of Pennsylvania after finding contempt of court for untruthful conduct in their joint bankruptcy case.

According to a press release issued by the U.S. Attorney's Office, Tammy Beecher and Wyatt Beecher filed a chapter 7 bankruptcy petition in May 2007. The filing stated that the Tammy Beecher had no income and that neither debtor operated a business within the previous six years. In fact, the Beechers owned a family business, "Fun 4 Kids Entertainment." Only after the Beecher’s were presented with a coupon for $5 off any party, and reminded by the chapter 7 trustee they signed the bankruptcy petition under penalty of perjury, did the Beecher’s admit that they owned and operated the business.

Bankruptcy fraud can be reported by ex-spouses, banks, and even your neighbors. The Executive Office of the United States Trustees (EOUST) recently launched an internet site that will allow the public to report suspected instances of bankruptcy fraud to the EOUST at http://www.usdoj.gov/ust/eo/fraud/index.htm.

The moral here is: tell your bankruptcy attorney everything. Your attorney can work with you to protect your assets and avoid criminal charges, but only if you tell all. The information you share with your attorney is shielded by attorney-client privilege, a powerful and time-honored protection. While your attorney cannot counsel or assist you in an illegal act, there are many legal options available in every case. If you are in over your head, speak with an attorney and understand your legal options.

 

Recently the House of Representatives Judiciary Subcommittee on Commercial and Administrative Law held a hearing to initiate legislation to change provisions of the federal bankruptcy law that give student loan lenders an advantage over other consumer loans. Current bankruptcy law provides that student loans are generally not dischargeable under any chapter of the bankruptcy code unless the debtor can show that repayment of the loan creates an "undue hardship." Unfortunately, Congress did not define "undue hardship" in the bankruptcy code, so this interpretation has been left to the individual bankruptcy court judges.

During the Committee hearing Rafael I. Pardo, an associate professor at the Seattle University School of Law who has studied the discharge of student loans in bankruptcy, challenged Congress “to clarify the undue hardship standard.” Many courts view "undue hardship" as a high bar that is only met by a showing of exceptional circumstances (like physical or mental disabilities, or poor or no future earning potential) that result in an inability to both repay the student loans and provide a minimum standard of living for the debtor and the debtor’s family. This is a very difficult burden for most debtors to meet, and consequently bars the discharge of student loans in most cases - even while other consumer debts like auto loans, credit cards, medical debts, mortgages, and even taxes are discharged in the debtor’s bankruptcy.

Consumer bankruptcy attorney Brett Weiss, who testified on behalf of the National Association of Consumer Bankruptcy Attorneys and the National Consumer Law Center, called the situation "unfair" when other consumer loans are forgiven in bankruptcy proceedings while student loans are not. As a result of these hearings, Rep. Steve Cohen (D-Tenn.) announced his plans to file legislation to “give private student loan borrowers more equitable treatment during the bankruptcy process.”

For the time being it remains extremely difficult to discharge student loans. However, there are other non-bankruptcy programs for debtors unable to repay their loans. In some cases debtors may qualify for reduced payments, deferment, forgiveness or cancellation. Chapter 13 bankruptcy can also provide a way to cure defaulted student loans, or pay them off during the bankruptcy. If you have student loan debt, discuss your situation and options with a qualified bankruptcy attorney.

Contact bankruptcy law firm Fears | Nachawati for a free consultation to discuss your options by calling toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com.

 

Bankruptcy is a legal process and a matter of public record. In the past newspapers have published local bankruptcy filings in the “public notices” section. Today this practice is not practical due to the large numbers of bankruptcy filings. Recently the American Bankruptcy Institute projected that individual bankruptcy filings nationwide would reach 1.4 million in 2009. Newspapers report news that is of interest to the community, so unless your name is Donald Trump or Burt Reynolds, your bankruptcy filing simply isn’t newsworthy.

The process of opening a case in the bankruptcy court is actually very confidential. Once you file a bankruptcy petition a notice of the filing is mailed to all of your creditors. Other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court by telephone. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.

Another common way to learn whether an individual has filed a bankruptcy is to use the Public Access to Court Electronic Records (PACER), an electronic public access service that allows users to obtain case and docket information from Federal Appellate, District and Bankruptcy courts via the Internet. PACER registration is free, but the system charges the user $.08 per page.

Finally, some lenders subscribe to bankruptcy information services. These services harvest public records daily and sell the information for a variety of purposes. It is surprising to many debtors in bankruptcy when they receive invitations from businesses seeking to loan money or finance automobiles.

As you can see, the bankruptcy process is actually very confidential. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different.  If you have specific questions about the effects of filing bankruptcy, please consult with an experienced bankruptcy attorney.  Call Fears | Nachawati at toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

 

 

An article provided by Bankrate.com found here lists out 4 common financial mistakes that people can make during the recession and solutions to prevent the same mistakes from happening again.  The 4 common financial mistakes are listed below and follow the article link above to find out how to avoid these costly errors. 

1.  I didn't have emergency reserves.

2.  I panicked when the market collapsed.

3.  I greedily overinvested in a 'sure' thing.

4.  I didn't read the fine print on my loan.

If you believe you have made some costly mistakes that have put you in a financial bind that you cannot escape then you may want to speak with an attorney that can provide you with options.  Call bankruptcy law firm Fears | Nachawati for a free consultation by simply dialing toll free 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 

Payday loan companies prey on individuals experiencing financial difficulties. These lenders offer a short-term loan of a few hundred dollars that will be repaid on the borrower’s next payday. To obtain the loan the borrower usually writes the lender a post-dated check. Often the payday loan lender will require a certification that the borrower is not contemplating bankruptcy, and, sometimes, that the borrower will not file bankruptcy.

While the borrower may initially intend to use payday loans to fix a short-term financial problem, often payday loans start an endless cycle of debt. Payday loan companies charge high interest rates over short periods and rely on the borrower’s inability to satisfy the loan, and is consequently forced to renew it. Unfortunately, this cycle of debt often leads the borrower to file bankruptcy.

Many individuals worry that they will face criminal trouble for passing a bad check when they cannot cover their post-dated check. With a few narrow exceptions, being unable to pay the payday loan check is not a criminal act.  However, your post-dated check may still be presented for payment, resulting in significant bank fees. In some cases (notably in the 6^th and 8^th Circuit Court of Appeals) courts have stated that the presentment of the post-dated check does not violate the automatic stay provisions of the bankruptcy code. However, these courts have said that the funds collected by the payday loan company may be an “avoidable transfer.”

While an agreement to not file bankruptcy is generally considered void because it violates public policy, a representation to the payday loan lender that the borrower is not contemplating bankruptcy is a serious matter. A borrower that takes a payday loan with the intention of discharging it through bankruptcy, and with no intention on repaying the loan, may have committed fraud and even a criminal act!

Proper handling of an outstanding payday loan is an important consideration before filing bankruptcy. Most payday loans are discharged through bankruptcy without problem; however, payday loan companies are becoming increasingly more knowledgeable and aggressive towards debtors in bankruptcy. If you have an outstanding payday loan, consult with your attorney and protect your legal rights.

 

 

The first part of a new federal regulation concerning consumer credit cards is now in effect.  The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (or Credit C.A.R.D. Act) has been billed as increasing protections to consumers and curtailing abusive practices by credit card companies.  These new regulations include: requiring more notice to cardholders prior to an interest rate increase; requiring that people under 21 must have a job or a co-signor in order to get a credit card; and eliminating an abusive practice known as “Universal Default.”

Unfortunately, the Credit C.A.R.D. Act is also having some unintended consequences.  The credit card industry is responding to these increased consumer protections by reducing credit lines and canceling many cardholder accounts without advance notice.  Card companies maintain that they are taking these steps in an attempt to “tighten up” and control their financial risk.  Under the present law the card company must notify you of a card cancellation “within a reasonable time” and many consumers are being surprised by a card cancellation at the register.

Additionally, while the practice of “Universal Default” (raising interest rates on all cards when you default on one card) will soon be against the law, the credit card industry is implementing a new policy to restrict your spending limit or close your account in the presence of negative credit items on your credit report.  In other words, if you default on one card, your cards may be canceled.

Card companies are also exploring new ways to exploit their customers.  CITI has announced that it will institute a $30 annual fee on certain accounts.  Other companies like American Express have increased their fee schedules for late payments, and, in some cases, increased interest rates prior to the new law taking effect.  American Express is not alone. A survey by Pew Charitable Trusts found that interest rates on credit cards have increased an average of two percent since last December.

Fortunately, consumers who find themselves victimized by credit card companies have a powerful tool to fight back: the United States Bankruptcy Code.  The bankruptcy laws protect consumers from the crushing debt that card companies enjoy placing on the average American.  If you are experiencing financial distress from the abusive practices of the credit card industry, consult an experienced bankruptcy attorney and discuss your options. Call us for a free consultation by dialing toll free 1.866.705.7584 or e-mailing info@fnlawfirm.com. 

 

 

Quite a bit of mystery surrounds the bankruptcy trustee.  Generally, the person identified as the bankruptcy trustee in a Chapter 7 case is a “panel trustee,” also called an “interim trustee.”  The Panel Trustee is appointed by the United States Trustee as a local agent to review the debtor’s bankruptcy petition and schedules, and to determine if the debtor has any non-exempt assets available for distribution to creditors.  The Panel Trustee is not a government employee, although he or she is supervised by the Office of the U.S. Trustee (a division of the U.S. Department of Justice).  While the Panel Trustee is required to be independent and disinterested in the debtor’s case, the Panel Trustee works primarily for the benefit of the debtor's unsecured creditors.

 

The Panel Trustee is almost always the individual that presides over the debtor’s Section 341 Meeting of Creditors.  The Panel Trustee must investigate the debtor’s affairs, examine the debtor under oath, and submit reports to the bankruptcy court and Office of the U.S. Trustee.  At the 341 Meeting the Panel Trustee is required to ask the debtor specific questions outlined in the U.S. Bankruptcy Code.  These questions include:

 

Did you read the schedules before signing?

Did you list all of your assets?

Did you list all of your debts?

Are the schedules accurate?

Do you want to make any corrections to the schedules?

Do you have a domestic support obligation?

 

Panel Trustees are paid a flat fee of $60 per case.  In addition, Panel Trustees receive an incentive commission on each dollar they collect from the debtor.  The commission rate is: 25% on the first $5,000 distributed; 10% on the next $45,000 distributed, 5% on the next $955,000, and 3% for every dollar distributed in excess of $1,000,000.  The National Association of Bankruptcy Trustees reports that approximately 90% of Chapter 7 cases are considered “no asset cases” in which there are no assets available for liquidation, either because assets are exempt (protected) by debtors or liened by secured creditors. 

 

Panel Trustees are usually attorneys or accountants with extensive bankruptcy law and auditing experience.  The bankruptcy trustee is forbidden from offering legal advice to debtors in bankruptcy.  Unfortunately, unrepresented debtors often do not receive the full protection of the bankruptcy laws because they lack the counsel of an experienced bankruptcy attorney.  These unrepresented individuals sometimes find themselves involved in “asset cases” and under the trustee’s microscope.  However, with the proper preparation, and with the experienced counsel of a skilled bankruptcy attorney, your Chapter 7 Bankruptcy can proceed very smoothly – even under the scrutiny of the bankruptcy trustee.

 

There is no immigration law, statute, or regulation that specifically forbids individuals who have filed for bankruptcy from applying for naturalization. Filing for bankruptcy will not necessarily disqualify you from becoming a US citizen. Basically, the Department of Homeland Security list the following general requirements for naturalization as:

• A period of continuous residence and physical presence in the United States.
• Residence in a particular USCIS District prior to filing.
• An ability to read, write and speak English.
• A knowledge and understanding of U.S. history and government.
• Good moral character.
• Attachment to the principles of the U.S. Constitution.
• Favorable disposition toward the United States.

Depending on the circumstances, the Department of Homeland Security, in its wide discretion, may deem filing for bankruptcy as proof of poor moral character.  Therefore, it may be wise for you to consult with an experienced bankruptcy attorney to discuss the procedures and implications of filing for bankruptcy.

  

*For more information on naturalization visit http://www.uscis.gov/portal/site/uscis/menuitem.

 

If a creditor has seized your bank account, an option to quickly “unfreeze” your account is to file for bankruptcy. In fact, it may be your only option. It is very difficult to function without a bank account. As you know, you use your bank account to pay for groceries, household items and other basic necessities. A frozen bank account can be disastrous for most people.

When you file for bankruptcy in Dallas no creditor can place a lien on your bank account. If you already have a lien on your bank account due to credit card bills or other debts, it will be removed immediately. In some cases, some of the monies removed from your bank account may be returned. The key is to act quickly to make sure that no other creditors place a “freeze” on your account and to try to recover any money a creditor may have received through your bank account. There are special bankruptcy rules that apply in those situations. A Dallas bankruptcy attorney can give you options based on your specific situation.

 

For a free bankruptcy consultation contact Dallas bankruptcy law firm, Fears | Nachawati Law Firm via phone at  (866) 705-7584 or e-mail at info@fnlawfirm.com.

Credit-card holders in Dallas and Fort Worth should benefit from House Bill, HR 627, which passed the House on Thursday.  The Credit Card Holders' Bill of Rights passed following lobbying by President Obama and the White House Administration.  If the Bill becomes law, the new provisions will not take effect for a year, other than one key requirement that customers get 45 days' notice before interest rates are increased.  The requirement may take effect in as soon as 90 days.  The changes in credit cards could cost the banking industry more than $10 billion a year in interest payments.  Because of the recession, many people have defaulted on their credit card obligations.  This Bill will certainly ease the burden of many households in the Dallas Fort Worth area and hopefully stymie the number of bankruptcy filings.  Questions or legal information inquiries concerning this Bill and its potential effect on individuals can be directed to info@fnlawfirm.com.

As the economy worsens, bankruptcy filings are on the rise. According to the American Bankruptcy Institute, consumer filings rose to 1.06 million in 2008, compared with 801,840 during 2007. The ABI based its study on data from the National Bankruptcy Research Center. Additionally, the National Association of Consumer Bankruptcy Attorneys jumped by one-third in 2008, to an estimated 3,200 practicing lawyers. "Consumers are under great financial stress, with no immediate end in sight," said ABI executive director Samuel Gerdano.  More than 1.3 million people in the United States are expected to file in 2009. While this is a relatively small part of the U.S. population, the number demonstrates that bankruptcy is not just something for ‘someone else,’ but instead, something for those who find themselves overwhelmed by today’s unsteady economy. Bankruptcy can provide a fresh start for the individual who finds him or herself in a difficult financial situation. So, while filing for bankruptcy may have in the past been something that no one wants to talk about, for many, it ends up being the light at the end of the tunnel—the saving grace that allows them to get their life back on track.  

The nation’s unemployment rate zoomed to a five-year high of 6.1 percent in August as employers slashed 84,000 jobs, dramatic proof of the mounting damage a deeply troubled economy is inflicting on workers and businesses alike.

The Labor Department’s report, released Friday, showed the increasing toll the housing, credit and financial crises are taking on the economy.

The report was sure to rattle Wall Street again. All the major stock indexes tumbled into bear territory Thursday as investors lost hope of a late-year recovery. With the employment situation deteriorating, there’s growing worry that consumers will recoil, throwing the economy into a tailspin later this year or early next year.

The Dallas Morning News reported, the jobless rate jumped to 6.1 percent in August, from 5.7 percent in July. And, employers cut payrolls for the eighth month in a row. Job losses in June and July turned out to be much deeper. The economy lost a whopping 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the government reported job losses at 51,000 in each of those months.

The latest snapshot was worse than economists were forecasting. They were predicting payrolls would drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent. The grim news comes as the race for the White House kicks into high gear. The economy’s troubles are Americans’ top worry.

“With the unemployment rate over 6 percent, it is a clear warning sign that this economy is continuing to soften faster than we thought. It is a real concern,” said Joel Naroff, president of Naroff Economic Advisors. “Businesses have decided to hunker down. They are not hiring, and they are paring workers where they can. That is making things pretty tough out there.”

Wachovia Corp., Ford Motor Co., Tyson Foods Inc. and Alcoa Inc. were among the companies announcing job cuts in August. GMAC Financial Services this week said it would lay off 5,000 workers.

Job losses in August were widespread, the government report showed.

Factories cut 61,000 jobs, with housing-related manufacturers and automakers among the hardest hit. Construction firms eliminated 8,000 jobs, retailers axed 20,000 slots, professional and business services slashed 53,000 positions and leisure and hospitality got rid of 4,000. Those losses swamped employment gains in the government, education and health.

Job losses at all private employers — not including government — came to 101,000 in August.

The government said workers age 25 and older accounted for all the increase in unemployment in August.

All told, the number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the jobless rate to 6.5 percent or higher next year.

Workers saw wage gains in August, however.

Average hourly earning rose to $18.14 in August, a 0.4 percent increase from July. Economists were forecasting a 0.3 percent gain. Over the past year, wages have grown 3.6 percent, but paychecks aren’t stretching as far because of high food and energy prices.

Caught between dueling concerns of slow growth and inflation, the Fed is expected to leave a key interest rate alone at 2 percent when it meets next on Sept. 16 and probably through the rest of this year. Concerned about inflation, the Fed at its last two meetings didn’t budge the rate. Before that, though, the Fed had aggressively cut rates to shore up the economy.

With the Fed on the sidelines, Democratic presidential nominee Barack Obama has called for a second round of government stimulus, while his GOP rival John McCain has favored free-trade and other business measures to spur the economy.

 

It may not make you feel better while pumping gas, but another sign of Houston's economic strength can be found in that barometer of financial weakness: bankruptcies.

The Houston Chronicle reports, while the rest of the country is experiencing a nearly one-third increase in personal and business bankruptcies, Houston's numbers remain stable.

Nationwide, the number of bankruptcies nearly reached 1 million for the 12-month period ending June 30, 2008, the U.S. Courts office announced Wednesday. The 967,831 personal and business bankruptcies represent a 28.9 percent increase over the year ending in June 2007.

In the U.S. Courts for the Southern District of Texas, the federal division that includes Houston, Galveston, Laredo and the Rio Grande Valley, the case filings haven't changed significantly, however.

"Ours are kind of a flat line, about 1,000 a month," said David Bradley, chief deputy clerk for the Houston area district.

By some measures, there even is a dip in the personal bankruptcy filings in the federal district that includes Houston.

U.S. Courts statistics for the district show that while business bankruptcies in the first quarter of 2008 inched up to 168 from 155 in the same period in 2007, personal bankruptcies dropped from 2,927 in 2007 to 2,764 in the first quarter of 2008.

Overall, in the first six months of 2008, there were 6,299 bankruptcies filed in the Houston district. That was about 5 percent fewer than the 6,658 cases filed in the last six months of 2007.

"Occasionally, it happens that you have a district that will be at odds with the national trend," said Jack Williams, resident scholar at the education and research group the American Bankruptcy Institute in Alexandria, Va. "It may be an anomaly, but your local industry still depends on the energy sector and sectors tied with it and they have done reasonably well."

Williams said by the end of the year there could be 1.2 million personal and business bankruptcies filed nationwide, compared with 800,000 in 2007. He expects it to get worse.

"It's a bad sign that Chapter 13s are down. That's the bankruptcy where you have a plan to pay some money back over three or five years. And Chapter 7s are up. That's where there is no such plan," he said.

Lydia Protopapas, a Houston bankruptcy lawyer who works for the national firm Weil, Gotshal & Manges, said there has been a deluge of work for her firm in the last six months, but most of it is outside the Houston area.

"We've seen distress in a lot of different industries and, in particular, in retail and home building," she said.

Protopapas said companies that file for bankruptcy can choose where to file, especially if they have assets nationwide. She said Houston area courts may lose out to Delaware and New York, where judges have developed special expertise.

Johnie Patterson, a Houston lawyer who represents consumers in bankruptcy, said he assumes the nationwide trend is driven in part by home foreclosures.

"But our housing market is not nearly so bad," he said. "Oil prices are so high and we have so much oil money that it insulates us."

 

Oftentimes a person or family member suffers a catastrophic illness that leads to mounting medical bills not covered by insurance, job loss, divorce, and high credit card debt. Filing a chapter 7 (sometimes referred to as a “liquidation filing”) bankruptcy can be a solution for you. Not only will it help you out of the astronomical amounts of debt, it could help increase your credit score.
Here are some ways that Chapter 7 Bankruptcy may help increase your credit score and help you get your life back on track:
• Depending on your due diligence and ability to procure new credit, being back in the 600 range or higher in a short period of time after filing Chapter 7 Bankruptcy is possible.
• You can apply for credit immediately after your bankruptcy is over.
• You can get a new vehicle loan as soon as a month after your bankruptcy is over.
• If you have the income, you may qualify for a mortgage 2 years after your bankruptcy is over.
• By buying a new home, vehicle, or getting new credit cards, your credit score may rise in a short period of time.
Remember that filing a Chapter 7 Bankruptcy can help get you debt free and let you start again with a clean slate. For legal assistance and more information please contact the attorneys and counselors of Fears & Nachawati.
Fears and Nachawati Attorneys & Counselors
4925 Greenville Avenue
Suite 715
Dallas, Texas 75206
Phone: (214) 890.0711
fears@fnlawfirm.com
*Principal Office
*Se Habla Espanol
 

The rise of bankruptcy filings have increased in Dallas/ Fort Worth Metroplex due to job loss, divorce, medical bills, disability, identity theft, and the difficult economy we are facing today. If you are facing foreclosure, huge amounts of debt, repossession, bankruptcy may be the only realistic way out. Our lawyers are here to help. Contact the lawyers at Fears & Nachawati to find out about getting rid of debt and getting a fresh start.

The most common types of bankruptcy are set forth below:
Chapter 7 Bankruptcy: (Sometimes referred to as a “Total Liquidation”) If you have little property and can’t make your basic minimum credit card payments, Chapter 7 Bankruptcy might be the right option for you. Chapter 7 is different from other bankruptcy filings because the debtor does not typically need to make any further payments to creditors such as credit card companies once the bankruptcy court issues a bankruptcy discharge letter.
Chapter 13 Bankruptcy: (Referred to as a “reorganization”) Chapter 13 Bankruptcy can help to adjust debt and obtain reduction or relief on secured debt such as a house that may be in foreclosure. Even if your creditors disagree, under Ch. 13, people typically are allowed to retain their secured property while making reasonable payments to creditors that are oftentimes much lower than the original amount owed.
Please contact the attorneys of Fears & Nachawati for more details. They will provide you with general legal information and consult with you concerning whether bankruptcy is the right choice for you.
Fears and Nachawati Attorneys & Counselors
4925 Greenville Avenue
Suite 715
Dallas, Texas 75206
Phone: (214) 890.0711
fears@fnlawfirm.com
*Principal Office
*Se Habla Espanol

Dallas Morning News Reported Today, All the publicity about so-called rescue plans to help troubled homeowners isn't having an impact so far on Dallas-Fort Worth foreclosures.

The number of homes facing foreclosure in the area next month is up almost 40 percent from a year ago.
More than 4,400 homes are scheduled to be sold at foreclosure auction in the four-county area on the first Tuesday in May, according to statistics released Thursday from Addison-based Foreclosure Listing Service.

"All these plans and different things the government and others are talking about evidently are still in the pipeline because it certainly hasn't helped," said George Roddy, president of the firm that tracks foreclosures in almost a dozen counties.

Mr. Roddy said the number of D-FW foreclosure postings is the second-highest on record.

"Back in February, we were over 5,000," he said. "But the percentage gain this year is unbelievable when you consider that last year was unbelievable."

Almost 43,000 homes were posted for foreclosure here in 2007 – a record and up 10 percent from 2006.

The number of home foreclosure postings has risen by 24 percent from the first five months of 2007.

The biggest increases for May's foreclosure sales are in Rockwall and Denton counties. The number of homes facing forced sale by lenders in Rockwall County is double what it was a year ago. And in Denton County, foreclosure postings are up almost 50 percent from May 2007.

Dallas and Tarrant counties both have a 39 percent jump in postings.

Between 50 percent and 60 percent of the monthly foreclosure postings result in an actual forced sale of the property. In some cases, the sales are delayed, or the borrower reaches a new agreement regarding the debt.

Many of the home loans that are in default are subprime mortgages that have burdened borrowers with rising payments.

But Mr. Roddy said current economic conditions are also playing a part in the spike in foreclosures.

"The whole economic issue is sad," he said. "You've had big increases in the prices of gasoline and food, and it's one thing after another that's hitting homeowners."

Consumer advocates say the foreclosure situation would be even worse without many programs that have been set up to help troubled borrowers.

But they admit that the scale of the situation is overwhelming.

"There is no one silver bullet to take care of the problems," said Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. "We are getting a lot of people calling who are many months behind in their mortgages."

Many of the borrowers have just stretched too far, Mr. Mark said.

"Somebody is always living beyond their means – maybe only by $100 or $200 a month," he said.

Rising food and energy costs are adding to consumer woes.

"We see people already stretched to the limit, and they can't handle that 25-cent jump in gas prices," Mr. Mark said. "And it's cheaper to drink gasoline than it is milk right now.

"All these factors are creating a perfect storm for consumers."

He said he doesn't expect to see much change in home foreclosures over the next 18 to 24 months.

Merrill Lynch & Co (MER.N: Quote, Profile, Research) on Thursday posted a quarterly loss of $2 billion and said it planned to cut 2,900 jobs after recording more than $9.5 billion in write-downs and losses on subprime mortgages and other risky assets.

The results were worse than analysts' gloomy expectations, and shares of the world's largest brokerage fell more than 2 percent in premarket trading. Chief Executive John Thain is trying to turn the company around as it struggles with the aftermath of bad bets on subprime mortgages and repackaged debt. He is increasing the investment bank's business in emerging markets and cutting costs to help offset write-downs.

Merrill Lynch reported losses, write-downs and reserve increases of $1.5 billion on collateralized debt obligations, $925 million on loans financing leveraged buyouts, $3.5 billion on an investment portfolio, more than $800 million on residential mortgages, and $3 billion for exposure to bond insurers.

Merrill Lynch's first-quarter net loss was $1.96 billion, compared with a year-earlier profit of $2.16 billion.
Including preferred stock dividends, the loss was $2.14 billion, or $2.19 per share, and compared with a profit of $2.11 billion, or $2.26 a share, a year earlier.
The loss from continuing operations was $2.20 per share, wider than the analysts' average forecast of $1.96, according to Reuters Estimates.

Net revenue declined 69 percent to $2.93 billion. Analysts expected $3.35 billion.

Dallas News Reported - Denver-based Frontier Airlines Inc. became the fourth U.S. airline in less than a month to file Chapter 11 bankruptcy papers Friday, joining Aloha Airlines Inc., ATA Airlines Inc. and Skybus Airlines Inc.

However, Frontier will continue flying its airplanes, the carrier said, unlike the other three which have grounded their aircraft and ceased operations.

Frontier blamed an unnamed credit card company that had tried to “substantially increase” the amount of customer receipts the credit card company wanted to hold back and keep in reserve in case the airline ran into trouble.

The action, which was to begin Friday, “threatened to severely impact Frontier’s liquidity,” the carrier said.

"Frontier is committed to delivering exceptional customer service and we intend to continue delivering on that promise with normal operations throughout our reorganization process," Frontier president and chief executive Sean Menke said in a statement.

"To be clear, we filed for very different reasons than those of other recent carriers, and our customers and employees can be confident that we intend to keep on flying and providing outstanding service and products,” he said.

Mr. Menke said Frontier “has continued to perform relatively well in this difficult environment, and contrary to the trend, we have not seen a decrease in consumer demand, as demonstrated by our record traffic and revenue in March.”

The credit card holdback “would have made it impossible for us to continue normal operations,” he said. The bankruptcy filing will prevent the card company from increasing the holdback, Mr. Menke said.

“We are prepared to litigate this issue is necessary,” he said.

From Dallas/Fort Worth International Airport, Frontier flies to Denver and Mazatlan, Mexico.

Washington Mutual Inc, the largest U.S. savings and loan, said on Tuesday it obtained a $7 billion capital injection from private equity firm TPG Inc and other investors, but that mortgage problems will lead to a $1.1 billion quarterly loss and the elimination of 3,000 jobs.

The thrift also plans to close its 186 stand-alone home loan offices and stop offering home loans through brokers. It will instead offer mortgages through its retail branches, where some of the affected mortgage employees will be offered jobs, spokesman Derek Aney said. WaMu, as the thrift is known, said it expects a first-quarter loss of $1.40 per share, more than twice the 51 cents that analysts on average expected.

The Seattle-based thrift expects to set aside $3.5 billion in the quarter for loan losses, nearly twice what it previously projected, and said net charge-offs will total $1.4 billion. WaMu will also reduce its quarterly dividend per share to 1 cent from 15 cents, saving $490 million a year. The cut is the second in four months.

"These companies are getting serious," said James McGlynn, a portfolio manager at Summit Investment Partners in Southlake, Texas. "They are bringing in capital, (and) getting out of businesses where they weren't efficient. It just seems like they are getting their comeuppance." Shares of WaMu fell 73 cents, or 5.6 percent, to $12.39 in morning trading. They had risen 29 percent on Monday, after news of the thrift's plans to raise $5 billion first surfaced.

WaMu joined more than a dozen commercial and investment banks to seek cash from outside investors in the last year, following more than $200 billion of write-downs and credit losses tied to the nation's housing and credit crisis.

Senate leaders announced an agreement Wednesday on legislation to ease the slumping housing market and help millions of families threatened by foreclosure.

The scaled-back proposal released by Majority Leader Harry Reid, D-Nev., and GOP Leader Mitch McConnell of Kentucky contains an amalgam of ideas aimed at boosting demand for housing and helping homeowners saddled with subprime mortgages avoid foreclosure. For instance, the plan contains $4 billion in grants to local governments to buy and refurbish foreclosed homes, new authority for states to issue bonds to be used to refinance subprime mortgages and a $7,000 tax credit for people buying new homes or properties in foreclosure.

"It is a robust package," Reid said. "This is good news for the American people."

But economists across the political spectrum sounded skeptical that the measure would have much practical effect to ease the wrenching crisis in the housing market and the wave of foreclosures spreading across the country. "They're good steps, but they're small steps and certainly not big enough steps to solve the problem," said Mark Zandi, chief economist for Moody's Economy.com. "I don't think it's going to be enough to solve the housing problem, at least not in 2008."

Reid did not release details, but staff aides described a still-being-drafted measure containing several elements from a bill Democrats have touted for weeks. The measure also contains a provision dropped from February's stimulus measure that would permit homebuilders and other money-losing businesses to reclaim previously paid taxes, new disclosure requirements aimed at preventing unsophisticated borrowers from being duped by mortgage brokers, and additional money to provide counseling to people threatened with foreclosure and help them in negotiating with their lenders.

Republicans forced Democrats to drop efforts that Zandi and other economists said might have proven more effective in alleviating the crisis, including a controversial plan opposed by banks and their GOP allies to change bankruptcy laws to help borrowers trapped in subprime mortgages keep their homes. Banking Committee Chairman Christopher Dodd, D-Conn., was forced to leave out of the bill a plan to have the Federal Housing Administration guarantee perhaps $400 billion worth of refinanced loans if lenders reduce loan amounts to reflect reduced home values.

The measure will contain a broader rewrite of the FHA that reduces down payments on FHA-insured loans and raises the dollar limit on mortgages that FHA can insure. "This package addresses the core issues of this crisis, including foreclosure mitigation, mortgage counseling, FHA modernization and homeowner tax credits, among other provisions," Reid and McConnell said in a joint statement. Reid said he hoped the measure could quickly pass, though it faces a flurry of amendments from senators in both parties.

According to The Houston Chronicle, employers slashed 80,000 jobs in March, the most in five years and the third straight month of losses. At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be shrinking. The new snapshot of the job market, released by the Labor Department today, underscored the damage that a trio of crises —in the housing, credit and financial sectors — has inflicted on companies, jobseekers and the economy as a whole.

"The labor market has indeed turned south," said Joel Naroff, president of Naroff Economic Advisors. "That was the one last bastion of hope to stay out of a recession. Now the question is how deep and how long will it last?"

The unemployment rate was the highest since September 2005, when significant job losses followed the devastating blows of Gulf Coast hurricanes. Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses. That overwhelmed gains elsewhere, including in education and health care, leisure and hospitality as well as in government. The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs and the unemployment rate to rise to 5 percent.

The 5.1 percent rate is relatively modest by historical standards, but was nonetheless the highest in 2 1/2 years.

Job cuts in both January and February turned out to be even deeper. Employers got rid of 76,000 in each month. The elimination of 80,000 jobs in March was the most since March 2003, when the labor market was still struggling to recover from the 2001 recession. The economy is suffering the effects of a housing collapse, a credit crunch and a financial system in turmoil. That's causing people and businesses to hunker down, crimping spending, capital investment and hiring. Those things in turn further weaken the economy in what has become a vicious cycle.

For the first time, Federal Reserve Chairman Ben Bernanke acknowledged Wednesday that the country could be heading toward a recession, saying federal policymakers are "fighting against the wind" in combating it. Many other economists and the public believe the recession already has arrived.

Bernanke wouldn't tip his hand about the Fed's next move. However, many economists believe the central bank will lower interest rates again when they meet later this month. The Fed has taken a number of extraordinary actions recently — slashing interest rates, providing financial backing to JP Morgan's takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions are ultimately aimed at limiting damage to the national economy.

With a public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans even as they engage in a political blame game.

With the pace of hiring slowing down, the number of unemployed people increased to 7.8 million in March; workers with jobs saw only modest wage gains at the same time.

Average hourly earnings for jobholders rose to $17.86 in March, a 0.3 percent increase from the previous month. That matched economists' forecasts. Over the past 12 months, wages grew 3.6 percent. With lofty energy and food prices, workers may feel like their paychecks are shrinking.
Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month. Under one rough rule, if the economy contracts for six straight months it is considered in a recession.

Bernanke, however, has said he is hopeful the economy will improve in the second half of this year, helped by the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses, as well as the Fed's rate reductions.

Still, even Bernanke predicted this week that the unemployment rate would rise in the months ahead. Some analysts say it could climb to 5.5 percent or higher by year's end.

When she was laid off in February, Patricia Guerrero was making $70,000 a year. Weeks later, with bills piling up and in need of food for her family, this middle-class mother did something she never thought she would do: She went to a food bank.  It was Good Friday, and a woman helping her offered to pay her utility bill.

"It brought tears to my eyes, and I sat there and I cried. I was like, 'This is really where I'm at?' " she told CNN. "I go 'no way;' [but] this is true. This is reality. This is the stuff you see on TV. It was hard. It was very hard."

Guerrero is estranged from her husband and raising her two young children. She's already burned through her savings to help make ends meet, and is drawing unemployment checks. She has had to take extreme measures to pay for her interest-only mortgage of $2,500 a month. In fact, her mother moved in with her to help pay the bills.

Guerrero even applied for food stamps, but was denied.
"I never used the system. I've been working since I was 15-and-a-half. I needed it now and it turned me down," she said.

Stories like Guerrero's are becoming more common as middle-class Americans feel the pinch of an economic downturn, rising gas prices and a housing crunch, especially in a state like California that has been rocked by foreclosures. On Wednesday, a key government report on the battered housing market found new home sales fell to their lowest level in 13 years in February, suggesting the nation's housing market is still struggling.

Americans also have been attending in large numbers foreclosure fairs where mortgage lenders, financial planners and counselors offer tips to hard-hit homeowners.

"Our economy is struggling, and families in the 'Inland Empire' and across the nation are hurting," California Rep. Joe Baca said, referring to an area of Southern California in his district.

"Our housing market is in a state of crisis due to rampant abuses of sub-prime lending, and unemployment is rising. At the same time, the cost of necessities such as gas, healthcare, and education continue to rise."
Daryl Brock, the executive director of Second Harvest Food Bank in California's San Bernardino and Riverside counties, said his organization supplies food to more than 400 charities in metro Los Angeles, from homeless shelters to soup kitchens to an array of food banks. While the majority of people they help are working poor families, he said they have seen some major changes.

In the last 12 to 18 months, Brock said, the agencies he supplies have begun seeing more middle-class families coming to their doors.

"Our agencies have said there is an increasing number of people coming to them for help," Brock told CNN by phone. "Their impression was that these were not people they normally would have seen before. They seemed to be better dressed. They seemed to have better cars and yet they seemed to be in crisis mode."

He added, "The only thing they can do is give us anecdotal evidence that they think it's because of the sub-prime mortgage meltdown and the housing crisis." See recent trends of foreclosure filings »

A former loan processor, Guerrero knows all about that, although so far she has been able keep her house. She used her tax refund to help pay many of her bills for the first two months, but now that money's gone. She says she's now in a middle-class "no-man's-land."

"It just happened so fast. It happened in a matter of -- what -- two months," she said.

She's eager to get back to work and to hold onto her home until the market turns. But for this single mom, every day it becomes harder to hang on.

"It's just depressing," she said. "For me, I just don't want to get out of bed, but I have to. That's my hardest thing. I have to