While it is common for a husband and wife to file a joint bankruptcy, in some cases it may be beneficial for only one spouse to file.  When one spouse files for bankruptcy protection, the other spouse is not automatically joined into the case.  The husband and wife are treated separately and individually, although there are some consequences to the non-filing spouse, both positive and negative. 

Filing separately can have several advantages to a husband and wife who have separate property and debts.  It is especially appropriate when there is a large debt that only one spouse is liable to pay, and the parties are able to either protect their marital property through exemptions or by virtue of the non-filing spouse holding the property as non-joint property.  Property in which the debtor has no ownership interest is generally not property of the debtor’s bankruptcy estate and beyond the reach of the bankruptcy court. 

While the bankruptcy automatic stay will stop collection action against the debtor, this protection does not apply to protect a non-debtor.  In a Chapter 7 case, a creditor may still collect on a joint debt from the non-filing spouse.  In a Chapter 13 case, the bankruptcy code imposes a co-debtor stay that generally prohibits collection on joint debts during the bankruptcy. 

Likewise, the discharge order at the end of the case will only apply to bankruptcy debtor.  The discharge does not prevent collection on any joint debt from the non-filing spouse.  Most joint debts are the result of a contract or the agreement of the husband and wife to pay a debt, however in some limited cases a statute or other circumstances may make both parties liable for a debt.  If you have any questions concerning whether you or your spouse is liable for a debt, consult with your attorney. 

Property may be protected during the property through state or federal law exemptions, or the property may be excluded from the bankruptcy estate when the bankruptcy debtor has no ownership interest.  Property that is held jointly and cannot be protected by exemption laws may be at risk for turn-over to pay creditors in a Chapter 7 case. 

The decision to file bankruptcy for one or both spouses can require a complex analysis of the separate and joint property and debts of each spouse.  Every case is different and while some cases gain a benefit from filing jointly, other cases receive a greater benefit from a separate bankruptcy.  If you are in a situation where a separate bankruptcy filing may benefit your family, consult with an experienced bankruptcy attorney and discuss your options.  The federal bankruptcy laws offer many choices for individuals needing debt relief and your attorney can help you decide the best financial decision for your family.

The Bankruptcy Code requires the individual debtor to file a petition and a series of financial reports with the bankruptcy court. Among these reports is a statement of income identified as “Schedule J.” For many debtors, it may be the first time, or a first time in a long time, that the families’ monthly expenses have been written down and examined. Usually there are surprising discoveries while completing this schedule.

Several monthly expense items are easily determined. Fixed monthly expenses like your mortgage or rent, auto loan payments, day care, insurance premiums, and cell phone bills are easy to identify. Fixed monthly expenses are predictable and do not generally fluctuate from month to month.  

Unlike fixed expenses, variable expenses change from month to month. A good example of a variable expense is an electric bill or transportation expense which may be higher during certain times of the year. It is a good idea to average variable expenses over six months or a year to obtain a more accurate estimate of this monthly expense.

Annual expenses are often overlooked. Some annual expenses are quickly ascertained, like home owner’s association dues or personal property taxes. Other expenses are much harder to estimate like out of pocket medical expenses. Again, a yearly average is recommended to find this expense.

Discretionary spending may be the most difficult category to determine. This category includes expenses like food, entertainment expenses and clothing purchases. Bankruptcy debtors often underestimate discretionary spending and the debtor should either take a critical examination of their lifestyle and spending, or keep receipts for a month to accurately estimate this category.

It is very important to accurately identify your monthly expenses on Schedule J. In a Chapter 7 the bankruptcy court may use schedules I (monthly income) and J (monthly expenses) when considering whether you have sufficient income to afford the monthly payment proposed in a reaffirmation agreement. In a Chapter 13, the debtor must show on Schedules I and J that there is sufficient income to pay creditors or the plan will not be confirmed.

Completing your bankruptcy schedules is not a mindless check-the-box process. The federal bankruptcy laws require you to accurately and completely disclose financial information to the court. Not only must you make your best effort to provide truthful information, but it is in your best interest to use these forms to paint a picture of your financial situation that will help you get the relief that you need. Carelessness and inaccuracies will cause delays and problems in your case.

If are buried in debt, consult with an experienced bankruptcy attorney and discuss how the federal bankruptcy laws can help. Your attorney will work with you to complete the bankruptcy petition and schedules carefully and accurately to get you the relief you need.

Occasionally a client is under a misconception that a Chapter 7 bankruptcy discharge will erase all creditor interests in secured property.  In other words, after the bankruptcy there is no house loan or car loan, and the debtor is able to keep the house or car.  

A Chapter 7 discharge acts as a permanent court injunction prohibiting the collection of debts incurred prior to filing the bankruptcy case.  The discharge order stops creditor action against the debtor personally - no more lawsuits, phone calls, or collection letters.  However, the creditor may pursue any legal claim against a debtor's property. 

To understand a collection action against a debtor's property (called an "in rem" action), let's examine a typical auto loan.  The creditor and the debtor enter into a contract wherein the debtor personally promises to make payments on the loan and the creditor promises to not repossess the car as long as these payments are made. The loan is secured by the auto and a lien is recorded with the state.  When a debtor receives a bankruptcy discharge, the creditor is prohibited from collecting on the contract, but the discharge does not (generally) extinguish the lien.  Consequently, the creditor can repossess the auto at the end of the bankruptcy case when done in accordance with state law.  The creditor may not sue the debtor to recover money on the contract. 

The general rule is that secured property must be paid for or returned to the creditor.  For this reason a reaffirmation agreement is often used during a Chapter 7 bankruptcy case.  A reaffirmation agreement is a new contract in which the debtor agrees to continue personal liability on a secured loan and the creditor agrees to not repossess the property.  The reaffirmation agreement continues the personal liability of the debtor, despite the bankruptcy discharge.  Reaffirmation agreements are only available to Chapter 7 debtors and the agreement must be executed before the bankruptcy discharge is entered.  The debtor can revoke the agreement with 60 days after the agreement is signed. 

Failure to timely execute a reaffirmation agreement causes the automatic stay to be lifted and the property is longer a part of the bankruptcy case.  The property then be repossessed by the creditor, even though you are current on the loan.  This situation recently was discussed last year in the Ninth Circuit Court of Appeals case Dumont v. Ford Motor Credit Company 

If you have an auto loan, home loan, or other secured property you want to keep after your Chapter 7 bankruptcy, discuss your options with an experienced attorney.  The federal bankruptcy laws offer many options for protecting property and your attorney can help you select the right decision for you and your family.

The word bankruptcy is derived from two Latin words, bancus, meaning “bench,” and ruptus, meaning “broken.”  The term was used to describe the breakup of a tradesman’s business (often resulting in physically breaking the tradesman’s table or bench, signifying the end of the business).  Early bankruptcy laws were concerned with protecting creditors from insolvent businesses.  Usually this meant total liquidation of the business.  In some cases a creditor could have the tradesman imprisoned for non-payment of a debt. 

Modern bankruptcy law in the United States is more forgiving and promises the individual creditor a fresh start.  The United States Bankruptcy Code is enacted by Congress via authority granted by Article I, Section 8 of the United States Constitution.  United States bankruptcy laws have evolved to protect the honest, but unfortunate debtor and provide a discharge of overwhelming debts.  Debtor’s prisons were abolished in the United States. 

The cornerstone of the bankruptcy fresh start is the bankruptcy discharge, a permanent court injunction that prohibits creditor collection against the debtor.  The bankruptcy discharge is available to individual debtors and is generally ordered at the end of the bankruptcy case.  A discharge is not available to a non-individual, like a businesses or corporation.  The discharge order forbids creditors from contacting the debtor to collect on a debt, or taking legal action against the debtor personally.  The bankruptcy discharge is very broad and is enforced through a contempt action with the bankruptcy court. 

Certain debts are not affected by the bankruptcy discharge including child support obligations, debts obtained by fraud, criminal fines or restitution, most student loans, and certain taxes.  While these debts are non-dischargeable for policy reasons, other common debts like medical bills and credit card debts are discharged by the bankruptcy.  The Bankruptcy Code offers certain protections to the debtor to repay non-dischargeable debts during a bankruptcy case. 

If you are struggling with debts and need a fresh start, discuss your options with an experienced bankruptcy attorney.  The modern bankruptcy law offers many legal options for paying or discharging personal debt.  Learn how a bankruptcy discharge can start you on a path to a fresh financial start.

There is an old saying in the bankruptcy world, “Pigs get fat, hogs get slaughtered.”  It means the honest, but unfortunate bankruptcy debtor will keep enough property to live comfortably and then some.  On the other hand, when the debtor conceals assets, hides income, or attempts to keep more than legally entitled, the bankruptcy process may serve up the hoggish debtor on a silver platter. 

We may be witnessing a good old fashioned hog roast in the media.  Teresa Giudice, star of the Bravo television show The Real Housewives of New Jersey, is embroiled in a fight with a New Jersey bankruptcy trustee.  Teresa and her husband Joe filed for Chapter 7 protection in late October, 2009, but have yet to receive a discharge from the bankruptcy court.   

On June 30, trustee John W. Sywilok filed an adversary complaint seeking to deny the Giudice’s bankruptcy discharge.  The trustee alleges that the Guidices “concealed documents, records and papers from which the Defendant's financial condition or business transactions could be ascertained.”  The trustee also complains that the Guidices failed to disclose financial or ownership interests in several businesses, including a pizza parlor and a Laundromat, as well as a book written prior to the bankruptcy.   

Recently the trustee produced documents showing that the Giudices when on a $60,000 shopping spree before and after filing bankruptcy.  During court testimony reported by the New York Post, Sywilok claimed that over $45,000 worth of furniture was purchased, and $11,000 of that just two days before filing bankruptcy.  

The trouble the Giudices face with the bankruptcy court is very real and very serious.  If the court determines that assets or income were intentionally concealed, the debtors may be denied a discharge.  An auction of assets has been ordered by the bankruptcy court, so a denial of discharge will mean that the Giudices lose their property, creditors will receive the proceeds of the auction (including a substantial payment to the trustee as compensation), and any remaining debt will survive the Chapter 7 case.  Consequently, the Giudices may face additional state court litigation on their debts and garnishment of future earnings.  If the case is egregious enough, the bankruptcy court may refer the case to the Department of Justice to investigate possible bankruptcy fraud, a federal criminal act.   

Regardless of the outcome, the Giudice case is an excellent example of how not to act before and during your bankruptcy case.  If you need relief from your debts and are willing to deal honestly and fairly with the trustee and your creditors, bankruptcy can discharge your debts and give you a fresh financial start.  Consult with an experienced bankruptcy attorney today and discover how the federal bankruptcy laws can help you and your family.

Individuals buried in debt need fast relief.  The required relief may vary from case to case, like relief from creditor harassment, from a lawsuit, or from a pending foreclosure.  Fortunately, the bankruptcy process provides you with immediate legal relief from the time you hire an attorney.  As your case progresses, the legal protections grow broader in scope and more powerful in effect. 

The first legal protection starts when you hire an attorney to represent you during your bankruptcy case.  This protection is derived from the federal Fair Debt Collection Practices Act (FDCPA).  Under the FDCPA a debt collector is prohibited from direct contact with a debtor who is represented by an attorney.  When you hire counsel you are able to forward all communication from a debt collector to your attorney, and the debt collector may no longer contact you directly.  This protection stops harassing phone calls and threatening letters from third party debt collectors while you and your attorney are preparing to file your bankruptcy. 

The second powerful protection commences the moment you file your bankruptcy case.  The bankruptcy automatic stay stops all creditor collection action immediately and automatically.  This legal protection applies to all creditors whether or not the creditor is aware of the bankruptcy filing.  The automatic stay is a legal protection that immediately stops any pending lawsuit, foreclosure, garnishment, or other legal proceeding.  The automatic stay is effective during the duration of your bankruptcy case. 

The final protection is the order of discharge that occurs at or near the end of your case.  The discharge order is a court injunction that prohibits discharged creditors from taking any kind of collection action against you personally.  The discharge injunction forbids a discharged creditor from sending bills, making collection phone calls, or filing a lawsuit to collect on a debt.  This protection is final and permanent.  Violation of this court injunction has serious consequences, and may result in a federal contempt of court charge. 

If you are experiencing a debt problem and need immediate relief, consult with an experienced bankruptcy attorney and find out how the bankruptcy process can help you.  Whether you need to stop harassing phone calls, or end a legal proceeding, bankruptcy’s powerful protections can eliminate your debt and give you peace of mind.

The worst thing about filing bankruptcy is agonizing over the decision to file.  Many people worry about under-going a grueling investigation concerning their finances, losing everything they own, and having to deal with a very public court proceeding.  The truth is that bankruptcy can be the best decision for someone drowning in debt. 

Once you decide to file bankruptcy, you will discover that the procedure is very simple and straight-forward.  The bankruptcy process essentially breaks down to an accounting to determine whether you have sufficient assets or income to pay something to creditors.  If you do, then your creditors will receive some payment and the rest of your debts are discharged.  If you don’t, then creditors receive nothing and are discharged.  There are a few narrow exceptions to discharging debts, like student loans, child support, and recent taxes, but most debts are dischargeable. 

Nearly all those who file bankruptcy are able to keep all of their property.  The United States Trustee Program reports that nationwide only around four percent of all Chapter 7 bankruptcy cases have assets that are turned over to the bankruptcy trustee.  That means one case in twenty-five may have non-exempt property that is taken and sold to pay creditors.  An experienced bankruptcy attorney is able to identify assets that may be at-risk and will advise the client regarding options for protecting the asset from turn-over. 

Many people are unaware that the bankruptcy process is quite private.  The press reports on celebrities who file bankruptcy, but unless you are famous or infamous, you will likely not receive any attention.  Newspapers no longer publish the names of individuals who file bankruptcy.  Notice of your bankruptcy is sent to your creditors, but not to your friends, family, bank, or your employer (unless you owe money to them). 

The typical debtor never sees the bankruptcy judge, and there is generally one meeting with a bankruptcy trustee.  This meeting will take place with other debtors and, while it is open to the public, it is rare that anyone other than debtors, attorneys, and an occasional creditor attends this meeting.  Most clients report being very nervous about meeting with the bankruptcy trustee, and are surprised at how fast and easy the meeting actually is. 

Many clients confess that bankruptcy was the best decision to discharge overwhelming debt.  Once the burden of debt has been lifted, you feel better and your financial condition can begin to improve.  If you are struggling with debt, speak to an experienced bankruptcy attorney and learn how the federal bankruptcy law can provide you with a fresh start.

Usually by the time a person visits a bankruptcy attorney he has been struggling with overwhelming debt for months if not years.  Often the person’s creditors have not been paid for a considerable time.  It is not surprising that occasionally a person will forget to list a creditor in the bankruptcy paperwork.   

If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor.  The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case.  Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether. 

Sometimes even the most diligent debtor will forget a creditor.  Things get trickier if the omission is discovered after the bankruptcy case has closed.  How the debtor proceeds will depend on the court and the circumstances.  In many cases an omitted creditor is considered discharged as a matter of law.  If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect.  In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway. 

Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal.  Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt. 

A person who files a bankruptcy case without an attorney is called a pro se debtor.  “Pro se” is Latin meaning “for oneself;” in other words, you are on your own.  Being on your own during your bankruptcy may save a few upfront dollars, but can cost you plenty in the long run.  There are many negative consequences that are often unexpected and sometimes disastrous. 

The savings pro se debtors receive is minimal and the risk is great.  Attorney fees during bankruptcy are supervised by the United States Bankruptcy Court.  The federal bankruptcy law allows an attorney to collect reasonable compensation for services rendered during a bankruptcy case.  Consequently, bankruptcy attorneys charge similar fees in order to stay competitive, and attorneys must disclose their fee to the bankruptcy court.   

When you are represented by an experienced bankruptcy attorney you receive several benefits.  Your attorney brings years of experience and knowledge in areas including the Federal Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the bankruptcy court’s local rules, federal bankruptcy case law, and state and federal exemption and collection laws.  Your attorney is also familiar with the bankruptcy judge, the bankruptcy trustee, and local creditor practices. 

When you are represented, you will have counsel at the Meeting of Creditors with the bankruptcy trustee.  The trustee assumes that a pro se debtor has made errors in the bankruptcy, and will grill the pro se debtor and scrutinize the bankruptcy case.  When you are represented, your attorney helps you answer any trustee questions, and can file motions and responses via the court’s electronic filing system.  When you are on your own you must mail or personally file documents with the court and must appear before the bankruptcy judge to reaffirm a debt. 

The effects of debt can affect your credit, your health, and even your job.  Calls to your work from debt collectors can interfere with your job performance.  Requesting payday advances from your employer can cost you a raise or promotion.  In some extreme cases your debt problem can even get you fired.   

The Cleveland Plain Dealer recently reported that 39 Defense Finance and Accounting Service employees will lose their jobs as a result of their bad credit ratings.  In each case the employee mismanaged finances and failed to meet standards the government requires of employees who have access to sensitive information like Social Security numbers.  While you may not have a government job that requires a security clearance, if your debt issues are affecting your job, it is time to get help. 

Government and many private employers hold the opinion that excessive indebtedness increases the temptation to commit unethical or illegal acts in order to obtain funds to pay off debts.  Private employers that are especially sensitive to their employees’ debt include banks and other financial institutions, retail stores, and any business where the employee might handle cash on a routine basis. 

The federal bankruptcy laws can help you solve your debt problem without losing your job.  Section 525 of the Bankruptcy Code prohibits a government or private employer from terminating or discriminating against an employee who files bankruptcy.  The federal law clearly forbids an employer from firing you on account of your bankruptcy. 

Many employers view bankruptcy as a resolution of a debt problem through a government approved process, which may positively reflect on the employee as an indication of financial responsibility. Eliminating your debts through bankruptcy may also decrease financial pressures and lessen the risk of unethical or illegal acts. 

If your debts are affecting your job, consult with a bankruptcy attorney and explore your options.  Bankruptcy is a federally guaranteed legal process that helps individuals recover from overwhelming financial hardship.  Protect yourself and your job by getting the help and relief you need. Free Consultation

Several courts have stated that the bankruptcy laws are meant to give an honest debtor a fresh start, but not a head start.  It is important to understand that the bankruptcy laws in this country are very forgiving, but these laws require the debtor to make reasonable efforts to repay creditors.  The debtor is obligated to disclose all income and assets to the bankruptcy court.  From these disclosures the bankruptcy trustee, creditors, and the court are able to determine what, if anything, the debtor can afford to repay. 

The debtor has a great responsibility to truthfully disclose income and assets to the best of his or her ability.  The federal bankruptcy laws will relieve the honest debtor from the stress of overwhelming debt.  However, the dishonest debtor can face serious consequences. 

One consequence of failing to disclose income or assets is that the debtor may be denied a discharge.  Section 727 of the Bankruptcy Code is designed to protect the integrity of the process and permits the court to dismiss the debtor’s case for dishonest acts like lying on the bankruptcy schedules, hiding assets, failing to maintain financial records, refusing to turn over records, and refusing to cooperate with the trustee.  The court may deny the dishonest or uncooperative debtor a discharge under Section 727 and the debtor will remain liable for all debts.  To make matters worse, any assets turned over during the case will still be administered by the bankruptcy trustee and the debtor may lose non-exempt property to creditors. 

Another more serious consequence for the dishonest debtor is the prospect of being charged with bankruptcy fraud.  The Federal Bureau of Investigation ordinarily investigates allegations of bankruptcy fraud, but other federal agencies may become involved including the Internal Revenue Service Criminal Investigation’s Bankruptcy Fraud Program.  Most bankruptcy fraud is first discovered by the bankruptcy trustee, and is often the result of whistle blowing from neighbors, creditors, or ex-souses.  The Department of Justice Trustee Program encourages individuals to report bankruptcy fraud.  

In bankruptcy, honesty is the best policy.  For an individual who needs relief from overwhelming debt, bankruptcy is a tremendous tool that gives real results.  The promise of bankruptcy is a fresh start, but not a head start.  Debtors who are dishonest during the bankruptcy process can lose the benefits of a bankruptcy discharge, and may be criminally charged with one or more federal crimes.  If you need help with your debt problem, speak honestly and frankly with an experienced attorney and learn how the powerful federal bankruptcy laws can help you. Free Consultation

Pop quiz: What do Walt Disney, Mark Twain and Larry King have in common? 

1. They each filed a personal bankruptcy and went on to have extraordinary success in life.

Bankruptcy is not a professional or financial death sentence.  Just ask Donald Trump who has filed multiple Chapter 11 reorganization bankruptcies for his casinos.  Bankruptcy is a financial tool that uses the federal law to protect the honest, but unfortunate debtor.  Bankruptcy allows the debtor the opportunity to restructure finances and formulate a plan to repay or discharge debt.  Bankruptcy provides the debtor a fresh start to a new financial future – one free of the pressures from debt collectors. Free Consultation 

Here’s another question: What honor did Kim Basinger and Burt Reynolds receive after filing personal bankruptcy? 

1. Each was nominated for an Academy Award in 1997.  Basinger won an Oscar for best supporting actress for L.A. Confidential, and Reynolds was nominated for best supporting actor for Boogie Nights.

Bankruptcy can help you and your family build a more solid financial foundation.  Henry Ford created another automobile company after his first company filed bankruptcy.  It’s safe to say that Ford Motor Company would not exist today without the help of the federal bankruptcy laws.  The same can be said for General Motors, which filed for Chapter 11 bankruptcy in 2009. Free Consultation 

How can bankruptcy help you?  The bankruptcy laws can stop a foreclosure sale, a pending lawsuit, and creditor harassment.  Bankruptcy can protect your family assets and retirement accounts from creditors.  Bankruptcy can eliminate debt or give you time to repay loans including delinquent car and home payments.  The federal bankruptcy laws helped over a million people get relief during 2009, including celebrities Stephen Baldwin, Sinbad, and Bernie Kosar. Free Consultation 

As Abraham Lincoln (filed bankruptcy in 1833) once said, “The best thing about the future is that it comes only one day at a time.”  If you are experiencing overwhelming financial difficulty, take the first step to a better future by speaking with an experienced bankruptcy attorney today.

The typical Chapter 7 bankruptcy case will take three to four months.  The Bankruptcy Code has established certain deadlines during a Chapter 7 case that dictate how long the case must remain open.  Additionally, delays by the debtor, the trustee, creditors, or even the bankruptcy court can prolong a case. 

Most debtors are confused as to when the bankruptcy case is finished.  There are actually two different events that happen near the end of a Chapter 7 case: the discharge and the closing of the case.  The discharge is a permanent injunction entered by the bankruptcy judge prohibiting certain creditors from collecting from the debtor personally.  The discharge injunction is ordered near the end of the case, but cannot be entered until after the last day for creditors to file objections has passed.  That day is set by the Bankruptcy Code as 60 days after the date first scheduled for your 341 Meeting of Creditors.  The date is also listed on the 341 meeting notice. Free Consultation 

While the bankruptcy court may enter the discharge order before the case is closed, your case is not finished a final order is issued closing the case.  When there are no assets to distribute, the bankruptcy court will often enter the discharge order and the order closing the case on the same day.  If there are assets to distribute or objections to the discharge of a debt, your case may remain open for several months.  Statistically, only one in twenty five Chapter 7 cases have assets to distribute to creditors.  The typical Chapter 7 case is discharged and closed soon after the objection deadline passes. Free Consultation 

Your Chapter 7 case will likely take between three to four months from start to finish.  One of the main advantages in hiring an experienced bankruptcy attorney is the benefit of the attorney’s efficient processes that will take your case from start to finish without complication. Your attorney can identify and correct potential problems before you file your case, and avoid any delays getting you the relief you need.  If you are considering bankruptcy, consult with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. Free Consultation
 

There are many strange misconceptions regarding bankruptcy.  Some believe that a person is unable to file bankruptcy if the debtor is employed.  Another myth is that self-employed people can't file bankruptcy. These myths can prevent a person from obtaining needed relief from overwhelming debt. Free Consultation 

Employment is not a precondition for filing for bankruptcy protection.  The bankruptcy laws require that the debtor state all income for the past six months and list his or her current income.  This income information is used to calculate the debtor's ability to pay creditors.  If the income information demonstrates that the debtor is able to pay a substantial amount to creditors over a five year period, the debtor may be ineligible to file Chapter 7 (a liquidation bankruptcy) and must file Chapter 13 (a repayment bankruptcy).  Most employed debtors are able to produce the required income information from pay stubs, W-2s, and employer records. Free Consultation 

Self-employed debtors must also produce income information for the six months prior to the bankruptcy filing and show current income.  The bankruptcy trustee will require a self-employed debtor to show net income (gross business profit minus necessary business expenses).  If you are self-employed and considering bankruptcy, it is time to start gathering income and expense information.  If you do not already keep track of your business finances in a ledger or with computer software, it is time to start.  You may have to recreate your income through bank records, and your expenses through receipts and memory. Free Consultation 

If you are struggling with a debt problem that you cannot overcome, consult with an experienced bankruptcy attorney.  Whether you are employed, unemployed, retired, disabled, or self-employed, an experienced bankruptcy attorney can suggest solutions that will end your debt nightmare.  The federal bankruptcy laws are very broad and can help you and your family to a fresh financial start. Free Consultation

Across the nation, consumer bankruptcy filings have increased 14% from the same period one year ago.  Over 770,000 consumers have filed bankruptcy during the first six months of 2010 - a rate of one in 150 households, according to data from the National Bankruptcy Research Center.  The American Bankruptcy Institutes estimates that more than 1.6 million bankruptcy cases will be filed during 2010, the largest total since Congress enacted bankruptcy reform legislation in 2005. Free Consultation 

Nevada is currently the state with the highest consumer bankruptcy rate followed by Georgia, California, Utah, and Tennessee.  The lowest bankruptcy rates are in Alaska, the District of Columbia, and South Carolina, which have filing rates less than 40% of the national average.  The national statistics also reveal that bankruptcy filers are choosing Chapter 7 (liquidation) over Chapter 13 (repayment plan).  Only 27% of May 2010 consumer bankruptcy cases were filed under Chapter 13 cases, despite the attempt by Congress to encourage more Chapter 13 filings rather than Chapter 7.  However, this chapter preference varies from state to state.  Louisiana debtors filed Chapter 13 a whopping 61% of the time, but debtors in Iowa, New Mexico, and South Dakota all chose Chapter 13 less than 10% of the time. Free Consultation 

The total number of bankruptcy cases has risen each year since 2005 when more than two million cases were filed.  Many of these bankruptcy cases are husband and wife filings, also called joint filings.  Researchers estimate that nearly one-third of all bankruptcy cases are joint husband and wife filings. 

If you are in financial distress, you are not alone!  The federal bankruptcy laws are meant to relieve the honest but unfortunate debtor of the stress of overwhelming debt.  The bankruptcy process works and can provide you and your family with real relief.  Don't live your life in a debt prison.  Free yourself through the power of the federal bankruptcy laws. Free Consultation

The United States Trustee Program is a component of the Department of Justice.  The Trustee Program appoints and supervises local private trustees who administer Chapter 7 and 13 bankruptcy estates.  One of the private trustee’s chief duties in Chapter 7 cases is to liquidate the debtor’s nonexempt assets and pay creditors with the proceeds.  Similarly, in a Chapter 13 case the trustee must ensure that the debtor devotes all disposable income to debt repayment. Free Consultation 

The trustee is not your friend, the judge, or your legal counsel.  The trustee has no judicial power to make final decisions or issue orders regarding your bankruptcy case.  While the private trustee is very skilled at bankruptcy law, the trustee is forbidden from giving the debtor legal advice.   

On occasion a debtor will contact the trustee’s office with questions concerning the bankruptcy case.  This is always a bad idea and often results in a negative outcome.  Direct debtor contact is uncommon, so the trustee will identify and remember a debtor that personally contacts his or her office.  The case may have been a “routine” bankruptcy case for the trustee, but after the debtor contact the case is squarely on the trustee’s radar.  The trustee will assume there is a problem with the bankruptcy and scrutinize the case. Free Consultation 

During a lawsuit direct communication with represented litigants is generally prohibited.  Many trustees are also licensed attorneys, but may communicate directly with you while performing the duties of bankruptcy trustee.  If you call the trustee, he or she will likely speak with you.  And why not?  You may inadvertently disclose something that is better left unsaid.  What seems like an innocent and expedient communication may turn into an issue that you are unable to predict.  Free Consultation 

The bankruptcy trustee is not your friend.  If you have questions concerning your bankruptcy, discuss your issues with your attorney.  Your attorney can answer questions about your case, and is experienced in dealing with the bankruptcy trustee.  Let your attorney represent you and do not complicate your case by communicating directly with the bankruptcy trustee. Free Consultation

Your bankruptcy attorney has many powerful methods to help you keep property while eliminating debt.  One tool is lien avoidance, which is available to both Chapter 7 and Chapter 13 debtors.  The general rule in bankruptcy is that debts secured by a lien must be paid or the property must be surrendered to the creditor.  However, under certain circumstances, a lien can be legally avoided without losing the property. Free Consultation 

The Bankruptcy Code identifies two different types of liens that may be avoided during bankruptcy: (1) a judicial lien; and (2) a non-possessory, non-purchase money security interest in household goods or tools of the trade.  Furthermore, to qualify for avoidance the debtor must be able to apply a bankruptcy exemption (a legal allowance to the debtor to protect property from creditors) to the property securing the debt. 

Clear as mud, right? 

Let's make it a little clearer: first, judicial liens are judgments and garnishments caused by a court order or judicial process.  If your property is subject to a debt imposed by a court order, it may be possible to avoid the lien during bankruptcy.  Statutory liens, like tax liens, are not avoidable in Chapter 7, but may be avoidable in Chapter 13. Free Consultation 

Second, a non-possessory, non-purchase money security interest is simply a lien that you gave a creditor against property that you owned prior to incurring the debt and did not acquire using money from the creditor.  A typical example is a personal bank loan secured by your television and/or other household items.

Finally, to qualify for lien avoidance, the debtor must be able to apply a legal exemption to the property.  For instance, if you own a television worth $500 used as collateral for a $1,000 personal loan, you may be able to apply a legal exemption to protect the television and avoid the lien against it.  Once the lien is avoided, the status of the debt changes from secured to unsecured and is likely discharged at the end of the bankruptcy case. Free Consultation 

Additionally, if the legal exemption does not protect all of the value of the property, the lien may be reduced to the extent the lien secures the property.  Using the above example, if the television is worth $500, but the debtor is only able to exempt $250 of its value, the creditor's lien would be reduced in value from $1,000 to $250 (the amount of non-exempt equity in the television). 

To avoid a lien the debtor's attorney files a motion with the bankruptcy court alleging that the creditor's lien is impairing the debtor's exemption.  Typically these motions are uncontested and are granted without hearing. 

It is important that you provide your bankruptcy attorney with documentation for all of your loans.  Your attorney can avoid certain liens during the bankruptcy that will safeguard your property after your bankruptcy discharge. Free Consultation

The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate debtor.  Bankruptcy balances the interests of the debtor to obtain his fresh start and the interests of the creditor to see that the debtor pays whatever he can afford.  In some circumstances the debtor can complicate his bankruptcy case before he files. Free Consultation 

Mistake #1: Paying an Insider Creditor

The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process.  One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment.  Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing.  For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000.  To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed. Free Consultation

Mistake #2: Incurring Debt After Deciding to File

Some people decide to charge up credit cards or take payday loans just before filing bankruptcy.  If you have decided to file bankruptcy, do not incur additional debt.  Taking loans with no intention to repay the creditor could be fraud.  It could also be a criminal act. 

Mistake #3: Transferring Property

Some people fear that they will lose property when they file bankruptcy.  Some will give away or sell property to avoid losing it.  In most cases your bankruptcy attorney can protect your property and you will not lose anything.  However, once you have transferred an item it is no longer eligible for legal protections.  For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy.  If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors. Free Consultation 

Mistake #4: Cashing out Retirement

Most retirement accounts are entirely protected during bankruptcy.  Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy.  Sometimes the money is spent to pay off loans which can create preference issues.  In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car). Free Consultation 

Mistake #5: Failing to Be Honest

This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor.  Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime). 

If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney.  Your bankruptcy attorney can advise you on the best actions to take before bankruptcy and how to avoid common mistakes.  Use the federal bankruptcy laws and protect your property. Free Consultation

There are generally two types of “bad checks.”  The first type is the kind that is “payable on demand” meaning that it is expected that the bank will honor the check when it is presented.  This is the most common type of bad check.  When you write a check that the recipient believes is “payable on demand,” and the check is returned for Non-Sufficient Funds (NSF), you may have committed a criminal act.  Depending on the amount of the bad check written, a person can be prosecuted for a misdemeanor or a felony.  Even if you later make payment on the check there may be criminal charges or substantial fees and/or fines. Free Consultation 

A NSF “payable on demand” check is not dischargeable in bankruptcy and bankruptcy will not exonerate you of a criminal act.  The bankruptcy automatic stay does not apply to stop criminal prosecutions.  Likewise, any debt to the victim of the bad check is now considered criminal restitution, also not dischargeable in bankruptcy.  Any restitution, costs, and fines are not discharged by the bankruptcy. 

While criminal prosecution of a bad check case is not affected by your bankruptcy, private collection is stopped by your bankruptcy.  Any civil legal action concerning a bad check must stop, and any civil garnishment or other collection action must cease. Free Consultation 

The second type of bad check is the post-dated check.  These checks include payday loans and other checks that are essentially promises to pay in the future.  You and the receiver are aware that the check is not presently negotiable.  The bank will not pay the check because you don’t presently have the money in your account.  

With a few narrow exceptions, being unable to pay a post-dated check is not a criminal act.  However, it may be a crime to write a post-dated check that you intend to include in your bankruptcy.  Typically the recipient of the post-dated check would have to file an adversary case with the bankruptcy court and prove that you committed fraud in writing the check with no intention to ever pay it. Free Consultation 

If you have outstanding bad checks and are considering bankruptcy, discuss your situation with an experienced bankruptcy attorney.  Your attorney can advise you on the best way to deal with a bad check during your bankruptcy. Free Consultation
 

Examining your options is important for anyone experiencing debt problems.  If you are considering bankruptcy or debt settlement to resolve your financial difficulties, investigate the consequences of each process before making your decision.  Below is some information about debt settlement companies and bankruptcy that you may not know: Free Consultation 

Debt Settlement:  The debt settlement process will harm your credit for years.  Creditors will report your delinquent account until it is paid.  Your report may identify settled accounts as paid less than 100%, which also adversely affects your credit score. 

Bankruptcy:  Any debt included in a bankruptcy appears on your credit report as discharged with a zero balance from the date you filed your bankruptcy case.  Bankruptcy stops adverse reporting so your credit report can improve.  Free Consultation 

Debt Settlement:  The typical debt settlement account will resolve your debt with a lump sum payment of between 20% and 80% of the debt.

Bankruptcy:  In most bankruptcy cases you pay nothing to unsecured creditors. 

Debt Settlement:  Any settled debt will have tax consequences and you may have to pay the IRS. 

Bankruptcy:  There is no tax liability for a debt discharged in bankruptcy. 

Debt Settlement:  You may be sued while you or your representative is attempting to settle your debt.

Bankruptcy:  All lawsuits are prohibited during your bankruptcy case. 

Debt Settlement: Some debt settlement companies are disreputable and the process is even illegal in some states.

Bankruptcy:  The bankruptcy process is authorized by the United States Constitution and its laws are written by Congress.  Only licensed attorneys admitted to practice in the federal courts are able to represent bankruptcy debtors. 

Debt Settlement:  The debt settlement process can take more than a year.  The general rule is: the longer you don’t pay, the better the settlement.  Creditors are reluctant to accept less than full payment unless they believe that you may file bankruptcy. Free Consultation

Bankruptcy:  The typical chapter 7 bankruptcy case takes less than six months. 

If you are struggling with debt, investigate your options and speak with an experienced bankruptcy attorney.  The federal bankruptcy law is a powerful tool to eliminate your debt problem and put you on the road to financial recovery.

The automatic stay is a powerful bankruptcy protection that immediately stops nearly all creditor action against a debtor.  The automatic stay is a temporary injunction against debt collection and is meant to give the debtor a “breathing spell” from his creditors.  The automatic stay permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy. Free Consultation 

This protection is immediate and “automatic” upon filing a bankruptcy petition - no hearing is necessary.  The stay is a legal injunction ordered by the bankruptcy court that prohibits a creditor with a claim that arose before commencement of the bankruptcy case from taking many actions, including: Free Consultation 

• contacting the debtor to request payment (stops collection calls)
• initiating or continuing a lawsuit against the debtor (stops lawsuits)
• enforcing a judgment against the debtor (stops wage garnishments)
• repossessing personal property or foreclosing on real estate (stops repossessions and foreclosure)

While the automatic stay is immediate, it is not permanent.  The stay can be contested by a creditor and lifted by the bankruptcy court after notice and a hearing.  There are also a few exceptions to the automatic stay protections, for instance: the automatic stay does not prevent criminal prosecution.  Likewise the automatic stay does not stop lawsuits to establish or modify alimony, maintenance, or support. Free Consultation 

Individuals that file for bankruptcy receive this powerful legal injunction against creditor actions.  However, the automatic stay is just one weapon in your bankruptcy attorney’s arsenal.  Your attorney can use the power of the bankruptcy laws to help you make the best decisions for your family’s future financial health.  If you are struggling with debt, consult with an experienced bankruptcy attorney and learn how the federal bankruptcy laws can help you. Free Consultation
 

The Bankruptcy Code requires every debtor to appear and submit to a bankruptcy examination under oath at a meeting with the debtor's creditors.  This meeting is presided over by the bankruptcy trustee and is an opportunity for creditors and the trustee to determine if assets have improperly been disposed of or concealed or if there are grounds for objection to discharge.  At this meeting the trustee must inform the Chapter 7 debtor of the consequences of bankruptcy, the availability of relief under other chapters of the Bankruptcy Code, and the effect of receiving a discharge of debts and of reaffirming a debt. Free Consultation 

The Meeting of Creditors (also called the "Trustee's Meeting," the "Creditors’ Meeting," or the 341 Meeting (after section 341 of the bankruptcy code which requires the meeting) is held between 20 and 40 days after your bankruptcy is filed.  The bankruptcy court schedules the meeting and mails notices to all of your creditors.  However, the bankruptcy judge is prohibited from attending the meeting.  Since there is no judge, the Meeting of Creditors is not a judicial proceeding.  Free Consultation  

The bankruptcy trustee is required examine you under oath and investigate your financial affairs.  The trustee then submits a report to the bankruptcy court and Office of the U.S. Trustee.  The trustee is also required to ask specific questions, including: 

Did you read your schedules before signing them?

Did you list all of your assets?

Did you list all of your debts?

Are your schedules accurate or do you need to make any corrections?

Do you have a domestic support obligation? 

The trustee may also have specific questions concerning your schedules which may involve your assets, income, expenses, debts, or financial transactions.  Your attorney will be present with you to assist you during this examination.  The trustee may also require that you provide information or documents before, during or after the meeting including bank statements, pay stubs, tax returns, vehicle titles, and land ownership and debt documents.  Finally, you are required to provide proof of identity including social security number and a government issued photo I.D. Free Consultation 

Despite the name, the Meeting of Creditors is generally a meeting that no creditors attend.  For most national creditors like Ford Motor Credit or Capital One it is not cost-effective to attend these meetings.  Because the trustee conducts dozens of these meetings on the same day, any creditor questions are limited to only a few minutes.  If the creditor needs additional time, it can ask the bankruptcy court to order the debtor to appear for a further examination between just the creditor and the debtor at a later date. Free Consultation 

Many bankruptcy debtors are very nervous going into the Meeting of Creditors, but soon realize that it is just a procedural formality.  Your bankruptcy attorney will assist you during your meeting, and can answer any questions concerning the Meeting of Creditors or the bankruptcy process. Free Consultation

When a bankruptcy debtor inherits money from someone who dies within 180 days of the date the debtor filed bankruptcy that money becomes part of the debtor’s bankruptcy estate.  The inherited money that becomes part of the bankruptcy estate is used to pay your creditors.  This is true even if you have received a discharge and your Chapter 7 bankruptcy case has closed.  Free Consultation  

For instance, if you file a Chapter 7 bankruptcy on April 1, and your great aunt dies on September 28 (within 180 days of the bankruptcy filing date), any money you receive from your great aunt’s estate must be turned over to the bankruptcy trustee.  It does not matter when you receive the money or when your case was discharged.  You might receive the inheritance years later, and it must be turned over to the bankruptcy trustee for payment to creditors.  You may be charged with bankruptcy fraud (a federal crime) if you fail to inform the trustee of your inheritance or turn over the money. Free Consultation 

If the trustee receives inherited money, your case will be reopened and a bankruptcy estate is formed.  Notices to creditors are sent and the trustee will distribute the funds to creditors.  In some cases you will be able to keep some of the money, and in other cases some of the funds may be returned.  Free Consultation  

Inherited property is treated the same as cash.  If you receive a car or a family heirloom, the property must be turned over to the trustee.  In some cases you may be able to exempt inherited property or the trustee may consider the value of the inheritance too small or burdensome to liquidate and distribute. Free Consultation 

If you are considering bankruptcy and are aware of a significant chance of someone leaving you inheritance money, speak with your attorney.  There are options to avoid turnover including rewriting the will to cut you out, or setting up a spendthrift trust.  A spendthrift trust cannot be reached by creditors.  Consult with an attorney to properly create a spendthrift trust or rewrite a will.  There is nothing illegal or immoral about estate planning and your loved one may prefer leaving money to you rather than your creditors. Free Consultation

Just because a relative is older and living on a fixed income does not mean that he or she is also debt-free.  Many older Americans struggle each month to pay unsecured debts from very modest incomes.  The most common forms of unsecured debts are credit cards and medical expenses, and for many of our elderly even a small unsecure debt can be a big financial complication.  Some face the difficult decision to cut back on food, prescription medicine, or home utilities in order to make minimum payments on these debts. 

Many of our elderly try to avoid bankruptcy because they believe that they can pay their obligations with minimum monthly payments.  The unfortunate truth is that it takes many years to pay off even a small high interest debt with minimum monthly payments.  In the meantime a changed interest rate and annual fees can cause that minimum payment to increase.  Additionally, forgotten payments can lead to creditor harassment or lawsuits which can result in a real estate judgment lien and/or an asset seizure. 

Discussing personal bankruptcy with an older loved one can be difficult.  In many cases there is great concern over losing property or income.  The federal bankruptcy laws have changed significantly over the past fifty years and offer great protections for the elderly.  For instance, retirement income and social security are protected from creditor garnishment during bankruptcy.  In most cases all of the bankruptcy debtor’s property is exempt from turnover; however your bankruptcy attorney can discuss any property that may be at risk.  The bankruptcy laws offer many options for retaining property and discharging debts.  After the typical case the unsecured debts are discharged and there is more money available to pay necessary living expenses. 

Another common concern is the embarrassment of bankruptcy.  A personal bankruptcy can is usually a very private legal process.  Friends and family are not contacted and bankruptcy cases are not published in the newspaper. Only creditors and co-debtors receive notice of a personal bankruptcy.  

If an older relative is struggling with debt, discuss the situation with an experienced bankruptcy attorney.  The federal bankruptcy laws contain many protections that shield the assets and incomes of the elderly while discharging burdensome creditors.  Don’t let the stress of credit cards and medical bills tarnish your loved one’s golden years.

A person’s financial situation is often desperate by the time a bankruptcy is filed.  In some circumstances the rent is past due and the debtor is facing eviction.  Fortunately, the bankruptcy laws can help many debtors stay in their homes, at least temporarily. 

Generally, when you file a bankruptcy petition all collection actions are automatically stayed.  The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties.  If you are behind on rent payments, the bankruptcy automatic stays the commencement or continuation of an eviction action.  The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date.  Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you.

The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date.  If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents.  If you are not behind on rents at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing.  However, you must account for any rent deposit on your bankruptcy schedules. 

In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property.  The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond.  The court must hold a hearing within 10 days.  If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue. 

If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex.  You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount.  This filing stays the eviction process for thirty days.  If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period. 

Bankruptcy can stop an eviction and give you time to move or make arrangements to stay.  If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.

It is no surprise that illness is a chief contributor to personal bankruptcy.  In fact, a 2009 study released by Harvard researchers claims that 62% of all personal bankruptcies during 2007 were caused by health problems. Many individuals struggling with medical bills need relief, but worry about how a bankruptcy will affect their ability to receive medical care in the future. 

Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay.  This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition.  In broad general terms, if you have an emergency medical condition, a hospital ER must treat you. 

If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor.  It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill.  If you have insurance or other form of guaranteed payment, the hospital will likely treat you. 

Individual physicians are more likely to deny services if you have discharged their bill.  Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed. While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy.  Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment). 

If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney.  In most cases there is no interruption in medical care or treatment.  Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.

There are a surprising number of options for a debtor to retain possession of a vehicle during bankruptcy.  Choosing the best option depends on several factors including your ability to pay and the condition of your vehicle.  In some cases the best financial option is to surrender your vehicle back to the bank and purchase a different one.   

Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan.  Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors.  The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble. 

Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur.  All lenders require a loan application and the criteria for approval can vary significantly.  Some lenders will not approve a loan if you have had a prior repossession.  Other lenders want a substantial down payment.  New auto loans often want the bankruptcy discharged before approving the loan.  In all cases your vehicle choice will be restricted to a newer vehicle with low miles. 

During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case.  The loan is not a part of the case and is not affected by the bankruptcy discharge.  For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court.  In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay. 

If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney.  There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle.  Call today and get the information you need to drive your financial future.  

Almost all debtors in bankruptcy are honest people who have experienced great financial difficulty.  One of the most common questions asked by debtors is, “Do I need to list a creditor I intend to repay?” 

The answer to this question is very simple: “Yes!”  You must list all of your debts and each of your creditors, even those you intend to repay.  There are two ways to repay a debt after bankruptcy.  The first is by voluntary payment.  The second is with a reaffirmation agreement. 

Voluntary payments made after your bankruptcy discharge neither create a new legal obligation nor invalidate the discharge order.  Any payment you make on a discharged debt is the result of a moral obligation since the legal obligation to pay the debt has been discharged by the bankruptcy court.  The creditor is still prohibited from contacting you or trying to collect on the debt. 

A reaffirmation agreement is a new contract between you and your creditor.  It is fully enforceable after the bankruptcy, so if you default on the obligation the creditor can sue you and repossess any property securing the agreement.  Reaffirmation agreements are commonly used to continue auto and home loans.  The debtor agrees to continue the legal obligation to pay the loan, and the lender agrees to not repossess the collateral.   

Reaffirmation agreements are only available to Chapter 7 debtors and the agreement must be executed before the bankruptcy discharge is entered.  The debtor can revoke the agreement with 60 days after the agreement is signed.  The Bankruptcy Code requires that the debtor demonstrate that the paying a reaffirmed debt will not create an undue hardship for the debtor or the debtor's family.  While a reaffirmation agreement can be used for credit card agreements and other unsecured loans, bankruptcy courts are reluctant to approve these agreements without exceptional circumstances. 

You are free to continue to pay a debt after your bankruptcy.  Congress specified in the Bankruptcy Code that “Nothing contained in. . . this section prevents a debtor from voluntarily repaying any debt.”  There are several legal options for repaying a debt after bankruptcy, as well as several avenues for debt restructuring.  Discuss your specific situation with your bankruptcy attorney and discover your options.  

Many people mistakenly believe that the bankruptcy court will take everything they own and sell it to pay creditors.  Some of their descriptions of bankruptcy conjure up images of a poor unfortunate walking the streets wearing a wooden barrel with no property or money to his name. 

Well, you can stop worrying about barrel chafing because there are many legal protections that allow you to keep household property during bankruptcy.  These protections are generally limited to “common sense” amounts and typically apply to clothing, household furniture, musical instruments, books, electronics, appliances, etc.   

One stated goal of bankruptcy is to give the debtor a “fresh start,” so Congress and state legislators attempt to balance the requirement of the debtor to have basic necessities against your creditors’ interests in receiving payment for your debts.  The idea is to permit the debtor the things he needs for day-to-day living while prohibiting the debtor from living a lavish lifestyle at the expense of his creditors.  For instance, if you have a Steinway grand piano worth $50,000 in your living room, it will likely be taken and sold to pay creditors.  If you have a family piano worth $2,000, you can likely keep it. 

The truth is that only around four percent of Chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor.  In the vast majority of these “asset cases” the debtor loses a car or real estate in which he has too much equity.  It is very rare to see a debtor lose any household item during a Chapter 7 bankruptcy.  Debtors in Chapter 13 keep their property. 

Determining whether a household item is at risk is a simple arithmetic calculation.  First, start with the liquidation value of the item.  Often this value can be determined by looking at yard sales or internet auction sites like Ebay.  Next subtract the applicable state or federal exemption amount for that item.  Any remaining sum is unprotected equity.  Your bankruptcy attorney can discuss your options for protecting and keeping items with unprotected equity. 

It is important to correctly describe, value and apply the proper exemptions to household items in your bankruptcy schedules.  Once you have provided an adequate description and value of your household items, your attorney can apply the proper exemptions and protect your property from turn-over to the bankruptcy trustee.  Discuss any high-dollar household item with your attorney to ensure that you obtain full legal protection for your property.

Many students are unable to attend college without federal financial aid.  Fortunately, a bankruptcy filing does not affect a student’s ability to obtain need-based financial aid.  For most students that means Pell Grants and Stafford Loans, both subsidized and unsubsidized.   Your credit is not considered in determining your financial need to receive Pell Grants and Stafford Loans and your bankruptcy filing does not disqualify you from receiving need-based financial aid.  Pell Grants and Stafford Loans are the two most common forms of financial aid to undergraduate college students. 

      Stafford Loans during a Chapter 13 bankruptcy presents a problem for the student.  You will need permission from the bankruptcy trustee and bankruptcy court to incur additional debt.  These requests are handled on a case-by-case basis, so consult with your bankruptcy attorney if you want to take loans to attend school during a Chapter 13 bankruptcy. 

      Credit-based financial aid is a different story.  This type of financial aid includes student loans from private lenders such as Sallie Mae.  Applying for credit-based loans is the same as applying for an unsecured personal loan.  Your credit history is considered and your bankruptcy will play a part in the decision to give you the loan. 

      Your credit is also considered if you are a parent applying for a parent loan like the PLUS (Parental Loan for Undergraduate Students) Loan and the Graduate PLUS (a loan for Graduate students) Loan.  These federally guaranteed parent loans are credit based and federal regulations state that a parent with a bankruptcy within the past five years is automatically disqualified from obtaining a PLUS Loan for his or her child, unless there were extenuating circumstances or the borrower obtains a creditworthy endorser. However, if you are denied a PLUS Loan, your child qualifies for increased unsubsidized Stafford loan limits.  Stafford loans remain in forbearance while the student attends school, while a PLUS Loan is subject to immediate repayment. 

      If you are a student or parent who needs money for school after a bankruptcy, speak with your student financial aid advisor and your bankruptcy attorney.  Bankruptcy can help eliminate your personal debt and free money for college, or college loan repayment.

Although bankruptcy filings are climbing back to the all-time high of 2 million reached in 2005, there is a growing concern that many Americans in need of bankruptcy protection are not filing.  A recent article in USA Today quotes Katherine Porter, associate professor of law at the University of Iowa who says, “[T]he filing rate doesn’t even begin to count the depth of financial pain.” 

Are you hurting financially?  Bankruptcy can help ease that pain. 

Bankruptcy is a federal legal process for declaring an inability to pay your creditors.  When you file bankruptcy you get immediate relief.  The bankruptcy court imposes an “automatic stay” prohibiting creditors from taking collection action against you while the bankruptcy case is pending.  The automatic stay is very powerful and stops lawsuits, wage garnishments, and even foreclosures.  Its purpose is to give the debtor some breathing room and an opportunity to decide how to resolve an overwhelming debt problem. 

There are typically two different types of bankruptcy cases: chapter 7 and chapter 13.  In chapter 7 you eliminate debt without payment while chapter 13 is a repayment plan over three to five years.  At the end of a bankruptcy case the court enters an order discharging eligible debts and permanently prohibits creditors from taking collection action against you. 

In some cases certain debts are not discharged.  The most common types are family support obligations, student loans, and taxes.  However, bankruptcy offers significant relief by discharging other debts and freeing up money to pay the non-discharged debt.  Chapter 13 can also be helpful by allowing payment of the non-dischargeable debt under the supervision of the bankruptcy court and without fear of lawsuits, wage garnishments, or other nasty creditor action. 

The bankruptcy process is very efficient.  For most chapter 7 debtors the case will last a few months and requires one meeting with the bankruptcy trustee.  The cost of bankruptcy is very reasonable compared to the relief that is given. 

Generally, in order to discharge a tax debt during bankruptcy, the tax debt must meet all four of the following criteria: (1) the tax must be income taxes or “gross receipt taxes;” (2) the tax must be over three tax years old; (3) your tax return must have been filed on time; and (4) the tax debt must not be amended or challenged by the IRS as inaccurate. 

There are four different types of tax debts that are automatically excluded from your bankruptcy discharge: 

1. unpaid taxes due within three years of the bankruptcy filing;
2. unpaid taxes for returns filed late, but within two years of the bankruptcy filing;
3. unpaid taxes for tax years when the debtor did not file a return; and
4. unpaid taxes due when the debtor filed a fraudulent return or tried to evade the tax obligation.

If you have any question whether your tax debt can be discharged during your bankruptcy, consult with your attorney.  Some tax penalties can also be discharged, so be sure to discuss exactly what portion of your tax debt will be discharged, and what portion will survive.

Tax liens can be stripped off during a Chapter 13 bankruptcy to the extent that the lien is more than the equity in property.  Tax liens cannot be stripped or otherwise avoided in Chapter 7. However if the tax is dischargeable in a Chapter 7, the bankruptcy court should determine the extent of the tax lien against your property.

Property taxes are treated differently after bankruptcy.  Your personal obligation to pay property taxes can be discharged if the tax was last payable without penalty more than one year before you file bankruptcy.  However, property taxes are secured with a lien which will generally survive the discharge.  If you keep the property, you must pay the tax debt after the bankruptcy.  If the property is surrendered during the bankruptcy, you will owe nothing. 

The intersection of tax and bankruptcy is a complicated area of the law.  It is important to address any tax issues early in your case and have a clear understanding of how you and your attorney will deal with your tax debt during your bankruptcy.

For many, walking away from a home loan is the right decision.  The recent economic downturn has left many homeowners owing substantially more than their home is worth and it may take many years of payments simply to break even.  In other cases homeowners have suffered a job loss, a reduction in pay, or other financial change that makes their present home unaffordable. 

The down-side to walking away from a home is that the debt still remains.  The mortgage company will take your home through foreclosure and sell it, sometimes at a steep discount, and you will be liable for the deficiency balance.  The mortgage company may try to collect or it may assign your debt to a collection company.  Harassing phone calls, threatening letters, and finally a lawsuit are inevitable.  Often the lawsuit is filed years later and just before the statute of limitations expires.  By then you may have rebuilt your credit and be in a much better financial situation.  The effect of this lawsuit can be devastating. 

Bankruptcy law can help you walk away and discharge your obligation to pay any balance on a home loan once and for all.  The instant you file bankruptcy you are under the protection of the United States Bankruptcy Court and creditors are prohibited from taking any collection action against you.  The bankruptcy filing immediately stops any foreclosure or repossession action, and any lawsuit.  This protection, called the automatic stay, extends through the duration of your bankruptcy case.  A creditor must seek permission from the bankruptcy court in order to start or continue the foreclosure process while you are under bankruptcy protection.  The filing of a bankruptcy case generally forestalls the foreclosure process for months and gives you the opportunity to walk away on your own terms. 

At the conclusion of your bankruptcy case you will receive an order of discharge from the bankruptcy judge.  This order permanently prohibits all discharge creditors from taking collection action against you.  However, once the bankruptcy case is closed, the mortgage company can commence foreclosure proceedings to take possession of your home, but cannot collect money from you personally. 

If you are considering walking away from your home, speak with an experienced bankruptcy attorney and learn how bankruptcy can help mitigate your financial exposure.  An experience bankruptcy attorney can explain your options and help you decide on a path that makes the most financial sense for your family.

Filing bankruptcy is a difficult decision, but sometimes life dictates choices to us.  Financial disaster can blind-side any of us, like a job loss or medical catastrophe.  Whatever the reason, individuals occasionally need the protections of the federal bankruptcy laws a second time. 

An individual can ordinarily file a bankruptcy case at anytime, however there may be restrictions on the relief that is available.  The most common restriction is the eligibility to receive a bankruptcy discharge.  To receive a Chapter 7 discharge, you must file your case eight (8) years after your previous Chapter 7 case was filed, or six (6) years after your Chapter 13 case was filed.  To receive a Chapter 13 discharge, you must file your case four (4) years after your previous Chapter 7 case was filed, or two (2) years after your Chapter 13 case was filed. 

In some cases, receiving a bankruptcy discharge may not be important to the debtor.  For instance, if a debtor has a non-dischargeable debt like child support or taxes that must be paid, bankruptcy can offer an organized process for payment while the debtor retains some control. 

Another less common restriction concerns the automatic stay.  If your bankruptcy case is dismissed within the past year, the bankruptcy court assumes that your second bankruptcy is filed in bad faith. The automatic stay will only apply for 30 days after your second filing. A hearing is required to extend the automatic stay and you must convince the court that you have filed in “good faith.”  If you file two or more cases within the past years, you must petition the bankruptcy court for a stay – it is not automatic for any period of time. 

Finally, you are not eligible to file at all if your case was dismissed by the bankruptcy court within 180 days due to a willful failure to obey an order of the bankruptcy court, or if your case was voluntarily dismissed after a creditor sought to lift the automatic stay to enforce a lien against your property. 

Filing a second bankruptcy is not uncommon.  Congress has established a few additional rules to deter abusive serial filers, but bankruptcy protection is available for the honest yet unfortunate debtor.  If you need assistance with filing a second bankruptcy case, contact an experienced bankruptcy attorney and get the relief you need.

A bankruptcy discharge is an order from the United States Bankruptcy Court.  The discharge is a court injunction prohibiting any attempt to collect on a discharged debt.  Creditors are strictly prohibited from contacting the debtor by mail, phone, or otherwise; filing or continuing a lawsuit; attaching wages or other property; or taking any other action to collect a discharged debt.  A creditor that violates this order is subject to contempt of court and may have to pay damages and attorney's fees. 

A creditor that contacts you in an effort to collect a discharged debt is in violation of the bankruptcy court’s discharge injunction.  Usually such contact is a mistake and the creditor is unaware of your bankruptcy discharge.  While claiming ignorance is not a valid excuse for violating the bankruptcy court order, informing the creditor that you have filed bankruptcy and received a discharge of the debt is often enough to stop future collection actions.  The creditor may want to know certain information about the bankruptcy (case number, date of discharge, chapter, etc.) to update their records and stop further collection efforts.  You can answer these questions or simply refer the creditor to your attorney. 

It is good practice to document any post-discharge collection action by creditors.  While these collection attempts are often mistakes, a main purpose of the bankruptcy discharge is to allow you to live your life free from creditor harassment.  The bankruptcy discharge applies to the debt and enjoins any collection of the debt.  Consequently, the discharge injunction applies to the original creditor, collection agencies, attorneys, and any other subsequent collector. 

Your bankruptcy discharge is legal protection against creditor harassment concerning discharged debts.  If you are repeatedly contacted by a creditor after your bankruptcy discharge, document the creditor contact and report it to your attorney.  The law is on your side and will protect your right to a fresh start free of creditor harassment.

A credit card is a safe and convenient way to pay for life’s necessities. In some cases a credit card is required to purchase goods or services. Debit cards are often a poor substitute for a credit card as bank holds can tie up your account for days.

If you want to keep a credit card during your bankruptcy, there are a few things to know. First, the Bankruptcy Code requires that you list all of your creditors and debts owed on the date of the bankruptcy filing. Consequently, if a credit card has a zero balance on the date that you file bankruptcy, it does not need to be listed and the credit card company does not receive notice.

Second, the use of credit during a chapter 13 bankruptcy is prohibited without prior authorization from the trustee and bankruptcy court. Usually credit approval is contingent upon a written agreement or statement from the credit card company. Chapter 7 debtors do not have this restriction.

Third, a payment on a credit card within 90 days before your bankruptcy filing may be considered a preference payment. The bankruptcy trustee may seek a court order compelling the credit card company to turn over any pre-filing payments.

Fourth, credit card companies conduct regular checks of their cardholders’ credit and your bankruptcy filing may result in the card issuer closing your account, reducing your credit line, or increasing your interest rate. These actions may also occur if you choose to reaffirm your debt with the credit card company. After reaffirming the debt the card may be cancelled and you are stuck with a non-discharged credit card balance.

Fifth, intentional failure to list a credit card with a balance can result in dismissal of your bankruptcy case. The bankruptcy court expects you to be entirely truthful concerning who you owe, regardless of your intention to pay the debt.

Sixth, consider obtaining credit after your bankruptcy discharge. Many debtors are offered unsecured credit cards shortly after their bankruptcy discharge. Many creditors consider a recently discharged debtor a good credit risk because the debtor is unable to receive another bankruptcy discharge for several years, and likely has a good debt-to-income ratio. Many post-discharge credit card offers carry high interest rates and fees, so choose wisely.

Secured credit cards are another credit option after bankruptcy. A secured credit card requires a security deposit placed with the credit card company who then issues a credit line secured by the deposit. Many banks and credit unions offer their customers secured credit cards at reasonable interest rates.

If you are interested in keeping a credit card during bankruptcy, consult with your bankruptcy attorney. Your attorney can discuss your options and help you decide on the best way to maintain a credit card account during and after your bankruptcy.
 

Filing bankruptcy is a very personal process. Many clients worry that their friends and neighbors will learn about their bankruptcy. A common question is, “Who will know about my bankruptcy?”

First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.

Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:

1. Everyone you owe money (called “creditors”);
2. The bankruptcy trustee;
3. Co-signors and co-debtors; and
4. You and your attorney.

Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.

Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.

Finally, 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 directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.

Filing a bankruptcy petition is generally a private and confidential process. 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, consult with an experienced bankruptcy attorney.

Bankruptcy is a powerful tool for eliminating personal debt. It is important to know what bankruptcy can do for you, and what it cannot.

What Bankruptcy Can Do:

Bankruptcy can eliminate your personal obligation on many unsecured debts. For many debtors this is the most important benefit of bankruptcy. Most credit cards and medical bills can be discharged during bankruptcy and you will never worry about them again.

Bankruptcy can stop creditor collection activities and harassment. When a bankruptcy is filed, all collection activity must stop. After a debt is discharged at the end of your bankruptcy case, the creditor is prohibited from contacting you to collect on that debt.

Bankruptcy can stop a foreclosure or repossession. In a Chapter 7 bankruptcy the debtor is given time to negotiate an agreement with the creditor, or prepare to walk-away from the debt and surrender a home or vehicle. In a Chapter 13, the debtor can also surrender property back to the creditor, or force the creditor to accept payments to cure an arrearage and resume monthly payments.

Bankruptcy can protect personal assets. Ordinary household goods, certain equity in vehicles or a family home, and retirement accounts are all protected during a bankruptcy. Statistically only 1 in 20 debtors lose anything, and your bankruptcy attorney can advise you of any property that is at risk in advance of the filing.

Bankruptcy can strip away certain liens. Many loans that are secured with an item you previously owned (called a Non-Purchase-Money Security Interest) can be stripped away during bankruptcy. Under certain circumstances a second mortgage can be stripped and made an unsecured debt (and eligible for discharged).

What Bankruptcy Cannot Do:

Bankruptcy cannot allow you to keep secured property without payment. While there are exceptions, generally if you do not pay for a secured property (e.g. car or house), the property must be returned to the secured creditor.

Bankruptcy cannot eliminate certain types of debts. The Bankruptcy Code lists debts that cannot be discharged such as student loans, certain taxes, and child support obligations. However, every situation is different and many of these “non-dischargeable debts” can be discharged under certain circumstances. Your bankruptcy attorney can discuss your individual situation and options for eliminating your debts.

The goal of the federal bankruptcy laws is to give the debtor a fresh start on a new financial future. There are many powerful legal options available in bankruptcy to eliminate or reduce overwhelming debt. An experienced bankruptcy attorney can explain your options and guide you to your fresh start.

Deciding whether to file bankruptcy can be difficult. There is no “bright line” test that signals when a bankruptcy is appropriate to solve a debt problem. For many debtors, it is not one issue, but a combination of debts that makes bankruptcy the right choice.

Below are common debt patterns that attorneys see from their bankruptcy clients. If you are experiencing one or more of these debt problems, a bankruptcy filing can improve your financial situation:

* Your wages are garnished or your bank account is attached
* You are unable to make even minimum payments to your creditors, or you struggle to make minimum payments each month
* Collectors harass you at home and at work
* You pick and choose what creditors to pay on-time
* You are caught up in a cycle of payday loans
* You are paying off large unsecured debts (e.g. credit cards, medical bills, etc.)
* You are at risk for repossession or foreclosure
* You are being sued for a debt
* The IRS is threatening collection action

Whether to file bankruptcy is a decision that is unique to your personal situation. If you are struggling with debt, a bankruptcy filing stops collection action and provides breathing room so you can decide how to move forward with your finances. The bankruptcy laws offer the choice of repayment or the outright discharge of most debts under the supervision of a federal court. In most cases there is no payment to unsecured creditors and the debtor does not lose any property.

If you are experiencing a persistent debt problem, bankruptcy may be the right choice for you. Discuss your situation with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can eliminate your financial burdens. Get started on a brighter financial future today!

The Bankruptcy Code directs the Chapter 7 debtor to file a statement of intention with the bankruptcy court within 30 days after the petition filing, or on or before the 341 Meeting of Creditors, whichever is earlier.  A statement of intention advises the court, the bankruptcy trustee, and your creditors of how the debtor intends to treat secured collateral, like a car or home, in the bankruptcy. 

The Bankruptcy Code also requires that the Chapter 7 debtor perform on that intention within 45 days after filing the statement.  The Bankruptcy Code allows the debtor to choose one of the following: (1) surrender the collateral back to the creditor and discharge any personal liability; (2) reaffirm the debt and retain the collateral in exchange for continued personal liability on the original debt; or (3) redeem the collateral by paying the current fair market value in a lump sum. 

Prior to the overhaul of the Bankruptcy Code in 2005, a Chapter 7 statement of intention had little relevance. Now the statement of intention can mean the difference between keeping and losing an automobile or other secured property.   

Failure to timely file or perform on a statement of intention causes the automatic stay to be lifted and the property is longer a part of the bankruptcy case.  In some cases, a purchase agreement may contain an ipso facto clause which creates a default on the loan by filing bankruptcy.  The Bankruptcy Code expressly nullifies ipso facto clauses, but only for property of the bankruptcy estate.  Most courts find that ipso facto clauses are enforceable under state law when property is no longer a part of the bankruptcy estate.   

Let me restate this situation in plain English: if you file bankruptcy and do not file or timely perform on a statement of intention, the property is no longer protected by the bankruptcy and can be repossessed by the creditor, even though you are current on the loan.  This situation recently was discussed in a Ninth Circuit Court of Appeals case, Dumont v. Ford Motor Credit Company. 

If you have an auto loan or other secured item you want to keep, discuss your options with an experienced bankruptcy attorney.  Your attorney can help you reach the right decision for you and your family.

Bankruptcy is a federal legal process for declaring an inability of an individual or organization to pay its creditors. The United States Constitution authorizes the bankruptcy laws and federal laws govern all bankruptcy cases.

One stated purpose of the federal bankruptcy laws is to give the debtor a financial "fresh start." At the end of most cases the bankruptcy judge will discharge certain debts and release the debtor from personal liability.

The bankruptcy laws are meant to give the honest debtor a fresh start, but not a head start. Therefore, Congress has identified certain debts that cannot be discharged in a bankruptcy. Many debts that would ordinarily qualify for discharge may be determined as non-dischargeable if a debtor has committed a crime or fraud in acquiring the debt. Other debts are deemed generally non-dischargeable based on public policy reasons (like taxes or child support).

Generally, the following are non-dischargeable debts:

1. child support or alimony obligations, and debts considered in the nature of support;
2. student loans, unless repayment would cause you undue hardship;
3. criminal fines or restitution;
4. debts listed in a prior bankruptcy where debtor was denied a discharge;
5. recent income taxes less than three years past due; and
6. auto accident claims involving intoxication.

Additionally, there are circumstances which may make a debt non-dischargeable:

1. debts incurred on the basis of fraud;
2. debts from willful or malicious injury to another or another's property;
3. recent purchases with credit cards;
4. debts from larceny (theft), breach of trust or embezzlement; and
5. most federal, state and local taxes and any money borrowed on a credit card to pay those taxes.

All of the categories of non-dischargeable debts in bankruptcy have specific rules and exceptions and each situation has its own challenges. If you have a debt that may fall into a non-dischargeable category, discuss your situation with a qualified bankruptcy attorney and learn your options. Your attorney can provide options for managing, repaying, or discharging the debt.

Around the country courts are questioning the standing of MERS to assert legal rights in
foreclosure or bankruptcy proceedings. Many courts are finding that Mortgage Electronic
Registration System, or “MERS,” is not a legal mortgage holder for lenders, investors
and their loan servicers, and are invalidating bankruptcy claims or foreclosure processes.

On its website MERS describes itself:

MERS is an innovative process that simplifies the way mortgage
ownership and servicing rights are originated, sold and tracked. Created by
the real estate finance industry, MERS eliminates the need to prepare and
record assignments when trading residential and commercial mortgage
loans.

Since the mortgage bubble burst, MERS has come under increasing attack in state and
federal courts. Some courts (most notably in Kansas, Florida, and New York) have found
that MERS does not have standing to assert mortgage rights because it is a mere nominee,
and not a mortgage assignee (an assignment of a mortgage without the debt transfers
nothing. 55 Am. Jur. 2d, Mortgages § 1002). Additionally, MERS routinely skips legally
required processes when a mortgage is transferred.

MERS is not the beneficiary of a Deed of Trust, and has no ownership or possession of a
promissory note. Therefore, many courts are finding noncompliance with state laws.
Recently one bankruptcy court in the State of New York invalidated a bankruptcy claim
by MERS when the company could not show how it had standing in the case.

Many bankruptcy attorneys are demanding proof of assignment and documents
establishing a paper trail for their client’s mortgage. In many cases MERS is unable to
provide this information; much like collection companies often cannot prove a debt.
Original documents, recorded deeds, payment history, and executed assignments seem to
be inconsequential matters to the MERS powerhouse. Fortunately, MERS is now under
attack and accused of not following legal processes. It will be very interesting to see how
the state and federal appellate courts address the MERS debacle.

If you are dealing with an uncooperative mortgage company and need assistance saving
your home, speak with an experienced bankruptcy attorney and discuss your options.
There are many legal options available and your bankruptcy attorney can help you
determine the best choice for your family.

Nevada, Tennessee, and Georgia are the highest per capita states for bankruptcy filings according recently released data concerning the first quarter of 2010. Records from the Automated Access to Court Electronic Records show there were 378,990 total bankruptcies in the first quarter of 2010, up from 325,815 in the first quarter of 2009.

In Nevada residents filed 10.3 bankruptcies per 1,000 residents for the first quarter of 2010. Tennessee and Georgia filed 8.0 and 7.8 respectively. Alaska is the state with the lowest per capita filing with 1.5 filings per 1,000 residents. According to these statistics the average Nevadan is almost seven times more likely to file bankruptcy than the average Alaskan.

Below is a list of the state’s bankruptcy filings per capita:

1. Nevada 10.3
2. Tennessee 8.0
3. Georgia 7.8
4. Michigan 7.4
5. Alabama 7.1
6. Indiana 7.0
7. California 6.4
8. Illinois 6.4
9. Kentucky 6.1
10. Ohio 5.9
11. Colorado 5.9
12. Utah 5.8
13. Arizona 5.6
14. Arkansas 5.6
15. Florida 5.6
16. Wisconsin 5.3
17. Rhode Island 5.2
18. Missouri 5.1
19. Delaware 5.1
20. Mississippi 5.0
21. Maryland 5.0
22. Washington 4.9
23. Oregon 4.8
24. Virginia 4.7
25. New Jersey 4.5
26. New Hampshire 4.5
27. Idaho 4.4
28. Nebraska 4.3
29. Minnesota 4.2
30. Louisiana 3.9
31. Oklahoma 3.8
32. West Virginia 3.7
33. Kansas 3.6
34. Massachusetts 3.5
35. New Mexico 3.3
36. Iowa 3.3
37. Connecticut 3.2
38. Pennsylvania 3.0
39. Maine 2.9
40. Vermont 2.9
41. Hawaii 2.9
42. North Carolina 2.8
43. Montana 2.7
44. New York 2.7
45. Wyoming 2.5
46. Texas 2.2
47. South Dakota 2.2
48. North Dakota 2.2
49. District of Columbia 2.1
50. South Carolina 2.1
51. Alaska 1.5

If you are considering a personal bankruptcy, you are not alone! In this tough economy, many families file bankruptcy to relieve them from the pressures of overwhelming debt and to begin their fresh start to a brighter financial future. Have your case evaluated today from an experienced attorney and discover how the federal bankruptcy laws can help you.
 

In some cases a debtor has no money, no job, and no assets. Lawyers commonly refer to this situation as being “judgment proof.” Any attempts to collect on a debt will be futile. As the saying goes, “You can’t get blood out of a turnip.”

While an entirely insolvent and judgment proof individual may avoid creditor collection, many people without money, jobs, or assets receive periodic federal benefits like Social Security. The federal law prohibits most creditors from garnishing federal benefits making the individual “legally” judgment proof.

Debt collectors will occasionally circumvent the federal prohibition by seizing the debtor’s bank account through a state court order. After a judge orders the seizure of a bank account to satisfy a judgment it is the debtor’s obligation to prove that the funds are federally protected. This generally requires hiring an attorney and holding a hearing in the state court. For more information, visit the Federal Trade Commission website for a free publication about bank seizure of federal benefits.

To close this legal loophole, the Obama administration has recently proposed rules to protect federal benefits from creditor garnishment. These proposed rules require banks to determine whether federal benefits have been directly deposited into a customer’s account within the past 60 days, and to determine the amount, before collecting funds pursuant to a court order. More than 80 percent of Social Security recipients receive their monthly benefits via direct deposit.

Many federal benefits are protected during bankruptcy. For a legally judgment proof debtor, a bankruptcy will end creditor harassment, prevent a bank account seizure, and discharge the debt for good. A bankruptcy can provide peace of mind.

If you receive federal benefits and have outstanding debts, consult with an experienced bankruptcy attorney. Your attorney can advise you on the best course of action to resolve the debt and protect your federal benefits.

Harvard law professor and bankruptcy expert Elizabeth Warren has stated that the economic fallout from divorce is a leading cause of bankruptcy. The divorce process assigns debt, awards assets, and can significantly deplete marital assets. In many cases, one or both spouses are in a difficult financial position after the divorce. If the fall-out from your marital debt is pushing you and your spouse into divorce court, consider how a bankruptcy can alleviate the stress and simplify your finances. Filing bankruptcy before starting a divorce proceeding can be advantageous to both parties, and, in some cases, can even save a marriage.

A common problem after a divorce is the family court’s order concerning joint debt. The order will typically direct one party to pay or refinance a joint debt. Many are surprised to learn that this order does not relieve a parties’ obligation to pay the debt. The simple explanation is that the family court judge does not have the authority to rewrite a contract between you, your spouse, and a creditor who is not a party to your divorce. If your spouse does not pay the joint debt, your credit may be harmed.

On the other hand, by filing a bankruptcy prior to the divorce, most joint debts can be legally and finally terminated either by payment or discharge. Additionally, by resolving many of your outstanding debts, it is easier to negotiate the remaining obligations between you and your spouse.

Married couples also enjoy protections in bankruptcy that single debtors do not receive. For instance, married couples often receive increased legal exemptions that protect property from creditor attachment. These exemptions may be lessened or no longer available once the divorce is finalized. In other words, what you could protect in bankruptcy while married may not be protected after a divorce.

To say that the interplay between the state family laws and the federal bankruptcy laws is complex is a gross understatement. However, many of these complexities can be avoided by filing a bankruptcy ahead of a divorce. In some cases, the couple decides to stay together after the financial strain is removed by the bankruptcy.

If you and your spouse are considering divorce, consult with an experienced bankruptcy attorney and have your finances examined. If bankruptcy is a possibility, it is generally better to proceed with the bankruptcy case prior to the divorce.

In an episode of television’s “The Office,” the main character Michael Scott makes a misguided attempt to resolve his debt problems by publically stating, “I. . . declare. . . bankruptcy!” Video clips of this funny episode can be found on YouTube.

Back in the real world, declaring bankruptcy is not nearly as public, or as simple, as shouting out “I declare bankruptcy!” The bankruptcy process begins with an accounting of your income, expenses, assets, and debts. The debtor is required to use approved forms for this financial accounting. A copy of these forms can be found on the U.S. Courts website, and a general description of each form that must be filed in all consumer debtor Chapter 7 and 13 cases is provided below.

The Voluntary Petition is three pages long and is the formal declaration of bankruptcy. Filing the Voluntary Petition begins the bankruptcy process and imposes the automatic stay which will generally stop action by creditors to collect debts.

Schedule A is a list of real property.

Schedule B is a list of personal property.

Schedule C is a list of property the debtor claims as exempt.

Schedule D is a list of creditors holding secured claims.

Schedule E is a list of creditors holding unsecured priority claims.

Schedule F is a list of creditors holding unsecured nonpriority claims.

Schedule G is a list of the debtor’s executory contracts and unexpired leases.

Schedule H is a list of codebtors in the bankruptcy.

Schedule I lists the debtor’s monthly income.

Schedule J lists the debtor’s monthly expenses.

The debtor must sign a Declaration that the above schedules are accurate to the best of his or her knowledge, information, and belief.

The debtor must file a Statement of Financial Affairs. This form provides a summary of the debtor's financial history, transactions, and operations over certain time periods before the case is filed. There are 18 separate items on this form:
1. Income from Employment or Operation of Business
2. Income Other than from Employment or Operation of Business
3. Payments to Creditors
4. Suits, Administrative Proceedings, Executions, Garnishments, and Attachments
5. Repossessions, Foreclosures, and Returns
6. Assignments and Receiverships
7. Gifts
8. Losses
9. Payments Related to Debt Counseling or Bankruptcy
10. Other Transfers
11. Closed Financial Accounts
12. Safe Deposit Boxes
13. Setoffs
14. Property Held for Another Person
15. Prior Address of Debtor
16. Spouses and Former Spouses
17. Environmental Information
18. Nature, Location, and Name of Business

Finally, the debtor must file either a Statement of Current Monthly Income and Means Test Calculation in a Chapter 7 case, or a Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income in a Chapter 13 case.

The success of your bankruptcy largely depends on the accuracy of these forms and the skill that your bankruptcy attorney applies in crafting these financial reports. Don’t leave your financial future to chance! Seek out an experienced bankruptcy attorney to complete these forms and advise you on the best course of action to resolve your financial problems.
 

The bankruptcy means test is a calculation designed to identify debtors who can afford to pay some of their unsecured debts (for instance, credit card debt) and encourage repayment of these debts through a Chapter 13 repayment plan. The first part of the means test determines whether your current monthly income is less than your state’s median income for a household of your size.

If your family’s income is less than your state’s median income for a family of your size, you PASS the means test. There is no other testing and you can proceed with a Chapter 7 bankruptcy. The current state median income figures can be found at the U.S. Trustee’s website: http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm.

If your family’s income is more than your state’s median income, you must complete the means test worksheet to calculate if you have (or should have) money to repay unsecured creditors. In the end if you are able to pay a significant portion of your unsecured debt, you will FAIL the means test and cannot file a Chapter 7 bankruptcy.

The truth is that most debtors pass the means test without any difficulty based upon their income. Others pass the means test after a skilled bankruptcy attorney has examined your income sources and made certain elections in completing the calculation. That is not to say that the test can be manipulated! On the contrary, the skilled bankruptcy attorney will work within the bankruptcy statutes, rules, case law, and local interpretations (which can vary a great deal among jurisdictions!) to obtain the best result from the means test.

If you would like to “test-drive” the means test, Nolo Publishing has a free on-line calculator. The Nolo calculator uses the language and formatting of Official Form B 22A, the means test form required in Chapter 7 bankruptcy cases. Be warned: passing the means test can be complex and is more than simply crunching numbers!

If you have questions or concerns about passing the means test, seek out competent legal advice. An experienced bankruptcy attorney can guide you through the means test to reach the best possible result for your circumstances.
 

Chapter 7 bankruptcy is generally a numbers game between the bankruptcy trustee and the debtor. The trustee seeks to liquidate the debtor's non-exempt assets to pay creditors, and the debtor tries to avoid liquidation of any property. When property is identified by the trustee as non-exempt, the trustee may ask the debtor to turn over the property (or its cash equivalent). The trustee will then liquidate the property and distribute the proceeds to creditors.

The United States Trustee Program reports only around four percent of all Chapter 7 bankruptcy cases are “asset cases.” In other words, statistically only one case in twenty-five has an asset that can be converted to cash and distributed to creditors. Some common types of non-exempt assets include:

• Cash money
• Tax refund
• Vehicle equity
• Home equity
• Misidentified financial account
• Unlisted property

Whenever a non-exempt asset is found by the bankruptcy trustee, the debtor’s case comes under greater scrutiny, the case is generally prolonged while the asset is administered, and creditors are invited to file proof of claims to participate in the distribution of the asset.

The key to keeping property during a Chapter 7 bankruptcy is early identification and full disclosure with your bankruptcy attorney. Poor communication between the client and attorney is usually the cause of “at risk” property. Every bankruptcy attorney has a story about a client who informs the trustee at the 341 meeting of creditors, “I didn’t tell my attorney about this property, but. . .” This story seldom has a happy ending for the client and usually results in the loss of that property.

There are many ways to protect property during a Chapter 7 bankruptcy. Be sure to discuss all of your assets with your attorney. If you have doubts whether you have an ownership interest in property, discuss it with your attorney. Your attorney can provide you legal options to protect your assets and avoid “at risk” property. 

A bankruptcy discharge is a permanent court injunction prohibiting creditors from enforcing certain obligations against the debtor. While the bankruptcy discharge does not actually “erase” a debt, it prohibits any collection against the debtor personally. In plain terms, the debt is no longer legally enforceable against the debtor and the creditor can no longer engage in any type of collection activity such as; letters, phone calls, threats of criminal proceedings or other adverse actions brought about with the purpose of debt repayment.

The purpose of the discharge injunction is to provide the debtor with a fresh financial start, free of the pressures of former debt. Violation of the bankruptcy discharge is a serious matter. A willful violation of the discharge injunction constitutes contempt of court. The violator (often called the “contemnor”) may be penalized for this conduct, including a hefty fine and payment of attorney fees.

Recently United States Bankruptcy Court Judge Enrique S. Lamoutte discussed the liability of a creditor that sold a discharged debt and the subsequent purchaser attempted collection action. This is practice is often referred to as “zombie” debt collection. The debt is legally “dead,” and the collector attempts to “bring it back to life” through direct collection efforts.

In the case of Laboy v. FirstBank Puerto Rico, Judge Lomoutte reminds creditors that they "are obligated to maintain procedures to ensure that they do not violate [the discharge injunction], and may be held liable for damages and attorney's fees if they do not.” He concluded that FirstBank had knowledge of the bankruptcy filing and discharge and that its actions in selling the debt to a debt collector some 15 years after the bankruptcy discharge violated the discharge injunction.

If you receive contact from a debt collector concerning a discharged debt, notify your bankruptcy attorney immediately. This may be an innocent error, or it may be a zombie debt collector on the prowl. Either way, you should contact your bankruptcy attorney and chase these zombies debts back to the grave!
 

When a consumer bankruptcy case is filed, a trustee is appointed to oversee and administer the case. The trustee does not represent the interests of the debtor and cannot give legal advice, which is the role of your bankruptcy attorney. However, it is important to cooperate with the trustee and any request for information.

The issue of a debtor’s duty to cooperate with the trustee was recently litigated in the case of In re Royce Homes, LP. 2009 WL 3052439 (Bkrtcy. S.D.Tex.). In that Chapter 7 case the trustee requested financial documents and information from a corporate debtor. In response to the request the debtor provided access to “storage facilities containing stacks of documents and old computer servers, most of which are wholly unresponsive to the Trustee's request.” The trustee filed a motion asking the bankruptcy court to compel the debtor’s cooperation.

In deciding the matter the court cited several sections of the bankruptcy code and rules which require debtors to cooperate with the trustee. Notably section 521(a)(3) requires the Debtor to “cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title.” The court ordered the debtor to provide the specific information that the trustee had requested, rather than simply dumping documents or permitting access to records. The court emphasized the debtor’s duty to cooperate by stating, “It is well settled that a [trustee] should not be required to drag information from a reluctant and uncooperative debtor. Because of the extraordinary relief offered under the Bankruptcy Code delay and avoidance tactics are inconsistent with, and offensive to, its purpose and spirit.”

Cooperation with the trustee is an important part of the bankruptcy process. Failure to cooperate or to testify truthfully could result in a discharge, or worse. Your bankruptcy attorney can help guide you through this process of disclosure with the trustee and protect your interests.
 

April 15 is quickly approaching and many Americans are filing their income tax returns. A common question at this time of year is, “Will I lose my income tax refund if I file Chapter 7 bankruptcy?” The short answer is no, at least if you consult with an experienced bankruptcy attorney.

The safest situation is to file your tax return and receive your refund prior to filing bankruptcy. The bankruptcy estate is calculated as of the date that you file your case. If the tax refund money is gone on the date you file your bankruptcy, there is generally no way for the bankruptcy trustee to make a claim against the tax money.

However (it’s funny how bankruptcy law, like life, has many “howevers”), there are exceptions to the general rule. For instance, if you pay an insider creditor on an antecedent debt, the trustee can avoid the transfer. An “insider” is a basically person close to you like a friend, family member, or business associate. If you owe an insider money, and you repay the debt from your tax refund, then the trustee could ask the insider to repay the money to the bankruptcy estate. Paying an insider within a year of filing bankruptcy usually leads to problems.

You may run into a similar problem if you pay down a loan, or pay any creditor a large lump sum within 90 days of filing bankruptcy. You could also run into an equity issue by paying off a vehicle with a large tax refund. These may seem like responsible actions, but the bankruptcy laws are full of landmines. Before spending your tax money it is wise to consult with your bankruptcy attorney to avoid these sticky situations.    

Another issue that occasionally happens is when a bankruptcy debtor files a Chapter 7 case after filing a tax return, but before receiving an expected small refund. “No problem,” says the bankruptcy attorney, until the IRS adjusts the small refund into a large refund. There is “no problem” if the debtor has available exemptions to protect the refund, the debtor simply amends his schedules. But sometimes there is no way to protect all of the refund and the trustee is able to collect. That is an unfortunate situation for someone that really could use the extra money, and a case that can be avoided by waiting until the refund is received and spent.

If you are concerned about keeping your income tax refund, consult with an experienced bankruptcy attorney. Your attorney can advise you on property that is exempt (protected) and non-exempt (not protected) before you file your case and risk losing any property.

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

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

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

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

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

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

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

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

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

Payday loans, also known as cash advances, are short-term loans made at a high interest rate. Payday loans are typically made for a relatively small amount of money, but because of the high interest rate, the debt can quickly spiral out of control.

In most cases, payday loans are dischargeable in Chapter 7 bankruptcy. Payday loans are a form of unsecured debt, and virtually all unsecured debts are discharged in Chapter 7 bankruptcy.

For free legal assistance with Chapter 7 bankruptcy, contact the bankruptcy lawyers of Fears | Nachawati today. To speak with one of our Texas bankruptcy attorneys, email us or call our toll free number at 1.866.705.7584.

Some, but not all, tax debts are dischargeable in Chapter 7 bankruptcy. In order to have your tax debts discharged under a Chapter 7 bankruptcy, you must meet all five of the following conditions:

1. The debts are income taxes. Taxes other than income tax, such as fraud penalties, cannot be discharged in bankruptcy.
2. You filed a tax return for the debt you want to discharge at least two years before filing for bankruptcy.
3. The tax debt is at least three years old.
4. You pass the 240-day rule. This rule requires that your tax debt was assessed by the IRS at least 240 days before you filed for bankruptcy, or, alternatively, that the debt has not yet been assessed.
5. You have not committed tax fraud or willful tax evasion.

Note that you cannot discharge a federal tax lien under Chapter 7 bankruptcy. If the IRS already recorded a tax lien on your personal property before you filed for bankruptcy, then the tax lien will remain in place. The upshot is that you have to pay off the lien before you are allowed to sell the property.

For free legal advice on tax debts and other issues related to Chapter 7 bankruptcy, contact Fears | Nachawati. To speak with one of our Texas bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

Texas residents have the right to file for a Chapter 7 bankruptcy to help get rid of excessive debts.

You will need to fill out a packet of forms when you file your Bankruptcy petition in the Northern District of Texas. One of the forms in a Chapter 7 bankruptcy will ask you to list all unsecured debts you want discharged. By listing creditors such as credit cards, medical bills and utility bills under unsecured debts you will get these debts discharged. It is one of the best ways to get rid of overzealous creditors who call you day and night.

It is important that all forms be filled out accurately to assure that you all unsecured debts will be discharged and you will no longer be responsible to pay the debts. Once the bankruptcy court discharges your Chapter 7 bankruptcy, you will no longer be responsible to pay your unsecured debts. It will give you the break you need for a fresh start.

If you are considering bankruptcy, please contact law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation and further information on what qualifies as an unsecured debt.

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

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

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

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

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

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

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

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

Many older Americans struggle each month to pay credit card debt with a modest income. Often paying unsecured debt is a tremendous burden and requires a sacrifice of basic necessities. Sometimes the elderly conserve utilities, or cut back on food, or forego prescription medication to pay credit card companies.

The subject of bankruptcy is especially difficult for elderly people who may cling to preconceptions that are out-dated or otherwise incorrect. There have been many changes in the laws that protect an elderly person’s ability to meet basic monthly living expenses. Many retirement accounts and social security income are protected from creditor garnishment. Additionally, elder Americans are often judgment proof, meaning all income and assets are protected from creditors. Unfortunately, many older Americans fail to take advantage of these protections because they believe they can honor their obligations by paying minimum payments each month. The sad truth is that it often takes decades to pay off a credit card by making minimum payments.

The stress and worry over repaying unsecured debt can cause health issues for young and old. A great deal of this stress and worry can be alleviated by choosing a feasible plan to either pay or discharge this unsecured debt. Bankruptcy is one tactic for managing unsecured debt and for reorganizing an elderly person’s finances. An experienced bankruptcy attorney at Fears | Nachawati can explain your options and provide solutions for living on a fixed income. Contact us toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com.  Don’t let credit card debt turn “the golden years” to rust.
 

Residents living in Texas are subject to wage garnishment by the IRS. The IRS commonly uses wage garnishment as a way to collect taxes and penalties that are owed. A wage garnishment requires an individual’s employer to withhold a portion of the taxpayer's pay each period and send it to the IRS. In most cases, the individual is not left with enough money each month to pay basic living expenses. A wage garnishment will remain in effect until the taxes and penalties owed are paid in full or until a wage garnishment release is issued.

The only other time the wage garnishment can be stopped for a debt to the IRS (or any  other creditor) is to file for bankruptcy. When you file for bankruptcy, an automatic stay is put in effect. This means that all garnishments, liens or other collection activity by the IRS and creditors will stop immediately. In some cases, you may even be able to get back some of the wages that were garnished.

For more information on how a bankruptcy can help you put an end to wage garnishment, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com.

Often filing for a Chapter 7 bankruptcy is seen as the final step in a personal financial crisis. While this thought is understandable, it’s more realistic to view a Chapter 7 bankruptcy as the beginning of financial freedom.

Benefits of a Chapter 7 bankruptcy

Briefly, filing for Chapter 7 bankruptcy will place an automatic stay that will help protect you against:

• Liens on your paycheck or bank account
• Foreclosure of your home
• Repossession of your vehicle

The filing fees for a Chapter 7 bankruptcy

The fee to file a Chapter 7 bankruptcy in Texas is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Attorney fees involved in a Chapter 7 bankruptcy

When considering the fees associated with attorney fees, the big picture must be taken into account. Mistakes on a Chapter 7 bankruptcy application can end up costing you money in the long run. Furthermore, representation by a skilled bankruptcy attorney can help you deal with unethical action from overzealous creditors who may harass you or refuse to remove liens on your paycheck or other assets.

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck or repossession of your vehicle.

For a free consultation to discuss your options, contact Fears | Nachawati by calling toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 
 

At first sight the title above may seem contradictory. How can filing for Chapter 7 bankruptcy be key to rebuilding your credit? After all, this statement is against everything your creditors and collections agencies have been telling you. In order to understand how Chapter 7 can help you it is best to explain the benefits of filing a Chapter 7 bankruptcy.

Benefits

The first benefit in filing for a Chapter 7 is the automatic stay. What this means for you is that the creditors included in your Chapter 7 must stop all collection action immediately.  This means that they will not be allowed to place a lien on your bank account, foreclose on your home or repossess your car. If these actions have already started against you, the creditor will have to reverse or stop the action right away.

The second benefit is that you will no longer be legally held to repay most (if not all) of your debts. You will not be obligated to pay your debts once your Chapter 7 bankruptcy is discharged.

In order to understand what debts are dischargeable it is important to consult with an experienced bankruptcy attorney in your area.  Contact law firm Fears | Nachawati toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com to discuss your specific financial situation.
 

Due to the worsening economy, self-employed business owners facing a massive amount of debt have no place to turn. Filing for a Chapter 7 bankruptcy can help business owners save their home and other assets. It is important for business owners to be realistic about their financial situation before it’s too late. Business owners who file for Chapter 7 bankruptcy can get protection from existing debt, protect from lawsuits, foreclosures, seizures, bill collectors, judgment liens and tax liens.

With the assistance of an experienced bankruptcy attorney, business owners of an existing corporation might be able file personal bankruptcy and form a new corporation in order to stay in business. There are certain steps that must be taken to achieve that goal. Therefore, it’s important to have the assistance of a skilled bankruptcy attorney to help you get the most benefits under bankruptcy laws.

If you are a business owner who is considering bankruptcy, contact Fears | Nachawati toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com for a free consultation.
 

Benefits of Chapter 7 Bankruptcy

When you file for a Chapter 7 bankruptcy, an automatic stay is placed on your debts. This means that your creditors must stop collection activity, including liens, and attempts to foreclose and repossess your property.

Contrary to what some creditors or collection agencies may tell you, there is nothing illegal about filing for bankruptcy. In fact, it is your right to file for bankruptcy.

Court fees

The court fee to file a Chapter 7 bankruptcy in Texas is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Bankruptcy attorney fees

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you
can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck, a foreclosure on your home or repossession of your vehicle. Additionally, most bankruptcy attorneys offer a free consultation to discuss your specific financial situation and to determine if a Chapter 7 bankruptcy is the best choice for you.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com  for more information on what bankruptcy can do for you. 
 

Why Chapter 7 bankruptcy?

As a result of the ever-declining economy, many small business owners are having to face the harsh reality that they will not be able to continue their business let alone pay off their Small Business Loan (SBA loan). Many small business owners have become aware that their best alternative is to file for Chapter 7 bankruptcy. By doing so, they are able to discharge their SBA loans. In many cases, they are also able to save their home and other possessions as well.

The truth about Chapter 7 and SBA loans

In the simplest terms, with the exception of student loans, most any loan issued by the government is subject to discharge. A common misperception about bankruptcy is that any debt associated with the government cannot be discharged in a bankruptcy filing.

Actually, the opposite is the truth. Most loans issued by the government or a municipality can be discharged in a bankruptcy case.

All the loans that could be governmentally issued, the broad majority of those loans are in fact, dischargeable in a bankruptcy filing.

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 SBA loan.

Many debt consolidation companies want you to believe that a Chapter 7 bankruptcy is expensive and that it will destroy your credit. Nothing could be farther from the truth. Bankruptcy fees are relatively low compared to a lien on your assets or endless payment plans that you probably cannot afford on a long-term basis and that will eventually lower your credit score.

Court Fees

The fee to file a Chapter 7 bankruptcy in the Dallas bankruptcy court is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Bankruptcy Attorney Fees

While it is true that you can file for bankruptcy on your own, bankruptcy laws can be very complicated. Unless you have working knowledge of the current bankruptcy laws, you may miss something that can benefit you. For example, many people who file on their own still have problems with creditors sending them letters and removing the debt from their credit report. This is an aggressive tactic that many creditors use when they know someone does not have an attorney. They know these actions are unlawful but will continue because they know that the average person does not fully understand their rights under bankruptcy law. You can avoid being a victim of this tactic by speaking to an experienced bankruptcy attorney.

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck or repossession of your vehicle.

For a free bankruptcy consultation for more information on what bankruptcy can do for you, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at  info@fnlawfirm.com. 

All Texans know how important it is to have a car. You need it for work and for daily activities such as grocery shopping and running other errands. For others it means the difference between having a job or not.

What is Chapter 7 bankruptcy?

When you file for Chapter 7 bankruptcy all collection efforts by creditors must stop. What this means is that all liens on your paycheck, foreclosures and repossessions must end.

How soon afterwards can I buy a car?

Typically 1-2 years. Used and new car dealers are very agreeable to extend credit to people who have a discharged Chapter 7 bankruptcy. They do so because the applicant now has no debt and is able to make timely payments. The key is to keep your credit clear and make payments on time.

How to file

Consult with an experienced bankruptcy attorney in your area. A skilled bankruptcy attorney will be able to discuss fees associated with filing and handling your case.

One of the biggest concerns for people contemplating filing for a Chapter 7 bankruptcy is the possible effect bankruptcy may have when purchasing a home in the future. Most people think that a Chapter 7 bankruptcy will keep lenders from approving a home loan. But in reality the opposite is true.

What is Chapter 7 bankruptcy?

When you file for Chapter 7 bankruptcy all collection efforts by creditors must stop under federal bankruptcy law. What this means is that creditors must end all liens on your paycheck, foreclosures and repossessions.

How soon after wards can I buy a home?

Most people qualify within1-2 years. Some factors that mortgage lenders will consider most important at the time you apply for a home loan will be your job, current credit status and down payment.

How to file

Consult with an experienced bankruptcy attorney in your area. A skilled bankruptcy attorney will be able to discuss fees associated with filing and handling your case.

If you want to speak with a bankruptcy attorney regarding your options, contact Fears | Nachawati toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation. 

When you file for a Chapter 7 bankruptcy all collections by payday loan companies must stop due to an automatic stay. What this means is that they cannot continue to make harassing phone calls or continue attempts to cash any postdated checks you may have given them as promissory notes. They also cannot place a lien on your paycheck.

Of course, the Chapter 7 bankruptcy must be filed in order to have the automatic stay come into effect. Additionally, due to the known aggressive tactics by payday loans companies, it is advisable to speak with a bankruptcy attorney in order to make sure that the Chapter 7 bankruptcy application is filled out correctly.

Many people are also concerned about their ability to take out a loan in the future. Typically it is best to wait at least one year after your bankruptcy is discharged before you apply for any type of loan. In the meantime it is best to pay your bills on time to help raise your credit score and qualify for a loan with lower interest rate versus the high payday loan interest rates.

Contact law firm, Fears | Nachawati, to schedule a free consultation with an experienced bankruptcy attorney by calling toll free at 1.866.705.7584 or email us at  info@fnlawfirm.com to discuss your options for filing bankruptcy.

Choosing an attorney to represent you in a bankruptcy case is an important decision that deserves careful consideration. There are several key issues that you should focus on when selecting your bankruptcy counsel:

First, how much of the attorney’s practice is devoted to bankruptcy? Bankruptcy law is a complex mixture of federal law, state law, prior court cases, and the common practices of the bankruptcy court and the trustee. Often it is also important to be familiar with creditor practices and their attorneys. It is easy for an inexperienced attorney to make an easy bankruptcy case difficult, and a complicated case a complete disaster.

Second, how much will you pay? Call around before making an appointment. Bankruptcy attorneys are accustomed to receiving the “how much do you charge” phone call and are happy to clearly explain all of the fees involved in the bankruptcy case, including attorney fees. The qualified and experienced attorney will charge a fair and competitive price. You may also ask if there is a fee for the initial consultation.

Third, how often will you meet with your attorney? While some cases are very simple and will not require much attorney-client contact, your attorney should meet with you at least twice prior to filing your bankruptcy case: (1) during the initial appointment, and (2) at the time you sign your bankruptcy petition and schedules to ensure completeness and accuracy. Your attorney should also be available to answer questions, either by phone, in person, or by email.

Fourth, are you personally comfortable with the attorney? This attorney will act as your guide through financial difficulty to a fresh start. It is important that you have faith in the person you entrust with this important responsibility. A good bankruptcy attorney asks the right questions, listens to the answers, and provides honest advice. If you have doubts or reservations, walk away.

The choice of a bankruptcy attorney is an important decision and should not be made simply on the basis of cost or expediency. Take the time to choose your attorney and interview him or her for the job. A careful and considered choice may mean the difference between a fresh start and a false start.

A family’s retirement fund represents years of hard work and sacrifice. When severe financial trouble plagues a household, losing the family nest egg is a serious concern. Fortunately, Congress has provided substantial protections in the bankruptcy laws that safeguard retirement accounts during financial crisis.

It is important to recognize that in a Chapter 13 bankruptcy assets (including retirement funds) are not taken from the debtor.  Most Chapter 13 plans are funded from earned income, and retirement funds are used only with the voluntary consent of the debtor. During a Chapter 7 bankruptcy case retirement funds are generally safe as they are either exempt or not part of the bankruptcy estate.

Congress has declared that certain retirement funds are exempt from creditors during a Chapter 7 bankruptcy case. These funds include retirement accounts classified under sections 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code. These sections cover most retirement plans and include pension plans, profit sharing plans, stock bonus plans, employee annuities, IRAs, Roth IRAs, government deferred compensation plans, plans of tax exempt organizations, and certain trusts.  The laws exempt these funds to over a million dollars for each debtor.

The bankruptcy laws further protect retirement accounts by providing that retirement funds not otherwise exempt are protected if they are necessary for the support of the debtor and the debtor’s dependents. The bankruptcy laws also protect certain retirement accounts subject to title 1 of ERISA, 457 deferred compensation plans, 403(b) tax deferred annuities, and health insurance plans regulated by state law.

The federal bankruptcy laws provide many ways to protect your retirement accounts during bankruptcy. The key is to identify the type of account and the corresponding protection prior to filing the bankruptcy case. As always, consult with an experienced bankruptcy attorney prior to taking any action to either move retirement funds, make contributions, or take withdrawals as these actions may impair your attorney’s ability to protect your retirement account.

Contact Fears | Nachawati today for a free consultation to discuss bankruptcy and protecting your retirement accounts.  Call us toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 

If you are paying child support, you may be confused about the effect of a bankruptcy filing on your child support obligation. A bankruptcy filing generally protects the debtor from the collection actions by creditors, but Congress has not extended the same protections to child support issues. Under the bankruptcy laws child support is a “non dischargeable debt” which means that the obligation will survive the bankruptcy, regardless whether it is a current or past debt.

The bankruptcy automatic stay does not apply:

(1) to the establishment of a child support obligation;

(2) to the collection of child support from property that is not property of the estate; or

(3) to the withholding of income that is property of the estate for payment of a child support obligation under a judicial or administrative order or statute.

In “non-lawyer speak,” child support collection actions are generally not halted by filing bankruptcy. Additionally, filing a bankruptcy case does not stop a tax intercept for the payment of child support arrears.

Domestic support obligations, including child support obligations, receive top payment priority when funds are available to pay creditors in a Chapter 7 case.  In a Chapter 13 case, child support arrears are paid through a “repayment plan” and are paid as a first priority. Support payments due after the bankruptcy filing date must be kept current or the debtor’s plan will not be confirmed, and the bankruptcy court will not issue a discharge in a case where child support is owed.

In addition to child support, debts that are “in the nature of support” (e.g. medical expenses, educational expenses, etc.) are ineligible for discharge. The bottom line is: child support obligations must be paid. Fortunately, the bankruptcy laws offer options to make the debtor’s payment burden more bearable. However, a debtor’s child support obligation is often a difficult legal situation that requires expert guidance. If you have a child support obligation and are considering filing bankruptcy, consult with an experienced bankruptcy attorney and discuss your options.  Contact Fears | Nachawati for a free consultation at toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

“Will filing bankruptcy ruin my credit?” This is a common question asked by individuals contemplating a bankruptcy filing. Usually this question is answered by asking another question, “If you are considering bankruptcy, isn’t your credit already ruined?”

Individuals in serious financial crisis generally wait too long before seeking assistance. A recent survey by the Consumer Bankruptcy Project, a continuing study of consumer bankruptcy filings, found that over 40 percent of individuals said they struggled with financial difficulty for more than two years before filing bankruptcy.

If you are facing a serious financial crisis, it is in your best interest to educate yourself and to identify your financial options. Waiting can only exacerbate the situation. Sometimes individuals try to “save the sinking ship” by taking on more debt (e.g. a home equity loan) to solve their debt crisis. Others empty their retirement accounts to pay down short-term debt. These tactics are short-term solutions and will rob your family of its future financial health. Even sadder is that many individuals discover that their quick fix solutions did not solve their financial problems – only now they are facing bankruptcy with no equity in their home, or without a retirement account.

A bankruptcy filing will stay on your credit report for ten years and may have a detrimental impact on your ability to borrow money (at least in the short run). However, bankruptcy will also lighten your debt load significantly and give you a second chance to arrange your finances in a way that is manageable for years to come.  If you are facing serious financial difficulties, speak to an experienced bankruptcy attorney before taking a quick fix route just to save your credit score. Don’t be “penny wise and pound foolish.”

Contact Fears | Nachawati today for a free consultation regarding you financial situation.  Call our toll free number at 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

The Means Test is a formula designed to identify debtors that can afford to pay some of their unsecured debts (for instance, credit card debt) and encourage repayment of these debts through a Chapter 13 repayment plan. Debtors that “fail” the Means Test are disqualified from filing Chapter 7 bankruptcy.

The Means Test is actually two tests. The first part of determines whether your current monthly income is less than your state’s median income for a household of your size. The current state median income figures can be found at the U.S. Trustee’s website: http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

If your family’s income is less than your state’s median income for a family of your size, you PASS the Means Test. There is no other testing and you can proceed with a Chapter 7 bankruptcy.

If your family’s income is more than your state’s median income, you must complete the Means Test worksheet to calculate if you have (or should have) money to repay unsecured creditors. In the end if you are able to pay a significant portion of your unsecured debt, you will FAIL the Means Test and cannot file a Chapter 7 bankruptcy.

The truth is that very few debtors fail the Means Test. Many debtors earn significant incomes and still qualify for Chapter 7 bankruptcy. Debtors with large monthly secured debt payments (e.g. house, car) often pass the Means Test as there is no extra money at the end of the month to pay unsecured creditors.

If you are contemplating a bankruptcy filing, it is in your best interest to consult with an experienced bankruptcy attorney as soon as practical. The Means Test is a new and complex feature of the bankruptcy laws, and, consequently, its application and interpretation varies from jurisdiction to jurisdiction. By examining your case early, a skilled bankruptcy attorney can identify whether you are able to pass the Means Test now or in the future.  To speak with a skilled bankruptcy attorney simply call Fears | Nachawati toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

The principal theory of consumer bankruptcy in America is that it provides a “fresh start” to debtors. A prime example of this policy is found in the 1918 Supreme Court case of Stellwagen v. Clum in which the Court stated:

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

The idea of giving a poor, but honest debtor a “fresh start” is not a modern concept. The Bible also contains debt forgiveness laws:

“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord's release.” Deuteronomy 15:1-2.

Under modern bankruptcy law a debtor is entitled to a Chapter 7 bankruptcy discharge once every eight years. However, this is not a clean slate. A Chapter 7 bankruptcy can stay on your credit report up to 10 years, and you may encounter other obstacles after filing bankruptcy (e.g. obtaining credit). Several bankruptcy courts have described the Chapter 7 discharge as giving honest but unfortunate debtor a fresh start, not a head start.

Bankruptcy is a safety net when you are at the end of your rope. The Chapter 7 discharge provides a second chance and a new beginning free of creditor harassment. If you are burdened with debt, consult with an experienced bankruptcy attorney and discover how a fresh start under the law can help you.

As a general rule, credit card debt is among the easiest type of debt to discharge during a Chapter 7 or Chapter 13 Bankruptcy. However, in some cases credit card companies will dispute the discharge of credit card debt by filing an adversarial proceeding against the debtor in the bankruptcy court. The creditor may claim that all or a portion of the debt is non-dischargeable. Debts that are declared non-dischargeable may have to be paid during the bankruptcy, or may survive the bankruptcy altogether.

A credit card company may claim that the debtor committed fraud in obtaining or using the credit card. If the creditor can prove that the card was obtained under false pretenses (i.e. that the application was false), the credit card debt may be declared non-dischargeable because of the fraud.

A credit card company may also claim that charges were placed on the credit card when the debtor had no intention to repay the debt. Additionally, a presumption of fraud arises where luxury goods and services are purchased or cash advances are taken shortly before the filing of a bankruptcy case. 

Credit card companies are entitled to notice of a debtor’s bankruptcy case, and these companies monitor bankruptcy cases for signs of fraud. Certain actions send up a red flag including:

·                     Filing bankruptcy on a new card;

·                     Taking a cash advance prior to filing;

·                     Charges for travel or vacation;

·                     A debt transfer from one card to another;

·                     Credit charges while unemployed; and

·                     Charges made after consulting a bankruptcy attorney.

The more time between the credit card activity and the bankruptcy filing, the less likely the charge will cause a discharge dispute. The best advice is: if you are considering bankruptcy, stop using your credit cards. Consult with your bankruptcy attorney regarding the best way to discharge your credit card debt.  Contact Fears | Nachawati for a free consulation by calling toll-free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

A Chapter 7 bankruptcy discharge releases an individual from personal liability for most debts and prevents creditors from taking collection action against the debtor.  In other words, the bankruptcy discharge is a legal injunction prohibiting the creditor from collecting against you personally.  There are a few circumstances in which a debt may “survive” the bankruptcy and be enforceable against the debtor.  The most common is a voluntary process known as “reaffirmation.”

A reaffirmation is an agreement that continues the debtor’s obligation on a debt, even though the debt would otherwise be discharged in the bankruptcy.  Usually these agreements concern property with a lien attached (e.g. a car) and the creditor agrees to not repossess the property as long as the debtor continues to pay the debt.

The decision to reaffirm a debt should not be made lightly.  A reaffirmation agreement must be made in writing before the discharge is entered.  It must be filed with the bankruptcy court and the debtor must include a statement of current income and expenses that demonstrates sufficient income to repay the debt.  The debtor’s attorney certifies that the debtor has been advised of the legal effect and consequences of the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor's dependents.

Sometimes a reaffirmation agreement is not in the debtor’s best interest.  For instance, many co-signed unsecured loans that the debtor perceives a moral obligation to repay can be paid without a reaffirmation agreement (and without a subsequent legal obligation).  As you can see, reaffirmation agreements can be complicated and should be carefully considered.  Fortunately, the bankruptcy laws provide many options and tools for solving difficult financial problems. 

If you are considering a reaffirmation agreement to continue paying on a debt, seek the advice of an experienced bankruptcy attorney.  Contact Fears | Nachawati for a free consultation to discuss your options by calling toll free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

Clients have many questions during the initial appointment with a bankruptcy attorney.  The most common concerns are losing property, and rebuilding credit after the bankruptcy case is over.  Occasionally someone will ask a straight-forward question: “Will filing a bankruptcy ruin my life?”  This powerful and important question deserves a straight-forward answer:

No!

The bankruptcy laws are widely misunderstood by the average American.  The purpose of bankruptcy is to put overwhelming financial difficulties behind and give an honest person a fresh start.  Many Americans have taken advantage of a fresh start to improve their lives and have made tremendous contributions to our society.  Perhaps the best way to illustrate the power of bankruptcy’s fresh start is to look at some famous examples:

Actor Burt Reynolds filed for bankruptcy in 1996 after his divorce from Loni Anderson. He listed more than $10 million in debt, and his dinner theater in Jupiter, Florida, was foreclosed on and his ranch was sold.  Never one to quit, Reynolds continues to act in movies and television.  Burt Reynolds was nominated for an Academy Award for Best Supporting Actor for his performance in the 1997 film Boogie Nights and won a Golden Globe Award for the movie.

Named as one of Time Magazine's "100: The Most Important People of the Century," business titan Henry Ford didn't always have the Midas touch.  By 1901 Ford had unsuccessfully managed his first automobile company into bankruptcy.  Two years later he founded Ford Motor Company.

Walt Disney may have had vision, but he needed a second chance to make the Happiest Place on Earth a reality.  After his first film company failed, Disney filed bankruptcy in 1923.  Five years later Disney introduced the world to Mickey Mouse and the Disney empire was born.

In 1875 a young businessman saw his horseradish company go bankrupt.  Undeterred, the young man formed a new company in Pittsburgh, PA with his brother and cousin making ketchup.  That company was a success for H.J. Heinz and in 2007 the H.J. Heinz Company had over $10 billion in revenue.

Other famous people who have used the bankruptcy laws to help them recover from financial difficulty include: singer Willie Nelson, talk show host Larry King, actress Kim Basinger, and even billionaire Donald Trump!

Don’t let financial difficulty stand in the way of your dreams!  Bankruptcy will not ruin your life; it is a tool to help you build a better future for yourself and your family.

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.

A recent survey by the Consumer Federation of America found that debt collection issues are the fastest growing category of consumer complaints.  The survey polled 34 state, county and city consumer agencies in 19 states and uncovered many abusive debt collection practices.  The complete report, including proposals for consumer protection laws and tips for consumers to protect themselves, is available at the Consumer Federation of America web site, www.consumerfed.org.

The results of this survey are not surprising to many bankruptcy attorneys.  People in debt can face a multitude of unethical practices employed by debt collectors.  Fortunately, there are some consumer protections that are available.  One of the most important consumer protections is the federal Fair Debt Collections Practices Act (FDCPA).  This law restricts third party debt collectors from employing abusive or unethical practices when collecting a personal, family, or household debt.  The law restricts these collectors from:

*  Contacting a third party who does not owe the debt;

*  Making a false threat of civil or criminal legal action;

*  Making repeated telephone calls or calls at unreasonable times (before 8:00 AM or after 9:00 PM); or

*  Making phone calls to an inconvenient place (e.g. contacting you at work in violation of your employer's policy).

Under the FDCPA the collector must state that the communication is from a debt collector and that any information obtained may be used to collect the debt.  Additionally, the debt collector must provide certain information concerning the debt, including:

*  The amount of the debt;

*  The name of the creditor (and original creditor);

*  That the debt will be assumed valid unless you dispute the debt within thirty days; and

*  That if you dispute the debt, the debt collector must provide verification of the debt.

One of the most beneficial aspects of the FDCPA is that once you are represented by an attorney, the debt collector can no longer contact you directly.  All communication must be made to the attorney.  That means that once you employ bankruptcy counsel, you should no longer be called at home or at work by third party debt collectors.

A violation of the FDCPA is a serious matter and may be litigated in federal or state court.  If you are being hounded by creditors, investigate your legal rights.  An experienced bankruptcy attorney can explain your legal rights and help you choose the best course of action.  Contact bankruptcy law firm, Fears | Nachawati, for a free consultation at toll free 1.866.705.7584 or via e-mail at info@fnlawfirm.com. 

If a debt collector is harassing you over a debt that you thought was dead and buried, you may be dealing with a zombie debt.  The usual scenario is an unexpected phone call or letter asking for payment on a debt that is either outside the statute of limitations or is in some other way legally uncollectible (e.g. discharged in bankruptcy).  The collector may even offer a “special deal” like a 75% discount for immediate payment.  What the collector will not reveal is that the debt is legally uncollectible – meaning it is unenforceable in a court of law.

Zombie debt collection is big business.  Zombie debt collectors buy old debts for pennies on the dollar, then try to collect as much as possible.  If the zombie debt collector buys an old $1,000 credit card debt for $20, and one phone call settles the debt for $100, the zombie debt collector makes a nice profit.  Since the debt is not legally enforceable, guilt and scare tactics are all the collector has to coerce payment.

Some zombie debt collectors actually violate the law by attempting to collect.  For instance, trying to collect a debt that was discharged in bankruptcy is a serious violation of the federal court discharge injunction.  Threatening a lawsuit for a debt that is past the statute of limitations is a violation of the federal Fair Debt Collections Practices Act (FDCPA).  Zombie collectors not only rely on ignorance of the law, they thrive on it!

Some individuals want to pay these debts.  While admirable in intention, the result may be extremely harmful.  Unpaid debts that have dropped off a credit report may be reported for another seven years after the payment date.  That dead and gone debt may reappear as an entirely new (and legal) negative item on your credit report – and substantially harm your credit score.

So what should you do if you encounter a zombie debt collector?

·                    Know your rights!  Your attorney can explain the statute of limitations or other legal restriction to the collection of an old debt.

·                    Do not give any personal information to a zombie debt collector.  Nothing good can result.

·                    Do not make a payment on an old debt until you learn your rights.  What may seem like an honest act of payment on an old debt may turn into a nightmare on your credit report.

Remember, zombie debt collectors are the bottom feeders of the collection industry.  They have been known to employ the worst ethical practices to obtain payment.  Don’t be haunted by zombie debts.  Contact bankruptcy firm Fears | Nachawati for a free consultation by calling 1.866.705.7584 or by e-mailing info@fnlawfirm.com and chase them back to the grave!  

When you are experiencing a financial crisis you may feel like you are the only one in that situation. The reality is that many people are feeling the current financial crunch for one reason or another. So whether you live in Dallas or any other part of the country, you are not alone!

The following top five reasons seem to be the most common reasons why many people are filing for bankruptcy:

1. Wiping the slate clean. The goal of a discharge is to reduce debt to give you a fresh start.

2. Stop foreclosure or sale of your home.  If your home is in foreclosure a Chapter 13 bankruptcy will stop the foreclosure any time prior to the sale.

3. Prevent repossession of your car or other property. If the bankruptcy is filed quickly enough it can effectively force the creditor to return your car or other personal property.

4. Stop aggressive collection efforts by creditors. Often, creditors will call the home of a debtor at all hours and behave in an abusive manner. Bankruptcy will help stop the harassing phone calls and other aggressive behavior by creditors.

5. Restore or prevent your utilities from being shut off. Filing bankruptcy can prevent the utility company from pulling the plug on you.

If you are experiencing a financial crisis, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for a free bankruptcy consultation.

What bankruptcy can do for you

When filing for a Chapter 7 or Chapter 13 bankruptcy you get immediate protection from creditors against collection efforts against liens on your assets or paycheck. A creditor is considered anyone you owe money to whether it be a credit card debt or a judgment from a civil law suit.

If you file for a Chapter 7 your debts are discharged and you are no longer obligated to pay the debts. In a Chapter 13 case you will have the opportunity to set up a payment plan that can last 3-5 years. Debtors who want to save their home or have IRS debts typically file for a Chapter 13 bankruptcy. This type of bankruptcy will freeze a foreclosure and relieve an individual of liens on their paycheck or bank account.

What bankruptcy can do for you

Unfortunately, even bankruptcy cannot absolve you of the following debts:

• Child support
• Spousal support/alimony
• Fines resulting from criminal cases

Student loans and IRS debts are usually not discharged but can be under specific and limited circumstances.

For a free bankruptcy consultation and to receive information on what bankruptcy can do for you, contact bankruptcy law firm, Fears | Nachawati, by calling our toll free hotline at 1.866.705.7584 or by e-mailing us at info@fnlawfirm.com.

When you file for bankruptcy you can stop harassment, foreclosures, repossessions and lawsuits and be allowed to keep your home, your car, assets and wages. In order to better understand your bankruptcy options, we will take a look at the two most common bankruptcy options for individuals:

Chapter 7

In a chapter 7 bankruptcy case the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay creditors. Part of the debtor's property may be subject to liens but will allow the debtor to keep certain "exempt" property.  A trustee may liquidate the debtor's remaining assets therefore when you file for a Chapter 7, you may lose property. Once the debts are discharged, a debtor is no longer obligated to pay them.

Chapter 13

A chapter 13 bankruptcy is also known as a wage earner's plan because it enables individuals who can provide proof of a regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years that is dependent on the debtor’s income. Payment plans cannot exceed a period longer than five years. During this time the law forbids creditors from any form of collection effort.

For more detailed information on your bankruptcy 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.

If you are on a fixed income and are contemplating bankruptcy, the best option may be a Chapter 7 bankruptcy. It will allow to you to discharge your bad debts and you do not need to have a minimum salary to qualify as opposed to a Chapter 13 filing.  And once your debts are discharged in a Chapter 7 filing, you are no longer obligated to pay any of the creditors listed in your bankruptcy.

Many people are in a financial situation where bankruptcy may be their only option for a fresh start but they are hesitant because they don’t want to ruin their chances of getting a job. Coupled with a troubled economy, it’s no wonder people are doing everything they can to keep or get a job.

A common question Dallas area bankruptcy attorneys hear is whether an employer can discriminate against an employee or a job applicant due to a bankruptcy. The good news is that Section 525 of the Bankruptcy Code prohibits private employers from terminating employees or discriminating with respect to employment solely because a person: (1) is or has been a debtor in bankruptcy; (2) has been insolvent prior to filing bankruptcy but before receive a grant or denial of a discharge; or (3) has not paid a debt what was dischargeable or was discharged in bankruptcy.

 
Another question bankruptcy attorneys get asked is whether they should reveal their bankruptcy to their employer or a prospective employer. In this economy, it can be expected that employers will be more selective and perform pre-employment background screening. How you respond depends on a variety of factors and a bankruptcy attorney can advice you on your rights and obligations regarding bankruptcy.

Contact the attorneys of Fears | Nachawati for a free consultation on bankruptcy and employment by calling toll free at 1.866.705.7584 or by e-mailing  info@fnlawfirm.com.

While it is true that bankruptcy can be a good option to remove bad debts or save your home, it should not be entered into lightly. Following are the pros and cons when deciding to file for bankruptcy:

• Filing bankruptcy means that your bankruptcy is listed on your credit report and remains there for 10 years on a chapter 7 and usually 7 years on a chapter 13. However, this does not mean that you have to wait to 7-10 years to get good credit again. Many bankruptcy clients have been able to get a mortgage from a bank to purchase a house about 2 years after the bankruptcy.

·         Another downside of filing bankruptcy is the cost involved. While bankruptcy does cost money, it can also save you thousands or even your home once debts are discharged or repayment plans proposed through bankruptcy. The fees paid to the court and a bankruptcy attorney are much less significant than if you had to pay your creditors or lose your home.

Each financial situation is different. Consult a competent bankruptcy attorney who represents debtors to find out what is in your best interest. For a free bankruptcy consultation contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com. 

Just because you filed bankruptcy does not mean you cannot buy a home in the future, but you will probably have to wait at least 2 years after your bankruptcy is discharged before a mortgage lender will approve you for a home loan. It is usually best to wait at least 2 years to qualify for a good interest rate and lower down payment. After the two-year waiting period is over, you should be able to get financing. You can usually achieve this as long as your debts are paid on time after the discharge of your bankruptcy.

Also, if you are currently facing foreclosure or too many credit card bills, it may be in your best interest to file for bankruptcy. When you file for bankruptcy, it will place an automatic stay that will suspend any collection action by creditors. Through bankruptcy you may be able to save your current home or improve your credit rating, as you will no longer be lowering it due to late payments.

If you are considering filing for bankruptcy contact bankruptcy law firm, Fears | Nachawati, by calling toll free 1.866.705.7584 or by e-mailing us at info@fnlawfirm.com for a free consultation.

Many people hesitate to hire a bankruptcy attorney is because they think that it will be very expensive. In actuality, the fees involved are not high and can save you thousands in the long run.

Many attorneys are very flexible in helping you get started in your bankruptcy. The cost of attorney fees varies widely depending on the issue surrounding your personal bankruptcy case. Some individuals have a basic Chapter 7 case while others have a complex Chapter 13 case that includes a home loan and IRS debts.

What needs to be considered carefully is that when you have a skilled, experienced bankruptcy attorney representing you in your bankruptcy you can save money on issues such as:

·         Discharge of debts

·         Exemptions for second mortgages

·         Assistance in stopping creditors take collection action against your assets

Additionally, it is crucial that the bankruptcy forms are filled out appropriately so that the bankruptcy trustee will not object to your proposed payment plan or debts to be discharged in your petition.

For more information on how to get started with your bankruptcy petition and for a free bankruptcy consultation contact law firm, Fears | Nachawati, by calling toll free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

For updated information on filing fees visit http://www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

If you are contemplating filing for bankruptcy you may be wondering how it will affect your job. This is understandable because while you do want to get rid of your debts, you do not want to lose your job. The good news is that you cannot get fired for filing bankruptcy because federal law prohibits an employer to discriminate against you for declaring personal bankruptcy.

Your constitutional rights protect you from being fired for filing bankruptcy. In fact, it is a violation of your rights, not to mention a crime, to fire someone for filing bankruptcy.

If anything, once your debts are discharged through a Chapter 7 bankruptcy or a proposed payment plan is approved through a Chapter 13 filing, you will sleep better, feel less stressed and will be able to better concentrate at work.

Additionally, if creditors are threatening you with liens, it may be a wise step to file for bankruptcy to freeze any type of collection action against your paycheck.

Contact bankruptcy law firm, Fears | Nachawati, by calling us toll free at 1.866.705.7584 or e-mailing us at info@fnlawfirm.com to find out how bankruptcy can help you get rid of debts.

You will be able to get a student loan after you file for bankruptcy, but you will have to wait until your bankruptcy is discharged. Depending on whether you file for Chapter 7 or Chapter 13 bankruptcy, it can be 6 months-5 years. For obvious reasons, a bankruptcy trustee will probably not allow you to take on new debt while your bankruptcy is pending.
The length of time you must wait also depends on the type of student loan you plan to apply for. In the case of government funded student loans, your credit history (including bankruptcy) is irrelevant. It may be more challenging you have to get private students loans, but not impossible by any means.

The ability to get student loans in the future should never be an impediment to your decision to file for bankruptcy. While an education is always best in the long run, you should carefully consider your current financial situation and what is in your best interest. When you file for bankruptcy you are erasing debts and able to start off fresh.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com to discuss your options for filing bankruptcy.

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.

The decision to file for bankruptcy before or after divorce will depend on a few factors. If you are married and your spouse declares bankruptcy, it may be a good idea to join with your husband in filing for bankruptcy, particularly in a community property state such as Texas. A joint bankruptcy will wipe the slate clean of debts for both of you.

If the divorce is complete before your husband files for bankruptcy, you may not be included in the bankruptcy. However, if bankruptcy is inevitable for you as well, it probably will be cheaper for you and your spouse to file jointly for bankruptcy before you complete your divorce proceedings. If you don't join in the action, his bankruptcy will only get him off the hook for joint debt and the creditors may pursue you to collect the full amount.

Each financial situation is different. Consult a competent bankruptcy attorney who represents debtors to find out what works best for you. For a free bankruptcy consultation contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com. 

Many people who are in over their heads with credit card debt are basically “Robbing Peter to pay Paul”. For example, many people who are out of work may be taking large cash advances to pay other debts. But in the end the credit card bill with the cash advance shows up and there is not enough money to pay it, so another credit card is used to pay that bill. It’s a merry go round that is very difficult to get off.

Many Dallas residents end up going through their savings account and putting themselves in heavy debt without realizing that they have a perfectly legal option such as filing for Chapter 7 bankruptcy. Some of the advantages of filing for a Chapter 7 bankruptcy:

• You do not have to make payments to creditors
• Creditors can not take action against you (liens on paycheck or bank account)
• Harassing phone calls must stop immediately
• All debts will be discharged

If you are a resident of Fort Worth, Dallas, Arlington, Garland, Rowlett, Mesquite and Plano, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com for more information how Chapter 7 can help you get a fresh start.

The automatic stay is the bankruptcy law’s most powerful provision and immediately stops nearly all creditor actions against a debtor.  The automatic stay is invoked upon filing the case – no hearing is necessary and no judge’s signature is required.  This powerful injunction is even effective against creditors that have no actual knowledge of the bankruptcy!

Congress has stated that the policy behind the automatic stay is to give the “debtor a breathing spell from his creditors, stopping all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.”  See Notes of Committee on the Judiciary, Senate Report No. 95-989.  That “breathing spell” is a welcome relief to families with overwhelming financial burdens.

The automatic stay prohibits a creditor with a claim that arose before commencement of the bankruptcy case from taking many actions, including:

• contacting the debtor to request payment (stops collection calls)
• initiating or continuing a lawsuit against the debtor (stops lawsuits)
• enforcing a judgment against the debtor (stops wage garnishments)
• repossessing personal property or foreclosing on real estate (stops repossessions and foreclosure)

The automatic stay is a temporary injunction which can be contested by a creditor and lifted by the bankruptcy court after notice and a hearing.  There are a few exceptions to the automatic stay, for instance: the automatic stay does not prevent criminal prosecutions.  Likewise the automatic stay does not stop lawsuits to establish or modify alimony, maintenance, or support.

Individuals that file for bankruptcy receive this powerful legal injunction against creditor actions.  However, the automatic stay is just one weapon in your bankruptcy attorney’s arsenal.  Your bankruptcy attorney can use the power of the bankruptcy laws to help you make the best decisions for your family’s future financial health and recovery.

Contact bankruptcy law firm Fears | Nachawati today for a free consultation to learn more about automatic stay and your rights.  Call us toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

Just as the title implies, filing for Chapter 7 is like hitting the reset button on your favorite electronic device. Everything disappears. After your Chapter 7 is discharged, you end up erasing the debt that was once there. In order to qualify for a Chapter 7 bankruptcy in the Fort Worth/Dallas region, you must:

1.      File a Chapter 7 petition.

2.      Pay your filing fee to the court clerk. There are waivers available for some applicants.

3.      Take a credit-counseling course approved by the bankruptcy court within 6 months of filing for Chapter 7.

While the initial process seems simple enough, the petition contains many forms that require a strong understanding of bankruptcy law. The court clerk cannot help you fill

out the forms. Once the forms are filled out appropriately and submitted to the bankruptcy court, an automatic stay is put in place that will immediately halt all collections efforts from creditors. This mean they will no longer be able to make harassing phone calls or place liens on your assets. In some cases, liens already in place can also be reversed.

Once your Chapter 7 bankruptcy is discharged, you are basically starting over with a clean slate. The debts are erased and you will no longer be held liable to pay them.

For more detailed information how Chapter 7 can help you start over debt free, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com. 

Yes, payday loans are considered creditors that can be added to a Chapter 7 bankruptcy petition. They will be discharged along with all your other debts.

Unfortunately, many people are not aware of this and do not include the payday loans in their petition due to intimidation tactics used by payday loan companies. Some of the tactics these companies use start way before a bankruptcy is anticipated. They will add a clause in the contract you originally signed that prohibits you from including them in a bankruptcy. But be assured that you are able to put your payday loan on a bankruptcy and that this is a clause that cannot actually be enforced by a payday loan company. Payday loan companies put that clause in a contract because they are insistent that you pay back the loan plus the exuberant interest rate they charge. This is how they make their money.

Make sure you consult with an experienced, highly skilled bankruptcy attorney regarding payday loan issues in your bankruptcy. For a free consultation, contact Dallas bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com. 

Famed songwriter Bruce Springsteen complained in his song Atlantic City, “I got debts that no honest man can pay.” For many honest people debt can come suddenly through no fault of your own.

You may have heard the hype from firms claiming they can reduce all of your IRS tax debt for pennies on the dollar. The reality is that most taxes can't be eliminated, but some can. But it is not as easy as it sounds. One legal and reliable way is to file for a Chapter 7 bankruptcy. Once you apply for bankruptcy, you must then pass a series of steps to see if you can discharge IRS tax debts under Chapter 7. Basically you can discharge an IRS tax debt if you meet all of the following conditions:

·         The taxes are only income taxes.

·         You did not commit fraud.

·         You did not commit willful evasion.

·         You filed a tax return.

·         The debt must be at least three years old.

·         You pass the "240-day rule."

As you can see the discharge of an IRS debt is not as simple or easy as some may lead you to believe. It is advisable to speak with an attorney experienced in bankruptcy law and you can by contacting Fears | Nachawati toll free at 1.866.705.7584 for a free bankruptcy consultation.

On May 22, 2009, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act.  This new legislation is intended to reform how

credit card companies deal with its customers. According to the White House,

”Just for starters, it bans unfair rate increases, prevents unfair fee traps, requires plain language in plain sight for disclosures, increases accountability all around, and institutes protections for students and young people.”

And while this is definitely a step in the right direction, it does not protect consumers who are in serious credit card debt at this moment. Most people are weighing basic necessities over paying a credit card bill. Even if you once had the recommended 6-month savings in your bank account, we have been in recession far longer than that.

In the meantime, the credit card bills continue to come, with late and over the limit fees for some. As a result, the bill does not get paid and the harassing phone calls and threats from the credit card companies begin to occur. If this is the case, filing for bankruptcy may be a good resolution to your credit card problems. It will help give you a fresh start and stop any collection actions by the credit card companies against your assets or paycheck.

If you are looking for a step in the right direction, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com 'for a free bankruptcy consultation.

Dallas bankruptcy filing rates are far more affordable than most people think. In fact, filing for bankruptcy can save you money on your mortgage and reduce the debt owed to creditors. For example, when you file for bankruptcy in Dallas or Fort Worth (Northern District of Texas), the filing fees for a Chapter 7 and 13 are $299 and $274, respectively.

When you file for bankruptcy in Dallas and pay the filing fees your application will be reviewed by the bankruptcy court and all action by creditors will stop immediately. That means that all harassing calls and liens by creditors must end. Creditors are very well aware of the penalties they face if they continue to take action against you after they have been notified that you have filed for bankruptcy.

Filing for bankruptcy can be a very powerful solution to those in debt as it gives the time and resources to renegotiate your mortgage and other debts with your creditors while saving your home and avoiding liens on your paycheck or bank account.

For a free bankruptcy consultation contact Dallas bankruptcy law firm, Fears | Nachawati, via toll free at 1-866-705-7584 or via e-mail at info@fnlawfirm.com.

Debt collectors can be relentless in their pursuit to collect on past due bills.  The following are some tips on how to avoid being bullied by collecting agencies.  These tips were published in an article in the Dallas Morning News that can be found here. 

1.  Do not ignore the collector's calls or written communication. 

2.  Make the collector prove that you owe the debt.

3.  If a collector calls regarding a bill that has already been paid then provide proof to the collecting agency the account is already settled and paid.

4.  Do not tolerate abusive debt collectors who make threats, use foul language or repeatedly call. 

5.  Take action by submitting written notice to debt collectors to cease communication if collection calls become over the top. 

By taking these steps hopefully you can work out a plan to resolve your debt with the collection agencies in a swift manner.  If however you feel you have taken the above action and still feel stressed from collection calls and cannot seem to get caught up on your bills then you may want to speak with an Attorney regarding your options.  If so, contact Fears | Nachawati toll free at 1-866-705-7584 or via e-mail at info@fnlawfirm.com. 

The Dallas Morning News published an article recently by bankrate.com regarding 5 common financial pitfalls that individuals make in a bad economy.  The article outlines the below 5 mistakes and offers realistic solutions regarding how to avoid them.  For a link to the article click here.     

1.  Continued spending using credit cards

2.  Invading your nest egg - withdrawing money from your IRA or 401k

3.  Paying for college without applying for aid

4.  Investing inertia - long-term investment management

5.  Obtaining cash from your home

If you have found yourself in one of the above situations not realizing that they were mistakes and cannot find a solution for relief then you may want to speak to an experience attorney who can discuss your options with you.  Call us toll free at 1-866-705-7584 or e-mail us at info@fnlawfirm.com.   

There are a few effective ways to stop or postpone a foreclosure or sale date on your home.  Your first step should be to contact your Mortgage Company directly as soon as you know you are behind or are about to miss a payment and speak to the Loss Mitigation department. Every mortgage company has Loss Mitigation department and they are there to help you in times of need (not that they always do help).  Let them know your current situation (such as loss of job, decrease in income, medical conditions or emergency situations) and ask them for your options.

The Loss Mitigation department of your Mortgage Company should be able to provide you a forbearance option or a modification option. BEWARE, some Mortgage Companies use their Loss Mitigation department to drag their feet until they sell your house.  Don’t let this happen to you!

If you keep getting the run-around, call our office and let us layout the options for you before it’s too late.  Call toll free at 1-866-705-7584 or e-mail us at info@fnlawfirm.com. 

Is your business turning a profit? Does it own any assets? Would you like to keep it running, or would you like to wrap it up? These are a few of the questions you should consider if you own a small business and are debating filing for bankruptcy.

If your goal is to keep the business in operation, you really need to look into a Chapter 13 Bankruptcy to relieve your budget and keep your doors open. If you’re ready to close up shop and want to move on with life, you should look in to filing a Chapter 7 Bankruptcy to give you a fresh start.

To talk with someone about the different options you have as a small business owner, contact Fears | Nachawati for a free consultation by calling toll free 1-866-705-7584 or e-mail info@fnalwfirm.com. 

This is a quick list of the things you can keep when filing for bankruptcy (Depending on the type of exemptions you qualify for and the amount of equity you have).

1.       Your house

2.       Your Car(s)

3.       Your Bank Account(s) – including Savings Accounts

4.       All Retirement Account(s) – Yes, 401ks, 403bs & IRAs.

5.       Your Personal Belongings

6.       Stocks, Bonds and Mutual Funds

7.       You’re Sanity!

Call the office anytime to find out more by dialing toll free 1-866-705-7584 or e-mailing info@fnlawfirm.com. 

Although obtaining a driver’s license is a privilege, for most people in Arlington, Texas, having a driver’s license is a necessity. You need it to drive to work and take your kids to school. There are many reasons people lose their driving privileges. Some get it suspended because of an unpaid judgment from an accident where you did not have insurance. In Texas you could have this type of suspension even if you have not been sued.

When you file for bankruptcy in Dallas the automatic stay takes effect immediately when you file and entitles you to get your driver's license back in most circumstances. Some of the circumstances when you have the right under bankruptcy law to get your license back are when it is suspended because of non-payment of a debt vs. the legitimate exercise of the state's police power as in a DUI situation.

You can get your license back through bankruptcy as long as the suspension is not the consequence of driving a vehicle while intoxicated that involved death or bodily injury. Another exception to re-instating a driver’s license is the non-payment of child or spousal support.

For a free consultation on how Arlington bankruptcy law can help you recover your driver’s license, contact Fears | Nachawati via toll free phone at 1-866-705-7584 or e-mail at info@fnlawfirm.com.

One of the main reasons people are afraid to file for bankruptcy is the misleading claim by credit companies that filing for bankruptcy will ruin your credit. The reality is that the opposite is true for people who are in over their heads in debt. Filing for a Chapter 7 bankruptcy in Dallas, Texas, will erase most if not all of your debt and help give you a clean start in rebuilding your credit.

Additionally, when you have no excess credit card debt or other financial obligations there will be no more late payments on your credit report because your debt has been eliminated. And with the new credit card law, Credit CARD Act of 2009*, and careful management of your finances you should be able to rebuild your credit in a few years.

Although lenders will be able to see the bankruptcy on your credit report, they will primarily focus on the last 2-3 years of your credit history when extending credit.

For a free consultation on how Dallas bankruptcy law can help you get out of debt, contact Dallas bankruptcy law firm, Fears | Nachawati, toll free at 1-866-705-7584 or by e-mail at info@fnlawfirm.com.

*Credit CARD Act of 2009 is a federal law passed by the United States Congress and signed by President Barack Obama on May 22, 2009. Briefly, it is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."

In many ways the new credit card law, the Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009* can help you with future credit card debt. It will help you against predatory lending practices and will help keep you in check by limiting your credit availability. But if you are looking for a fresh start right now, filing for Chapter 7 may be the best way to relieve the heavy burden of excess credit card debt.

When you file for a Chapter 7 bankruptcy in San Antonio, Texas, your credit card debt will be dismissed. You will get the fresh start you need as well as the opportunity to build credit in a more consumer friendly environment under the new Credit CARD Act of 2009.

If you are feeling the stress of too many credit card bills and not enough money to pay them, then a Chapter 7 bankruptcy may be the best option for you.  For a free bankruptcy consultation contact San Antonio Bankruptcy law firm, Fears | Nachawati, via toll free phone at 1-(866) 705-7584 or via e-mail at info@fnlawfirm.com. 

*Credit CARD Act of 2009 is a federal law passed by the United States Congress and signed by President Barack Obama on May 22, 2009. Briefly, it is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."

Most homeowners who file for bankruptcy in Arlington, Texas, do it to save their homes.  They are aware that by filing for bankruptcy, the mortgage lender will not be able to foreclose on their home and that any pending sale of your home will also be halted immediately. What many homeowners do not know about Dallas bankruptcy law is that bankruptcy can do more than save their homes.

In a way, when a homeowner files for bankruptcy, they can modify their loan by getting rid of a second loan on their mortgage. Currently there is no law allowing the bankruptcy court to modify a loan, but when a second mortgage is removed through a bankruptcy proceeding, it can greatly reduce your monthly mortgage. Also, even after your file for bankruptcy, and your file has been approved by the trustee, you can modify your home loan. For more clarification on how this process works, it is best to consult with an experienced bankruptcy attorney.

If you are in danger of losing your home, filing for bankruptcy can be a very powerful solution for many homeowners as it can give you the time and resources to renegotiate your mortgage with your lender while saving your home. For a free bankruptcy consultation contact Dallas bankruptcy law firm, Fears | Nachawati, via toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.

MSN.com posted an article regarding 12 myths about bankruptcy and how bankruptcy can affect your possessions and credit.  Among some of the myths and misconceptions is that you will loose everything, you will never get credit again and that bankruptcy will improve your credit rating.  Of course these are in fact myths and the article provides explanations for each as well as other common misconceptions.  I believe it is a great article to read if you are debating the pros and cons for filing bankruptcy and need answers to some very common questions. 

The full article can be found here. 

If you believe bankruptcy might be the answer for you and want a fresh start then contact Fears | Nachawati for a free consultation via toll free at 1-866-705-7584 or via e-mail at info@fnlawfirm.com. 

According to Yahoo.com, Harvard Researchers conducted a study that revealed in the U.S. in 2007 that medical problems caused 62% of all personal bankruptcies filed.  Factors such as high medical costs in which families were forced to mortgage their home or medical problems causing loss of income contributed to financial turmoil.  Many families are also forced to charge medical costs on their credit cards in order to pay off expenses.  The complete story on the Harvard study can be found here. 

If you or your family are suffering from financial distress caused by medical problems then bankruptcy may be the right solution.  To schedule a free consultation with Fears | Nachawati contact us toll free at 1-866-705-7584 or via e-mail at info@fnlawfirm.com.   

There is a great article published on Yahoo.com today listing out 7 ways to essentially ruin your credit.  Many mistakes on the list are very common and can lead to a lower credit score and trouble with lenders viewing your credit report.  The article can be found here and the 7 key mistakes are listed below:

1. Close Credit Card Accounts

2. Let Credit Cards Collect Dust

3. Run Up High Balances

4. Apply for New Credit Repeatedly

5. Don't Pay Fines or Non-Credit Card Bills

6. Ignore Mistakes on Your Report

7. Make Late Payments or Skip Them Entirely 

If you believe that your credit is beyond repair and have made many of the above mistakes then bankruptcy might be the right answer for you.  Contact Fears | Nachawati for a free consultation today by calling toll free at 1-866-705-7584 or by e-mailing info@fnlawfirm.com. 

One of the most embarrassing and inconvenient things that can happen in a household is to have the utility power suddenly turned off. Unfortunately, it can and does happen when someone gets behind in their utility bill and fails to make payment arrangements with the utility company. It can also happen when you are too far behind and cannot catch up. At that point the utility company can only extend past due payments for so long and at an amount that you will not be able to realistically afford.

If you are in this scenario, chances are that you are also behind in other bills. A good option may be to file for bankruptcy. By filing for bankruptcy in Fort Worth the electric company cannot refuse or cut off service. But, the utility company can require a deposit for future service and you will also have to pay bills that arise after bankruptcy is filed.

A bankruptcy lawyer in Fort Worth can go over more specific details case by case, as everyone’s financial situation is unique.

If you are feeling the stress of past due utility bills and not enough money to pay them, then bankruptcy may be a good solution for you.  For a free bankruptcy consultation contact Tarrant County bankruptcy law firm, Fears | Nachawati Law Firm, toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.

One of the most asked questions a Dallas bankruptcy lawyer hears is, “How do I stop creditors from calling me?” When someone is delinquent on their bills, creditors have the right to make collection efforts. That can include daily, repeated phone calls demanding payment for past due bills. When faced with these aggressive calls from creditors you have the following options:

• Pay the debt
• Make payment arrangements
• File for bankruptcy

For most people who are behind in their bills, the first two options are not the ones they can realistically afford. At this point the best solution may be to file for a Chapter 7 or 13 bankruptcy to stop persistent and hostile collection efforts. When you file for bankruptcy in Dallas, an automatic stay is placed on all debts. What this means is that all collection efforts, including phone calls, must stop right away. Most creditors know they are not allowed to continue contacting you after you file for bankruptcy. If they continue, they can be fined in bankruptcy court.

For more specific information on how bankruptcy can help stop endless phone calls from creditors and give you peace of mind, contact Dallas bankruptcy law firm, Fears | Nachawati Law Firm toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com for a free bankruptcy consultation.

Yes, personal injury judgments can be discharged with a few exceptions. In fact, many people in Garland, Texas, file for a Chapter 7 or 13 bankruptcy to avoid paying on a judgment. There are many advantages to filing for bankruptcy to discharge a judgment. When you file for bankruptcy all liens on your assets will be removed. You will regain control over your bank account and your paycheck. Additionally, no further action will be taken against for any judgments or debts included in the bankruptcy. It is a perfectly legal way to wipe the slate clean and give you a fresh start.

In order to make sure that your bankruptcy application has been filled out correctly you should consult with an experienced Garland bankruptcy lawyer. During the consultation you can discuss your specific financial situation and exceptions to judgments such as:

·         Child Support

·         Spousal Maintenance

·         Fraud

·         Personal Injury Resulting From DUI

·         Student Loans

Because the Federal bankruptcy law is very specific on what can and cannot be discharged, it advisable for anyone considering bankruptcy to speak with a Garland Bankruptcy attorney.

Contact Garland bankruptcy law firm, Fears | Nachawati Law Firm, today for a free bankruptcy consultation via toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.

Many people are afraid to file for bankruptcy because they feel it may ruin their chances to get a loan in the future. The reality is that if you are behind in payments or have judgments hanging over you, your current credit score is probably too low to get a loan. Ironically enough, filing for bankruptcy can be the best thing you can do for your credit.

When you file for a Chapter 7 bankruptcy in San Antonio, most if not all of your debts will be discharged. You will no longer owe payments on old debts.

For more specific information on a Chapter 7 bankruptcy, a San Antonio bankruptcy lawyer can answer questions such as:

How long will a bankruptcy stay on my credit report? While a bankruptcy can stay on your credit report up to 10 years, most lenders only look at the last 2-3 years on your credit report.

Will a bankruptcy keep me from getting a loan? The more important issue should be to work towards improving your credit after you file for bankruptcy. If you can show a lender that you can afford to buy something and have a good credit report you will probably get the loan.

For more information on how a Chapter 7 bankruptcy can help you have a fresh start, contact San Antonio bankruptcy law firm, Fears | Nachawati Law Firm, for a free bankruptcy consultation via toll free at (866) 705-7584 and via e-mail at info@fnlawfirm.com.

Yes, certain debts can be given priority when you file for bankruptcy in Arlington, Texas (or any state in the United States). In fact, the Bankruptcy Code has specific guidelines as to what debt falls under priority claims. Claims in a higher priority must be paid in full before claims with a lower priority receive payment.  For example, some priority claims can include:

• Child support or spousal alimony
• Administrative expenses of the bankruptcy
• Unsecured post petition claims in an involuntary case
• Wage claims of employees up to $10,000 per claim
• Recent income, employment or gross receipts taxes
• IRS taxes

Briefly, the Bankruptcy Code has established the order in which claims are paid from the bankruptcy estate: 

1)      Costs of administration 

2)      Priority claims

3)      General unsecured claims

Additionally, for an individual debtor, these kinds of claims are also non-dischargeable in Chapter 7. In other words, you will still owe on any past payments involving these types of debts.

For more information on how the bankruptcy trustee will determine priority claims and how to properly fill out your bankruptcy application, it is advisable to speak to an experienced Arlington bankruptcy attorney.

For a free bankruptcy consultation with an Arlington bankruptcy lawyer contact Fears | Nachawati Law Firm toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.

This one is one the most common questions Austin bankruptcy attorneys hear.

The answer is that it really depends on the type of bankruptcy being filed and the individual financial circumstances of each person.

In short, yes you will be able to buy a home after bankruptcy. You may be required to come up with a bigger down payment and you may have to wait a few years but it is possible. But if you file for a Chapter 13 bankruptcy and it has not been discharged, you may need permission from the trustee to enter into an additional home loan agreement.

What you need to keep in mind is that you should have re-established your credit in 3-4 years after your bankruptcy is discharged. Even if a bankruptcy remains on your credit report for 10 years, most lenders will only care about the most recent activity and your current financial circumstances.

For a free consultation on how filing for bankruptcy today can help you have a better tomorrow contact Fears | Nachawati Law Firm toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com for a Travis County or Round Rock bankruptcy lawyer.

Ironically enough, you will have an easier time getting a car loan after you file for bankruptcy and it is discharged. While this may not make sense to most people, lenders realize that people who have filed for and have a discharged bankruptcy:

• No longer have any debt
• Cannot file for bankruptcy for a number of years
• Are eager to re-establish their credit
• May have extra disposable income

For these reasons, lenders view people who have a discharged bankruptcy as ideal customers. Of course, there are some things to keep in mind. While you can buy a vehicle, property or anything else after a bankruptcy--you must be able to afford it!

But if you are feeling the stress of too many debts at this time and not enough money to pay them, then bankruptcy can be very beneficial. Contact an Arlington bankruptcy lawyer today for more information on how filing for bankruptcy today can help you have a better tomorrow.

For a free bankruptcy consultation to learn more about discharging debts through bankruptcy contact Arlington bankruptcy law firm, Fears | Nachawati Law Firm toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com.

Yes, bankruptcy can help you save your vehicle. When you file for bankruptcy in Fort Worth, you need to list all the property that you possess or is under your name. When you list the vehicle, it cannot be repossessed while the bankruptcy court trustee is reviewing your case. Depending on the type of bankruptcy you file for, Chapter 7 or 13, you may be allowed to keep the vehicle if you agree to make up any past due payments or continue making payments.

Other options include evaluating the equity in the vehicle and how much is owed on the vehicle. The bankruptcy trustee will not take the car if it has no equity. In the unusual case that there is equity, you may have other options as well. If you still owe money on the car, you can reaffirm the debt. Some jurisdictions don’t require that you reaffirm the debt but only that you continue to make the payments as agreed in the original contract.

A consultation with a Fort Worth bankruptcy attorney can help answer specific questions based on your circumstances.For a free bankruptcy consultation to learn more about protecting your vehicle and other assets through bankruptcy, contact a Tarrant County bankruptcy lawyer at Fears | Nachawati Law Firm by calling toll free at (866) 705-7584 or via e-mail at info@fnlawfirm.com. 

One of the most devastating life events can be an illness. It can affect anyone at any time.And what most people do not realize is that even if you are lucky enough to have medical insurance, not all medical costs are covered. Therefore, you can end up with huge medical bills and limited funds to pay them.

As a result, a substantial number of people in Austin (and many other parts of the country) are filing for Chapter 7 bankruptcy to eliminate medical debts. When you file for Chapter 7, your medical debts are discharged and you get to keep all of your property. The process takes approximately four months and you can then immediately start re-building your credit. 

Although the initial filing requirement is simple enough--you only have to live or have property in the United States, there can be complex issues that may require the assistance of an Austin bankruptcy lawyer. For example, you may be wondering when to file. A general suggestion is to not file until all anticipated bills have been incurred. If you are still sick and require expensive medical care, the filing should be delayed. A consultation with an Austin bankruptcy lawyer can explain these and many other issues in more detail.

For a free bankruptcy consultation to learn more about discharging medical debts through Chapter 7, contact Austin bankruptcy law firm Fears | Nachawati Law Firm via phone at  (866) 705-7584 or by e-mail at info@fnlawfirm.com.

It is estimated that the average American has over $8,000 in credit card debt. It starts with one small purchase and before you know it you are using one card to pay another card off. If this sounds familiar, then filing for Chapter 7 bankruptcy may be a great way for you to get out from under the mountain of credit card bills. When you file a Chapter 7 bankruptcy practically all your credit card debts will disappear.

Additionally, all collection efforts from the credit card companies 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 also means that any liens on your bank account or wages will be lifted. To find out which debts can be waived under a Chapter 7 bankruptcy, it’s important for you to get in touch with an experienced Fort Worth/Tarrant area bankruptcy attorney to find out how you can start living a debt free life.

If you are feeling the stress of too many credit card bills and not enough money to pay them, then bankruptcy may be an option for you.  For a free bankruptcy consultation contact Fears | Nachawati Law Firm, (866) 705-7584.

Despite Tighter Rules, More Strapped Americans Seek Debt Relief

Danielle Lancaster makes $28,000 a year as a bank employee in Richmond. She owes almost twice that on her credit cards, student and car loans.

Add to that day-care expenses for her 2-year-old daughter, rent and utilities, and she uses up every cent she brings in. She has cut costs any way she can, suspending luxuries such as restaurant meals and movies. But that didn't stop her car from getting repossessed. "I work to live," she said. "I see my check, and it's gone right away."

Lancaster is 26 and bankrupt.

Two weeks ago, she filed for Chapter 13 bankruptcy protection, which will restructure her debt. She will have five years to pay it off under a plan that lowers her monthly payments. "Everything just got to be too much," said the Richmond resident who recently earned an undergraduate degree from Norfolk State University.

Despite the 2005 passage of a law that made it more difficult and expensive to file for personal bankruptcy, more Americans are choosing bankruptcy over destitution. Filings -- including Chapter 7, which wipes out debt, and Chapter 13, which reorganizes it -- totaled 822,590 last year, up 38 percent from 2006.

The numbers tell the story of a crippled economy, one in which people owe more than they can pay to their creditors -- be they credit card companies, mortgage lenders or auto and student loan servicers. And it's one more disturbing chapter in the saga of the subprime mortgage crisis, in which homeowners unable to handle higher interest payments on their adjustable rate mortgages are turning to bankruptcy to avoid foreclosure.

"The rise in bankruptcies is not about something that happened last week or last month," said Elizabeth Warren, a Harvard Law School professor and a bankruptcy expert. "It's about the fundamentals. It's about declining wages, rising costs, inadequate health insurance, job instability. More hardworking middle-class families simply can't make it in this economy, and it's only getting worse."

Bankruptcy attorneys and economists said the trend cuts across all segments of society -- the young and the old, homeowners with bad mortgages and renters, the poor and the middle class. In the past, bankruptcies were more common among people who had sudden life changes, such as a divorce, illness or job loss. Now, the bankrupt are people who have simply racked up too much debt.

"It is pretty widespread because there are widespread problems in the economy," said Peter Morici, an economist at the University of Maryland at College Park. "Americans have been spending 105 percent of their income for the last three or four years. That's not sustainable."

Declining home values are exacerbating the problem. No longer can people rely on the equity in their homes to pay down more expensive debt. Most troubling is that people are increasingly seeking bankruptcy protection to save their homes. Filing for Chapter 13 freezes a foreclosure and allows homeowners to negotiate more manageable payments with their lenders.

Take Jerome and Stephanie Smith. They used a fixed-rate mortgage to buy a house in Richmond in 2000, then refinanced to an adjustable rate loan in 2003. At least three more refinances followed -- Jerome Smith said he has lost count. The couple's monthly mortgage payment more than doubled to $1,600, excluding taxes and insurance. "I'm not dumb, but sometimes we do dumb things," Jerome Smith, 52, said.

Then something happened that had nothing to do with his judgment. He injured his back at his job as a machine operator. He has not worked since surgery in December and is getting $350 a week in disability payments, about one-third what he normally brings home.

The family -- the couple and their daughter -- had to go on what Jerome calls "the poor man's budget." That means buying a bag of 15 chicken legs and thighs, four boxes of macaroni and cheese for $1, three cans of green beans for $1, a big can of spaghetti and meatballs for $1.84, a 20-pound bag of rice for $5, some cereal, grits, eggs, bread, milk and juice. "You stick to that, and that comes under $100" a month, he said.

Still, the couple has not been able to keep up with the mortgage. One of three cars has been repossessed. The electric company has sent a cutoff notice. Phone service has been suspended.

Late and missed payments damaged their credit score so much that they couldn't get any lenders to refinance at more favorable terms. Then their mortgage company scheduled a foreclosure. Filing for Chapter 13 fended that off.

"There was nothing that I could really do," Jerome Smith said. "My hands were tied."

Congress recently considered a proposal by Sen. Richard J. Durbin (D-Ill.) to let bankruptcy judges cut interest rates and principal on troubled mortgages. But that plan was scuttled last month. Instead, consumers must operate under the law passed in 2005, which was intended to get people like the Smiths to choose other alternatives. In response to critics, such as credit card issuers who complained that people sought bankruptcy too frivolously, Congress enacted tighter income limits, tougher standards for measuring a debtor's ability to pay and mandatory credit counseling.

Personal bankruptcies reached a peak of 2.04 million that year as debtors rushed to file before the changes went to effect. The number dropped precipitously in 2006 but started climbing back up in 2007, according to the Administrative Office of the U.S. Courts.

In the District, there were 358 Chapter 7 filings in 2007, up from 297 the previous year. There were 336 Chapter 13 filings, up from 240 the year before, according to the Administrative Office of the U.S. Courts.

U.S. bankruptcy courts in Maryland and Virginia provided more recent figures. In Maryland, there were 982 Chapter 7 filings in April, up from 534 in April 2007. There were 625 Chapter 13 filings, up from 424. In the Eastern District of Virginia, which includes Northern Virginia, there were 1,191 Chapter 7 filings in April, more then double the number -- 581 -- this time last year. There were 552 Chapter 13 filings, up from 410.

Bob Arnold, 46, is waiting to find out whether the court will accept his Chapter 7 filing. He once made more than $100,000 a year as a manager at a printing plant. Then he lost his job, which wiped out his ability to pay child support and send money to about a dozen credit card companies, the lender for his timeshare and Capital One for his car. His monthly obligations totaled about $2,000, more than he takes in at his new job as a paralegal. He kept up his child support but stopped payments to other creditors. Then a friend, an attorney, suggested bankruptcy.

"I'm not happy about it, but I have to do what I have to do," the Centreville resident said. "I can't keep these creditors on hold, and I can't give them what I don't have."

Earlier this month, he sat in a hot, windowless room at the Legal Services of Northern Virginia's Falls Church Office as attorney Nancy Ryan explained how to file for bankruptcy. In the room were people with credit card debt, cars that had been repossessed, houses that had been foreclosed upon. "It's a tsunami," said Q. Russell Hatchl, pro bono coordinator for Legal Services.

Ryan reminded them that although a bankruptcy would take care of their debts, it could also leave them with damaged credit for as long as 10 years.

Lancaster knows that all too well. Although she is relieved that her monthly payments to her creditors will drop to $290 -- her car alone had cost her $400 a month -- she has felt the negative impact of filing for bankruptcy. She is trying to move closer to the District so she can get a better-paying job, but she cannot persuade any landlord to let her rent a place unless she hands over a lot of money up front. "It's hard to do anything once you get a bankruptcy," she said.

Ultimately, though, the bankruptcies will be restorative, said Morici, the economist. "It's better to get people a clean slate," he said, "so when the economy recovers they can participate again."

If you are feeling the crunch of unemployment and do not seem to have enough money to pay your bills bankruptcy may be an option for you.  For a free bankruptcy consultation contact Fears | Nachawati Law Firm, Phone (866) 705-7584. Immediate Assistance

Fears | Nachawati Law Firm has offices located throughout Texas in: Dallas / Fort Worth / Houston / San Antonio / and Austin.

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.  

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
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