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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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

A study released October 28, 2009, by the Pew Charitable Trust found that that 100% of credit cards offered online by the twelve leading U.S. banks engage in practices that the Federal Reserve has defined as “unfair or deceptive.” The study examined the terms of almost 400 credit cards advertised by banks and credit unions in July 2009 and December 2008.

The federal Credit Card Accountability Responsibility and Disclosure (CARD) Act, which is being implemented in stages, requires banks to eliminate unfair and deceptive practices such as “universal default” or raising rates based on a missed payment to another lender. Some of the new regulations are already in effect; others are scheduled to begin Feb. 22, 2010.

Even though the Federal Reserve lowered the federal funds rate to near zero to encourage lending by banks, the study found that credit card rates have actually increased over the past year. Bank of America had the largest percentage increase, rising from 14.99% to 18.24% for its highest rate card. Ironically, it appears that this increase in interest rates has been in some part caused by the passage of the CARD Act, which bars rate increases without a 45-day notification. To reduce risk under this the CARD Act, banks have raised rates before this part of the Act takes effect in February.

The study concluded that these rising rates makes credit cards a potentially dangerous part of most Americans’ financial lives. If credit card debt has become a danger to your financial well-being, you should consult with a qualified bankruptcy attorney and discover the cure. Don’t rely on Congress or the beneficence of the credit card industry to make your debt disappear. Take matters into your own hand, and discharge these unscrupulous lenders from your life once and for all.