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

Before starting your holiday shopping, take a moment and view some sage advice from a “consumer expert:”

http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/27169/

Sure, it’s a funny video, but only because we are laughing at ourselves! Of course you shouldn’t buy stuff you can’t afford. Bad things can happen when you abuse credit, especially if you have over-extended your finances.

This holiday season layaway is making a comeback as a financing option. Layaway was very popular with holiday shoppers years ago, but its popularity diminished as credit became easier to obtain during the 1990’s. The basic idea is that you set aside an item at the store, hold it with a deposit, and make payments over time. Once you have fully paid for the item, you can take it home.

Recently New York Sen. Chuck Schumer issued a public warning that the fees that retailers are charging for layaway purchases can add up to a higher interest rate than any credit card would be allowed to charge.

"These layaway programs are nothing more than hideaways for sky-high interest rates that consumers would never tolerate with a credit card," Schumer told the AP. "The holiday season is supposed to be about giving and not taking, but these layaway programs are taking advantage of people and charging them outrageous interest rates, under the guise of making it easier and more affordable to shop."

A good example of how the typical layaway program works is at Kmart. The retailer offers an 8 week layaway plan that charges an initial $5.00 “Service Fee” for all new layaway contracts. The customer is required to put down a minimum of $15.00 to hold the item, and must make four “easy” payments over the next eight weeks. There is a $10.00 “Cancellation Fee” if you change your mind. If you can’t pay for the item or change your mind, kmart keeps $15.00 and you get nothing.

Bankruptcy debtors are especially susceptible to high interest credit schemes since credit cards are generally not available. However you decide to pay for your holiday purchases, make sure you make a wise choice. If you decide to use layaway or some other form of credit, be sure that you understand the details of the deal. That way you can make an informed decision.

“We wish you a debt-free Christmas and a fresh start New Year!”
 

National banks that took federal bail-out money also agreed to participate in government home modification programs. These banks have created in-house loan negotiators to assist in home-loan modifications, which may reduce loan principle or interest to adjust the loan to an affordable rate. Many American homeowners have applied for these programs, but few have been approved. In many cases the empty promise of home loan modification leaves the homeowner in a worse position than when he started.

It has become clear that these banks are simply not playing fair. Several lawsuits have been filed against national banks alleging fraud. A federal lawsuit was recently filed by the State of Nevada Attorney General against Bank of America, the nation's largest home loan servicer, alleging deceptive practices. Additionally, a class-action lawsuit against Bank of America is pending in Massachusetts federal court. These suits claim that Bank of America deceived consumers into depleting their savings by making mortgage payments based on false hopes they'd be eligible to modify their home mortgages. The lawsuits allege that BOA accepted $25 billion from the U.S. government in 2008 as part of the Troubled Asset Relief Program (TARP), but has failed to participate in programs such as the Home Affordable Modification Program (HAMP) aimed to minimize foreclosures.

If you are in need of a home modification, review your options with an experienced bankruptcy attorney. Many bankruptcy debtors are able to strip away a second or third mortgage, or pay past-due payment over three to five years. Bankruptcy debtors can also apply for government programs such as HAMP during the bankruptcy case, while under the protection and supervision of a federal bankruptcy court judge.
 

There is no requirement of citizenship in the Bankruptcy Code. Section 109(a) of the Bankruptcy Code states that "...only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor" in bankruptcy. Your legal status does not determine eligibility to file bankruptcy; however there may be complications if you are not a U.S. citizen.

First, you must be able to prove a physical residence or ownership of property within the bankruptcy court's jurisdiction. A permanent physical address is required for the bankruptcy forms. Residency is also important to qualify for state exemptions used to protect your property. Generally, a debtor must show residency within a state for at least 90 days preceding the bankruptcy filing in order to qualify for that state's exemption laws.

Second, you must prove your identity. Most bankruptcy debtors use a social security number (SSN), but an individual tax identification number (ITIN) may also be used. An ITIN is issued by the IRS to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs. Whether a SSN or ITIN is used, physical verification of the number must be shown to the bankruptcy trustee.

While there is no requirement in the Bankruptcy Code that you must have either a social security number or ITIN, the bankruptcy petition requires you to sign a Statement of Social Security Number. The options on this Statement are (1) you have a social security number; (2) you have an ITIN; or (3) you don't have either. If you select option three, you may be able to use a valid passport or some other official government issued identification as proof of identity. There are bound to be consequences for the debtor that does not have a SSN or ITIN including the red flags it sends to the Department of Justice, the IRS, and INS.

Crimes of "moral turpitude" that are be disclosed within a bankruptcy filing may affect your immigration status or application for citizenship. These acts include the fraudulent use of credit cards, bad check offenses, tax evasion, fraudulent transfer of an asset, or falsifying government documents (including your bankruptcy petition.

If you have immigration issues and need to file bankruptcy, discuss your situation with an experienced attorney. The United States bankruptcy laws are very liberal and can help you get out of debt. Your attorney can work with you to resolve your debts while avoiding deportation.
 

Most credit unions and some banks use “Loanliner” documents. These agreements are standard loan documents developed by CUNA Mutual Group and sold to financial institutions. Over 70% of all credit unions use Loanliner documents for their lending transactions. Included in standard Loanliner lending agreements is a provision in which the borrower agrees that all other loans with the lender are cross-collateralized.

Cross-what?

Cross-collateralization is basically the use of collateral from one loan to secure other loans. The cross-collateralization clause from a recent Loanliner agreement reads: “the security interest also secures any other loans, including any credit card loan, you have now or receive in the future from us and any other amounts you owe us for any reason now or in the future.” Credit unions are fond of using this clause in vehicle loan agreements to secure all other credit union debts with the vehicle. This often causes surprises (and anger) when an unsuspecting credit union member tries to trade-in his car and discovers that the debt on the vehicle includes a personal loan, a line of credit, and credit card balances.

There are a few options if you are faced with a cross-collateralized auto loan. First, you can file a Chapter 13 and cram-down the loan to match your vehicle's value. Any remaining debt is discharged at the end of the Chapter 13 case. During a Chapter 13 case, you can pay a cram-down over three to five years.

During a Chapter 7 case, your attorney can simply ask the credit union to draft a reaffirmation agreement for the vehicle without regard to other debts. You are basically asking the credit union to voluntarily strip off the cross-collateralized loans. If the credit union refuses your request, you have two options: (1) surrender the vehicle and discharge all debts to the credit union; or (2) redeem the vehicle. Redemption is a process exclusive to a Chapter 7 bankruptcy case where the debtor keeps a vehicle by paying the value of the vehicle, not the total debt that is owed. While similar to a Chapter 13 cram-down, redemption differs in that the payment to the secured creditor must be a lump sum. Payments are not permitted.

If you have an auto loan through your local credit union, review the loan paperwork with your attorney for a cross-collateralization clause. Your bankruptcy attorney can discuss your options with you and help arrive at the best financial decision for your family.
 

Your bankruptcy discharge prohibits certain creditors from collecting from you personally after your bankruptcy case. So what happens when a creditor contacts you after your discharge? The answer depends on the situation and first involves answering three questions: (1) “Was the debt discharged in bankruptcy?” (2) “Is the collection directed at the discharged debtor?” and (3) Was the creditor notified of the discharge?”

Discharged debts are no longer legally enforceable against the debtor. The discharge injunction is a court order from a federal bankruptcy judge prohibiting creditors from filing lawsuits, sending collection notices, or making collection phone calls. Substantial sanctions may be imposed on a creditor that violates this order. However, some debts are not discharged. It is important to discuss your discharge with your bankruptcy attorney and understand which debts are included in the discharge and which are not. For instance, taxes, student loans, and family support obligations  may not be subject to the discharge. In other cases a debt may be excepted from discharge by the court.

Your discharge only protects you from collection efforts. It does not protect a co-debtor who did not also file bankruptcy, and, as a general rule, it does not protect property that is subject to a lien. Therefore, it is important to understand how your property is affected by the bankruptcy discharge and whether a creditor can seize, repossess, or foreclose on the property after your bankruptcy.

As a practical matter, if a collector does not know about your bankruptcy discharge, the bankruptcy court is not likely to impose sanctions against it. Often a collection attempt can be resolved by informing the collector of the discharge and either providing a copy of the discharge or referring the collector to your attorney. Buying and selling debt is big business, and debts often get passed from collector to collector – even uncollectible debts like those discharged in bankruptcy!

Your bankruptcy discharge injunction applies to the original creditor, collection agencies, attorneys, and any other subsequent collector. Don’t let creditor harassment disturb your peace of mind. If the answer to the above three questions is “Yes, Yes, Yes,” the collector has violated the bankruptcy court’s discharge order. Contact your attorney and discuss the best course of action to stop the harassment.
 

Fears & Nachawati Bankruptcy Law Office

4925 Greenville Ave Suite 715, Dallas, TX 75206 (214) 890-0711
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Realizing that you can no longer pay for your home means that you have difficult decisions to make.  While modification and even lien stripping in bankruptcy may be options for some, if you truly cannot afford to keep your home, you must decide on the best way to walk away.

Do Nothing

If you do not pay your mortgage payment, the lien holder will foreclose on your property.  Although not paying your mortgage payment and the resulting foreclosure will significantly harm your credit rating, the home finance industry is presently in such turmoil that it may be months to more than a year before the lien holder forecloses on your property.  During this time you live rent free and can save for the future.  Note that if you do not maintain insurance and do not pay real estate taxes, the foreclosure timeline will likely accelerate.  Also note that under the Mortgage Forgiveness Debt Relief Act, which extends through 2012, income normally attributable by the IRS in connection with a foreclosure is not taxable, although you may be liable for a deficiency balance when the home is sold for less than you owe.  A foreclosure is listed as a public record on your credit report and the late payments are also reported.

Deed in Lieu of Foreclosure

Some financial “experts” have advised distressed homeowners to “just walk away.”  Walking away from a home is easier said than done, since you still own the home and are legally responsible for the property in a variety of ways.  One way to legally “walk away” is to transfer title of the property via a Deed in Lieu of Foreclosure.  Now the lien holder owns the property, which may sound pretty good until the property is sold for less than you owe, triggering a deficiency balance.  You may also end up owing taxes on the difference. 

Short Sale

A Short Sale is a sale for less than what is owed by the seller.  A lender will sometimes agree to allow the property to be sold for less than you owe if it is clear that you are unable to continue paying for the property and the home is upside-down.  In many cases the Short Sale deficiency is forgiven by the lien holder, but that will depend on the lender and on state law.  A Short Sale is identified as a settlement on your credit report and will hurt your score, although not as much as foreclosure or bankruptcy.

Bankruptcy

A bankruptcy is a legal discharge of your debt.  It is the cleanest and most powerful option to “walk away” from the home with no contract or tax obligation.  A bankruptcy uses the power of federal law to stop further negative credit reporting and collection attempts.  In the end your credit report identifies the loan as “Discharged in Bankruptcy” with a “Zero Balance.”  The bankruptcy record will stay on your credit report for up to ten years, but by surrendering the property you will avoid a foreclosure on your record.

If you need to walk away from your home and are weighing your options, consult with an experienced bankruptcy attorney and learn how the federal bankruptcy laws can help.  Bankruptcy can provide you time to move without foreclosure and without owing money in connection with the home.

Fears & Nachawati Bankruptcy Law Offices

4925 Greenville Ave Suite 715, Dallas, TX 75206 (214) 890-0711
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For a person in financial trouble, examining options can mean the difference between a fresh start and a false start. Before you decide to use a debt settlement program to resolve your debt problem, arm yourself with information and make a wise decision. Below are six reasons that the federal bankruptcy laws may be a better choice than a debt settlement program:

First, the debt settlement process can take many months or even years, and your credit is harmed each month until the debt is settled. On the other hand, negative reporting of debts discharged in bankruptcy ends on the date you filed your bankruptcy case. Discharged debts are reported as “discharged in bankruptcy” with a “zero balance.”

Second, debt settlement programs typically settle your debt for 20% to 80. Creditors in most bankruptcy cases are paid nothing.

Third, any settled debt will have tax consequences and you may have to pay the IRS. A discharged debt has a special tax exemption and there is no tax liability.

Fourth, during the debt settlement process you may be sued, even while you or your representative attempts to settle your debt.  During bankruptcy all lawsuits are prohibited without the express permission of the bankruptcy court.

Fifth, many debt settlement companies are disreputable and lack a solid financial basis. You may lose your money and get nothing in return. 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.

Finally, the debt settlement process can take more than a year. The general rule is: the longer you don’t pay, the sweeter the settlement. Creditors are reluctant to accept less than full payment unless they believe that you may file bankruptcy. The typical chapter 7 bankruptcy case takes less than six months.

If you are considering a debt settlement program, you owe it to yourself to 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.

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Bankruptcy attorneys know that owing a debt that you cannot repay causes the debtor many headaches.  First, there are the collection calls and letters.  These collection actions are meant to harass you into paying something on the debt.  Since the creditor only has a certain number of years to collect before the statute of limitations runs, after a few years the creditor will file a lawsuit against you.  After the creditor obtains a judgment, the statute of limitations clock is reset and the creditor has more time to collect by garnishing wages, or seizing bank accounts or property.  In some cases, the creditor may have twenty years or more to collect on a debt!  During this time fees and interest can increase the balance of the debt many times over.

An unpaid debt has serious consequences to your credit report.  Any debt that is more than 90 days delinquent indicates that the individual is experiencing serious financial problems.  A debt stays on your credit report for seven years after the date of the last payment.  Even after the debt drops off your credit report, if the creditor sues you the judgment will be reported for an additional seven years.

One of the chief benefits of a bankruptcy discharge is it provides a final resolution of your unpaid financial obligations.  The bankruptcy discharge is a permanent injunction ordered by the bankruptcy court against your creditors forbidding any collection action against you, forever.  The discharge order is extremely powerful and the penalties for a creditor who violates this federal court order can be severe.

A report of your bankruptcy case will stay on your consumer credit report for ten years after the date you file bankruptcy (not from the date of your bankruptcy discharge as many believe).  While on the surface a bankruptcy stays on your credit report longer than a bad debt (ten versus seven years), the truth is that a bad debt can linger and significantly harm your credit score for much longer than ten years.  After a bankruptcy your debts are reported as “discharged in bankruptcy” with a balance of “zero.”

If you are struggling with debts you cannot afford to pay, consider filing bankruptcy sooner rather than later.  The sooner you discharge your debts, the sooner you can begin your financial recovery.  Delay in filing usually results in further harassment, lawsuits, and difficulties.  Contact an experienced attorney today and discuss your legal options for discharging your debts.

Fears & Nachawati Law Offices

4925 Greenville Ave Suite 715, Office 1, Dallas, TX 75206 (214) 890-0711  Google Reviews ‎  |  fnlawfirm.com  |  Directions

Bankruptcy attorneys see people from all cross-sections of our population.  Most people have a good understanding of their financial obligations and know who they owe.  Others bring in grocery store bags and boxes full of bills they have collected for months and, in some cases, years.

It is very important to identify all of your creditors when you file a bankruptcy.  The Bankruptcy Code requires that you list all of your creditors, even those you want to pay in the future.  You must also make a good-faith effort to list the amount owed to the creditor.

There are two excellent sources for discovering who you owe.  The first is the US Postal Service.  Creditors and collection agencies are very good at sending monthly bills when you owe them money.  Collect your mail for a month and you will have a good start on listing your creditors.

The second excellent source for creditor information is your credit report.  There are three main consumer credit reporting agencies:

Equifax

http://www.equifax.com/

800-685-1111

P.O. Box 740241

Atlanta, GA 30374-0241

Experian

http://www.experian.com/

888-397-3742

P.O. Box 2104

Allen, TX 75013

Trans Union

http://www.tuc.com/

800-916-8800

P.O. Box 2000

Chester, PA 19022 

Each of the above consumer credit reporting agencies are required by federal law to provide one free credit report to you every 12 months.  You can obtain an absolutely free credit report from Equifax, Trans Union, and/or Experian by visiting the following website: https://www.annualcreditreport.com/cra/index.jsp

Obtaining a copy of your credit report is a very good step in making a good-faith effort to identify all of your creditors.  However, it is important not to rely exclusively on the information contained in the credit reports.  Not all creditors report to the credit reporting agencies.  Additionally, the information contained in your reports may be inaccurate, outdated, or incomplete. 

If you are considering a bankruptcy filing, get a free copy of your credit report and seek legal assistance.  You and your bankruptcy attorney can review your credit report and assess you financial situation.  While bankruptcy isn’t the answer to all financial problems, it can provide powerful relief to people who are buried in debt.

Fears & Nachawati Law Offices

4925 Greenville Ave Suite 715, Office 1, Dallas, TX 75206 (214) 890-0711  Google Reviews ‎  |  fnlawfirm.com  |  Directions

The decision to file a personal bankruptcy can be emotionally difficult for many individuals.  Sometimes these emotions can make it difficult to accurately assess your financial picture.  If you are facing a financial dilemma, it is a good idea to consult with someone skilled in evaluating your finances and obtain advice.  The answer to a financial problem can vary from reducing spending, to increasing income, to selling assets, and finally to reorganizing or liquidating in bankruptcy. 

Filing bankruptcy should always be your last good option.  Unfortunately, good people will make bad decisions when trying to avoid this last good option.  Bankruptcy attorneys see people regularly who have made bad decisions regarding their finances in the hope of avoiding bankruptcy.  These bad decisions always make matters worse.  Some of these bad decisions include:

* Borrowing from retirement funds

* Borrowing money from a business, family, or friends

* Misappropriating money, kiting checks, or other illegal activities

* Borrowing from payday loan companies, taking cash advances from credit

* Selling assets that may be protected from creditors

It is true that desperate people do desperate things.  When things get desperate, it is time to consult with an experienced bankruptcy attorney and discover how the bankruptcy process can help you and your family.  Bankruptcy is a legal process that is authorized by the Constitution of the United States.  Its laws are drafted by Congress and a federal bankruptcy judge oversees your case along with a trustee appointed by the Department of Justice.

One goal of the bankruptcy process is to return the debtor to financial health by relieving the burdens of overwhelming debt.  The great majority of debtors never file bankruptcy again and rebuild their financial lives by making good decisions after the bankruptcy discharge.  For these people, bankruptcy provides a second chance.

If you need a second chance and a fresh financial start, speak with an experienced bankruptcy attorney and discuss your options.  Make wise decisions about your personal finances.  The bankruptcy laws help over a million families get a new financial beginning each year, and it can help you too!

Fears & Nachawati Law Offices

4925 Greenville Ave Suite 715, Office 1, Dallas, TX 75206 (214) 890-0711  Google Reviews ‎  |  fnlawfirm.com  |  Directions

The Federal Trade Commission has recently announced new rules that will prevent debt collection firms from charging customers up-front fees.  The FTC's new rules take effect October 27, 2010, and apply to telemarketing by for-profit debt settlement services, credit counseling services and debt negotiation companies.  These for-profit companies may not charge customer fees until a debt is successfully renegotiated, settled, or reduced.  The FTC rules do not apply to in-person or internet-only sales.  Nonprofit credit counseling services are also not covered by the new rules. 

Other new FTC rules set to take effect earlier, on September 27, 2010, forbid debt settlements from misrepresenting their services; require specific disclosures about costs and services; and mandate disclosures and fee protections available to customers who call in response to advertising.  These new rules are the FTC's response to thousands of consumer complaints to the Better Business Bureau and federal and state agencies. 

While under certain circumstances debt settlement can be a viable alternative to bankruptcy, debt settlement only benefits a small percentage of borrowers.  For most consumers, the remedy of debt settlement is worse than the illness of debt.  Debt settlement generally boils down to outlasting the creditor to the point that the creditor believes that bankruptcy is inevitable.  The creditor finally decides that some money is better than no money, but by that time the consumer has suffered serious harm. 

The debt settlement process contains many dangers including significant damage to your credit report, increased balances from fees and interest, creditor harassment, and possible litigation.  Many consumers are unaware that a settled debt is a taxable event.  Any forgiven balance that exceeds $600 is taxable income.  Debt settlement customers are often surprised by a bill from Uncle Sam after their debt is settled. 

Bankruptcy is generally a better choice for families struggling with overwhelming debt.  A bankruptcy can discharge your legal obligation to pay certain debts, or provide time to pay what you can afford through a court-supervised repayment plan.  There is no creditor harassment, increased fees, or litigation.  Any debt discharged in bankruptcy does not create a tax debt. 

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.

A bank account debt can offer many challenges to an individual in bankruptcy. Usually a bank account debt originates from fees associated with an overdrawn account. These fees can quickly accumulate and result in a debt of hundreds of dollars. A bankruptcy will generally discharge this debt, assuming the debt was not incurred by fraud or criminal activity. However, the issue is often should you discharge your bank account debt rather than can it be discharged.

In deciding whether to discharge a bank account debt, you must determine if repayment is feasible. In cases where the debt is small, the account is still open, and you have the resources to pay the debt, repaying the debt is generally the best option. Remember to consult with your attorney before repaying any debt prior to filing bankruptcy. In many cases it is advantageous to wait until after the case is filed before repaying a debt.

If paying the bank account debt is not feasible, you may face several negative consequences. First, the bank will close your bank account. Second, over eighty percent of all banks use Chexsystems, a consumer reporting agency that provides information regarding accounts at banking institutions. Negative information may remain on your Chexsystems file for five years. To view your Chexsystems report for free, visit: https://www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm

While a bankruptcy will discharge a bank account debt, factual information concerning the debt will remain on your Chexsystems report after the bankruptcy. This information is available to financial institutions and may prevent you from opening another bank account.

Fortunately, there are programs available to an individual with a derogatory Chexsystems report offered by banks, universities, and not for profit groups. One of the most popular is the “Get Checking” program offered by several groups around the country. The University of Missouri Extension offers a typical “Get Checking” program, which requires a debtor to pay all outstanding bank fees on the prior bank account and take a six-hour checking education class. The debtor then receives a certificate of completion which can be used to open a new account at a participating financial institution. If Chexsystems reports suspicion of fraud on a prior account, a certificate will not be issued and institutions are not required to open an account.

If you have an overdrawn bank account and are considering bankruptcy, discuss your financial situation with an experienced bankruptcy attorney. There are many options to deal with bank account debt, but the situation can only grow worse from procrastination. Quick action is the best cure for this type of debt.

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

1.  I didn't have emergency reserves.

2.  I panicked when the market collapsed.

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

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

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

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.

Debt relief ads seem to be everywhere: on television, on the radio, and in newspapers and magazines.  These companies use different terms to describe their services like counseling, consolidation, negotiation, mediation, settlement, reduction, relief, elimination, and so many others.  They all make promises – some more bold than others.  A few of these companies are legitimate.  I want to discuss the majority of these companies that are not legitimate and how to identify debt relief scams.

There are several simple warning signs to identify debt relief scams.  One warning sign is when the company requires a large up-front fee.  The company may even disguise that fee by calling it a “first payment.” Many consumers are surprised when that “first payment” is paid to the debt company and not paid to creditors.  That can also result in a thirty day delinquency on a credit report – just the kind of damage the consumer was trying to avoid!

Another warning sign is if the company makes promises that your credit score will not be affected by their program.  The truth is that there is not a legitimate debt relief program available that can guarantee that your credit report will not be adversely affected.  Any time a debt is not paid according to the terms of the original contract, the creditor is entitled to report adversely.  The creditor may fail to report, or may agree to not report at all, but there is no way to prevent a creditor from reporting truthful information to a credit bureau.

Finally, if the company claims that it can protect you from lawsuits or creditor harassment, run away!  The Fair Debt Collections Practices Act (FDCPA) provides that third party collectors (e.g. collection agencies) cannot contact a debtor directly once an attorney is representing the debtor.  However, the FDCPA does not apply to original creditors (e.g. a credit card company), and it does not apply to non-attorney debt relief companies.  If your creditor wants to sue you over a delinquent debt, only a bankruptcy filing can prevent it.  Additionally, the debt relief company cannot represent you in court – only a licensed attorney can do that!

You can protect yourself from these scams by consulting an attorney.  Only an attorney can explain your legal rights and help you choose the best course of action to resolve your debt problems.  For more information on how to protect yourself contact Fears | Nachawati toll free at 1.866.705-7584 or by e-mailing info@fnlawfirm.com. 

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!  

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 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.   

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. 

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."

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