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

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.