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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Debtor – an individual who files a bankruptcy petition

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

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

Exemptions – legal protections that shields property from creditor collection

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

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

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

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

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

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

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

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

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

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

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

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

A Chapter 13 bankruptcy is a repayment plan that lasts three to five years. During that time the debtor is required to devote all disposable income to the repayment of debt. Most bankruptcy trustees and courts consider tax refunds part of the debtor’s disposable income that is over-withheld and should be paid into the Chapter 13 plan. However, instead of reducing the amount payable under the debtor’s plan, tax refund money is paid to unsecured creditors that would otherwise not be paid. If the debtor is paying a 100% repayment plan, the trustee will not request turnover of any tax refunds.

Some courts have approved a provision in the Chapter 13 plan that requires the Internal Revenue Service to forward any tax refund to the trustee’s office. However, at least one bankruptcy court has found this practice to be unlawful. In United States v. Carroll, No. 2:09-cv-13505 (E.D.Mich. Jan. 20, 2010), the bankruptcy court concluded that the IRS was not a party to the debtor’s chapter 13 case and did not have an opportunity to object to the plan. Additionally, as a part of the United States government the IRS possesses sovereign immunity that it did not waive.

Keeping your money and avoiding an income tax turnover may be as simple as adjusting your paycheck withholding. By speaking to a tax professional you may be able to predict your tax liability and put more money in your pocket each payday. However, be careful to avoid a situation where you do not withhold enough taxes and end up with a large tax bill at the end of the year.

If your tax refund is largely due to an Earned Income Tax Credit (EITC), the IRS allows tax payers to request an advance payment of the EITC. Information regarding this advance payment program can be found on the IRS website.   If you qualify, your employer will add additional money to your take-home pay each paycheck.

If you want to avoiding surprises during your Chapter 13 bankruptcy, seek out and hire an experienced bankruptcy attorney. An experienced bankruptcy attorney can discuss your financial situation with you and help you keep your hard-earned money for your family.

In order to be confirmed, a Chapter 13 repayment plan must meet the Best Interest Test.

The Best Interest Test is found in Section 1325(a)(4) of the bankruptcy code. It requires that your unsecured creditors receive at least as much under the Chapter 13 repayment plan as they would have under a Chapter 7 liquidation. Essentially, the goal is to make sure that your creditors are no worse off under Chapter 13 bankruptcy than they would have been under a Chapter 7 bankruptcy.

To understand how the Best Interest Test works, you must first understand how a Chapter 7 liquidation works. In a Chapter 7 bankruptcy, your nonexempt property is liquidated and sold. The proceeds from the sale are used to pay back as much of your debt as possible.

When you file for Chapter 13 bankruptcy, a hypothetical Chapter 7 liquidation is performed to determine how much your creditors would have received. The amount they receive under your Chapter 13 repayment plan must be at least equal to this amount.

Quite often a debtor is determined to have no assets, so the unsecured creditors would have received nothing under a Chapter 7 liquidation. Of course, this does not actually mean that the debtor has no assets at all. Rather, it means that the assets the debtor does have are all protected from liquidation through exemptions.

In these cases, it is proper for the debtor’s unsecured creditors to receive nothing under the Chapter 13 repayment plan, and the plan will be approved provided that it is offered in good faith and passes the disposable income test.

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

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

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

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

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

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

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

Imagine this: you are behind on your car payments. Heck, you are behind on a lot of bills, and perhaps you have been considering bankruptcy for some time. Then one day you walk out the door for work and discover. . .

Your car has been repossessed!

Don’t despair! Bankruptcy can still help. Call an experienced bankruptcy attorney immediately because you may be able to get your vehicle returned to you.

The law in most areas (including the Sixth, Seventh, Eighth, Ninth, and Tenth Circuits) is when a debtor files a Chapter 13 bankruptcy, the creditor must immediately return a repossessed vehicle to the debtor. This is because even though the creditor has taken possession of your vehicle, you are still the legal owner. The Bankruptcy Code states that in a Chapter 13, a creditor in possession of a debtor’s asset must ordinarily relinquish the asset back to the debtor.

However, this begs the question: what if your car is sold at auction or the creditor transfers the vehicle title out of your name? If this transfer is done after the Chapter 13 bankruptcy is filed, it is typically a violation of the automatic stay and the vehicle will be returned. If the transfer is done before the Chapter 13 bankruptcy is filed, you are out of luck. You no longer have ownership of the vehicle.

If the creditor refuses to return the vehicle, or does not return the vehicle in a timely manner, most courts will sanction the creditor. Once your vehicle is returned you must provide “adequate protection” to the creditor to assure that the property will be safeguarded and that the creditor will be adequately compensated. This usually takes place by submitting a Chapter 13 plan of repayment to the bankruptcy court.

If your vehicle has been repossessed, take immediate action! Call an experienced bankruptcy attorney and discuss your options. Your attorney can help you make the right financial choice for yourself and your family.

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

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

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

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

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

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

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

A lot can happen during a Chapter 13 repayment plan which generally lasts three to five years. Sometimes large debts are incurred that the debtor is unable to pay. Fortunately, a Chapter 13 debtor is able to discharge a post-petition debt, but only after certain prerequisites are met.

First, the debtor must amend the repayment plan to provide for a post-petition debt. Second, the debtor must usually obtain the approval of the bankruptcy trustee prior to incurring the debt. This is not always obtainable, especially in the case of a large medical bill. Third, the creditor must voluntarily choose to file a proof of claim. And finally, the claim must either be a tax claim, or a claim for a consumer debt necessary for the completion of the debtor’s plan.

A common situation in which post-petition debts arise in a Chapter 13 case is where the debtor needs to purchase a different automobile. Repaying a post-petition car loan through a Chapter 13 plan is easily accomplished through coordination and cooperation from the trustee, the lender, and the court. The lender agrees to be paid by the trustee, the trustee agrees to sanction the debt, and the court approves the amended plan allowing the lender to be paid through the bankruptcy plan. 

In some cases it may not be practical to include a post-petition debt in the debtor’s Chapter 13 plan. In that case, the debtor may elect to convert the Chapter 13 case to one under Chapter 7. The Bankruptcy Code states that a debt that arises after the Chapter 13 filing date, but before the debtor’s conversion to Chapter 7, is to be treated as a pre-petition debt. The Chapter 13 restrictions and requirements listed in the preceding paragraph do not apply to debts in a conversion case. 

The Bankruptcy Code contains many flexible options for reorganizing your finances and dealing with your creditors. Even when there is an unexpected event that results in a debt, your bankruptcy attorney can provide you with choices for dealing with a post-petition debt.

The bankruptcy discharge is generally the goal of a debtor’s bankruptcy. The bankruptcy discharge is the cornerstone of the fresh start and debt relief promised by the bankruptcy laws. The discharge is a permanent court injunction prohibiting creditors from enforcing certain obligations against the debtor. That may seem simple and straightforward enough, but the devil is in the details.

First, the bankruptcy discharge does not “erase” a debt; it simply prohibits collection against the debtor personally. Since the debt still exists, the creditor can take any legal action so long as he does not collect from the debtor personally. That means no legal action and communications with the debtor. The creditor is permitted to contact or sue a co-debtor, or repossessing property if it secures a debt. For instance, if the debtor’s car loan is discharged in bankruptcy, and the debtor does not pay for the vehicle, the car can be repossessed after the case closes. However, the creditor cannot try to collect any money from the debtor.

Second, the discharge does not apply to all debts. Some debts, like child support obligations, are not dischargeable. Other debts, like taxes owed to the government, may be discharged under certain circumstances. To avoid any confusion consult your attorney regarding the extent of your discharge. Additionally, debts that occur after the bankruptcy filing date are usually not covered by the bankruptcy discharge.

The order of discharge generally occurs at the end of the debtor’s bankruptcy case and copies of the discharge order are mailed to all of the debtor’s creditors by the bankruptcy court. The discharge order informs creditors generally that the debts owed by the debtor have been discharged and that they should not attempt any further collection. If a creditor does try to collect from the debtor personally, the debtor can complain to the bankruptcy judge and the creditor may be held in contempt of court.

The bankruptcy discharge is usually the culmination of the bankruptcy case and relieves the debtor of the burden of overwhelming debt. An experienced bankruptcy attorney can help explain the extent of the bankruptcy discharge on your debts and help clearly define your fresh start under the bankruptcy code.

Sometimes a young couple who has struggled for years will finally decide to file bankruptcy. For a young family the financial difficulty is often a combination of unstable income, medical bills and overextended credit. While desperate to buy their first home, they have resigned themselves to the belief that the bankruptcy will prevent home ownership for the foreseeable future.

Not so.

Most debtors emerge from bankruptcy financially stronger and determined to not repeat past mistakes. Many debtors who receive bankruptcy discharges have steady jobs, no unsecured debt, and low debt-to-income ratios. Additionally, a bankruptcy debtor cannot receive a second discharge for several years. That actually sounds like a good credit risk combination, right? 

The federal government recognizes that a person who has recently discharged unsecured debt through bankruptcy has little debt, but must demonstrate a commitment to managing credit in a responsible manner. That is why the FHA credit guidelines require the debtor to show two years of responsible credit management after the bankruptcy discharge before it will issue a federal guarantee on a home loan. It is also possible to obtain a federal guarantee after twelve months, if the debtor can show that the bankruptcy was caused by extenuating circumstances beyond his or her control. An FHA guarantee means that the lender is guaranteed money if the borrower defaults on the loan. This federal guarantee makes your loan application more appealing to banks and other lenders.

Rebuilding your credit report and safeguarding your credit score is very important if you want to buy a house after bankruptcy. Your bankruptcy attorney can provide helpful tips regarding the rebuilding process and help you on the path to home ownership.

One day, the Pastor sees Matthew walking slowly out of Church. Matthew is dejected, disheveled and looks terrible. "Matthew," asked the Pastor, "what's the matter?" "Well, Pastor, my business is shot, I'm losing my house and my wife says she is going to leave me and take the kids if I don't straighten things out. I just don't know what to do." "Matthew, find the answer in the Bible," the Pastor replied. And Matthew left.

Four months later, the Pastor sees Matthew coming out of Church, only this time, he's smiling, wearing a nice suit, and lighting a cigar.

"Matthew, you look great! Did you follow my advice?" "I did. I went home that day and decided to open the Bible and to follow the advice I saw. So I opened the Bible and the first phrase I saw said: Matthew Chapter 7."

Here is a funny answering machine message:

"Sorry, Chris and Ashley aren't here right now. Please leave your name and number after the tone. If you are calling regarding an outstanding debt, please leave your message before the tone."

Finally, the video below is from Tim Clue, a very funny and talented entertainer, who gives his unique perspective on credit card debt. Many thanks to Tim for his permission to use this clip. Check out more of Tim's videos at his website.

While you are in bankruptcy, you must report your income to the Trustee every month. In general, however, the money you make after your bankruptcy has started belongs to you, and typically, the Trustee won’t interfere with your earnings.

You will, though, be under some income restrictions. The Superintendent of Bankruptcy sets standards that dictate what is a reasonable net income level for you based on the number of people in your family and your personal situation. Any amount of money you earn above that level will be collected by the Trustee and distributed to your creditors.

A Texas bankruptcy attorney can help you understand how bankruptcy will affect your wages and answer any questions you may have about Texas’ bankruptcy laws.

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.

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.

It’s a vicious cycle: You lose your job, causing you to fall behind on your mortgage, car payments and other bills. As a result, your credit suffers. You finally land an interview with good prospects, but a credit check costs you the job.

You need employment to improve your finances, but it’s your finances that are holding you back from employment.

Some legislators are taking steps to prevent this situation from occurring. Recently a House bill was introduced that would prohibit employers from using consumer credit checks to make adverse employment decisions.

The Equal Employment for All Act (H.R. 3149) would amend the Fair Credit Report Act and prohibit employers from making hiring decisions based on an applicant’s consumer credit report. The Act makes exceptions for financial firms, government agencies and jobs that require certain security clearances.

The bill was introduced by Representative Steve Cohen from Tennessee. According to Cohen, the bill would provide some of our country’s “most vulnerable, ‘credit challenged’ citizens” the chance to start rebuilding their credit by getting a job.

Supporters of the bill do not believe that a person’s credit history is a reflection of how they would perform on the job. Critics of the bill, however, point to the vulnerability of small businesses to employee theft, citing the bill’s limited exceptions as a cause of concern.

To read more on the Equal Employment for All Act, click here for the complete article from the U.S. News and World Report.

Regardless of whether the bill passes, one thing remains certain: an experienced Texas bankruptcy attorney is the best source of advice for consumers facing credit difficulties. A Texas bankruptcy lawyer can explain your options and help you make decisions that will get you back on the road to financial stability.

Mandatory arbitration, one of the credit card industries’ dirties tricks, may soon be a thing of the past. Mandatory arbitration has been a wide-spread practice among credit card companies that forces the consumer to address any dispute in a pre-selected arbitration forum. These arbitration forums act as private judges pre-selected by the credit card company. 

How fair can that be? Well, recently the Minnesota Attorney General filed a lawsuit against National Arbitration Forum of Minnesota accusing it of unfair and biased practices against consumers. A 2007 study found that consumers lost 94 percent of the cases filed by MBNA (now owned by Bank of America) and arbitrated by the National Arbitration Forum. After the Minnesota lawsuit was filed, the National Arbitration Forum announced that it would not accept new cases from many “clients,” including credit card companies.

The handwriting is on the wall. Bank of America, Chase, and even the notorious Capital One Bank have stated that they will eliminate the arbitration requirement from future credit card agreements and will not enforce the provision in existing contracts. Congress has indicated its commitment to protect consumers by passing the Credit CARD Act of 2009, and the current trend is to create a federal consumer financial protection agency that would have the power to eliminate such unfair practices. Currently there are two bills pending in Congress that would address mandatory arbitration forced upon consumers by the unfair contracts.

Credit card companies are not your friends! If you are overwhelmed by credit card debt and struggle to make minimum payments each month, consult with an experienced bankruptcy attorney and consider your options. A bankruptcy attorney can eliminate credit card debt through the power of the federal law.

Yes. You will have to attend a hearing called the First Meeting of Creditors. This meeting takes place about 30 to 40 days after you file for bankruptcy and is required for both Chapter 7 and Chapter 13 bankruptcy.

The bankruptcy trustee presides over this meeting, and during the hearing the trustee will ask you questions about your assets, debts and other matters related to your bankruptcy filing.

After the trustee is finished asking their questions, your creditors are allowed to ask you questions as well. It is rare, though, for creditors to actually show up for this meeting.

In most cases, you will not have to return to court after this hearing is over. However, if a creditor files a motion or initiates an adversary action, you will likely have to go to court again.

Don’t worry. You do not have to go to court alone. If you hire a Texas bankruptcy attorney, they will be there to represent you during all of your court appearances.

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

Recently the Supreme Court of the United States heard oral argument concerning whether bankruptcy attorneys should be allowed to advise their clients to incur more debt before filing. Currently the law states that "debt relief agencies" are not allowed to advise clients to incur more debt in contemplation of bankruptcy. The case before the high court also questions whether attorneys are "debt relief agencies" according to the statute.

Justice Antonin Scalia said of the statute, “It’s a stupid law,” but also asked, “Where is the prohibition of stupid laws in the Constitution?”

The popular consensus is that Congress enacted this prohibition to prevent attorneys from advising their bankruptcy clients to incur debt that could be discharged in a bankruptcy. In short, that situation amounts to a fraudulent act, the debt would be determined non-dischargeable, and the attorney could be held civilly or even criminally liability.

However, the statute is not narrowly tailored to prevent this kind of abuse; it also stops bankruptcy attorneys from effectively advising honest debtors in anticipation of a bankruptcy filing. In other words, the law can prevent "bankruptcy planning." For instance, in certain circumstances it may be highly beneficial to refinance a house or car loan at a lower interest rate prior to filing bankruptcy. The current law ostensibly forbids this type of helpful advice.

The Supreme Court is now considering this case and will interpret the intent of Congress. Hopefully, the Supreme Court can make sense of "a stupid law" and bankruptcy attorneys will be able to provide full, legal, and ethical legal advice to their clients.

To receive free legal advice from a Texas bankruptcy lawyer, contact the law firm of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Are you in financial distress? Is it also causing you health problems?

A 2008 health poll by the Associated Press and AOL found that people in financial distress are more likely to report health problems, including “serious” health problems like ulcers, severe depression, and even heart attacks. Individuals reported the following health problems related to debt stress during the poll:

• 44 percent had migraines or other headaches, compared with 15 percent of those with low levels of debt stress;
• 29 percent suffered severe anxiety, compared with 4 percent;
• 27 percent had ulcers or digestive tract problems, compared with 8 percent;
• 23 percent had severe depression, compared with 4 percent; and
• 6 percent reported heart attacks, twice the rate of those with low debt stress;

More than half, 51 percent, reported muscle tension and/or lower back pain compared with 31 percent of those with low levels of debt stress. Those individuals with high debt-related stress also reported trouble concentrating and sleeping.

This information is neither new nor surprising. In 2005 researchers at three major universities surveyed three thousand people regarding the negative effect of financial stress and found that the top three health effects of financial distress are stress, anxiety, and depression. Anyone who works with individuals in debt on a regular basis sees the negative physical effects that debt stress can have.

Financial distress can negatively impact many areas of your life including your health. Take charge of negative financial stress today and do something to improve the quality of your life. An experienced bankruptcy attorney can evaluate your situation and give you legal advice that can lead to a fresh financial start. 

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

Some transfers of assets that would be perfectly legal and valid outside the context of bankruptcy are invalid when bankruptcy is involved. A bankruptcy trustee has the power to invalidate transfers that are deemed to be fraudulent conveyances.

Fraudulent conveyances, or fraudulent transfers as they are sometimes called, are an attempt on the part of the debtor to hide an asset before filing for bankruptcy by giving it to someone, such as a relative, free of charge or at an unreasonably low price.

There are two types of fraudulent conveyances: actual fraud and constructive fraud. Cases of actual fraud require proof that the debtor acted with the intent to hinder or defraud a creditor.

With constructive fraud, the debtor’s intention behind a transfer is irrelevant. A transfer will be considered constructive fraud if two conditions are met: the debtor received less than a reasonably equivalent value in exchange for their asset and the debtor was unable to pay their debts at the time the transfer was made or as a result of the transfer.

If you file for bankruptcy, any transfer of your assets that you make within 90 days of filing for bankruptcy, or within one year if a relative or business associate is involved, will be carefully scrutinized by the court.

To receive free legal advice on transferring your assets in the context of bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.

Chapter 7 bankruptcy wipes out most unsecured debts, but it does not get rid of all of your debts. If you successfully file for Chapter 7 bankruptcy, you will still be responsible for:

• Your most recent back taxes
• Child support
• Alimony
• Most student loans
• Government fines or penalties
• Fraudulent debt
• Recent purchases of luxury goods of more than $550 bought within 90 days of filing for bankruptcy
• Cash advance loans of $825 or more within 70 days of filing for bankruptcy

If you are considering filing bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati for free legal advice. Simply email us or phone us toll free at 1.866.705.7584.

Bankruptcies are reported by credit reporting agencies. The number of years for which a bankruptcy will stay on your credit report depends on the type of bankruptcy you filed. A Chapter 7 bankruptcy, for example, will stay on your credit report for 10 years, while a Chapter 13 bankruptcy will be reported for 7 years.

Your credit report is used by credit card companies and lenders to determine your creditworthiness. However, having a bankruptcy on your credit report does not automatically mean that you can’t obtain credit.

Some credit card companies are willing to extend credit to people who have filed bankruptcy. Typically, though, you will have a higher interest rate and/or lower credit limit than someone who has not filed bankruptcy.

It is also worth noting that some creditors will see a person as a better credit risk after they have filed for bankruptcy because they have less debt, they are in a better position to repay new debt and they can’t file a Chapter 7 bankruptcy again for another 8 years. If you filed a Chapter 13 bankruptcy, then you have shown that you can manage regular payments.

If you take the proper steps to responsibly rebuild your credit after you file for bankruptcy, you can improve your credit standing within a few years.

For free legal advice on Texas bankruptcy, contact the law firm of Fears | Nachawati today. To receive free legal assistance from a Texas bankruptcy lawyer, email us or phone us on our toll free number at 1.866.705.7584.

The fear of losing property stops many people from exploring their options in bankruptcy. The fact is that only four percent of chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor. For the other 96% of chapter 7 cases, the debtor continues to pay secured debts, like a house or car, and is able to keep the property.

Determining whether a debtor has an asset case is a simple arithmetic calculation using bankruptcy law exemptions. Bankruptcy exemptions are provided by state law. Every state grants exemptions so that the debtor can retain property, like home equity, a modest vehicle, some personal property, and household furnishings.

The homestead equity exemption can vary greatly from state to state. Some states grant an unlimited homestead exemption to their residents (which the federal law may limit in some circumstances), and other states do not offer much protection. Ohio, for instance, only provides a $5,000 exemption, while Kansas gives its residents an unlimited exemption.

The motor vehicle exemption generally allows the debtor to exempt equity in one (sometimes more) personal vehicle. The exemption can vary greatly by state, usually ranging from $2,000 to $10,000.

Every state grants an exemption for basic household furniture.  In addition, most states give an exemption for tools used for work, musical instruments, etc.

Many states provide a wild card exemption to exempt miscellaneous items. This wild card exemption can be used to protect otherwise non-exempt equity in a vehicle or home. Generally it is used to protect cash money in the bank.

Identifying your property, determining its value, and applying your exemptions is the difference between retaining and losing property in a bankruptcy case. An experienced bankruptcy attorney can guide you through this process.

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

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

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

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

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

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

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

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

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

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

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

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

Reason 1: The Federal Bankruptcy Code is complex.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Associate Press is reporting that Citigroup Inc. will suspend foreclosures and evictions for 30 days. This moratorium will provide temporary relief for about 4,000 borrowers during the holiday season. Other lenders are expected to follow suit continuing a tradition that began last year for suspending foreclosures during the holiday season.

Thanks a lot.

A report release earlier this month by the U.S. Department of the Treasury indicates that many of the nation’s largest mortgage lenders are not doing enough to lower the numbers of home foreclosures. In one case the report found that after eight months of participating in the Home Affordable Modification Program (HAMP) Bank of America had registered a dismal 15 percent of the more than 1 million delinquent borrowers who are potentially eligible.

The HAMP, introduced in March 2009, provided guidelines for lenders to modify a home mortgage, such as capitalizing arrearages, extending a mortgage to 40 years and reducing the interest rate, until the payments get down to 31 percent of a borrower’s income.

One reason for the low numbers of loan modifications is that it is labor-intensive, according to John Rao, an attorney with the National Consumer Law Center. Mr. Rao testified to Congress earlier this year that lenders are not compensated for the labor-intensive process of a modification, whereas they are compensated for the extra work in foreclosing on a home. In other words, there is no real incentive to help the homeowner. Some lenders have delayed the loan modification process until the homeowner is forced to file bankruptcy and then add thousands of dollars in interest and costs to their home loans.

For homeowners that would benefit from a loan modification and a chapter 7 bankruptcy, lenders are especially reluctant to give permanent loan modifications, often offering interim loan modifications that last only two to three months. If the homeowner files for bankruptcy, the lender will often withdraw any workout plan leaving the homeowners further in debt.

The road to saving your home and easing your monthly debt obligation can be a perilous journey. It is best to use an experienced bankruptcy attorney to guide you through this difficult path. Until Congress decides to offer an effective program that offers real relief, bankruptcy can be a powerful option for saving your family’s home. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fidelity Investments reports that:

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

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

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

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

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

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

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

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

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

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

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

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

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.

Under a 1992 decision by the U.S. Supreme Court called Dewsnup v. Timm, a second mortgage or lien stripping can only be accomplished in a Chapter 13 bankruptcy. Chapter 13 is intended for people with regular income or earnings to pay back a portion of their debts over time approved by the bankruptcy court.

In the Northern District of Texas, the process begins by filing a petition for Chapter 13 bankruptcy. You must also file a plan with the court to repay creditors all or part of the money that is owed to them using your future income. Depending on your income a repayment plan can take three or five years. In order to remove an unsecured second mortgage, the fair market value of the home must be less than the balance owed on the first mortgage.

The plan must be approved before it can take effect. If the bankruptcy court grants the motion, it will issue an order directing the holder of the second deed of trust to remove the lien from the home. The type of loan you hold does not matter during this process.

For a free consultation to see if you qualify for the removal of a second mortgage on your home, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com.

Reaffirming your debt after you have filed for bankruptcy means that you are agreeing to repay a certain debt that would have otherwise been discharged. You sign a debt reaffirmation agreement, reaffirming to your lender or creditor that you will repay your debt. In return, you are allowed to keep the property that is the subject of the debt.

Normally, when you file for bankruptcy, creditors of your secured debts can treat the bankruptcy as a default and therefore repossess their collateral, such as a car. While there are property exemptions applicable to bankruptcy cases, the only sure way to retain a piece of property is to reaffirm the debt.

That does not mean, however, that reaffirming your debt is always a good idea. If you fail to make your payments, not only can your creditor repossess your property, but you are also still responsible for the balance of the debt.

Whether or not you should reaffirm a debt is a matter of deciding how badly you want to keep the property and whether you will be able to afford to make the payments. An experienced bankruptcy attorney can assess your situation and help you decide whether it is a good idea to reaffirm your debt.

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

Individuals facing a financial crisis are concerned that by filing Chapter 13 they will lose their home to repay debts. In a Chapter 13 bankruptcy, you don't have to give up any property, but you are required to use your income to pay some or all of your debt over time. Depending on the size of your debts and income it can take from three to five years.

The most important part of your Chapter 13 paperwork will be the repayment plan as this will list the secured and unsecured debt you have. Your repayment plan needs to be carefully drawn up to show how much you will pay towards your secured and unsecured debts. The plan must show any disposable income you have left after making required payments on secured debt. You also need to demonstrate how much will go towards repaying your unsecured debts, such as credit card or medical bills. Many times you will not have to pay your unsecured debt or will only have to pay pennies on the dollar.

Contact us today for further information on what qualifies as unsecured debt by calling Fears | Nachawati at toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com.

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.

There is no one right answer as to whether it’s better to file Chapter 7 or Chapter 13 bankruptcy. The best choice depends on your financial circumstances and your goals.

Each type of bankruptcy has relative advantages and disadvantages. Which type is best is a matter of deciding which advantages apply to your situation.

The primary advantage of Chapter 7, for example, is that all of your unsecured debts are discharged. However, you may have to give up some of your assets. For that reason, Chapter 13 is a better choice for some people.

Chapter 13 is essentially a repayment plan, and it doesn’t require you to give up any of your property. Also, it avoids foreclosure, enabling you to keep your house even if you’re behind on your mortgage payments.

A potential disadvantage of Chapter 13 bankruptcy is that you debts are not discharged until the payment plan is done, which could be as much as 5 years. With Chapter 7, by contrast, your debt is discharged within 3 to 5 months.

An experienced bankruptcy attorney can help you understand the differences between Chapter 7 and Chapter 13 bankruptcy and advise you on which is more beneficial to you given your financial circumstances and current debt.

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

While every bankruptcy case is different, it is safe to say that most individuals who file for bankruptcy get to keep most of their property. Every state has its own set of laws that exempt certain types of property from the reach of bankruptcy creditors and trustees. If the property is exempt, you get to keep both the property itself and, in many cases, the equity you might have in it.

To understand how bankruptcy property exemptions apply to you and your situation, contact Fears | Nachawati today to speak with a bankruptcy attorney. Simply email us or phone us toll free at 1.866.705.7584.

A reaffirmation agreement is a new contract signed by you and your lender or creditor reaffirming your existing debt on a piece of personal property.  It is an agreement that states that, bankruptcy notwithstanding, you will still pay the debt that you owe to this lender.

The reason that a debtor would sign a bankruptcy reaffirmation agreement is so they can keep the piece of property on which they still owe money. The debtor will continue to repay the loan, even though it would otherwise be discharged by the bankruptcy.

Reaffirmation agreements are completely voluntary. Neither you nor your lender are required to enter into one. Also, after you sign a bankruptcy reaffirmation agreement, you have 60 days within which to revoke it, thereby relieving yourself of the debt.

In most cases, reaffirmation contracts are overseen by a bankruptcy lawyer. If the debtor does not have a bankruptcy lawyer, then the contract must be approved by the bankruptcy court judge.

To receive free legal advice from a bankruptcy lawyer, contact Fears | Nachawati today. Simply e-mail us or call us toll free at 1.866.705.7584, and you will speak directly with an experienced bankruptcy lawyer who will provide you with a free legal consultation.

During bankruptcy a debtor is required to reveal all assets and give an estimated value of the property. When the asset is cash money or an investment, figuring its value is easy. In other cases nailing down a value can be very elusive. This is especially true when dealing with a unique or expensive household item. So how does the bankruptcy trustee expect the debtor to come up with a value for household property?

To understand how to value household property for bankruptcy purposes, it is important to understand the bankruptcy process. One of the chief functions of the bankruptcy trustee is to uncover assets for the benefit of creditors. Federal and state laws allow the debtor to keep certain modest items of household property that are considered “necessary,” like clothing and household items, but only up to a certain dollar amount. That amount is called an “exemption,” and that property is considered “exempt” and protected from a creditor’s collection remedies. Any property that is worth more than the allowed exemption amount is subject to be liquidated, usually at auction.

So the easy answer to how household property should be valued is, “At auction prices.” Since auction prices can vary, that doesn’t really answer the question at all. Instead, what most bankruptcy trustees suggest is to set a price like you would at a yard sale. Additionally, internet resources like eBay can be helpful to determine the quick-sale market value of a unique item. Using one of these on-line resources can provide good evidence that your new-in-box Barack Obama Chia Pet is only worth $20.00.

Many used household items, like common dinner dishes or bedding, have little or no value. On the other hand, a grandfather clock, piano, or gun safe usually has some value. A bankruptcy trustee is not in the used furniture business, and will usually incur significant costs in selling a debtor’s property. Consequently, the trustee will not be interested in your household property unless you own a non-exempt item that can be sold for a substantial profit to the bankruptcy estate. 

As owner of your property, you are entitled to give an opinion regarding its value. It is important not to under-value or over-value your household property, but instead give a fair and reasonable estimate. If you own an expensive household, do some research and speak to your bankruptcy attorney. There are many ways to protect property in bankruptcy and your bankruptcy attorney can help you decide on the best course of action.

For free legal assistance from an experienced bankruptcy attorney, contact Fears | Nachawati. To receive your no charge legal consultation, email or call us toll free at 1.866.705.7584.

One of the principle aims of the U.S. bankruptcy laws is to give an honest debtor a "fresh start." It is important to know how bankruptcy will affect your financial life, during and after your bankruptcy case. An experienced bankruptcy attorney can guide you through the process, and get you the relief that you need, but what then? What happens after the bankruptcy court issues your discharge, your case closes, and your bankruptcy attorney sends you a nice letter wishing you well in the future? It is important to know what to expect after your bankruptcy ends, and how you can get that "fresh start."

There is actually quite a bit of confusion surrounding when a bankruptcy can no longer be reported on your credit report. Some sources say ten years, others say ten years for a chapter 7 and seven years for a chapter 13. The law is actually very clear. The Fair Credit Reporting Act ("FCRA") directs credit reporting agencies to exclude bankruptcy case information from all consumer reports ten years after “the date of entry of the order for relief.” The FCRA does not distinguish between chapter 7 or chapter 13. However, many credit counselors cite an "unofficial policy" of the three largest credit reporting bureaus (Experian, TransUnion, and Equifax) that removes a chapter 13 filing from your credit report after seven years.

Many individuals (and some credit experts!) are also confused over when the FCRA's ten year bankruptcy clock starts. Some say the information must be removed ten years after the date of the discharge. Section 301 of the bankruptcy code states that the “order of relief” date is the filing date, so the ten year period is measured from the bankruptcy filing date, not the discharge date. Information about your bankruptcy must be removed from your credit report not later than ten years after the date you filed the case. If you file on January 1, 2010, the bankruptcy must be removed before January 1, 2020.

Knowing what to expect during and after your bankruptcy case can help you plan for the future. Do not be bashful about asking your bankruptcy attorney questions, and make the most of this fresh start opportunity.

For free legal advice from a bankruptcy attorney, contact Fears | Nachawati. Simply email us or call us toll-free at 1.866.705.7584.

As consumers venture out shopping for gifts this holiday season, many will be surprised by the number of stores that have gone out of business since last Christmas. Many shopping favorites have closed their stores for good, including Linens N’ Things, Goody’s, Mervyns, KB Toys, Sharper Image, and Circuit City. However, many stores like Circuit City and Linens N’ Things have filed a business bankruptcy, but are still selling on-line.  This kind of restructuring through a business bankruptcy is not unusual in today’s economy. Shrewd businessmen like Donald Trump know the power of the federal bankruptcy laws. In fact, Mr. Trump has seen his businesses file, and emerge from, bankruptcy several times.

According to the Wall Street Journal, business bankruptcies are up 16% from last year, and number 74,832 filings through October. For many retailers, the holiday season is a make-or-break time of and will do what they can to attract shoppers. For instance, BusinessWeek reports that Sears, Amazon.com, and Wal-Mart are invoking Black Friday deals weeks before Thanksgiving and retailers are planning to offer more holiday promotions and discounts this holiday season.

The federal bankruptcy laws have helped retailers keep their stores open.  Eddie Bauer and Mrs. Fields Cookies are two well-known businesses that recently filed chapter 11 bankruptcies to reorganize finances, get a breathing spell from creditors, and continue operating. Chapter 11 of the bankruptcy code is a reorganization bankruptcy, usually used by a corporation or partnership. In a chapter 11 the debtor proposes a plan to keep its business alive and pay creditors over time.  An individual can also file a chapter 11 bankruptcy, but usually opts for filing under chapter 13 or 7.

If you are struggling with bills you can’t pay, you are not alone. Many businesses and individuals are hurting during this recession period. The good news is that the federal bankruptcy laws have helped millions of individuals and businesses get back on their feet, and it can help you too! 

Speak with an experienced bankruptcy attorney and learn how you can get relief and a fresh start in your financial life. For free bankruptcy advice, contact Fears | Nachawati. Email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

A creditor is sometimes forgotten or overlooked when preparing the debtor’s bankruptcy schedules. Even the most diligent individual can occasionally forget a past debt. When this happens, the bankruptcy law offers several remedies:

First, if the debt is remembered during the bankruptcy, the debtor is required to file amended schedules and identify the creditor. It is important to ensure that your schedules are honest and accurate, so let your bankruptcy attorney know immediately if you remember an old debt.

Second, sometimes a debtor will discover a pre-bankruptcy debt after the bankruptcy case has closed. How this omitted debt is handled depends on the court and the circumstances. In some cases it may be prudent to ask the bankruptcy court to reopen the bankruptcy case and discharge the debt. In other cases the debt may be considered discharged as a matter of law - in other words, the bankruptcy discharge took care of that debt even though it wasn’t listed in the schedules. Finally, in some rare cases the debt cannot be discharged and the debtor is simply stuck with it.

The bankruptcy courts expect the debtor to be open and honest in describing assets and debts. Failure to list a creditor means that the creditor did not receive notice of the bankruptcy case and was not given an opportunity to protect its interests during the case. In cases where there are no assets for creditors, inadvertent omission of a creditor will not matter much. On the other hand, an omission matters a great deal in cases where creditors are paid. An intentional failure to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases courts have denied a bankruptcy discharge because of the debtor’s intentional failure to list all debts.

In bankruptcy, honesty is the best policy. Fully disclose all of your assets, debts, income, and expenses to your bankruptcy attorney. If you forget something, let your attorney know as soon as possible. Your attorney can advise you on the best course of action.

To receive free expert bankruptcy advice, contact the law firm of Fears | Nachawati. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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