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

For most, the decision to file a bankruptcy is a tough choice. It is the final step in a long journey that has included great compromise and sacrifice. A person usually experiences a sense relief when deciding to file bankruptcy, and there may be a tendency to "let go" of your debt problem. Unfortunately, in some cases people will “let go” by recklessly spending money and running up credit card balances.

It is generally not a good idea to incur any new debt before a bankruptcy filing. The Bankruptcy Code has several provisions prohibiting the debtor from loading up on debt prior to filing bankruptcy. One of the most commonly cited is a spending spree prohibition against purchasing “luxury goods or services” totaling more than $550.00 within 90 days prior to filing a bankruptcy case. Another provision makes credit card cash advances presumptively non-dischargeable if taken within 70 days prior to the bankruptcy filing.

Recently the United States Supreme Court in Milavetz, Gallop & Milavetz, P. A. v. United States reiterated that incurring new debt before bankruptcy with the intent to discharge the debt is not only prohibited, but may also amount to civil fraud or a criminal act. The high court said that bankruptcy attorneys cannot instruct or encourage debtors to take on more dischargeable debt before bankruptcy, but attorneys “remain free to talk fully and candidly about the incurrence of debt in contemplation of filing a bankruptcy case.” 

There are many situations where taking on additional debt is beneficial and permissible. The Supreme Court cited three of those situations in the Milavetz opinion: (1) refinancing a mortgage; (2) purchasing a reliable car; and (3) incurring “additional debt to buy groceries, pay medical bills, or make other purchases ‘reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor[.]’”

The bankruptcy process can relieve you of many financial worries. However, your path to financial recovery can be complicated without the sound advice from an experienced bankruptcy attorney. Don’t make any significant financial decisions prior to filing bankruptcy without consulting your attorney.  

Bankruptcy filings are on the rise – that’s according to the American Bankruptcy Institute which pulled data from the National Bankruptcy Research Center. This past February, 111,693 consumer bankruptcies were filed, which represents a 14% increase over the 98,344 consumer bankruptcy filings in February of 2009.

The number of consumer bankruptcies filed in February was also 9% higher than the 102,254 filings in January 2010.

The director of the American Bankruptcy Institute, Samuel Gerdano, believes that the number of bankruptcies filed in 2010 could ultimately exceed 1.5 million.

Last year, there were more than 1.4 million bankruptcy filings, including both consumer and business bankruptcies. That represented a 31.9% increase over the previous year, according to a report released by the Administrative Office of the U.S. Courts (AOUSC).

Of those bankruptcies, says the AOUSC, the majority were filed by consumers rather than businesses. Overall, consumer bankruptcies in 2009 increased 32% from the 1.07 million filed in 2008.

While business bankruptcies may have totaled fewer than consumer bankruptcy filings, the overall increase was higher, with 60,837 filings equating to a 40% increase over 2008.

If you are considering filing for bankruptcy in Texas, seek the advice of a qualified bankruptcy attorney today.

People often fear the idea of filing for bankruptcy in Texas because they are operating under myths and misconceptions. The fact is, there is a lot about Texas bankruptcy that most people don’t know.

To help you make a more informed decision, Fears | Nachawati – a team of experienced Texas bankruptcy attorneys – has put together this list of five of the most surprising secrets about bankruptcy:

1. You may be able to keep most, if not all, of your property: Texas bankruptcy law allows you to choose between Texas state exemptions and federal exemptions. These exemptions allow you to keep a good deal, if not all, of your property when you file for bankruptcy. For example, in Texas, you may be able to keep your car, home, household goods, jewelry and retirement savings, among other things.

2. There is no minimum amount of debt necessary to file for bankruptcy in Texas: No law, in Texas or elsewhere, exists that dictates the amount of money you must owe in order to file for bankruptcy.  Bankruptcy laws were designed to help out individuals who are unable to pay their existing debts. Whether or not you can file for Chapter 7 bankruptcy in Texas is a matter of evaluating your debts, assets and income.

3. It is possible to get credit after bankruptcy: Because bankruptcy does negatively affect your credit for a time and does remain on your credit report for up to 10 years, many people understandably but mistakenly believe that they will never be able to obtain credit again if they file for bankruptcy in Texas. However, the reality is that you will be able to get credit within a relatively short time after you file for bankruptcy. You will, for instance, be able to get secured credit cards that will improve your credit score. You might even be able to get a mortgage within as little as two years after filing for Texas bankruptcy.

4. Your employer will not be notified of your bankruptcy: While it is true that bankruptcy records are public, there is little chance that your employer will find out about your bankruptcy. No one from the bankruptcy court will notify your employer of your bankruptcy. The only people who will know about your Texas bankruptcy are your creditors and the people that you choose to tell.

5. Your spouse is not required to file for bankruptcy with you: There is absolutely no legal requirement that you and your spouse file jointly for bankruptcy in Texas. One spouse can file for bankruptcy without the other. The effect that your bankruptcy will have on your spouse’s assets and liabilities is a question that can be answered by a qualified Texas bankruptcy attorney.

The decision whether to extend a person credit is up to each individual creditor. There is no law that dictates how long you must wait after filing for bankruptcy before you can seek a credit card or loan.

Creditors vary greatly from one another in their willingness to grant credit to a person who has recently filed for bankruptcy. While bankruptcy can remain on your credit report for up to 10 years, it is quite possible to establish good credit within a short time after filing for bankruptcy.

Obtaining and using credit is critical to your ability to improve your credit score after bankruptcy, which is why financial experts recommend that you apply for a secured credit card. With a secured credit card, you are given a line of credit equal to an amount of money you deposit with the issuing bank. You may be able to find one that converts to an unsecured credit card after 12 to 18 months of on-time payments.

Another important step you can take to rebuild your credit after bankruptcy is ensuring that your credit report is accurate. Review a copy of your credit report to ensure you’re your discharged debts are no longer listed as open and overdue.

The bottom line is that credit will be available to you even after you file for bankruptcy. You won’t have to wait until the bankruptcy disappears from your credit report before you will be able to obtain a loan or credit card.

Here are six common mistakes that debtors make when they are considering filing for bankruptcy – mistakes that can lead to additional debt and even to having your bankruptcy petition dismissed.

Avoid the following mistakes to ensure that your bankruptcy petition is successful and that as much debt as possible is discharged:

1. Running up credit card bills once you’ve decided to file for bankruptcy: Some debtors mistakenly believe that they can charge as much to their credit cards as they want since their debts are going to be eliminated in bankruptcy. The fact is, however, certain debts you incur within 90 days before filing for bankruptcy are non-dischargeable – which means you’re left with the bill and you won’t get the clean slate you were hoping for.

 2. Transferring property out of your name: Often consumers mistakenly believe that they can protect assets such as their home or car by giving it to a family member before they file for bankruptcy. Under the law, a bankruptcy trustee has the authority to reverse transfers of property if those transfers were made in an attempt to hide assets from creditors. Undertaking these transfers is typically unnecessary anyway because property exemptions allow debtors to keep much of their property after filing for bankruptcy.

3. Repaying family members:Under bankruptcy law, you cannot treat one creditor more favorably than another, and that includes family members.Payments that you make to family members within one year of filing for bankruptcy may actually be reclaimed by the bankruptcy trustee and then distributed proportionately amongst your creditors.

4. Liquidating your retirement account: In general, retirement accounts are considered exempt property in bankruptcy filings. By cashing out your retirement accounts, you could lose your security for the future while still being left with considerable debts.

5. Using an equity line of credit to pay off debt: Under bankruptcy law, you typically have the ability to claim an exemption for equity in your home, which means that you retain that equity even after you go through bankruptcy. If you convert your equity into debt before filing for bankruptcy, however, you may be left with new debt that will be non-dischargeable, meaning you will still be responsible for paying it off even after your other debts have been wiped out.

6. Failing to be completely honest with your bankruptcy attorney: Unless your bankruptcy attorney has complete and accurate information about your debts and assets, they cannot properly file your bankruptcy petition. By withholding information from your bankruptcy attorney, you are taking the chance of having your bankruptcy petition dismissed as well as losing out on assets you may otherwise have been able to keep. Attempting to hide an asset can even result in criminal charges.

Remember, your bankruptcy attorney is there to help you, not judge you – there is no reason why you can’t be completely open and honest with your bankruptcy attorney throughout the entire process.

The two most common types of consumer bankruptcies are Chapter 7 and Chapter 13. In a Chapter 7 all of the debtor’s property is placed into an estate which is controlled by the bankruptcy trustee. While no property physically changes hands (at least not at the beginning of the case), the trustee and bankruptcy court have broad legal power over your property. If you have money in a bank account on the day you file, your bank account and money are assets of the bankruptcy estate. You are no longer free to transfer funds or assets as they now belong to the bankruptcy estate.

Take for example that you have $5,000 sitting in your checking account on the day you file bankruptcy. That money is property of the Chapter 7 bankruptcy estate and is no longer yours to control or use. If you take the $5,000 out of the bank the day after filing to pay your mortgage payment and other bills, the Chapter 7 trustee can seek to recover those funds, either from you or from the payee.

During a Chapter 13 bankruptcy the debtor retains possession and control over his or her property, and is free to use any funds in the debtor’s bank account. An accounting is performed and the debtor’s property is classified as either exempt or non-exempt. Non-exempt property is not taken from the debtor (as is often the case in a Chapter 7), but the Chapter 13 debtor is required to pay unsecured creditors a sum equal to the amount of non-exempt equity. For instance, if there is $5,000 in the debtor’s bank account, the debtor may only be able to exempt a portion of the entire sum. The non-exempt portion must be paid to the creditors through the debtor’s Chapter 13 plan (over three to five years).

Cash in a bank account can be a problematic issue for a debtor. Avoiding these problems is the joint responsibility of the debtor and the debtor’s bankruptcy attorney. Timing is critical to minimizing your financial exposure. An experienced bankruptcy attorney can help you maximize the benefits of the bankruptcy laws and navigate around any pitfalls. 

One of the most common questions asked by bankruptcy clients is, “Can I go to jail if I can’t pay my debts?” The general answer is no, there are no debtors’ prisons. The federal judicial system abolished debtors' prisons in 1833, and most states did the same during the 1830s and 1840s.

But that’s not exactly the whole story. A person can be jailed by a court for non-payment of many debts including unpaid taxes, court-ordered debts or fines, and non-support issues such as criminal non-support or owed child support. Additionally, a court can imprison a person to coerce compliance. Just ask H. Beatty Chadwick, the Pennsylvania lawyer who spent 14 years in jail for failing to comply with a court order.

Chadwick, now 73, was ordered to retrieve $2.5 million from an off-shore account and place it into a court-controlled account until his divorce was settled. He told the court that the money had been lost in a bad business deal, but the court did not believe him. Chadwick was ordered to jail for contempt of court until he produced the $2.5 million. Fourteen years later, in July of 2009, Chadwick was released when the last in a long series of judges (several who are now deceased) ruled that his continued imprisonment would be punitive instead of coercive. In other words, after 14 years it was obvious either Chadwick would not or could not pay up.

While debtors’ prisons are illegal, the threat of imprisonment still remains for some debt issues. It is important that anyone with serious debt problems to seek competent legal advice. It is equally important to provide honest information and documents to your attorney.  

You cannot pick and choose which debts to list in your bankruptcy petition. You must list all of your debts, including credit cards and debts you owe to friends and family members.

Intentionally leaving a debt off your bankruptcy petition is against the law. When you sign a bankruptcy petition, you are certifying under penalty of perjury that all of your assets and debts are listed. During the meeting of the creditors, you will also be asked under oath if all of your debts have been listed on the petition.

Even though you have to list a particular debt, there is nothing in the law that prevents you from voluntarily repaying the debt after it has been discharged. In fact, with secured debts, such as mortgages and car loans, you can choose to reaffirm the debt in order to keep the property.

The Dallas News reports that the Dallas-Fort Worth area has seen a decrease in foreclosure filings in February, according to Foreclosure Listing Service.

Home foreclosure postings for the four-county area (Dallas, Tarrant, Collin and Denton) totaled 4,695. That’s a 20% decrease from the nearly 6,000 postings recorded in January.

This month’s number of postings also represents a 4% decrease from February of last year. In fact, it’s the lowest foreclosure total for a February sale in three years in the Dallas-Fort Worth area.

The largest decline in foreclosure filings was seen in Collin County, where postings were down 9% from a year ago. Dallas County has seen a 7% decrease, followed by a 4% decrease in Denton.

Only Tarrant County is up from last year, with a 2% increase compared to the same period in 2009.

CEO of Foreclosure Listing Service George Roddy Sr. says the decline is welcome news but cautions against jumping to any conclusions. “While this decline may be what we have been waiting to see, a change for just one month does not establish a new trend. We will just have to wait to see what happens next month.”

If you are a Texas homeowner facing foreclosure, talk to a bankruptcy attorney today to learn more about your financial options. Bankruptcy may be able to stop the foreclosure and allow you to keep your home.

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.

The number of Texas homeowners filing for bankruptcy to avoid foreclosure on their homes is on the rise according to a recent study.

An analysis of post-bankruptcy cases of homeowners in 60 Texas counties was done by Foreclosure Listing Service. Included in the study were bankruptcy cases filed in courts in Dallas, Fort Worth, Sherman, San Antonio, Houston and Austin.

In their analysis, Foreclosure Listing Service found that $2.28 billion worth of real estate was affected by a bankruptcy filing in 2009. That’s an increase of 26% over the $1.92 billion figure from 2008.

The overall number of properties affected was higher, too. In 2008, 11,171 properties were affected by bankruptcy. In 2009, the number increased by 9% to 12,170.

The U.S. bankruptcy court in Fort Worth handled 3,154 properties affected by a post-bankruptcy filing in 2009, up 3% from 2008 when the number was 3,064. The dollar volume increased 10% from $420.4 million in 2008 to $464.5 million in 2009.

In Dallas, the number leapt even higher. In 2009, 4,764 properties were affected by a post-bankruptcy filing, 21% higher than the 3,952 properties affected in 2008. The dollar volume saw a significant increase of 38% from $548.4 million in 2008 to $757.9 million in 2009.

For more on this look at bankruptcy and foreclosures in Dallas and Fort Worth, Texas, click here for the article from the Star-Telegram.

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.

When you file for bankruptcy, you must make one appearance in court. This appearance is formally called the meeting of creditors. It has been given the nickname of “341 meeting” because it is required by section 341 of the bankruptcy code.

The trustee assigned to your case presides over the meeting and will ask you questions about your assets, liabilities, bankruptcy petition, schedules and related documents that you have filed. You will be sworn in and must answer these questions under oath. The meeting will be recorded either on video or by a court reporter.

Your creditors are invited to attend the 341 meeting, but they are not required to be there and it is rare for creditors to come. Creditors, if they do come, are allowed to ask you questions as well.

The 341 meeting is not like a trial. You do not have to “prove” your case. All you have to do is answer the trustee’s questions fully and honestly. The trustee is simply verifying the information you have provided in your filings and determining whether any information may be missing.

These meetings are typically quite short, usually lasting only about 15 minutes, and your Texas bankruptcy attorney can attend the 341 meeting with you and answer any questions you may have about the process.

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.

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.

A bankruptcy trustee is the individual assigned by the court to administer a bankruptcy case. Bankruptcy trustees are appointed by the United States Trustee, who is an officer of the Department of Justice.

The role of a bankruptcy trustee varies depending on whether it is a Chapter 7 or a Chapter 13 bankruptcy.

In a Chapter 7 bankruptcy case, the role of the trustee is to determine whether any of the debtor’s assets must be liquidated, review the claims of exemption and evaluate whether the debtor is entitled to a discharge.

For purposes of a Chapter 7 bankruptcy proceeding, the trustee basically acts as a representative for the debtor’s creditors. The trustee can object to exemption claims or oppose the debtor’s discharge. Those issues are then decided by the bankruptcy judge.

The trustee in a Chapter 13 bankruptcy case performs the same basic duties as a Chapter 7 trustee. The difference is that a Chapter 13 trustee has the additional responsibility of  disbursing the payments made by the debtor under their Chapter 13 repayment plan.

For free legal advice on Texas bankruptcy laws, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply 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.

Under the new bankruptcy laws, tax debt is treated the same way for both Chapter 13 and Chapter 7 bankruptcy.

In order for a tax debt to be discharged under Chapter 13 bankruptcy, five specific criteria must be met:

1. The tax return was due at least three years ago: The due date for the return must be at least three years before the bankruptcy petition was filed.
2. The tax return was filed at least two years ago: The return must have been filed a minimum of two years before the bankruptcy petition was filed.
3. The tax assessment is at least 240 days old: The IRS must have assessed the tax a minimum of 240 days before the bankruptcy petition was filed.
4. The tax return was not fraudulent: The return must not be frivolous or fraudulent.
5. The tax payer did not commit tax evasion: The bankruptcy petitioner must not be guilty of evading tax laws.

Note also that before a Chapter 13 bankruptcy will be granted, the petitioner must prove that they filed their four previous tax returns with the IRS. The petitioner must also provide the bankruptcy court with a copy of their last tax return.

For free legal advice about Chapter 13 bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. 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.

The Bankruptcy Judges Division of the Administrative Office of the United States Courts has published a 77 page Ebook and nine short online videos to explain the bankruptcy process. The series entitled “Bankruptcy Basics” provides basic information to debtors, creditors, and to the general public on different aspects of the federal bankruptcy laws. It also provides a basic explanation of the different bankruptcy chapters and answers commonly asked questions.

The nine part video series includes the following topics:

Part 1: Introduction - Bankruptcy is a legal process that provides relief to many individuals who can no longer pay all of their debts.

Part 2: Types of Bankruptcy - There are three main types of bankruptcy cases for individuals, the most common of which are chapter 7 and chapter 13.

Part 3: Limits of Bankruptcy - Some debts cannot be discharged in a bankruptcy.

Part 4: Filing for Bankruptcy - In order to file for bankruptcy, an individual must take a credit counseling course and accurately complete and file a number of documents.

Part 5: Creditors' Meeting - Every debtor is required to appear at a creditors' meeting conducted by a trustee who asks the debtor questions about the debtor's financial condition and gives creditors the opportunity to do the same.

Part 6: Bankruptcy Crime - A debtor must be honest and accurate in dealing with the court or face serious consequences, including being charged with a bankruptcy crime.

Part 7: Court Hearings - In some cases, a debtor may be required to appear at hearings before a bankruptcy judge.

Part 8: The Discharge - Debtors are usually able to discharge most or all of their debts. Once a debt is discharged, a creditor may not attempt to collect it from the debtor.

Part 9: Legal Assistance – Debtors are strongly encouraged to find competent legal counsel.

Please be advised that while the court’s resources are excellent sources for general information, the courts cannot give legal advice, and your unique situation will certainly require the advice of a competent bankruptcy attorney.

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

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.

Yes, you can still purchase a home after filing for bankruptcy. Bankruptcy does not create any type of legal barrier to home ownership. As long as you are otherwise creditworthy, you can buy a house after you have filed for bankruptcy.

Also, the property you acquire after you file for bankruptcy, such as a new home, is not subject to the claims of your pre-filing creditors. You can purchase a home without fear that your past creditors will try to repossess it from you in order to fulfill your old debts.

As mentioned above, the issue really boils down to whether mortgage lenders see you as creditworthy. Most everyone needs a loan in order to be able to afford to buy a house. These days, bankruptcy typically ceases to have a real effect on your credit within about two years after you file. That means that within 24 months, many people who have filed for bankruptcy will qualify for a loan on as favorable of terms as they would have had they not filed for bankruptcy.

To learn more about the legal effects of bankruptcy, contact the bankruptcy lawyers of Fears | Nachawati today for free legal advice. Simply email us or phone us toll free at 1.866.705.7584.

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

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

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

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

Typically student loans are not discharged in bankruptcy. In order to have your student loans discharged, you must be able to show that repaying your student debt will impose an “undue hardship” on you and your dependents.

It is difficult, but not impossible, to make this showing. However, you generally will not be able to prove undue hardship unless the court finds that you are physically unable to work and have no chance of gaining future employment.

In order to have your student loans discharged, you must file a separate motion and present your case to a judge. Both privately funded and federally funded student loans are treated the same way.

For free legal advice on bankruptcy, including the effect of bankruptcy on student loans, contact Fears | Nachawati today. To speak with one of our experienced bankruptcy lawyers, simply email us or phone us toll free at 1.866.705.7584.

One of the main criteria that determines whether you are eligible to file Chapter 13 bankruptcy is the amount of debt you currently have. To be eligible to file Chapter 13 bankruptcy, you must have less than $336,900 in unsecured debt and less than $1,010,650 in secured debt.

In order to file for Chapter 13 bankruptcy, you must also reside in the United States and have a regular income. Specifically, you must be able to show the court that you have sufficient income to meet your repayment obligations. Additionally, you must have received credit counseling within the preceding 180 days.

Other criteria that must be met in order to file for Chapter 13 bankruptcy are:

• You must not have been granted a Chapter 7 bankruptcy discharge in the past 4 years.
• You must not have been granted a Chapter 13 bankruptcy discharge in the past 2 years.
• You cannot have had a bankruptcy petition dismissed within the past 180 days because of failure to appear before the court, failure to comply with a court order or a voluntary dismissal after your creditors tried to recover property through the bankruptcy court.
• You must have filed both your federal and state income tax returns for the four years preceding your bankruptcy filing date.

To find out if you are eligible to file for Chapter 13 bankruptcy, contact the bankruptcy attorneys of Fears | Nachawati today. To receive free legal advice on bankruptcy, 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.

Many people who were in financial crunch a few years ago are facing the same dilemma once again. As a result, many bankruptcy attorneys are being asked:

Can I File Chapter 13 After Filing A Chapter 7? Yes, you can file for Chapter 13 any time after your Chapter 7 bankruptcy is discharged.

Can I file Chapter 7 if I filed Chapter 7 a few years back? Only if it was over 8 years ago. But as an individual (versus a corporation) you have the option to file a Chapter 13 any time after your Chapter 7 bankruptcy is discharged.

How do I know when my Chapter 7 bankruptcy was discharged? You should have or will receive a notice from the bankruptcy court where you filed your Chapter 7 bankruptcy.

Most people who file a Chapter 13 bankruptcy are trying to save their homes from foreclosure, so it may be a better option than a Chapter 7 bankruptcy where you may have to sell your home and use any equity you may have to pay your creditors. For more specific information on your options based on your personal information, it is best to get advice from an experienced bankruptcy attorney.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation on bankruptcy and your eligibility options.

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.

Chapter 7 and Chapter 13 bankruptcy differ significantly from one another in several major aspects. The main difference, however, is that with Chapter 7 bankruptcy, most of your debts are being discharged by the court – you will no longer owe your creditors anything.

With Chapter 13 bankruptcy, on the other hand, you are restructuring rather than discharging your debts. Rather than eliminating your debts, a Chapter 13 bankruptcy sets up a new payment plan under which you pay back all or some of your debts over a designated time period.

Depending on your state’s laws regarding exemptions, you may lose some of your property with a Chapter 7 bankruptcy filing. You do not have to give up any of your property when you file bankruptcy under Chapter 13.

A third major difference between the two types of bankruptcy is the length of time it takes before the slate is “wiped clean,” so to speak. With Chapter 7 bankruptcy, the entire process is complete within approximately 4 months. Because Chapter 13 involves a repayment plan, it takes anywhere from 3 to 5 years to complete.

Both types of bankruptcy have their advantages and disadvantages. A qualified and experienced bankruptcy lawyer can help you understand these differences and advise you on whether bankruptcy is the right decision for your financial circumstances.

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

If you are considering filing bankruptcy, it is important that you are aware of both the advantages and disadvantages of taking this legal action. Bankruptcy, while it may be the right solution for your debt problems, is not without its downside.

First is the effect that bankruptcy will have on your credit. Bankruptcy remains on your credit report for as much as 10 years. During those 10 years it will be difficult for you to obtain credit and loans. If you are approved for a loan, it will likely be at a much higher interest rate. 

Even when bankruptcy is no longer on your credit report, you will always have to answer yes to having had a bankruptcy when asked on an application for a credit card or loan.

The second downside to filing for bankruptcy is the effect that it can have on your future employment prospects. Certain industries will not hire individuals who have filed for bankruptcy because they are considered to be high risk.

A third potential downside to bankruptcy is the effect that it can have on your ability to rent housing. Applications for rental housing often include credit checks, and having a bankruptcy on your credit report can result in a denial of your application.

Fourth, having a bankruptcy on your credit report can also adversely impact your ability to obtain car insurance. Some car insurance companies will deny your request for insurance, and others may charge you much higher premiums.

Last, you should also consider the cost of filing bankruptcy. Bankruptcy is not free. Once all is said and done, it will likely cost you around $2000 to file bankruptcy.

If you’re considering filing bankruptcy, you are well advised to first speak with a qualified bankruptcy attorney. The bankruptcy lawyers of Fears | Nachawati will provide you with a free initial legal consultation. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

Earlier this year a bill that would have given bankruptcy judges the authority to modify home mortgages was soundly defeated in the Senate after intensive lobbying by the financial industry. After the defeat Sen. Dick Durbin said of the bank lobbying effort, “Frankly, they own the place.”

Six months later, it is apparent that legislation designed to encourage home loan modification between lender and home owner is impotent. The “Home Affordable Program (HAMP)” and the 2008 HUD “Hope for Homeowners” are voluntary programs that have proven too costly and cumbersome to be effective. The Huffington Post recently characterized the situation this way:

“The Obama administration had high hopes for the law Congress passed intended to encourage mortgage modifications. The law is all carrot, however, and no stick. Cramdown is the stick. If banks think they could get hit in bankruptcy court, they're more likely to bargain.”

Rising unemployment rates and mounting home foreclosures are putting new pressures on Congress to do something. Some lawmakers are revisiting the idea of bankruptcy cramdown to encourage voluntary modification by lenders, or to enable forced modification by the bankruptcy courts. Passage of this cramdown legislation would give Federal bankruptcy judges the authority to modify bankruptcy debtors’ mortgage contracts by lengthening terms, cutting mortgage rates, or reducing loan balances. The current bankruptcy law allows modification of some contracts, but not home loans.

House Financial Services Committee Chairman Barney Frank (D-Mass.) has announced his intent to push for legislation giving bankruptcy judges the authority to modify home mortgages. The Huffington Post reports that Frank has met with key members of the Senate Banking Committee who are ready to make a serious push at major financial regulatory reform before the year was out.

If you are behind on your mortgage and experiencing difficulty with your lender, consult an experienced bankruptcy attorney for advice. There are many options available to homeowners, and new opportunities are developing, but quick action is still vital to your chances for a positive result. Take control of your situation by learning your rights and legal options.

Contact bankruptcy law firm Fears | Nachawati toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com for a free consultation on bankruptcy.

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

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

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

I recently read a newspaper advice column written by a Certified Financial Planner who suggested that, as a practical matter, there is no difference between ignoring your credit card debt and filing bankruptcy. Well, let’s look at the “practical effects” of ignoring your credit card debt:

First, ignoring credit card obligations will cause a persistent series of harassing telephone calls and letters from credit card companies, collection agencies, and finally law firms. Phone calls are systematically made to the debtor’s home and work, and sometimes to third parties including neighbors, extended family, and your employer. The agencies that collect credit card debt are experts at telephone harassment – it is one of their most important weapons.

Bankruptcy, on the other hand, stops all collection calls.

Second, your credit score will be ruined on a continuing basis. For each month that a credit card goes unpaid, the creditor will report negatively to the credit reporting bureau. Additionally, collection agencies will often further harm your credit score by “resetting” the date of last activity when the account is transferred to a new collector.

Bankruptcy stops all negative reporting. Discharged debts should be identified as “Discharged in Bankruptcy” with a zero balance. The debtor’s credit report and score can begin to recover from the date of the bankruptcy discharge.

Third, you can (and will) be sued. The typical consumer will undoubtedly lose a lawsuit over a legitimate debt. The resulting judgment may include substantial penalties, interest, court fees, and attorney fees. A judgment creditor can collect from your wages, your property, and your bank account. While there are some people who are judgment proof, they are the exception and not the norm. Most people have assets that a judgment creditor can attack.

Bankruptcy prevents all lawsuits and even stops collection actions from judgment creditors.

Many consumer advocates have likened credit card debt to an illness. Like any illness, the cure is not found in ignoring the problem, which will only make things worse. If you are sick from credit cards and are unable to pay your debts, consult with a bankruptcy attorney and find the cure!

Call Fears | Nachawati today for a free consultation regarding you options at toll free 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 

On November 1, 2009, chapter 7 debtors must pass the bankruptcy “means test” using new income figures released by the U.S. Trustee Program. In thirty-two states and the District of Columbia the median income figure for a family of four has decreased. These new figures are not surprising when considering the widespread unemployment and economic hardships our nation has recently faced.

State median income figures are used in the means test to identify debtors who may have the ability to repay some the debts in bankruptcy. When a debtor “fails” the means test by having too much disposable income, the debtor may be denied relief under chapter 7 and must proceed under chapter 13 (a three to five year repayment plan). If a debtor is above the state median income for his or her family size, the chapter 13 repayment plan must last for five years.

The new income figures could make it more difficult for a family in many states to file for chapter 7 bankruptcy protection, or make a debtor’s chapter 13 plan last longer. This added burden seems unfair for families that are struggling with a job loss, or facing a foreclosure due to the economic recession. In most cases the difference is a few hundred to a few thousand dollars annually. The State of Alaska saw the biggest plunge: an income reduction of over $6,000 per year.

If you are contemplating a bankruptcy, speak to an experienced bankruptcy attorney and take the bankruptcy means test. Pass or fail, you have options that your attorney can explain to you.  Contact Fears | Nachawati today for a free consultation to discuss your options at toll fee 1.866.705.7584 or by e-mail at info@fnlawfirm.com. 
 

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.

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

Benefits

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

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

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

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

What is Chapter 7 bankruptcy?

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

How soon afterwards can I buy a car?

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

How to file

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

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

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

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

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

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

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

Bankruptcy fraud is a federal felony that carries a sentence of up to five years in prison and/or a fine of up to $250,000. Some examples of bankruptcy fraud include concealing assets, intentionally filing false or incomplete forms, and providing false information while under oath. Often bankruptcy fraud is accompanied by other serious offenses like identity theft, mortgage fraud, tax fraud, or money laundering.

Bankruptcy fraud can become very complex and may involve the IRS or FBI. The penalty may involve many years of incarceration when coupled with other criminal charges. Other cases are relatively simple like a recent case in Pennsylvania:

A husband and wife were each sentenced to fifteen days in prison by U.S. Magistrate Judge J. Andrew Smyser in the Middle District of Pennsylvania after finding contempt of court for untruthful conduct in their joint bankruptcy case.

According to a press release issued by the U.S. Attorney's Office, Tammy Beecher and Wyatt Beecher filed a chapter 7 bankruptcy petition in May 2007. The filing stated that the Tammy Beecher had no income and that neither debtor operated a business within the previous six years. In fact, the Beechers owned a family business, "Fun 4 Kids Entertainment." Only after the Beecher’s were presented with a coupon for $5 off any party, and reminded by the chapter 7 trustee they signed the bankruptcy petition under penalty of perjury, did the Beecher’s admit that they owned and operated the business.

Bankruptcy fraud can be reported by ex-spouses, banks, and even your neighbors. The Executive Office of the United States Trustees (EOUST) recently launched an internet site that will allow the public to report suspected instances of bankruptcy fraud to the EOUST at http://www.usdoj.gov/ust/eo/fraud/index.htm.

The moral here is: tell your bankruptcy attorney everything. Your attorney can work with you to protect your assets and avoid criminal charges, but only if you tell all. The information you share with your attorney is shielded by attorney-client privilege, a powerful and time-honored protection. While your attorney cannot counsel or assist you in an illegal act, there are many legal options available in every case. If you are in over your head, speak with an attorney and understand your legal options.

Deciding to walk away from a family home is a gut-wrenching decision. Before walking away the prudent person will investigate all of the options, including returning the property to the lender (i.e. a deed-in-lieu of foreclosure), a short sale, or renting the property. Unfortunately, for some walking away is unavoidable, so it is important to know the repercussions.

The first concern is safeguarding the property. Maintaining insurance and basic utility service is important until possession (and in some cases ownership) of the house is transferred. Should you fail to safeguard the property, you may be liable to the lender for damages.

Next, once transfer of title is accomplished (usually through a foreclosure proceeding), the bank may sue you for breach of contract and damages. Sometimes the bank will wait until after it fully realizes all of its damages upon sale of the house, then it will sue for the difference between the amount it recovers and the amount you owed. This is called a deficiency balance and it is recoverable by the lender in most states.

The bank may also forgive the debt difference and issue you an IRS Form 1099C. When this happens the bank is telling the IRS that it has given you a “gift” in the amount of its loss (because you don’t have to pay it back) and you owe income tax on the “gift” amount. You have two options to avoid paying the tax debt: bankruptcy, or the insolvency exclusion in the tax code. The insolvency exclusion requires that you prove that your liabilities exceeded the value of your assets. By filing bankruptcy this type of tax debt will be discharged.

Congress has granted a reprieve from tax debts stemming from the sale of your primary residence. The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) provides that taxpayers do not owe taxes on mortgage debt that was forgiven by the lender. The law only applies to deficiencies during the 2007, 2008, and 2009 tax years.

Finally, walking away from your home will have negative consequences to your credit report. The possible negative items include 120 day late entries, foreclosure, and debt write-off. All of these items have a devastating impact on your credit report and, consequently, your credit score.

If you are contemplating walking away from your home, get the facts! Investigate your options from a qualified bankruptcy attorney. Only a bankruptcy attorney will be able to explain your options including those available under the bankruptcy laws.  Contact Fears | Nachawati for a free consultation to discuss your options by calling toll-free 1.866.705.7584 or by e-mailing info@fnlawfirm.com. 

Bankruptcy is a legal process and a matter of public record. In the past newspapers have published local bankruptcy filings in the “public notices” section. Today this practice is not practical due to the large numbers of bankruptcy filings. Recently the American Bankruptcy Institute projected that individual bankruptcy filings nationwide would reach 1.4 million in 2009. Newspapers report news that is of interest to the community, so unless your name is Donald Trump or Burt Reynolds, your bankruptcy filing simply isn’t newsworthy.

The process of opening a case in the bankruptcy court is actually very confidential. Once you file a bankruptcy petition a notice of the filing is mailed to all of your creditors. Other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court by telephone. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.

Another common way to learn whether an individual has filed a bankruptcy is to use the Public Access to Court Electronic Records (PACER), an electronic public access service that allows users to obtain case and docket information from Federal Appellate, District and Bankruptcy courts via the Internet. PACER registration is free, but the system charges the user $.08 per page.

Finally, some lenders subscribe to bankruptcy information services. These services harvest public records daily and sell the information for a variety of purposes. It is surprising to many debtors in bankruptcy when they receive invitations from businesses seeking to loan money or finance automobiles.

As you can see, the bankruptcy process is actually very confidential. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different.  If you have specific questions about the effects of filing bankruptcy, please consult with an experienced bankruptcy attorney.  Call Fears | Nachawati at toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

·                     Filing bankruptcy on a new card;

·                     Taking a cash advance prior to filing;

·                     Charges for travel or vacation;

·                     A debt transfer from one card to another;

·                     Credit charges while unemployed; and

·                     Charges made after consulting a bankruptcy attorney.

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

The first part of a new federal regulation concerning consumer credit cards is now in effect.  The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (or Credit C.A.R.D. Act) has been billed as increasing protections to consumers and curtailing abusive practices by credit card companies.  These new regulations include: requiring more notice to cardholders prior to an interest rate increase; requiring that people under 21 must have a job or a co-signor in order to get a credit card; and eliminating an abusive practice known as “Universal Default.”

Unfortunately, the Credit C.A.R.D. Act is also having some unintended consequences.  The credit card industry is responding to these increased consumer protections by reducing credit lines and canceling many cardholder accounts without advance notice.  Card companies maintain that they are taking these steps in an attempt to “tighten up” and control their financial risk.  Under the present law the card company must notify you of a card cancellation “within a reasonable time” and many consumers are being surprised by a card cancellation at the register.

Additionally, while the practice of “Universal Default” (raising interest rates on all cards when you default on one card) will soon be against the law, the credit card industry is implementing a new policy to restrict your spending limit or close your account in the presence of negative credit items on your credit report.  In other words, if you default on one card, your cards may be canceled.

Card companies are also exploring new ways to exploit their customers.  CITI has announced that it will institute a $30 annual fee on certain accounts.  Other companies like American Express have increased their fee schedules for late payments, and, in some cases, increased interest rates prior to the new law taking effect.  American Express is not alone. A survey by Pew Charitable Trusts found that interest rates on credit cards have increased an average of two percent since last December.

Fortunately, consumers who find themselves victimized by credit card companies have a powerful tool to fight back: the United States Bankruptcy Code.  The bankruptcy laws protect consumers from the crushing debt that card companies enjoy placing on the average American.  If you are experiencing financial distress from the abusive practices of the credit card industry, consult an experienced bankruptcy attorney and discuss your options. Call us for a free consultation by dialing toll free 1.866.705.7584 or e-mailing info@fnlawfirm.com. 

Quite a bit of mystery surrounds the bankruptcy trustee.  Generally, the person identified as the bankruptcy trustee in a Chapter 7 case is a “panel trustee,” also called an “interim trustee.”  The Panel Trustee is appointed by the United States Trustee as a local agent to review the debtor’s bankruptcy petition and schedules, and to determine if the debtor has any non-exempt assets available for distribution to creditors.  The Panel Trustee is not a government employee, although he or she is supervised by the Office of the U.S. Trustee (a division of the U.S. Department of Justice).  While the Panel Trustee is required to be independent and disinterested in the debtor’s case, the Panel Trustee works primarily for the benefit of the debtor's unsecured creditors.

The Panel Trustee is almost always the individual that presides over the debtor’s Section 341 Meeting of Creditors.  The Panel Trustee must investigate the debtor’s affairs, examine the debtor under oath, and submit reports to the bankruptcy court and Office of the U.S. Trustee.  At the 341 Meeting the Panel Trustee is required to ask the debtor specific questions outlined in the U.S. Bankruptcy Code.  These questions include:

Did you read the schedules before signing?

Did you list all of your assets?

Did you list all of your debts?

Are the schedules accurate?

Do you want to make any corrections to the schedules?

Do you have a domestic support obligation?

Panel Trustees are paid a flat fee of $60 per case.  In addition, Panel Trustees receive an incentive commission on each dollar they collect from the debtor.  The commission rate is: 25% on the first $5,000 distributed; 10% on the next $45,000 distributed, 5% on the next $955,000, and 3% for every dollar distributed in excess of $1,000,000.  The National Association of Bankruptcy Trustees reports that approximately 90% of Chapter 7 cases are considered “no asset cases” in which there are no assets available for liquidation, either because assets are exempt (protected) by debtors or liened by secured creditors. 

Panel Trustees are usually attorneys or accountants with extensive bankruptcy law and auditing experience.  The bankruptcy trustee is forbidden from offering legal advice to debtors in bankruptcy.  Unfortunately, unrepresented debtors often do not receive the full protection of the bankruptcy laws because they lack the counsel of an experienced bankruptcy attorney.  These unrepresented individuals sometimes find themselves involved in “asset cases” and under the trustee’s microscope.  However, with the proper preparation, and with the experienced counsel of a skilled bankruptcy attorney, your Chapter 7 Bankruptcy can proceed very smoothly – even under the scrutiny of the bankruptcy trustee.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.  Continued spending using credit cards

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

3.  Paying for college without applying for aid

4.  Investing inertia - long-term investment management

5.  Obtaining cash from your home

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