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

 Your bankruptcy filing contains financial information that is accurate as of the day your bankruptcy is filed. This information paints a complete picture of all of your assets, debts, income, and expenses. Generally, the bankruptcy court has jurisdiction over your debts as of the day your bankruptcy petition is filed, called “pre-petition debts.” But what happens if you incur debts after the bankruptcy petition is filed?

The general rule is that post-petition debts are not included in the bankruptcy case. For instance, if you file a bankruptcy case to get rid of credit card debt, but then have a medical emergency the day after filing, the post-petition medical debt is not included in the bankruptcy case. However, the debtor still has options to pay or discharge the medical debt.

First, a Chapter 7 debtor may have two options to discharge the debt: (1) dismiss the case and re-file a second Chapter 7 bankruptcy; or (2) convert the case to a Chapter 13 bankruptcy. Re-filing a bankruptcy case is never a pleasant option, and the second bankruptcy further harms a personal credit file. A Chapter 7 debtor does not have an absolute right to dismiss his case prior to discharge and must “show cause” why the court should dismiss the case.

A second, better option for a Chapter 7 debtor who needs to discharge post-petition debt is to convert the Chapter 7 case to a Chapter 13 repayment case. All debts that arise after the Chapter 7 filing and before the Chapter 13 conversion are included in the Chapter 13 case. Only one bankruptcy case is counted on your credit file, and the post-petition debt may be included in your discharge at the end of the case.

Likewise, Chapter 13 debtors may elect to convert to Chapter 7, if they otherwise qualify. Chapter 13 debtors have an absolute right to dismiss their Chapter 13 bankruptcy case prior to discharge, unlike Chapter 7 debtors. In some cases a Chapter 13 debtor may ask the bankruptcy court to include a post-petition debt in the bankruptcy case. The debtor must file the appropriate motion to include the post-petition creditor in the Chapter 13 repayment plan and file an amended plan providing for full payment of this debt. If the creditor objects to being included in the Chapter 13 repayment plan, the debt will not be added to the plan. However, the creditor is prohibited from collecting the debt until the case is concluded. If the creditor agrees and files a proof of claim, the creditor will then be allowed as part of the Chapter 13 plan.

Post-petition debts can cause a few stumbling blocks for any bankruptcy debtor. Discuss your options with your bankruptcy attorney as soon as you discover any post-petition debt. Acting timely is often a serious consideration and delay could limit your options for paying or discharging your post-petition debt through bankruptcy.

The steady increase in bankruptcy filings since 2005 may have finally leveled off. According to the American Bankruptcy Institute and National Bankruptcy Research Center, fewer individual bankruptcy cases were filed during the first six months of 2011 than the same period in 2010.

“The drop in bankruptcies for the first half of the year shows the continued efforts of consumers to reduce their household debt, and the overall pull back in consumer credit,” said Samuel J. Gerdano, executive director of the American Bankruptcy Institute. The statistics show an overall 7.9% decrease: 709,303 personal bankruptcy filings this year versus 770,117 filings in 2010. More than 1.5 million personal bankruptcy cases were filed last year.

However, not all states are reporting a decrease in bankruptcy filings. Southwestern states, the hard-hit by the housing crisis, are still reporting high bankruptcy rates. Nevada remains the state with the highest number of bankruptcies per capita, although Nevada bankruptcy filings have fallen 16% this year compared to 2010. Bankruptcy filings have dropped significantly in Vermont, West Virginia, North Dakota and Washington, D.C.

So does bankruptcy actually help? Yes! Over 6.2 million personal bankruptcy cases have been filed since 2005, and many of these bankruptcies were filed as joint husband and wife cases. Our national adult population is around 250 million, so a ballpark estimate is that one adult out of 30 filed bankruptcy from January 2006 to July 2011. The national rate of repeat filers is around 10% (different sources estimate this rate at between 8% and 13%), so only one out of ten needed federal bankruptcy relief again. The rest were able to reorganize their finances and move on to a better future.

If you cannot pay your monthly expenses and need debt relief, consult with an experienced Texas bankruptcy attorney and explore your options under the federal Bankruptcy Code. The bankruptcy laws contain many powerful provisions that can assist you in reorganizing your finances, eliminating overwhelming debt, and give you financial peace of mind.
 

 When a bankruptcy case is filed, information about the case is reported on the individual’s credit file. The report lists the date filed, the type of bankruptcy case (i.e. chapter 7, 11, 12 or 13), the case number, the case status, and closing date. The federal Fair Credit Reporting Act (FCRA) permits credit reporting agencies to keep this information on an individual’s credit report for up to ten years. Note that the FCRA does not mandate that reporting agencies list the bankruptcy for ten years; only that bankruptcy information must be removed from the individual’s credit report at that time.

Each credit reporting agency has its own policy regarding the length it reports a bankruptcy case as a public record. In general, Chapter 7 cases are reported for ten years and Chapter 13 cases are reported for 7 years. However, the FCRA does not distinguish between Chapter 7 and Chapter 13 cases and a bankruptcy case under either chapter may be reported for up to ten years.

The FCRA is very clear regarding when the ten year period commences. Credit reporting agencies are directed to exclude bankruptcy case information from an individual’s consumer report ten years after “the date of entry of the order for relief.” The “order of relief” is a bankruptcy term defined in Section 301 of the Bankruptcy Code as the date the bankruptcy case is filed. The day the bankruptcy case is filed is the day the ten year clock begins to run. For instance, if a case is filed on January 1, 2012, then the bankruptcy record must be removed from a credit report before January 1, 2022.

Knowing the time limitation for reporting your bankruptcy information is an important part of the “fresh start” promised by the bankruptcy laws. Filing bankruptcy does not brand an individual for life; bankruptcy relieves the individual of overwhelming debts and provides the opportunity for a second chance at a better future. If you need a financial fresh start, discuss your options with an experienced bankruptcy attorney.

Many individuals trying to make ends meet take on extra work to pay off debt.  In some cases the added income is enough to make a difference.  In other cases the second job makes no difference, or can even make the financial situation worse.

Working a second job can often create additional unexpected expenses.  Additional travel, food, and child care costs are a few added expenses that will eat away at any increased income.  A second job can create more stress on the family when one spouse is working and the other spouse must increase his or her responsibilities at home.

For some people increasing the family's income can have a big negative consequence on a future bankruptcy.  The bankruptcy "means test" is a calculation that determines whether your income is low enough for you to file Chapter 7 bankruptcy.  The means test is designed to prevent individuals with the ability to pay creditors from filing a Chapter 7 bankruptcy.  Higher income debtors must file Chapter 13 and repay their debts over five years.

When a family that would otherwise pass the bankruptcy means test increases its income, there is a danger that the increase will push the income over the threshold and force the debtors into Chapter 13.  Additionally, the trustee may flag the case for abuse when a debtor voluntarily quits a job and decreases the family income prior to filing bankruptcy.  The debtor is demonstrating that he could afford to repay something, but has chosen to not pay creditors by quitting the second job.

If you are struggling with debt, consult with an experienced bankruptcy attorney before taking on a second job.  It is important to have an understanding of the risks involved and a clear strategy for getting out of debt.  As the saying goes, "Hope for the best, but plan for the worst."  Just make sure that your plan doesn't leave you in a worse financial position.

Fears & Nachawati Law Offices

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Facebook is an internet social networking site that is just six years old, but it already boasts over 500 million active users.  That’s about 1 in 14 people in the world.  Facebook is a great way to stay in touch with friends and family, or even network for business.  Unfortunately, many debt collectors have discovered that Facebook can be a gold mine for personal and financial information.

The typical scenario goes like this: the “under cover” debt collection agent will make a friend request in order to gain access to the debtor’s private information and friends.  Once the friend request is accepted the agent will monitor the posts and updates of the debtor, or may contact the debtor’s friends for information.

In many cases the agent is successful in locating assets or income that can be attacked by the collection agency.  In some extreme cases collection agents have discussed the delinquent financial obligation with the debtor’s friends and family in order to cause embarrassment and coerce payment.

Is this legal?  In some cases yes, in some cases no.  In most cases the debtor has no idea that a debt collector is posing as a friend on the Facebook account.  Information you share on your social network regarding your job, your assets, and even your travel plans may be used against you to collect a debt.

The best strategy is to avoid discussing financial matters on any social networking site.  It is also a good idea to closely screen new friend requests and exclude people that you do not know from your account.  While this debt collection activity is a recent phenomenon, it is certain to continue.  Protect yourself by being cautious about the information you share on-line.

Finally, if you are experiencing a debt problem you can’t solve by yourself, discuss your options with an experienced bankruptcy attorney.  Once your bankruptcy case is filed any contact by a debt collector on a social networking site to your friends or family is a violation of the federal law and can be punished by a federal bankruptcy judge.  Don’t let debt collectors ruin your life.  The facts about bankruptcy and legally eliminate your debts.

When a debtor dies during a pending bankruptcy case, the case may or may not be dismissed depending on a few factors.  The first factor is the bankruptcy chapter that controls the case.  For a Chapter 7 case, the death of the debtor does not terminate the bankruptcy.  For an individual bankruptcy case filed under Chapters 11, 12, or 13, the death of the debtor will affect the bankruptcy case, but does not necessarily terminate it.

During a Chapter 7 bankruptcy the court will continue the bankruptcy proceedings despite the death of the debtor.  The reasoning is that all of the debtor’s assets, exemptions, and debts are determined at the time the case was filed, and the trustee is now in charge of liquidating any non-exempt assets.  The participation of a debtor is not necessary.  Bankruptcy Rule 1016 directs that “the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.”

Death of the debtor during a Chapter 11, 12 or 13 case poses different complications.  Bankruptcy Rule 1016 states that “the case may be dismissed; or if further administration is possible and in the best interest of the parties, the case may proceed and be concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.”  While dismissal of the bankruptcy is common in Chapter 11, 12, or 13 cases, the trustee may seek to continue the case per Rule 1016, the case could be converted to a Chapter 7, or the executor or administrator of the decedent’s estate may petition the bankruptcy court for a hardship discharge.

Since the bankruptcy discharge will only prohibit collection against the debtor personally, the question becomes, how will the debtor’s discharge affect the heirs to the estate?  In most cases, an unsecured debt that is not a joint obligation will not pass to the decedent’s heirs.  However, a creditor could obtain a judgment against the deceased debtor’s estate and attempt to collect from any available property.  Consequently, the discharge is important to provide peace of mind and avoid any potential debt litigation or collection action.

The federal bankruptcy laws are very broad in scope and provide for benefits even under unusual circumstances, such as the death of a bankruptcy debtor.  If you are struggling with debt you cannot afford to pay, speak with an experienced attorney and discover how the bankruptcy laws can help.

The effects of debt can affect your credit, your health, and even your job.  Calls to your work from debt collectors can interfere with your job performance.  Requesting payday advances from your employer can cost you a raise or promotion.  In some extreme cases your debt problem can even get you fired.   

The Cleveland Plain Dealer recently reported that 39 Defense Finance and Accounting Service employees will lose their jobs as a result of their bad credit ratings.  In each case the employee mismanaged finances and failed to meet standards the government requires of employees who have access to sensitive information like Social Security numbers.  While you may not have a government job that requires a security clearance, if your debt issues are affecting your job, it is time to get help. 

Government and many private employers hold the opinion that excessive indebtedness increases the temptation to commit unethical or illegal acts in order to obtain funds to pay off debts.  Private employers that are especially sensitive to their employees’ debt include banks and other financial institutions, retail stores, and any business where the employee might handle cash on a routine basis. 

The federal bankruptcy laws can help you solve your debt problem without losing your job.  Section 525 of the Bankruptcy Code prohibits a government or private employer from terminating or discriminating against an employee who files bankruptcy.  The federal law clearly forbids an employer from firing you on account of your bankruptcy. 

Many employers view bankruptcy as a resolution of a debt problem through a government approved process, which may positively reflect on the employee as an indication of financial responsibility. Eliminating your debts through bankruptcy may also decrease financial pressures and lessen the risk of unethical or illegal acts. 

If your debts are affecting your job, consult with a bankruptcy attorney and explore your options.  Bankruptcy is a federally guaranteed legal process that helps individuals recover from overwhelming financial hardship.  Protect yourself and your job by getting the help and relief you need. Free Consultation

The typical Chapter 7 bankruptcy case will take three to four months.  The Bankruptcy Code has established certain deadlines during a Chapter 7 case that dictate how long the case must remain open.  Additionally, delays by the debtor, the trustee, creditors, or even the bankruptcy court can prolong a case. 

Most debtors are confused as to when the bankruptcy case is finished.  There are actually two different events that happen near the end of a Chapter 7 case: the discharge and the closing of the case.  The discharge is a permanent injunction entered by the bankruptcy judge prohibiting certain creditors from collecting from the debtor personally.  The discharge injunction is ordered near the end of the case, but cannot be entered until after the last day for creditors to file objections has passed.  That day is set by the Bankruptcy Code as 60 days after the date first scheduled for your 341 Meeting of Creditors.  The date is also listed on the 341 meeting notice. Free Consultation 

While the bankruptcy court may enter the discharge order before the case is closed, your case is not finished a final order is issued closing the case.  When there are no assets to distribute, the bankruptcy court will often enter the discharge order and the order closing the case on the same day.  If there are assets to distribute or objections to the discharge of a debt, your case may remain open for several months.  Statistically, only one in twenty five Chapter 7 cases have assets to distribute to creditors.  The typical Chapter 7 case is discharged and closed soon after the objection deadline passes. Free Consultation 

Your Chapter 7 case will likely take between three to four months from start to finish.  One of the main advantages in hiring an experienced bankruptcy attorney is the benefit of the attorney’s efficient processes that will take your case from start to finish without complication. Your attorney can identify and correct potential problems before you file your case, and avoid any delays getting you the relief you need.  If you are considering bankruptcy, consult with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. Free Consultation
 

When a bankruptcy debtor inherits money from someone who dies within 180 days of the date the debtor filed bankruptcy that money becomes part of the debtor’s bankruptcy estate.  The inherited money that becomes part of the bankruptcy estate is used to pay your creditors.  This is true even if you have received a discharge and your Chapter 7 bankruptcy case has closed.  Free Consultation  

For instance, if you file a Chapter 7 bankruptcy on April 1, and your great aunt dies on September 28 (within 180 days of the bankruptcy filing date), any money you receive from your great aunt’s estate must be turned over to the bankruptcy trustee.  It does not matter when you receive the money or when your case was discharged.  You might receive the inheritance years later, and it must be turned over to the bankruptcy trustee for payment to creditors.  You may be charged with bankruptcy fraud (a federal crime) if you fail to inform the trustee of your inheritance or turn over the money. Free Consultation 

If the trustee receives inherited money, your case will be reopened and a bankruptcy estate is formed.  Notices to creditors are sent and the trustee will distribute the funds to creditors.  In some cases you will be able to keep some of the money, and in other cases some of the funds may be returned.  Free Consultation  

Inherited property is treated the same as cash.  If you receive a car or a family heirloom, the property must be turned over to the trustee.  In some cases you may be able to exempt inherited property or the trustee may consider the value of the inheritance too small or burdensome to liquidate and distribute. Free Consultation 

If you are considering bankruptcy and are aware of a significant chance of someone leaving you inheritance money, speak with your attorney.  There are options to avoid turnover including rewriting the will to cut you out, or setting up a spendthrift trust.  A spendthrift trust cannot be reached by creditors.  Consult with an attorney to properly create a spendthrift trust or rewrite a will.  There is nothing illegal or immoral about estate planning and your loved one may prefer leaving money to you rather than your creditors. Free Consultation

Just as the title implies, filing for Chapter 7 is like hitting the reset button on your favorite electronic device. Everything disappears. After your Chapter 7 is discharged, you end up erasing the debt that was once there. In order to qualify for a Chapter 7 bankruptcy in the Fort Worth/Dallas region, you must:

1.      File a Chapter 7 petition.

2.      Pay your filing fee to the court clerk. There are waivers available for some applicants.

3.      Take a credit-counseling course approved by the bankruptcy court within 6 months of filing for Chapter 7.

While the initial process seems simple enough, the petition contains many forms that require a strong understanding of bankruptcy law. The court clerk cannot help you fill

out the forms. Once the forms are filled out appropriately and submitted to the bankruptcy court, an automatic stay is put in place that will immediately halt all collections efforts from creditors. This mean they will no longer be able to make harassing phone calls or place liens on your assets. In some cases, liens already in place can also be reversed.

Once your Chapter 7 bankruptcy is discharged, you are basically starting over with a clean slate. The debts are erased and you will no longer be held liable to pay them.

For more detailed information how Chapter 7 can help you start over debt free, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com.