Declaring Bankruptcy: A Strategy for Twenty-Somethings?

If you’re in your twenties, things could be a little rough right about now. For recent college graduates, job prospects are tough. Interest rates on college loans – and for debt in general – are on the rise. Moreover, statistics suggest that you’re likely to go in-and-out of the job market, make several expensive moves and experience costly personal turmoil in the near future. With this in mind, declaring bankruptcy may be tempting.

 

For some twenty-somethings, declaring bankruptcy may be the right decision. Filing Chapter 7 or Chapter 13 bankruptcy can be like hitting the “reset” button, letting you shed credit card debt, become revenue positive and reduce your stress level. And for debtors who end up so deep in debt that bankruptcy is the only way out of the hole, filing sooner may be better than filing later.

 

On the other hand, other twenty-somethings may make the wrong choice if they file. Student debt is infamously difficult to shed in bankruptcy, meaning that your primary financial obligation may stay on your balance sheet. Moreover, by putting a personal bankruptcy on your credit rating, you could reduce your ability to access the credit you need to start out in life. This includes formal credit – like a car or home loan – as well as informal credit – like whether an apartment owner will rent to you.

 

The bottom line is that these decisions are difficult and that for many debtors in their twenties, it’s best to get good advice. Fortunately for you, the attorneys at the law firm of Fears Nachawati specialize in this area of law and, as a result, can guide you through the tough decisions you may face. Find out how we can help by contacting us today. The consultation is free and the advice could be priceless.

The Power of the Automatic Stay

If you’re behind on your debts, it probably feels like you’re at a disadvantage when it comes time to negotiate with your creditors. And, in many ways, you may be. However, for debtors who declare bankruptcy, one provision of the Bankruptcy Code in particular – the automatic stay – may level the playing field.

 

The automatic stay is sometimes referred to as “the big stop sign.” In general, the automatic stay puts a stop on all legal proceedings, including wage garnishments and the repossession efforts of creditors. For people who are in a losing battle for their home, car, paychecks or home furnishings, the automatic stay could be just what they need.

 

On the other hand, it’s important to understand that although the automatic stay is powerful and useful, it isn’t a silver bullet. The automatic stay has its limits. For instance, it won’t put an end to child support payments or criminal proceedings. And if you don’t make monthly payments on your secured loans, its benefits could be short-lived.

 

The dedicated, experienced and knowledgeable bankruptcy professionals at the law firm of Fears Nachawati are prepared to answer your questions about the automatic stay and the many other bankruptcy provisions that might help you. For your free consultation, call us today. We’re ready to help you.

Bankruptcy is Not Insolvency

Although down-on-their-luck debtors are often said to be “bankrupt,” that turn-of-phrase is a bit inaccurate. While it’s true that people who can’t pay their debts often declare bankruptcy, the two terms mean different things.

 

An individual is insolvent when he or she cannot meet his or her financial obligations as their debts come due. An individual is bankrupt when he or she takes a certain legal action, namely, filing bankruptcy, wherein he or she files a petition with a bankruptcy court as provided under federal law (the Bankruptcy Code).

 

The difference is more than mere semantics. An individual who is insolvent may not chose to declare bankruptcy. Creditors may exercise their rights under state law or they may simply wait and hope that the debtor makes a payment at a later time.

 

Likewise, a bankrupt debtor is not necessarily insolvent. The Bankruptcy Code does not impose an insolvency requirement. As a result, some debtors decide to make a strategic bankruptcy filing, declaring bankruptcy before they hit rock bottom. Consequently, they are often left with more available financial assets and cash-on-hand than if they waited until the bitter end.

 

Are you considering declaring bankruptcy, regardless of whether you happen to be insolvent? You may have questions and, fortunately, as experienced bankruptcy professionals, we may have answers. Find out whether the attorneys at the Dallas law firm are prepared to help you by talking to us today. With years of experience, we help struggling debtors get back on their feet. For your free consultation, call today.

Emotional Neutrality Critical in Personal Bankruptcy

Investors have a term for not letting your emotions get the better of your decision-making: emotional neutrality. In a world where fear can cause a foolish sale and greed can cause a foolish purchase, investors understand how important it is to check your emotions at the door when handling your finances.

 

The benefits of emotional neutrality are equally important in personal bankruptcy. A legal process designed to let you shed yourself of your debts and get a fresh start in life, personal bankruptcy is a critically important tool for people who want to rebuild their finances.

 

The challenge is that bankruptcy is emotional. The hope of financial freedom can produce elation. The fear of failure following your plan confirmation can result in severe apprehension. The tedious and lengthy process can result in boredom and frustration. A successful debtor must play the long game, remaining focused on the end result and not getting distracted by the imperfect means.

 

To maintain emotional neutrality, it’s important to have a skilled, dedicated attorney who can guide you through the bankruptcy process and serve as your emotional ballast, not letting you list too much toward irrational hope and unnecessary fear. The professionals at the Dallas law firm of Fears Nachawati are ready to give you the direction you need. Call us today to schedule you’re free consultation.

Disclose Your Lawsuits

Every year, many Americans unexpectedly suffer a personal injury and must confront large and growing medical bills. They are unable to pay not because they didn’t prepare or spent foolishly; they simply can’t afford the care their injury demands. As a result, they decide to file for personal bankruptcy and the protection of bankruptcy law.

 

In a large number of instances, their decision is the right one. Bankruptcy gives their family and their pocketbook a little breathing space. It also opens important conversations with their creditors, including the health care providers who offered medical services. Lastly, it also let’s them consider whether to move forward with any personal injury claims associated with the party who caused their injury.

 

If this situation sounds familiar, it’s important to remember: you must disclose any active personal injury litigation in your bankruptcy filing. Although it may not feel like your rights have monetary value, that’s exactly how the law – and your creditors – see it. If you’ve sustained an injury because of someone else’s carelessness and you’ve filed a lawsuit in order to prosecute your claims, you must disclose that lawsuit. In the event of a successful tort action, your creditors may have a claim against those proceeds.

 

Don’t run afoul of federal bankruptcy law by failing to disclose pending litigation to which you are a party. It’s a relatively easy misstep to avoid – and an important one. Do you have questions about the relationship between your tort law claims and your bankruptcy filing? The attorneys at the Dallas law firm of Fears Nachawati are prepared to advise you. Talk to us today to schedule your free consultation.

Are Payroll Cards Part of Your Bankruptcy?

Increasingly, national retailers are adopting a new way to pay employees: payroll cards. In the last several years, some national employers like Walgreen’s, McDonald’s and Wal-Mart have begun paying employees with payroll cards instead of cash or check.

 

Similar to debit cards, payroll cards have many of the benefits of other A.T.M.-compatible cards. Like debit cards, payroll cards may be used to purchase items online. Employees can check their account balance with a few clicks of a mouse or touches on a screen. And by holding digital currency rather than a check, unbanked employees avoid the fees of a check cashing service.

 

Of course, as with debit cards, payroll cards have detriments, too. If a cardholder uses an out-of-network A.T.M., they may face a different set of fees. Also, payroll cards can be inconvenient for people who need ready cash for a variety of purposes; it can be difficult to know how much to withdraw at the A.T.M.

 

But what is most important at the moment is not just the virtues and drawbacks of payroll cards. It’s whether these employers received the consent of their employees before dramatically altering the way they compensated their workers. That’s the question that some state attorneys general want to answer. It’s a question you may want to answer, too.

 

If you’re facing financial distress in part because of the difficulties of managing your payroll card, you may consider discussing that with an attorney from the dedicated firm of Fears Nachawati. With years of experiencing handling consumer claims and consumer bankruptcies, we’re prepared to help you consider whether you have valuable claims with respect to your payroll card. Let us advise you. Contact us today for your free consultation.

Elderly Debtors Win in Fourth Circuit Appeals

The first of July was a red-letter day for senior citizens considering whether to file for Chapter 13 bankruptcy. The Fourth Circuit Court of Appeals held in Ranta v. Gorman (In re Ranta), No. 12-2017 (July 1, 2013) that debtors who file for Chapter 13 bankruptcy are not required to list their Social Security income as part of their projected disposable income for purposes of the Chapter 13 means test.

 

In general, the Chapter 13 means test requires that debtors who wish to file Chapter 13 bankruptcy must make payments for 5 years – 60 months – unless their average gross income is less than the median income for similar households in the state. In the event that their average gross income is less than the median household income, they may make payments on a plan for only 3 years – 36 months.

 

For debtors, a shorter payment plan under Chapter 13 is better than a longer one. In fact, Chapter 13 debtors who fall below the median household income figure stand to save thousands of dollars and, literally, years of frustration, anxiety and stress. Thus, one of the critical questions in a Chapter 13 filing is whether a debtor’s projected disposable income exceeds the median household income for his or her state. This question, in turn, is dependent upon simple arithmetic: namely, adding up a debtor’s projected income.

 

Enter the Ranta decision. By excluding Social Security income as part of the projected disposable income calculus, the Fourth Circuit made it easier for Chapter 13 debtors to qualify under the Chapter 13 means test and, consequently, enter a 36 month plan rather than a 60 month one.

 

Want to find out more about Chapter 13 bankruptcy and the case law that may make easier – or more difficult – for you to successfully restructure your personal finances. The dedicated and experienced attorneys at the Dallas law firm of Fears Nachawati may be able to help you. For your free consultation, contact us today.

Understand the Texas Exemptions

Texans are fortunate. They live in a state where taxes are low and opportunities are plentiful. What’s more, our laws are forgiving for people who take chances, make mistakes or fall down on their luck. When facing bankruptcy, Texans find that although time may not be on their side, the law related to exempt assets in bankruptcy is.

 

Texas law shields certain types of property from the reach of your unsecured creditors if you decide to declare bankruptcy. As you confront your financial difficulties, it may be important to remember what assets are exempt – and what assets are not.

 

The Texas homestead exemption is one of the most generous in the country. Regardless of its value, a residence located on no more than 10 acres in the city or 100 acres in the country is exempt from the reach of creditors. For that matter, so are the proceeds of the sale of a residence if you file for bankruptcy within six months.

 

The Texas motor vehicle exemption is generous, too. One vehicle per licensed household member, regardless of its value, is exempt under Texas law. In other words, whether it’s a Mercury or a Mercedes, each driver may keep his car.

 

Third, Texas exemption law protects certain pension, retirement and insurance accounts. For older debtors, these exemptions may be particularly important, as your net worth may be high, but your impending health-related expenses may be even higher. If your wealth has been placed in the right asset classes, you may be able to hold on to your retirement nest egg.

 

Finally, Texas exemption law shields a number of items of personal property, $30,000 for an individual or $60,000 per couple, including firearms, family heirlooms, jewelry, pets and clothing. As you think about how to remember your past, continue in the present and rebuild in the future, these items can be of particular sentimental as well as financial value.

 

Want to know more about Texas exemption law and how it may impact your bankruptcy? The dedicated attorneys at Fears Nachawati are prepared to help you get started with your free consultation. Let us inform your decisions and put your mind at ease.

Your Creditors are Coming!

In his famous midnight ride, Paul Revere made phase a simple phrase, “The British are coming!” The Boston silversmith didn’t say much on his ride into the history books, but he said what mattered: the nature of the threat and the way the threat would appear – not by land, but by sea.

 

One of the most important reasons why you need a dedicated bankruptcy attorney is to issue the warning you need when you face financial difficulty: the nature of the threat your creditors pose and the way that threat may appear. So, just how might creditors come if you default on your payments?

 

You probably won’t be surprised to learn that you lenders will come after assets you purchased on credit. Your car, your home and consumer products like a television or furniture may all be subject to repossession or foreclosure.

 

What may surprise you is that your creditors may also come after your intangible assets, such as bank accounts or earned wages. These repossession efforts can be highly disruptive and embarrassing and may result in your family, friends, co-workers and supervisors knowing that you’re experiencing money problems.

 

The bottom line is that if you’re facing financial distress and falling behind in your payments, in a matter of days or weeks you could lose your car, your income and your house. You can prevent the harshest effects of this process, but you need to act promptly and deliberately.

 

Calling the experienced attorneys at Fears Nachawati may be the right first step for you and your family. With years of experience, we know how to advise you on your legal rights with respect to your creditors. Contact us today for your free consultation.

U.S. Trustee's Office: John Wayne of the Bankruptcy Court

For decades, the actor John Wayne played the part of the sheriff in Western movies. Citizens of frontier towns were able to live their quiet lives, but if they stepped over the line and into criminal conduct, they risked reprimand by the tall, forceful and loud-voiced sheriff.

 

In the context of federal bankruptcy law and bankruptcy courts, the United States Trustee’s Office plays a part similar to that of John Wayne’s sheriff. More specifically stated, the mission of the U.S. Trustee Program is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors, and the public.

 

Attorneys for the U.S. Trustee’s Office have standing in bankruptcy cases to fight for the fair process upon which all of the related parties rely. UST attorneys may take action to prevent fraud and abuse, refer matters for criminal investigation, ensure that fees are reasonable, review disclosure statements, and advocate for changes to procedural and substantive bankruptcy law.

 

Want to know more about the United States Trustee Program and the role they may play in your bankruptcy? The attorneys at the law firm of Fears Nachawati are prepared to answer this and many more important questions. Talk to our professionals today so that you can begin the process of moving toward financial freedom.

Preparing Your Statement of Financial Affairs?

Accurately completing your statement of financial affairs (SOFA) is one of the most important early steps in your bankruptcy proceeding. Like business’s balance sheet, your SOFA should list the entire universe of your assets and liabilities, including which creditors have a priority claim, a secured claim, and an unsecured claim against you.

 

As a general rule, you must list everything you own or owe on your SOFA – even if you are absolutely certain that the listed asset is protected against repossession or the listed debt is uncollectible. In fact, failing to disclose a portion of your assets or liabilities can be a serious civil and criminal offense that may be fatal to your ability to file for bankruptcy and receive a discharge of your debts.

 

Your SOFA may look like a “check the box” form, but appearances may be deceiving. The questions on a Statement of Financial Affairs tend to be nuanced, precise, and comprehensive. To make sure that you complete your SOFA correctly, you should seriously consider speaking with an experienced and qualified bankruptcy professional.

 

The dedicated attorneys at the law firm of Fears Nachawati are prepared to help you. For your free consultation and the opportunity to find the answer to your questions about your Statement of Financial Affairs and, more generally, your bankruptcy, contact us today.

Rising Medical Bills Push Up Bankruptcy Filings

An estimated 1.7 million Americans will file for personal bankruptcy this year as a result of their medical expenses. For most observers, this doesn’t come as a surprise. Factors such as rising health care costs, a soft economy, and reduced health insurance coverage are converging to cause serious financial problems for a sobering number of Americans.

 

What’s more, for every American who declare bankruptcy as a result of unsupportable medical costs, more than 25 more will not declare bankruptcy despite owing more than they can easily pay. While some of these chose not to declare for valid reasons, many others fail to declare bankruptcy because of a lack of information or fear.

 

You don’t have to feel ashamed about filing for bankruptcy as a result of rising medical costs. In many cases, debtors who filed for bankruptcy do so because of a sudden, sharp increase in costs. An extended stay in the hospital, new and costly prescription drugs, or an expensive surgery hit their wallet at a time they least expect. As a result, filing for Chapter 7 or Chapter 13 is really their only option.

 

Want to know more about your options in bankruptcy? The dedicated and experienced professionals at Fears Nachawati are prepared to give you the advice you need to make an informed, fear-free choice. Contact our attorneys today for your free consultation.

Relief, Restructuring and Liquidation

If you’re facing financial difficulties, you may feel like you’re facing challenges without meaningful tools for dealing with them. It’s an understandable feeling and one that virtually every struggling debtor experiences. However, more often than not, that feeling is not an accurate reflection of reality.

 

Debtors may have as many as three meaningful options when dealing with financial distress. First, you may be able to work with your creditors to secure debt relief. In a large number of instances, a private creditor may cut you a break, forgiving some or all of your debt. Your creditor may also propose paying more now – a lump sum – and writing off the remainder. Before you get too frustrated with your financial predicament, it may be wise to explore your debt relief options.

 

Of course, in many instances, your creditor doesn’t want new promises, new money or new agreements. They may just want cold, hard cash. If that’s the situation you face, you may be backed into a corner, forced to consider meeting your obligations in full or filing for either restructuring bankruptcy or liquidation.

 

For debtors who meet the means test, Chapter 13 restructuring may let you keep more of your assets, extend your debt and find a soft place to land. For debtors who do not meet the means test, Chapter 7 liquidation may be the only arrow in your quiver. When that’s the case, it’s important to take every precaution to ensure that you liquidate your debts correctly – the first time.

 

Want to know more about your options – relief, restructuring or liquidation – and what’s the right course of action for you and your family? The dedicated and experienced attorneys at the law firm of Fears Nachawati are prepared to help you. Speak to us today for your free consultation. We’re committed to helping people just like you.

Is Your Retirement Plan Protected in Bankruptcy?

A 401(k), a retirement plan held by millions of Americans, may be one of your most important financial assets. In addition to its value, it represents something powerful for you and your family: the ability to retire. As many debtors consider filing for personal bankruptcy, they often ask: will I be able to keep my 401(k) assets?

 

The short answer is, “Yes – most of the time.” In general, the assets contained in a 401(k) plan are shielded from creditors during Chapter 7 or Chapter 13 bankruptcy. Specifically, Section 522 of the Bankruptcy Code provides an unlimited exemption for retirement assets exempt from taxation such as ERISA qualified and solo 401(k) plans.

 

There is a catch, however. If you withdraw assets from your 401(k) account, you may be required to recognize those dollars as income – and as non-exempt property available to your creditors. Even if you later attempt to return this income to your 401(k) account, it may be too late and the damage to your bankruptcy-protected retirement assets may have already been done.

 

Want to know more about the relationship of your 401(k) account and your pending Chapter 7 or Chapter 13 bankruptcy? The dedicated and experienced attorneys at the Dallas law firm of Fears Nachawati are prepared to answer these and other important questions. To get started with your free consultation, talk to our professionals today.

Should You Consider a Short Sale?

If the value of your mortgage exceeds the value of your house, your home is “underwater.” It’s not an enjoyable position to be in and, what’s more, it probably means that you’re experiencing financial difficulties in other parts of our life, too. Perhaps you’ve even considered bankruptcy.

 

Personal bankruptcy may be a solution to the problems you face. And, if that’s the right course of action for you, the dedicated attorneys and professionals at the Dallas law firm of Fears Nachawati can help you navigate the challenges and opportunities associated with declaring Chapter 7 or Chapter 13 bankruptcy.

 

It’s important to note, however, that bankruptcy may be a more extreme remedy than the one you may actually need. Selling your home for the value of the mortgage (but less than the full value of the property) is known as a “short sale.” For many debtors, a short sale may have the advantage of knocking out your largest financial obligation, freeing up your monthly income and settling with your primary creditor. Additionally, a short sale may leave you with a better credit score than what you might have post-bankruptcy.

 

Short sales aren’t risk free. Depending on your type of mortgage, you may have lingering debt following a short sale. And if you have large amounts of unsecured financial obligations – such as credit card bills – then a short sale may not do enough good to justify the personal and financial costs.

 

Want to know whether bankruptcy or a short sale is your best bet? Our attorneys can help you answer this and many other important legal and financial questions. For your free consultation, talk to a Fears Nachawati representative today. We’re dedicated to helping clients just like you.

What Debts Should You Reaffirm?

Let’s say you’ve decided to declare Chapter 7 bankruptcy. As a general rule, you’ve decided to shed your debts and start with a clean slate. Of course, you’ve also decided to sacrifice many of your assets in order to pay your creditors as much as possible.

 

As with all rules, there are exceptions. And one of the biggest exceptions to the general rule of shedding your debts in Chapter 7 bankruptcy is whether to reaffirm certain, particularly valuable debts. Reaffirming your car debt, for instance, may ensure that you keep your car – a particularly valuable asset for your post-bankruptcy financial future.

 

Reaffirming your car loan isn’t just about keeping your car. It’s about ensuring that you have any car after your bankruptcy. Although a Chapter 7 bankruptcy can serve many valuable strategic ends, it comes with costs. Most notably, you may have to go months – and even years – without meaningful access to credit. Reaffirming certain debts, such as your car loan, may let you hold on to assets that you might not otherwise have.

 

Do you have questions about the strategic nuances of your personal bankruptcy? Hope is not a plan; if you’re in need of a meaningful plan for personal financial restructuring, the attorneys at the Dallas law firm of Fears Nachawati can answer all of your pressing, important questions. Contact us today for your free consultation. We’re ready to help.

Your Credit after Bankruptcy

Although declaring personal bankruptcy has many advantages, one of the principle disadvantages is that it can be difficult to access credit in the weeks, months and even years after your Chapter 7 or Chapter 13 filing. Fortunately, by taking timely, prudent action, you can minimize your interest payments and maximize your credit score.

 

There are many steps you can take. And the best one may be to work out a post-bankruptcy financial plan with the professionals at the law firm of Fears Nachawati. Still, here are three suggestions you may consider.

 

First, review your credit score, credit history and claims against your credit. Make sure that the listed debts are numerically accurate. Also, be sure to check that they are appropriately characterized. Debts that were included in bankruptcy should be labeled as such – as should debts that are not included in bankruptcy.

 

Second, write a budget and live within your means. It’s a lot easier to say than to do, but making the hard choices now will make your life much easier in the near future. Once your financial life has stabilized, you’ll feel a lot more comfortable using credit instruments – like credit cards – when the time comes.

 

Finally, think seriously about when you should reacquire credit – and for what purpose. It’s important not only to steer clear of a bad relationship with credit cards, but also to establish a good one. Future lenders will want to see that you can handle the challenges of credit. At some point, you may want to contract for a limited amount of debt that serves a particular purpose, such as your weekly tank of gas.

 

The team of professionals can help you plan for your future – both in bankruptcy and beyond. Contact our attorneys today for your free consultation.

Are Your Payday Loans Enforceable Against You?

There’s an old concept, known as “usury,” that remains alive and well in Texas law. Usury, the charging of exorbitant interest rates on a loan, is prohibited under state law. Still, the temptation of the unscrupulous to make a quick buck on the unfortunate is simply too much for a large and growing number of lenders who skirt Texas usury law, hoping that they won’t get caught.

 

What’s an appropriate amount of interest to charge a debtor? The short answer is that it depends on the debt. In general, the Texas Finance Code prohibits the lending of commercial loans, debts made primarily for the operation of a business, at an annual interest rate in excess of 28 percent. Likewise, the financing of the sale of a motor vehicle must remain within 27 percent interest. Other appropriate levels of interest depend on whether the debt is for residential or consumer purposes, but the point remains: there really is too much of a good thing for creditors.

 

By way of comparison, most debt from major lenders today is offered at around 5 or 6 percent, so there’s still plenty of money for a creditor who lends at a 20 or 25 percent interest rate.

 

So just how much do some unscrupulous lenders charge for a loan? Incredible as it may sound, some online payday lenders charge an effective interest rate in excess of 500 percent. If this sounds painfully familiar to you, there may be good news: the excessive interest rate associated with this loan may make it unenforceable against you.

 

Want to find out if you’ve been the victim of a usurious loan – and if you really have to pay it? How may this impact your pending or possible bankruptcy? The attorneys at the law firm of Fears Nachawati may be able to help you answer these and many more important questions. To get started with your free consultation, contact us today.

Should You Agree to a Debt Settlement?

Before you agree to a debt settlement, you may want to consider speaking to the dedicated, experienced bankruptcy professionals at Fears Nachawati. For some people who are struggling to make their monthly payments, a debt settlement may be just what they need. For others, however, a Chapter 7 or Chapter 13 may be a faster, cleaner, simpler and more final approach to escaping their indebtedness.

 

Typically, a debt settlement occurs between a creditor and a debtor. By modifying the debt structure in the way a creditor may want – such as extending the payment period, posting additional collateral or agreeing to modified terms and conditions – then a debtor often receives in exchange benefits which they want, such as lower monthly payments. In some cases, such as when the debtor is just missing payments by a few dollars or a few days, a debt settlement may make sense.

 

In other situations, however, such as when the debtor is regularly missing payments or paying considerably less than what is owed each month, a debt settlement may simply prolong an inevitable bankruptcy and, in the process, do more harm than good. Unlike a private settlement, a bankruptcy occurs under the watchful eye of a third party – namely, the federal government – which generally makes sure that consumer debtors play on a level playing field with sophisticated creditors.

 

So, what’s the right move right now: a debt settlement or a personal bankruptcy? The first step is to talk to the experienced and dedicated bankruptcy professionals at Fears Nachawati. Our team of attorneys and advisors can outline your options and provide you with the roadmap you need to move forward successfully. Contact us today for your free consultation.

Is Student Debt Causing You Undue Hardship?

Indebtedness arising out of your time in college or graduate school can be some of the most difficult form of debt to discharge in bankruptcy – but it’s not impossible. Moreover, for debtors struggling under the weight of student loans, bankruptcy may also be an effective strategy for clearing out non-student debt, such as home loans, car loans, credit card debt, and short-term bank loans.

 

In general, bankruptcy courts require a debtor with student debt to demonstrate that the debt “will impose an undue hardship on you and your dependents,” in order to discharge the student debt in bankruptcy. As is often the case with the legal standards, every word in a rule is important, and the standard for the discharge of student debt is no different. Your student debt must be more than a hardship. It must be an undue hardship. Likewise, that hardship must not only impact you, but your spouse or children, your dependents, as well. Not surprisingly, many debtors carrying student debt face hardships, but few face the kind of particular hardship that the rule requires. Still, if you face hardship as a result of your student debt, it may be worthwhile to speak to the attorneys at Fears Nachawati.

 

Many debtors who carry student debt also have non-student debt, too. Even if your student debt is currently non-dischargeable, eliminating portions of your non-student may make it considerably easier for you to manage your personal finances. For some debtors, Chapter 13 restructuring of their personal balance sheet is best; for others, Chapter 7 liquidation – a completely fresh start – is preferable. Find out what course of action is best for you by talking to the professionals at Fears Nachawati today.

 

With years of experience and dedicated expertise, we can quickly assess your financial and legal needs and give you the direction and comfort you want and need.

Federal Reserve Policy and Its Effect on Bankruptcy

For the last several years, the United States Federal Reserve Bank, the financial entity with the ability to set interest rates, has kept the cost of borrowing money low in an attempt to encourage economic growth and prevent a “double-dip” recession. In Texas, during this period, the economy has been improving. But it’s difficult to know whether this growth is because of – or in spite of – Fed policy.

 

And some suspect that the number of bankruptcies in D/FW is artificially low as a result of Fed policy and that a flood of filings may be just around the corner.

 

In North Texas, the Fed’s low-interest policy has likely resulted in a significant decrease in the number of business bankruptcies. The first quarter of 2013, for instance, saw an 11 percent decline from the same period in 2012 in Chapter 11 filings. Looking back even further to 2011, the decline is even more steep.

 

Critics of the Fed’s “cheap money” policy and its effect of discouraging Chapter 11 filings have prompted some to call this the era of “extend and pretend.” Banks are extending loans, they say, and pretending that their debtor’s underlying business reality is not as bad as it appears.

 

If these predictions are accurate, debtors and their creditors may soon find that even a modest increase in interest rates may kick off a wave of business filings. That may, in turn, put pressure on bankruptcy professionals and courts to process the significant influx of bankruptcy filings.

 

Want to know the extent to which your small business is exposed to the risk that interest rates increase in the months ahead? Do you have your own “break the glass” plan in which you begin taking steps toward bankruptcy? Answer these questions and many more important concerns like them by talking to the dedicated professionals at Fears Nachawati today. We’re prepared to advise you.

Has a Debt Collector Harassed You on Social Media?

Texas and federal laws are designed to provide statutory guidance to debt collectors – and statutory protection to consumers. For instance, the Texas Deceptive Trade Practices Act (DTPA) provides a legal cause of action against a debt collector who makes certain false or misleading statements and the Federal Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

 

Similarly, the federal Bankruptcy Code requires debt collectors to stop all state debt collection activities once the automatic stay is in effect. Typically, the stay goes into effect upon the filing of your bankruptcy case, so in the customary circumstance once you make the decision to declare bankruptcy, your debt collectors should make the decision to stop any effort to secure payment. In fact, you can get in serious trouble for making side payments to debt collectors when the stay goes into effect.

 

Unfortunately, despite these consumer protections and remedies, some debt collectors have little regard for your – or your other creditors’ – rights under state and federal law. And a number of pioneering, tech-savvy collectors have gone so far as to stalk debtors on social media sites like LinkedIn, Facebook and Twitter. In some ways, social media is a new and developing area; on the other hand, harassment and abuse is harassment and abuse whether its in person, over the phone, or online.

 

Do you think that you’ve been the victim of unfair, abusive or deceptive debt collection practices? These issues commonly arise in civil litigation and, in particular, bankruptcy litigation. Learn how to avail yourself of your rights by talking to the attorneys and dedicated professionals at the Dallas law firm of Fears Nachawati today.

The Unintended Benefits of Bankruptcy

Bankruptcy was originally intended for debtors who had experienced financial hardship. In modern practice, however, this important legal right has become much more than a shield in the face of oppressive personal finances. In some situations, it can be used as an effective sword, too, freeing up needed financial resources to underwrite important life choices and changes.

 

Litigation can be costly. Like a job loss or a medical procedure, the high costs of fighting a court battle can be so high that the only way to free up enough available income is to declare personal bankruptcy. It isn’t the right move for everyone – or even necessary an available action for some – but for many, filing for Chapter 7 or Chapter 13 is an effective way to move forward.

 

In addition to the benefits of shedding debt, filing bankruptcy empowers a debtor with the automatic stay. By compelling all other legal actions to stop, a bankruptcy’s automatic stay momentarily prevents litigation from moving forward. This can let you maintain your lifestyle a little longer and, more importantly, can open up opportunities for negotiation and collaboration between you and your creditors.

 

Don’t let civil or criminal litigation result in you winning the courtroom battle but losing the financial war. Bankruptcy may expand your options during this difficult period and buy you a little more of your most precious asset: time. To find out how the bankruptcy professionals at the law firm of Fears Nachawati may be able to help you, contact our team of dedicated attorneys today. With years of experience, we’re ready to help you.

Asset Sale May Be Helpful in Chapter 13 Case

If your liabilities exceed your assets, filing personal bankruptcy may be the right strategic move for your personal balance sheet. And if your monthly debt payments exceed your available monthly income, bankruptcy may be the only realistic option for protecting your family’s financial and legal interests.

 

If Chapter 13 bankruptcy is the right direction for you – or if it’s your only choice – it’s important to recognize that the law may require you to sell some of your assets. In this circumstance, it may be important for your legal counsel to help you maximize the value of the assets you put on the action block. Even on a relative basis, the proceeds from these sales may reduce the amount that you’re required to pay your Chapter 13 plan.

 

When thinking about when to file for personal bankruptcy, consider your timing. Some assets, such as real estate, can experience significant fluctuations in value in the span of just a few months or years. By delaying – or expediting – a sale of assets in bankruptcy, you may be able to increase the value of your estate and, as a result, reduce a portion of the obligations you’ll carry into your plan.

 

Want to find out more about how a timely, well-considered asset sale may improve your ability to manage your future during bankruptcy? The attorneys at the law firm of Fears Nachawati may be able to help answer your questions. Talk to us today for your free consultation.

Planning for Bankruptcy May Save You Thousands

If you disobey federal bankruptcy law, you could face serious civil and even criminal penalties. Of course, if you follow the advice of the Boy Scout motto – “Be Prepared” – and work within bankruptcy and state laws to shield your assets, you may save thousands. For many potential debtors, the difference between success and failure is their willingness to rely on the advice of dedicated, informed professionals.

 

In Texas, the homestead exemption is a particularly valuable tool in a would-be debtor’s tool kit. In a city, a debtor may keep a home of up to 10 acres without forfeiting it to his or her creditors. In rural areas, the homestead exemption applies to a primary residence, including surrounding land, of up to 100 acres.

 

What distinguishes rural from urban property for the purposes of the Texas homestead exemption? As established in Texas Property Code § 41.002(c), a homestead is considered urban if the property is located within the limits of municipality and served by police and fire protection and at least three of the following city services: electricity, natural gas, sewer, storm sewer, and water.

 

If personal bankruptcy is something that you may need to manage some time in the years ahead, it may be wise to be prepared for every contingency and plan for how to best shield your assets. Living on a rural homestead may be one of a number of strategies to consider. To find out more about how to best protect your legal interests in the event of a financial downturn, talk to the professionals and attorneys at Fears Nachawati.

Beware the Bankruptcy Consequences of Do-It-Yourself Legal Forms

The old adage “penny wise, pound foolish” is taking a new expression in the form of legal forms. A Texas bankruptcy debtor learned this lesson the hard way in the last few months when the $10 legal form that created her living trust resulted in thousands in after-the-fact, bankruptcy and appellate court costs.

 

In an attempt to avoid probate issues for her son, the debtor sought to put her home in a living trust by using a do-it-yourself form. When she declared bankruptcy some time later, however, the bankruptcy trustee objected to her attempt to claim an exemption on an asset she did not own. Agreeing with the bankruptcy trustee, the bankruptcy court ruled that did not own her home for purposes of her homestead exemption. By her own actions, the court determined, the trust owned the home.

 

Fortunately for the debtor, the district court to which she appealed the matter found that her trust was not properly created and, therefore, never owned or controlled the asset. In the end, the debtor was able to claim the homestead exemption and hold on to her home.

 

That’s good news for the debtor, but it’s even better news for individuals trying to decide whether pre-packaged legal forms are a good idea. Be careful! While low cost, quick resolution do-it-yourself legal forms have their place, it’s important to be mindful of their unintended consequences, including how they may impact your bankruptcy filing.

 

Want to know how your prior legal actions may impact your present bankruptcy filing? The attorneys at the Dallas firm of Fears Nachawati may be able to help you. Contact our professionals today for the advice and support you need.

Teaser Rates: A Roll of the Dice

An introductory rate, commonly known as a teaser rate, is an interest rate charged to a debtor during the initial stage of a loan. Generally, this interest rate exists for a period of time, such as 12 months, before the rate automatically reverts to a higher, permanent rate.

 

Teaser rates represent a roll of the dice for many debtors. Some debtors take advantage of an introductory rate by not only borrowing during the introductory period, but repaying the loan as well. For these savvy consumers, they are like gamblers who beat the house. Unfortunately, most debtors don’t have the discipline or the opportunity to repay the loan in full prior to the end of the introductory period. As a result, they face the difficult circumstance of a significant rate hike – often when they’re least prepared for it.

 

If you’re in bankruptcy because of credit card debt and the teaser rate trap, you may find an ironic and dangerous opportunity when you leave the protection of bankruptcy: the only credit you may be able to find in the first few months or years after bankruptcy may be teaser rate-driven, high interest credit cards. Just like a roll of the dice, these financial instruments aren’t inherently bad or good – they’re just tools at your disposal. What’s most important is that you understand how to use them.

 

Want to find out the answers to your most pressing questions about bankruptcy? The attorneys and dedicated professionals at Fears Nachawati are prepared to help you. Contact us today for your free consultation.

Bankruptcy: A Responsible or Irresponsible Choice?

In 2012, more than 1,000,000 Americans filed for personal bankruptcy. Job loss, health issues and divorce were just a few of the principle drivers that pushed these individuals into the protection of the bankruptcy court. For most, declaring bankruptcy wasn’t simply a legal act. It was a challenging personal choice, too.

 

Traditionally, many debtors feel emotions like guilt, shame and embarrassment for finding themselves so close to insolvency. They worry that bankruptcy is an irresponsible choice. They wonder what their parents, friends, and siblings may say about them.

 

Sometimes, bankruptcy is an irresponsible choice. For a debtor who has plenty of cash-on-hand and ample monthly income to cover his or her costs, it may be difficult to justify filing for Chapter 7 or Chapter 11 bankruptcy. In some situations, bankruptcy may not be the best way forward.

 

On the other hand, in most situations, declaring bankruptcy is the right decision, not the wrong one. The unexpected is part of life. Sometimes housing prices fall unexpectedly or interest rates rise when you least expect it. You can’t always guess when you’ll inexplicably lose your job or face an expensive medical condition. For many, it’s unfair to hold yourself to an unrealistic standard. For these situations and more, bankruptcy isn’t just available to you – it was intended for you.

 

Ready to find out more about the role personal bankruptcy may play in your future? The attorneys at the Dallas law firm of Fears Nachawati are prepared to give you the advice you need. Talk to us today for your free consultation.

Taking Advantage of Generous Texas Exemptions

Bankruptcy is a challenging and difficult time. With creditors pulling at you in different ways, it can be easy to think that finding the money for a personal bankruptcy attorney isn’t a high priority. While the law allows debtors to file on their own behalf, known as pro se, for many individuals this is a serious mistake.

 

A dedicated, experienced attorney can help you navigate the various challenges associated with your bankruptcy. For instance, he can advise you as to whether you should file Chapter 7 or Chapter 13 bankruptcy. Or he can ensure that you’ve completed all the necessary filing documents. And, of course, he can also protect you from inadvertently making a false statement and, as a result, facing potentially steep civil or criminal sanctions.

 

Perhaps most importantly for your case, a knowledgeable bankruptcy professional can also help you take advantage of the generous exemptions offered under Texas law. While you may lose a significant amount of personal property in your bankruptcy, state law shields a portion of your assets, such as a qualifying home, certain personal property, and various insurance contracts and pension plans. When you’re trying to get back on your feet after bankruptcy, these assets can be instrumental to your recovery.

 

Want to know more about how the lawyers at the Dallas law firm of Fears Nachawati may be able to help you? Talk to our devoted team today. With years of experience, we know about the exemptions you may want to claim and the pitfalls you may want to avoid.

Preparing for Your Bankruptcy

If your financial house is crashing down around you, the time to act may be rapidly approaching. For many debtors, the old Boy Scout motto – Be Prepared – is an important mantra to remember. For personal bankruptcy, there’s no substitute for preparation. In fact, a prepared debtor may succeed even where a better-financed debtor may fail.

 

What should you do to prepare? Speaking to the dedicated, experienced attorneys and professionals at the law firm of Fears Nachawati should be at the top of your list. Nevertheless, not far down that list, you should also include organizing your personal financial affairs, retaining bank statements and credit card bills, and identifying all of your legal contracts, like rental agreements and car loans. For at least the last three months, you should know where your money came from and where it went.

 

Just as there are steps you should take, there are also things you shouldn’t do. You shouldn’t try to hide money, give it to family members on the condition that they give it back to you, or pay creditors you prefer rather than those you dislike. Likewise, you should not intentionally destroy certain property or evidence of obligations. And, of course, you shouldn’t “rob Peter to pay Paul,” such as transferring your debt from one creditor to another so as to saddle an unsuspecting lender. Again, at the top of the list, you should remember to talk to the knowledgeable professionals at our firm.

 

The attorneys at Fears Nachawati can help you prepare for your bankruptcy. Once you have a game plan, you’ll be able to face the coming months and years with greater confidence. Preparation is key to your success. Get started preparing today.

What's In Your Wallet after Bankruptcy?

The widely used credit card, Capitol One, has made the phrase, “What’s in Your Wallet?” one of the most famous marketing taglines in American business history. For an up-and-coming consumer financial services firm, Capitol One’s question gently asked consumers to reexamine their financial life and focus on the issue of whether they were getting the deal they deserved from their credit card company.

 

For individuals and families preparing for bankruptcy, this question is important, too. In the months after bankruptcy, your access to credit will likely be limited. High-interest, low-balance credit cards may be your only place to find financing. Prudent people may tell you that a credit card is the last thing you need. In fact, for many families, high-interest debt is precisely why they’re in the fix that they’re in.

 

Ironic as it might seem, a credit card may be just what the financial doctor ordered. In the immediate aftermath of your bankruptcy, your credit score will tell one story to a lending institution: “Don’t trust this person with a loan!” By signing up for a credit card and making timely, full payments, you’ll start to change that story. Creditors will see your regular payments and responsible use of credit.

 

Will you pay for this strategy with higher interest rates? You bet. And if you can’t control your spending, this strategy can be extremely dangerous. On the other hand, if you really have turned a corner in your personal, business, and financial life, this approach may ensure that you get the credit you need to rebuild your credit score.

 

Ready to talk about other strategies to improve your financial life after bankruptcy? Talk to the professionals at the law firm of Fears Nachawati today. With years of experience, we know how to give you the advice you need.

What to Consider When Considering Bankruptcy for Your Small Business

Small business restructurings are often as relatively costly as they are emotionally painful. Clearly, large corporate bankruptcies, like the recent American Airlines restructuring, carry legal and consulting fees in the millions of dollars. However, given the size of American Airlines assets and its potential for future revenue, these fees are just a few small drops in a huge bucket. For a small business, the costs of bankruptcy can swamp revenue and doom the opportunity to bounce back.

 

For many small businesses, the price of Chapter 11 is too high. Legal and consulting fees can extend into the tens and hundreds of thousands of dollars. Without significant financial resources, often in the form of outside equity or creditor financing, small businesses can’t survive the long haul that is Chapter 11.

 

Chapter 13, the cheaper form of small business restructuring, presents many challenges for managers, owners, and stockholders. With your business assets under the supervision of a bankruptcy court, your decisions may be scrutinized. During the restructuring period, your staff would be required to submit monthly reports to the bankruptcy trustee. In general, the fruits of any business upside would go to your past creditors, not to you and your team. Additionally, your business would have to keep up with plan payments.

 

If Chapter 13 is too risky or expensive, then Chapter 7 may be your only option. Liquidation isn’t fun, but it may be the only way for you to bounce back. With your business debts clear, when the time comes, a Chapter 7 liquidation will free you to try again.

 

Want to know more about your legal options? The attorneys at Fears Nachawati understand how to advise you of your options and execute on the decisions you make. Contact us today for your free consultation. We’re ready to give you the help you need. 

Why Are You Thinking about Bankruptcy?

Americans consider filing for personal bankruptcy for a wide variety of reasons.

 

For some, their month-to-month costs already exceed their income and, as a result, they have been confronted with creditor state law claims, such as garnishment of their wages, repossession of property, like an automobile, or even foreclosure on a home. Where this is the case, bankruptcy may provide not only a longer-term solution to their financial predicament, but also an immediate reprieve, courtesy of the Bankruptcy Code’s powerful automatic stay provision.

 

For others, their income may exceed their operating costs, but their overall debt burden far exceeds their assets. Moving the mountain of debt they face may take years, even decades, and for some debtors, the prospective of managing this process is just too much to bear. Divorce, medical costs, or a legal verdict may have caused the immediate and profound spike in their personal debt level.

 

Recognizing why you’re thinking about bankruptcy and what you hope to gain from this life-changing legal procedure is important if you are to achieve a successful outcome. No approach to personal bankruptcy is easy. Chapter 7 takes place quickly, over just a few months, but the amount of change a debtor experiences is considerable. Likewise, Chapter 13 imposes less dramatic change to your day-to-day life, but typically occurs over a period of between three and five years. Living with your finances under bankruptcy court supervision for that long can be trying to any debtor – and their family.

 

What’s the right way forward for you and your loved ones? The attorneys at the Dallas law firm of Fears Nachawati can help you answer this and many other important questions. Before you make any major decisions with respect to your finances, talk to our dedicated professionals. The consultation is free and the advice could prove very helpful.

Can Bankruptcy Halt Your Foreclosure?

The short answer to this important question is usually, “Yes, but not always.”

 

Many Americans qualify to file bankruptcy under Chapter 13 of the Bankruptcy Code. For these debtors, Chapter 13 provides them with the opportunity to make up past mortgage payments on a court-supervised repayment plan that more closely matches your financial means with your financial obligations.

 

For those debtors who earn too much income for Chapter 13, Chapter 7 bankruptcy can sometimes provide a way to keep your house. First, the provision of the Bankruptcy Code known as the automatic stay will stall the foreclosure proceedings. Second, if a debtor only has unsecured debt or if he or she can find a way during the bankruptcy proceeding to catch up on the secured lender’s claims, then the house may stay in his or her possession.

 

Unfortunately, for debtors who make too much money for Chapter 13 and who have outstanding secured debt against their home, Chapter 7 may only delay, but not ultimately prevent a creditor’s successful foreclosure proceeding. Where this is the case, you should take care to ask if bankruptcy really is right for you and you may also want to explore whether a private workout may better accomplish your financial objectives.

 

Want to know more about the differences between Chapter 7, Chapter 13, and a private workout, as well as which one may be right for you? The dedicated and experienced attorneys at Fears Nachawati know how to answer these important questions and many more. To get started, talk to our team today. Your consultation is free. 

Will a Private Workout Work for You?

If you’re facing financial distress, you may be considering whether you should file personal bankruptcy or attempt a private workout with your creditors. In some cases, a private workout isn’t possible because your creditors simply refuse to negotiate with you. In other situations, a personal bankruptcy isn’t an option because you’ve already filed within the seven-year period following a prior bankruptcy discharge.

 

Notwithstanding these considerations, more often than not, debtors have a choice. If this is a choice you’re facing, it may be wise to speak with the dedicated bankruptcy and insolvency lawyers at Fears Nachawati. With years of experience advising clients just like you and your family, we know how to address your fears, ease your concerns, and advise you of your legal and financial interests.

 

A private workout has advantages. Compared to a personal bankruptcy, a private workout can take place quickly and without the hassle and expense of litigation. Similarly, because the parties can speak to one another more directly and define their own needs, a debtor and his creditors may consider options that may not be available otherwise.

 

Of course, a Chapter 13 or Chapter 7 bankruptcy has its advantages, too. By availing himself of the Bankruptcy Code, a debtor may operate within its protections. Interest on pre-petition debts will stop accruing. The automatic stay will prevent collection efforts by harassing institutions. State law exemptions, such as Texas’s generous homestead exemption, may allow a debtor to shelter valuable assets from creditors.

 

Each situation is unique. Your legal affairs deserve the personal attention and experienced qualifications that our team provides. Contact our professionals today to learn how we can help you as your move toward financial solvency and certainty.

Why Bankruptcy Timing Matters

To the surprise of many debtors, the Bankruptcy Code is full of provisions that relate to the timing of a personal bankruptcy. For instance, if you file too soon, you might have to divest yourself of certain Christmas or birthday gifts. Some debtors have had the embarrassment of having to ask for a few gifts back – or face civil and criminal allegations of violating the Code’s preferential transfer provisions.

 

Waiting too long can have even more dire consequences. The powerful automatic stay provision of the Bankruptcy Code stops debt collection efforts from virtually all of your creditors. Moreover, the automatic stay can help you keep particular assets, such as your car and home. When you’re working to emerge from bankruptcy later, these assets will be essential to your ability to earn income and your family’s ability to function.

 

By waiting, you don’t get the benefits of the automatic stay. And by not getting the benefits of the automatic stay, you may lose assets that you shouldn’t have to forfeit. Unfortunately, these assets can be hard to recover after they’ve left your possession. In bankruptcy and basketball, it’s easier to play defense with a lead than to rely on your offense to play catch-up.

 

Finally, quick filings can have one more additional impact on timing: the future. The faster you file, the more quickly you can get through the bankruptcy process and beyond the reach of preexisting creditors. You may have your eye on some non-exempt property. Buying before bankruptcy might mean that you’re just buying that vacation home for your credit card company; buying after bankruptcy may mean that you’re buying it for your spouse and your family.

 

Do you have questions about the timing of your bankruptcy? The attorneys at the Dallas law firm of Fears Nachawati are prepared to talk to you about your options and your needs. Talk to our professionals today for your free consultation.

What are the Advantages of Chapter 13?

Chapter 13 bankruptcy isn’t for everyone. For many debtors, added fees for the U.S. trustee and the cloud of uncertainty associated with the three-to-five year payment period discourage some debtors. Moreover, many others do not even qualify under the Chapter 13 means test. In short, they make too much money to declare Chapter 13.

 

For millions of Americans, however, Chapter 13 is an available and reasonable option. Chapter 13 gives debtors the chance to consolidate their various outstanding debts into one, easy monthly payment. Additionally, Chapter 13 debtors can keep their property. Many debtors have real and personal property that is personally invaluable. Chapter 13 dramatically increases the likelihood that they can hold on to these near-and-dear assets.

 

For debtors who complete the Chapter 13 marathon and cross the finish line, Chapter 13 provides a clean slate. Specifically, unsecured debts which remain unpaid at the end of the applicable three or five-year period are eliminated, leaving many debtors with considerably greater disposable income in the years ahead.

 

Bankruptcy isn’t right for everyone, and Chapter 13, a particular kind of bankruptcy, may not be the best option for you and your family. On the other hand, for those debtors who may benefit from Chapter 13, the financial, emotional, and personal benefits can be enormous. Want to find out if this strategy is right for you? Contact the dedicated professionals at Fears Nachawati today. We’re here to help you.

Do You Have a Break the Glass Plan?

During the height of the 2008 financial crisis, policymakers at the Treasury Department and the U.S. Federal Reserve Bank created a “break the glass” plan. For use only in an emergency, the break the glass called for an extraordinary set of policies designed to right the U.S. financial ship, should the need arise. As it happened, the need arose.

 

Do you have a “break the glass” plan for your own personal balance sheet? If not, it may be time to visit with the bankruptcy professionals and dedicated attorneys at Fears Nachawati. With years of experience in this important area of law, we can help define the issues you may face and discuss contingency plans that work best for you.

 

Personal financial crises are like national and global financial crises in that they happen at unpredictable times and in unpredictable ways. You can’t predict when a crunch may come, but you can prepare for it. That’s what a “break the glass” plan is all about.

 

What might be the components of your plan? For many debtors, a three-step process makes the most sense.

 

First, you should know what a so-called “workout” between your creditors and you might look like. This may include modifying your debts, extending payment periods, or altering the interest rate.

 

Second, you should know what triggering events in your life might prompt you to declare Chapter 7 or Chapter 13 bankruptcy. Timing and asset allocation can have a meaningful impact on your bankruptcy’s bottom line, so preparation is critical.

 

Finally, you should have a post-bankruptcy plan, too. Living in the wake of a personal bankruptcy can be tough at times. Being forewarned is to be forearmed.

 

Ready to find out more? Talk to our professionals today. We’re ready to help you and the consultation is free. 

The Real Effect of Illusory Debts after Bankruptcy

Your personal bankruptcy may have been costly, emotionally painful, and time-consuming. The good news was supposed to be that your debts were discharged and debt collectors and credit reporting agencies were supposed to record your changed status. For you and your family, however, this fresh-start may not yet have occurred.

 

If your bankruptcy was finalized with a court order, your old debts should have been discharged. Therefore, any remaining reference to them by a credit reporting agency, credit card company, or collection agency would be in error. In effect, these debts are illusory. Nevertheless, if these third parties believe they exist, these debts can still have a meaningful effect on your financial life.

 

Section 524 of the Bankruptcy Code provides for a discharge injunction which prohibits collection efforts by pre-petition creditors. These firms cannot deny credit, make collection calls, or file lawsuits against you in an effort to collect those debts. Nevertheless, through harmless errors and intentional ones, some creditors attempt to collect on those debts. The good news: if your debts have been discharged, you have the upper hand when it comes to their legal claims. In fact, the harassment you’ve experienced may serve as the basis for a legitimate counterclaim.

 

Want to find out your post-petition options? Talk to the professionals at the law firm of Fears Nachawati today. With years of experience and dedicated expertise, we know how to advise you during this stressful time. Contact us today!

The Advantages of Home Ownership

As you’re thinking about how to resolve your troubled finances, selling your house – even at a loss – may be an option you’re considering. Before you make that difficult and potentially costly decision, you should remember some of the subtle advantages of home ownership.

 

First, the federal government’s principal tax law, the Internal Revenue Code, heavily subsidizes homeowners. For instance, the home mortgage interest deduction allows you to deduct from your taxable income the interest you pay on your home loan. For many taxpayers, this law results in thousands of dollars in tax savings every year.

 

Second, the home you purchased isn’t just a residence. It’s also a financial bet that home prices will appreciate and that you’ll benefit from the upside. In recent years, this bet hasn’t paid off the way it did in years past, but with the recovery picking up speed in states like Texas, future years may see future gains.

 

Finally, your home is a store of value. Though financial instruments like home equity loans, you can trade some of the illiquidity in your residence for liquid cash. This isn’t usually a good long-term financial strategy, but as a stop-gap measure during a financial shock to your family – such as a job loss or illness – this liquidity can come in handy.

 

These advantages are worth considering as you think about your financial future. If you’re facing debt-related problems, a financial workout with your creditors or even bankruptcy may be the right move. However, as you enter those negotiations, it’s important to remember what assets you value most highly.

 

Want to find out how the attorneys at Fears Nachawati can help you as you deleverage through a financial workout or personal bankruptcy? Want to find out if holding on to your home is a realistic possibility? Our attorneys and professionals are committed to helping people like you. Contact us today to learn more.

To Keep or Not to Keep Your House

If you’re facing financial trouble, you’re probably asking yourself one question above all others: should we sell our house?

 

A residence is typically the most valuable asset an individual or family owns. Not surprisingly, it’s also frequently the asset against which the most amount of debt is leveraged. Residential mortgage debt often extends into the range of hundreds of thousands – if not millions – of dollars. It can be the source of an incredible amount of personal and financial stress.

 

If you qualify under the Chapter 13 means test, your bankruptcy attorney may be asking himself one question above all others: should the ownership of this house determine whether this debtor enters Chapter 7 or Chapter 13 bankruptcy?

 

A Chapter 13 bankruptcy is the personal equivalent of a corporate restructuring under Chapter 11. Under Chapter 13, a debtor may elongate his debt repayment schedule, retain levered assets, and force his creditors to bet with him on his future. Under a Chapter 7 liquidation, however, a debtor loses more of their assets immediately.

 

How much do you value your residence? This question may be central to your upcoming financial planning if you’re a distressed debtor. To find out the answers to your questions, including how you should approach the timing and strategy of your debt relief options, talk to the bankruptcy professionals at Fears Nachawati today.

Put the Brakes on Your Car's Repossession

If you’ve fallen behind on your monthly car payments, your lender likely has the legal right to repossess your vehicle. From your lender’s perspective taking action may make sense. If your creditor doesn’t think that you can make timely payments, the value of the car may be the only thing standing between him and a bad debt.

 

From your perspective, of course, losing your car is the last thing you need. If you’re like most Texans, your car isn’t a luxury. It’s a necessity. To get to work in the morning, go home at night, or to buy groceries on the weekend, you must have your car. Losing access to your car – even temporarily – may cost you thousands of dollars in lost time, lost wages, and lost opportunity.

 

To tap the brakes on your car’s repossession, exercising your state rights and remedies may be required. To repossess your car, your creditor must have an attached, enforceable security interest in your car. If the creditor has fallen short in executing the necessary steps for an attached, enforceable security interest, you may be able to keep your car. Additionally, your creditor cannot breach the peace in the act of repossession. So, there may be practical limits on his repossession efforts, too.

 

To slam the brakes on your car’s repossession, filing for personal bankruptcy may be necessary. The Bankruptcy Code’s automatic stay and other powerful provisions may give you the ability to retain your car. By filing a Chapter 13 plan, you may be able to restructure your note, reducing the size of your monthly payments, and moving toward a more acceptable debt structure.

 

Need to find out more information about how to manage your creditors expectations and, if necessary, protect your legal rights and interests? The attorneys at the law firm of Fears Nachawati are prepared to help you do just that. With years of experience, we’re prepared to give you the advice you need to navigate the challenges you face.

 

When HAMP Fails

Millions of American debtors are struggling to make ends meet. Burdened with a mortgage they cannot service and a house they cannot reasonably sell, many debtors have become delinquent on their home loans. In fact, just a few years ago, the Mortgage Bankers Association (MBA) announced that the delinquency rate had reached 15 percent.

 

In an attempt to respond to these concerns, the U.S. Treasury Department launched the Home Affordable Modification Program (HAMP). Despite the program’s noble goals, many observers believe HAMP has been a programmatic failure. Primarily, HAMP resulted in a little over half a million mortgage modifications, rather than the 3 or 4 million modifications originally predicted.

 

The idea of home loan modifications is a good one, even if HAMP proved to be the wrong approach for many families. So, what should you do when HAMP fails? Many bankruptcy courts have stepped into the breach, bringing together creditors and debtors in an attempt to foster dialogue and resolve the financial impasse. Although foreclosure is sometimes still the outcome, in a large number of situations, these court-sponsored workouts have enriched the creditor and let the debtor keep his home.

 

Working out your financial difficulties is important. Whether it requires a formal bankruptcy filing or not, the professionals and dedicated attorneys at the law firm of Fears Nachawati know how to ask the right questions and drive to the best solution for you and your family. If you’re struggling to meet your obligations – and, in particular, your mortgage payment – it may be time to speak with our staff. Talk to us today.

Plan Your Timing, Prepare for Your Needs

The effectiveness of your bankruptcy may turn on your timing and your needs. With this in mind, it’s important to prepare carefully and time your filing accordingly.

 

Sometimes, a consumer debtors needs to act quickly. If you’re facing the possibility of a home foreclosure, apartment eviction, or car repossession, filing immediately will activate the Bankruptcy Code’s powerful automatic stay provision. As a result, pending legal actions – such as foreclosures, evictions, or repossessions – will stop in their tracks.

 

On the other hand, a consumer debtor sometimes needs to act deliberately. In general, there’s only one shot in the bankruptcy gun. You need to hit your target the first time. Additionally, the Bankruptcy Code’s look-back provision may make you unwind certain monetary transfers that took place in the months preceding bankruptcy. In some cases, waiting just a matter of days or weeks can save you thousands of dollars.

 

Finally, it’s important to speak with bankruptcy and financial professionals to understand more clearly what your financial future will look like after bankruptcy. If you undergo a Chapter 13 restructuring, you may have to pay a portion of your monthly earnings to your creditors. Living within this budget can constrain your lifestyle in new ways. You’ll want to prepare for that change before it comes.

 

Ready to speak with the dedicated professionals and skilled attorneys at Fears Nachawati. Our Dallas-area practice is ready to serve your needs and prepare you for your bankruptcy filing. For your free consultation, talk to us today.

The Chameleon Court

If you’re in bankruptcy, you’re probably going to spend a little time in a bankruptcy court. It may be worth knowing that bankruptcy courts play by a different set of rules than most other federal or state courts. The Bankruptcy Code empowers the presiding judge to act in a number of different ways, playing a variety of different roles.

 

A bankruptcy judge is a referee. Historically, bankruptcy judges weren’t judges. They were called “referees.” Today, the nomenclature has been standardized, but the fundamental concept remains. In many situations in bankruptcy litigation, the judge lets the parties dispute. He or she just makes sure that the punches stay above the belt.

 

A bankruptcy judge is a governor. As the presiding officer in the court, the bankruptcy judge has the authority to police the forum. The judge is empowered to punish unruly behavior, outbursts, or behavior suggesting disrespect or contempt, including throwing the parties out of the courthouse.

 

A bankruptcy is a parent. In the eyes of a child, a parent sometimes does things that seem unjust to one child, even though it’s the right thing to do for another child. And the justification can feel as thin as, “Because I said so.” Bankruptcy judges have a similar power. From the bench, a bankruptcy judge can limit some of the rights and remedies of a litigant, including nullifying contracts that previously bound the parties. And, sometimes, it can feel like the justification is as thin as “Because I said so.”

 

A bankruptcy judge is an auctioneer. In many bankruptcies, the best solution is for the debtor to sell a portion of his, her, or its assets. When this is the case, it’s essential that the sale be orderly. An orderly sale maximizes the value for the creditors and the debtor. It also lends legitimacy to the proceedings. Given these needs, a bankruptcy judge will often fill the role of auctioneer, presiding over the sale and ensuring a proper process.

 

What roles should you expect the bankruptcy court play in your proceedings? It’s an important question to ask – and to answer. To find out, talk to the professionals and dedicated bankruptcy attorneys at Fears Nachawati today. We’re ready to help you.

Understanding Your Debt Management Plan

If you’ve struggled with your personal finances, you may have worked with a professional to arrive at a debt management plan. Alternatively, if you’re just coming to terms with your finances, a debt management plan may be beneficial. In either case, it’s important to recognize that such a plan requires attention, diligence, and understanding.

 

Do you fully understand your debt management plan? Do you have questions about what you’re paying and who is receiving your payments? The attorneys at the Dallas law firm are prepared to help you answer these important questions. With years of experience advising debtors like you, we know what you’re facing.

 

Additionally, you may try to keep to your plan and realize that keeping up with your payments just isn’t possible. When this is the case, filing Chapter 7 or Chapter 13 personal bankruptcy may be appropriate. Whether you need an immediate fix or a more complex reorganization, our professionals are prepared to advise you.

 

To schedule your free consultation with a qualified Fears Nachawati bankruptcy attorney, contact our dedicated professionals today.

Can I Keep My Apartment during Bankruptcy?

Whether you can keep your apartment during your bankruptcy is an important question for many debtors. If possible, this is a question you may consider asking – and answering – before you file your bankruptcy petition.

 

If you are current on your rent payments, your Chapter 7 or Chapter 13 bankruptcy will largely not effect your rental arrangement. While you must continue to make payments and your rental deposit may be subject to a trustee action, your landlord won’t be one of your creditors and, therefore, won’t have an interest in your bankruptcy.

 

On the other hand, if you’ve fallen behind in your rent payments, your landlord will likely be one of creditors for purposes of your Chapter 7 or Chapter 13 bankruptcy. As a result, you may fall into a risky and conflictual legal grey area.

 

If you file your bankruptcy petition before your landlord files an eviction action, it’ll probably be easier for you to stay in your apartment. On the other hand, if your landlord beat you to the punch and has filed an eviction action before you’ve filed for bankruptcy, it’ll probably be harder for you to stay in your apartment.

 

In either case, persuasive arguments from the landlord’s legal counsel may sway the bankruptcy judge to lift the automatic stay to your bankruptcy proceeding just as compelling arguments from debtor’s counsel may convince the bankruptcy judge to stay the state court eviction action.

 

The bottom line: the well-trained, dedicated attorneys at Fears Nachawati can advise you as to the facts in your particular case and can fight for your right to remain in your apartment. To get started on your bankruptcy case, talk to our professionals today.

The Bankruptcy Marketplace

North Texas residents are familiar with the Fort Worth Sheraton Hotel and Spa. For years, the Fort Worth Sheraton has been a spot for romantic weekends, conferences, and up-scale business meetings. Today, however, it’s a symbol of the bankruptcy marketplace in action, or, more accurately, bankruptcy inaction.